EXHIBIT 1.4
CALPINE CORPORATION
89,000,000 Shares of Common Stock
UNDERWRITING AGREEMENT
September 28, 2004
Deutsche Bank AG London
Deutsche Bank Securities Inc.
c/o Deutsche Bank Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
1. Introductory. Calpine Corporation, a Delaware corporation (the
"COMPANY"), proposes, subject to the terms and conditions stated herein, to
issue and sell to Deutsche Bank AG London, acting through Deutsche Bank
Securities Inc., as its agent (together, "DEUTSCHE BANK" or the "UNDERWRITER"),
up to 89,000,000 shares of common stock, par value $.001 per share, of the
Company (the "SECURITIES") pursuant to a Share Lending Agreement dated September
28, 2004 (the "SHARE LENDING AGREEMENT") between the Company and Deutsche Bank.
The Company has filed with the Securities and Exchange Commission
(the "COMMISSION") a registration statement (No. 333-76880), including a
prospectus (the "BASE PROSPECTUS"), relating to various securities of the
Company (including the Securities) and has filed with, or transmitted for filing
to, or shall promptly hereafter file with or transmit for filing to, the
Commission a prospectus supplement (the "PROSPECTUS SUPPLEMENT") specifically
relating to the Securities pursuant to Rule 424 under the Securities Act of
1933, as amended (the "SECURITIES ACT"). The term "REGISTRATION STATEMENT" means
the registration statement (No. 333-76880), including the exhibits thereto, as
amended to the date of this Agreement. The term "PROSPECTUS" means the Base
Prospectus together with the Prospectus Supplement. The term "PRELIMINARY
PROSPECTUS" means a preliminary prospectus supplement specifically relating to
the Securities, together with the Base Prospectus. As used herein, the terms
"Base Prospectus," "Prospectus" and "Preliminary Prospectus" shall include in
each case the documents, if any, incorporated by reference therein. The terms
"supplement," "amendment" and "amend" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Base Prospectus by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT").
The Company agrees with the Underwriter as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriter that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such
purpose are pending before or, to the knowledge of the Company, threatened by
the Commission. No document has been or will be prepared or distributed in
reliance on Rule 434 under the Securities Act.
(b) On the effective date of the Registration Statement, such
Registration Statement conformed in all material respects to the requirements of
the Securities Act, the Trust Indenture Act of 1939 ("TRUST INDENTURE ACT") and
the rules and regulations of the Commission thereunder ("RULES AND REGULATIONS")
and did not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and on the date hereof, the Registration Statement and
Prospectus conform in all material respects to the requirements of the
Securities Act, the Trust Indenture Act and the Rules and Regulations, and
neither of such documents includes any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the foregoing does not apply to (A)
statements in or omissions from any of such documents based upon written
information furnished to the Company by the Underwriter specifically for use
therein, it being understood and agreed that the only such information is that
described as such in Section 8 of this Agreement or (B) to that part of the
Registration Statement that constitutes the Statement of Eligibility (Form T-1)
under the Trust Indenture Act.
(c) Each Preliminary Prospectus complied when filed in all
material respects with the Securities Act and the Rules and Regulations.
(d) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Registration Statement and the Prospectus; and the
Company is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification.
(e) Each subsidiary of the Company listed on Schedule A hereto
(the "SCHEDULED SUBSIDIARIES") (x) other than those Scheduled Subsidiaries
specified in clause (y) of this subparagraph, has been duly incorporated and is
an existing corporation in good standing under the laws of the jurisdiction of
its incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; or (y) that
is not a corporation is a limited liability company, has been duly formed and is
validly existing as a limited liability company in good standing under the laws
of the jurisdiction of its formation, and has full power and authority to own
its properties and conduct its business as described in the Prospectus. Each
Scheduled Subsidiary is duly qualified to do business as a foreign corporation
or limited liability company in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business requires
such qualification. All of the issued and outstanding capital stock or
membership interests of each Scheduled Subsidiary has been duly authorized and
validly issued, with respect to Scheduled Subsidiaries that are corporations,
and is fully paid and nonassessable, except as set forth on Schedule B hereto.
The capital stock and membership interests of each Scheduled Subsidiary owned by
the Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects; and the Company is not a general partner in any
partnership. For purposes of this agreement, "SUBSIDIARY" means, as applied to
any person, any corporation, limited or general 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 any time, directly or indirectly, owned by such person and/or one
or more subsidiaries of such person, including with respect to the Company. For
purposes of the definition of "SUBSIDIARY," "VOTING SHARES" means with respect
to any corporation, the capital stock having the general voting power under
ordinary circumstances to elect at least a majority of the board of directors
(irrespective of
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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).
(f) The Company has an authorized capitalization as set forth
in the Prospectus; all of the issued and outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable; and all of the issued and outstanding shares of capital stock of
each subsidiary of the Company have been duly authorized and validly issued in
accordance with the organizational documents of such subsidiary, and the
ownership interests of each subsidiary owned by the Company, directly or
indirectly, are fully paid and non-assessable and (except for (i) directors'
qualifying shares, if applicable, and (ii) unissued shares of Stock underlying
unvested stock options granted to its employees) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities
or claims (except for such liens, encumbrances, equities or claims that are
disclosed in the Prospectus).
(g) The Securities have been duly authorized by the Company;
and, when the Securities have been delivered in accordance with this Agreement
on the Closing Date, such Securities will be validly issued, fully paid and
non-assessable, free and clear of any liens and will conform to the description
thereof contained in the Prospectus; and the stockholders of the Company have no
preemptive rights or any similar rights with respect to the Securities.
(h) Except as shall be disclosed in the Prospectus, there are
no contracts, agreements or understandings between the Company and any person
that would give rise to a valid claim against the Company or the Underwriter for
a brokerage commission, finder's fee or other like payment in connection with
this offering.
(i) Except as (i) set forth on Schedule A hereto and (ii)
provided for in this Agreement, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities with any other
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(j) The outstanding shares of common stock of the Company are
listed on the New York Stock Exchange (the "NYSE") and the Company has applied
to list Securities on the NYSE.
(k) Based on information supplied by the Company's common
stock transfer agent, EquiServe Trust Company, N.A., the number of outstanding
shares of common stock of the Company on the date hereof is not less than that
disclosed in the Prospectus under the caption "Description of Capital Stock."
(l) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement or the Share
Lending Agreement or otherwise in connection with the issuance and sale of the
Securities by the Company, except (i) such consents, approvals, authorizations
and orders as have already been obtained under the Securities Act, (ii) such
consents, approvals, authorizations and orders as may be required under state
securities or Blue Sky laws, and (iii) such other consents, approvals,
authorizations and orders, of which the failure to obtain or file would not, in
the aggregate, have a material adverse effect on the condition (financial or
other), business, properties or results of operations of the Company and its
subsidiaries taken as a whole (any such event, a "MATERIAL ADVERSE EFFECT").
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(m) The execution, delivery and performance of this Agreement
and the Share Lending Agreement by the Company; the issuance and sale of the
Securities by the Company; the compliance with the terms and provisions of each
of the foregoing by the Company and the consummation by the Company of the
transactions contemplated herein and therein will not result in a breach or
violation of any of the terms and provisions of, or conflict with or constitute
a default under, or result in the imposition or creation of (or the obligation
to create or impose) a lien under, (i) any statute, any rule, regulation or
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any Scheduled Subsidiary or any of their
properties, or (ii) any agreement or instrument to which the Company or any such
Scheduled Subsidiary is a party or by which the Company or any such Scheduled
Subsidiary is bound or to which any of the properties of the Company or any such
Scheduled Subsidiary is subject, or (iii) the charter, by-laws or other
organizational document of the Company or any Scheduled Subsidiary, except, in
the case of (i) and (ii) above, as would not have a Material Adverse Effect, and
the Company has full power and authority to authorize, issue and sell the
Securities as contemplated by this Agreement.
(n) This Agreement and the Share Lending Agreement have been
duly authorized, executed and delivered by the Company.
(o) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and all other
properties and assets owned by them, in each case free from liens, encumbrances
and defects except (i) such as do not materially affect the value thereof or
materially interfere with the use made or to be made thereof by them or (ii)
such as would not, individually or in the aggregate, have a Material Adverse
Effect; and except as shall be disclosed in the Prospectus, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions to the Company's title to its leasehold
interests except (i) such as do not materially interfere with the use made or to
be made thereof by them or (ii) such as would not, individually or in the
aggregate, have a Material Adverse Effect.
(p) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by them as described in
the Prospectus, except where the failure to possess the same would not
reasonably be expected to have a Material Adverse Effect, and have not received
any written notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would, individually or in the aggregate,
have a Material Adverse Effect.
(q) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that would
reasonably be expected to have a Material Adverse Effect.
(r) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential information, and
other intellectual property (collectively, "INTELLECTUAL PROPERTY RIGHTS")
necessary to conduct the business now operated by them, or presently employed by
them, and have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property rights that,
if determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(s) Except as shall be disclosed in the Prospectus, neither
the Company nor any of its subsidiaries (i) is in violation of any statute, any
rule, regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
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hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, "ENVIRONMENTAL LAWS"), (ii) owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, (iii)
is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, or (iv) is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation which might lead to such a claim.
(t) Except as shall be disclosed in the Prospectus, there are
no pending actions, suits or proceedings against or affecting the Company, any
of its subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate, have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under, or
contemplated by, this Agreement or the Share Lending Agreement or which are
otherwise material in the context of the sale of the Securities; and, to the
knowledge of the Company, no such actions, suits or proceedings are threatened.
(u) The financial information included in the Prospectus will
present fairly in all material respects the financial position of the Company
and its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown in each case, on a consolidated
basis, and, except as otherwise shall be disclosed in the Prospectus, such
financial statements shall have been prepared in conformity with generally
accepted accounting principles in the United States applied on a consistent
basis throughout the periods covered thereby; and the assumptions used in
preparing the pro forma financial information and the related notes thereto
included in the Prospectus shall provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, and will be prepared in accordance with the rules and
guidelines of the Commission with respect to pro forma financial statements, and
will be properly compiled on the bases described therein; and the adjustments
used therein shall be appropriate to give effect to the transactions and
circumstances referred to therein.
(v) The statistical and market-related data (other than
market-related data and statistical data provided by the Company) included in
the Registration Statement, any Preliminary Prospectus and the Prospectus shall
be based on or derived from sources which the Company believes to be reliable
and accurate, it being understood, however, that the Company has conducted no
independent investigation of the accuracy thereof.
(w) Except as shall be disclosed in the Prospectus, since the
date of the latest audited financial statements that shall be included or
incorporated by reference in the Prospectus there shall have been no material
adverse change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in or contemplated by the Prospectus, since the date of the
June 30, 2004 unaudited financial statements that are incorporated by reference
in the Prospectus, there has been no change in the capital stock of the Company
or long-term debt of the Company or any of its consolidated subsidiaries other
than (a) issues of capital stock pursuant to equity incentive plans and (b) the
repurchase of, or the exchange of capital stock for, outstanding indebtedness in
aggregate principal amount not in excess of $60 million, and no dividend or
distribution of any kind has been declared, paid or made by the Company on any
class of its capital stock.
(x) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act; the Company is not
and, after giving effect to the offering and sale of the Securities to the
Underwriter, as described in the Prospectus, and the consummation of the
transactions
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contemplated by this Agreement or the Share Lending Agreement, will not be an
"investment company" as defined in the Investment Company Act.
(y) Neither the Company nor any "subsidiary company", as that
term is defined in the Public Utility Holding Company Act of 1935 ("PUHCA"), of
the Company is, or after giving effect to the issuance and sale of the
Securities, will be, subject to regulation as a "holding company," a "subsidiary
company" of a holding company or a "public-utility company," as those terms are
defined in PUHCA (except that Androscoggin Energy LLC, which is a QF (as defined
herein) and Acadia Power Partners, LLC, which is an EWG (as defined herein) are
"subsidiary companies" of holding companies.
(z) Each of the power generation projects in which the Company
or its subsidiaries has an interest which is subject to the requirements of the
Public Utility Regulatory Policies Act of 1978, as amended ("PURPA"), and the
regulations of the Federal Energy Regulatory Commission ("FERC") promulgated
thereunder, as amended from time to time, necessary to be a "qualifying
cogeneration facility" and/or a "qualifying small power production facility"
("QF") meets such requirements except where the failure to meet such
requirements would not have a Material Adverse Effect.
(aa) Each of the Company's subsidiaries that is a public
utility under the Federal Power Act, as amended ("FPA"), has validly-issued
orders from the FERC, not subject to any pending challenge, investigation, or
proceeding (i) authorizing such subsidiary to engage in wholesale sales of
electricity, ancillary services and, to the extent permitted under its
market-based rate tariff, other services at market-based rates, and (ii)
granting such waivers and blanket authorizations as are customarily granted to
entities with market-based rate authority, except where the failure to have such
orders would not have a Material Adverse Effect.
(bb) With respect to each of the Company's subsidiaries that
is a public utility under the FPA, the FERC has not imposed any rate caps or
mitigation measures other than rate caps and mitigation measures generally
applicable to similarly situated marketers or generators selling electricity,
ancillary services or other services at wholesale in the geographic market where
such subsidiary conducts its business.
(cc) Each of the Company's subsidiaries that owns and/or
operates an Eligible Facility within the meaning of Section 32 of PUHCA has
received a determination from FERC, not subject to any pending challenge or
appeal, that it is an Exempt Wholesale Generator ("EWG"), within the meaning of
Section 32 of PUHCA.
(dd) Each of the Company's subsidiaries providing retail
electric service in the Electric Reliability Council of Texas, Inc. ("ERCOT")
has validly issued orders from the Texas Public Utilities Commission ("TPUC"),
not subject to any pending challenge, investigation, or proceeding, authorizing
such subsidiary to engage in sales of electricity at retail under the laws of
the State of Texas, except where the failure to have such orders would not have
a Matieral Adverse Effect. Each of the Company's subsidiaries that is
participating in the Texas wholesale electric market has registered with the
TPUC and the TPUC has not imposed on any such subsidiary any specific rate cap
or mitigation measures
(ee) Each of the Company's subsidiaries providing retail
energy services has full authorization to provide retail energy services to
retail industrial, commercial and residential customers in its applicable states
under the applicable Energy Laws, except as would not have a Material Adverse
Effect. "ENERGY LAWS" shall mean any state and local energy laws and
regulations, in each of
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the states, regions or other applicable jurisdictions in which the Company and
its subsidiaries are organized or otherwise conduct business, applicable to: (i)
the ownership, operation, or control of electric generation, transmission, and
distribution facilities; (ii) the purchase, sale, transmission, distribution,
marketing or trading of electric energy; and (iii) organizational, financial and
rate regulation of entities engaged in (i) and (ii) above.
(ff) Except as disclosed in the Prospectus, there are no
material pending complaints filed with the FERC seeking abrogation or
modification, or otherwise investigating the terms of a contract for the sale of
power by the Company or any of its subsidiaries.
(gg) The Company is subject to Section 13 or 15(d) of the
Exchange Act.
(hh) None of the transactions contemplated by this Agreement
nor the sale of the Securities to the Underwriter pursuant to the Share Lending
Agreement will violate or result in a violation of Section 7 of the Exchange
Act, or any regulation promulgated thereunder, including, without limitation,
Regulations T, U and X of the Board of Governors of the Federal Reserve System.
(ii) Prior to the date hereof, neither the Company nor any of
its affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company in
connection with the offering of the Securities.
(jj) Neither the Company nor any of the Scheduled Subsidiaries
is (i) in violation of its Certificate of Incorporation or By-laws or (ii) in
default in the performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other material agreement or instrument to which it is a party or by
which it or any of its properties may be bound, except, as to this clause (ii),
as would not reasonably be expected to have a Material Adverse Effect.
(kk) The statements set forth in the Prospectus under the
caption "Description of Capital Stock" insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate, complete
and fair in all material respects.
(ll) Deloitte & Touche LLP and PricewaterhouseCoopers LLP, who
have expressed an opinion as to certain financial statements of the Company and
its consolidated subsidiaries, are each independent public accountants as
required by the Act and the rules and regulations of the Commission thereunder.
(mm) Each of Netherland, ▇▇▇▇▇▇ & Associates Inc. and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Jung Associates Ltd. is an independent petroleum engineering firm and
nothing has come to the Company's attention to cause it to believe that either
such firm is not qualified to pass on questions relating to the reserves and
production of the Company's oil and gas properties as set forth or incorporated
by reference in the Prospectus.
(nn) The present fair saleable value of the assets of the
Company and each of the Scheduled Subsidiaries exceeds the amount required to
pay the probable liability on its and their existing debts, respectively
(whether matured or unmatured, liquidated or unliquidated, absolute, fixed or
contingent), as they become absolute and matured, and as a result of
consummation of the transactions contemplated herein and in the Prospectus, will
continue to exceed such amount.
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(oo) The Company, does not, and, as a result of consummation
of the transactions contemplated herein and in the Prospectus, will not, have
unreasonably small capital for it to carry on its business as proposed to be
conducted.
(pp) Neither the Company nor any of the Scheduled Subsidiaries
are incurring obligations or making transfers under any evidence of indebtedness
with the intent to hinder, delay or defraud any entity to which it is or will
become indebted.
(qq) No person has the right to require the Company or any of
its subsidiaries to register any securities for sale under the Securities Act by
reason of the filing of the Registration Statement with the Commission or the
issuance and offering of the Securities.
3. Issuance, Loan and Delivery of the Securities. Subject to the
terms and conditions set forth herein and in the Share Lending Agreement, the
Company agrees to issue and sell to the Underwriter and the Underwriter agrees
to purchase (subject to return to the Company in accordance with the terms of
the Share Lending Agreement) from the Company, for a fee of $.001 per share of
common stock (the "FEE"), the Securities. The Company will deliver against
payment of the Fee the Securities in the form of one or more certificates in
definitive form (the "CERTIFICATES") through the facilities of The Depository
Trust Company ("DTC") for the account of the Underwriter. Certificates for the
Securities shall be registered in such name or names and shall be in such
denominations as the Underwriter may request.
Payment of the Fee for the Securities shall be made by the Underwriter in
Federal (same day) funds by official bank check or checks or wire transfer to an
account at a bank acceptable to the Underwriter drawn to the order of Calpine
Corporation at the office of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, 1330 Avenue of the Americas,
New York, New York, at 10:00 A.M. (New York time), on September 30, 2004, or at
such other time thereafter as the Underwriter and the Company may agree upon in
writing, such time being herein referred to as the "CLOSING DATE," against
delivery of the Certificates representing all of the Securities to the
Underwriters through the facilities of DTC. The Certificates representing the
Securities will be made available for checking at the above office of ▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ (or such other location as the Underwriter may direct) at least 24
hours prior to the Closing Date.
4. Certain Agreements of the Company. The Company agrees with the
Underwriter that:
(a) The Company will file the Prospectus Supplement with the
Commission pursuant to and in accordance with Rule 424(b)(2) (or, if applicable
and if consented to by the Underwriter, subparagraph (5) thereof) not later than
the second business day following the date of this Agreement.
(b) So long as a prospectus relating to the Securities is
required to be delivered under the Securities Act in connection with sales of
the Securities by the Underwriter or any dealer, the Company will advise the
Underwriter promptly of any proposal to amend or supplement the Registration
Statement or the Prospectus and will afford the Underwriter a reasonable
opportunity to comment on any proposed amendment or supplement thereto; and the
Company will advise the Underwriter promptly of the effectiveness of any such
amendment or supplement and of the institution by the Commission of any stop
order proceedings in respect of a Registration Statement or of any part thereof
and will use its best efforts to prevent the issuance of any such stop order and
to obtain as soon as possible its lifting, if issued. If, at any time when a
prospectus relating to the Securities is required to be delivered under the
Securities Act in connection with sales of the Securities by the Underwriter or
any dealer, any event occurs as a result of which the Prospectus as then amended
or supplemented would
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include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend the Prospectus to comply with the Securities Act, the
Company promptly will notify the Underwriter of such event and promptly will
prepare and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or effect such
compliance. Neither the Underwriter's consent to, nor the Underwriter's delivery
to offerees or investors of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 5.
(c) The Company will furnish to the Underwriter copies of the
Registration Statement (two of which will be signed and will include all
exhibits), any related Preliminary Prospectus, the Prospectus and all amendments
and supplements to such documents, in each case in such quantities as the
Underwriter requests, so long as a prospectus relating to the Securities is
required to be delivered under the Securities Act in connection with sales of
the Securities by the Underwriter or any dealer. The Prospectus shall be so
furnished on or prior to 3:00 P.M., New York time, on the business day following
the date of this Agreement. All other documents shall be so furnished as soon as
available. The Company will pay the expenses of printing and distributing to the
Underwriter all such documents.
(d) The Company will arrange for the qualification of the
Securities for sale under the laws of such jurisdictions as the Underwriter
designates and will continue such qualifications in effect so long as required
for the distribution of the Securities, provided that the Company will not be
required (i) to qualify as a foreign corporation, (ii) to file a general consent
to service of process in any such state or (iii) to take any action that would
subject itself to taxation in any jurisdiction if it is not otherwise so
subject.
(e) During the period of two years hereafter, the Company will
furnish to the Underwriter as soon as practicable after the end of each fiscal
year, a copy of its annual report to stockholders for such year; and the Company
will furnish to the Underwriter (i) as soon as available, a copy of each such
report and any definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to stockholders, and (ii) from time
to time, such other information concerning the business and financial condition
of the Company as the Underwriter may reasonably request.
(f) During the period of two years after the Closing Date, the
Company will not be or become an open-end investment company or unit investment
trust or face amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act.
(g) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) all expenses
in connection with the execution, issue, authentication, packaging and initial
delivery of the Securities, the preparation and printing of this Agreement and
the Share Lending Agreement, the Securities and amendments and supplements
thereto, and any other document relating to the issuance, offer, sale and
delivery of the Securities; (ii) any expenses (including fees and disbursements
of counsel) incurred in connection with qualification of the Securities for sale
under the laws of such jurisdictions in the United States and Canada as the
Underwriter designates and the printing of memoranda relating thereto; (iii)
expenses incurred in distributing the Prospectus and the Preliminary Prospectus
(including any amendments and supplements thereto) to the Underwriter; (iv) the
cost of registering and qualifying the Securities for trading on The New York
Stock Exchange or other applicable exchange; and (v) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 4. The Company will
reimburse the Underwriter for all travel expenses of the Underwriter and the
Company's
9
officers and employees and any other expenses of the Underwriter and the Company
in connection with attending or hosting meetings with prospective purchasers of
the Securities.
(h) In connection with the offering, until the Underwriter
shall have notified the Company of the completion of the distribution of the
Securities, neither the Company nor any of its affiliates will make bids or
purchases for the purpose of creating actual, or apparent, active trading in, or
of raising the price of, the Securities or the Company's common stock.
(i) As soon as practicable, but not later than 16 months,
after the date hereof, the Company will make generally available to their
security holders an earnings statement covering a period of at least 12 months
beginning after the later of (i) the effective date of the Registration
Statement relating to the Securities, (ii) the effective date of the most recent
post-effective amendment to the Registration Statement to become effective prior
to the date hereof, and (iii) the date of the Company's most recent Annual
Report on Form 10-K (or Form 10-K/A) filed with the Commission prior to date
hereof, which will satisfy the provisions of Section 11(a) of the Act.
5. Conditions of the Obligations of the Underwriter. The obligation
of the Underwriter to pay the Fee and to purchase the Securities on the Closing
Date will be subject to the accuracy of the representations and warranties on
the part of the Company herein on the date hereof and on the Closing Date, to
the accuracy of the statements of officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions precedent:
(a) The Underwriter shall have received on each of the date
hereof and the Closing Date "comfort" letters, in form and substance
satisfactory to the Underwriter, from each of Deloitte & Touche LLP (with
respect to periods ending on or before December 31, 2002) and
PricewaterhouseCoopers LLP (with respect to the period beginning after December
31, 2002). The comfort letter delivered by PricewaterhouseCoopers LLP shall
include, among other items, a SAS No. 100 review of the three-month and
six-month periods ended June 30, 2004 and customary "tick ▇▇▇▇" procedures
addressing numbers included in or incorporated by reference in the Prospectus,
including the Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 2003, filed with the Commission on September 22, 2004 (the
"10-K/A"), and the Company's quarterly report on Form 10-Q for the period ending
June 30, 2004 (the "10-Q"), included or incorporated by reference therein.
(b) The Prospectus shall have been filed with the Commission
in accordance with the Rules and Regulations and Section 4(a) of this Agreement.
No stop order suspending the effectiveness of the Registration Statement or of
any part thereof shall have been issued and no proceedings for that purpose
shall have been instituted or, to the knowledge of the Company or any
Underwriter, shall be contemplated by the Commission.
(c) The Chief Financial Officer of the Company shall have
furnished a certificate, dated the Closing Date, in form and substance
satisfactory to the Underwriter, stating to the effect that:
(i) The Company does not intend to or believe that it
has incurred or will incur debts that will be beyond its ability to pay as they
mature;
(ii) The present fair saleable value of the assets of
the Company exceeds the amount that will be required to pay the probable
liability on its existing debts (whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent) as they become absolute and
matured;
10
(iii) The Company does not have unreasonably small
capital for it to carry on its businesses as proposed to be conducted; and
(iv) The Company is not incurring obligations or
making transfers under any evidence of indebtedness with the intent to hinder,
delay or defraud any entity to which it is or will become indebted.
(d) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date, there shall not have occurred (i) any change, or
any development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole which, in the judgment of the
Underwriter, is material and adverse and makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
the Securities; (ii) any downgrading in the current rating accorded any debt
securities or preferred stock of the Company; (iii) any suspension or material
limitation of trading in securities generally on The New York Stock Exchange, or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market; (iv) a general moratorium on commercial banking
activities declared by either Federal or New York State authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States which, in the judgment of the Underwriter, makes
it impracticable or inadvisable to proceed with the completion of the offering
of the Securities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in the
judgment the Underwriter, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with the completion of the offering or the sale of and payment for the
Securities.
(e) The Underwriter shall have received an opinion, in form
and substance reasonably satisfactory to the Underwriter, dated the Closing
Date, of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to (a) own its properties, and conduct
its business as described in the Prospectus, and (b) issue the Securities;
(ii) The Company has duly authorized, executed and
delivered the Underwriting Agreement and the Share Lending Agreement
(collectively, the "COMPANY AGREEMENTS");
(iii) The Securities have been duly authorized by the
Company and, when issued in accordance with the Share Lending Agreement, will be
validly issued, fully paid and non-assessable and will conform in all material
respects to the description thereof contained in the Prospectus; and the
Securities will not be subject to any preemptive rights, or to such counsel's
knowledge any similar rights, under the law of the State of New York, the
Federal law of the United States of America or the Company's certificate of
incorporation or by-laws;
(iv) Except as set forth on Schedule B hereto, there are
no contracts, agreements or understandings known to such counsel between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by
11
such person or to require the Company to include such securities in any other
registration statement filed by the Company under the Securities Act;
(v) The Company is not and, after giving effect to the
offering and sale of the Securities pursuant to the Share Lending Agreement,
will not be an "investment company" within the meaning of the Investment Company
Act;
(vi) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required for the
consummation by the Company of the transactions contemplated by the Company
Agreements in connection with the issuance or sale of the Securities by the
Company, except for (a) such as have been obtained and made under the Securities
Act and the rules and regulations thereunder and (b) any of the foregoing as may
be required under State securities or blue sky laws and the rules and
regulations promulgated thereunder;
(vii) Except such as are set forth in the Prospectus, to
such counsel's knowledge, there are no pending or threatened actions, suits or
proceedings against or affecting the Company, any Scheduled Subsidiary or any of
their respective properties that, if determined adversely to the Company or any
such Scheduled Subsidiary, would individually or in the aggregate have a
Material Adverse Effect or would materially and adversely affect the ability of
the Company to perform its obligations under the Company Agreements;
(viii) The execution, delivery and performance by the
Company of the Company Agreements; the issuance and sale of the Securities; and
the consummation of the transactions contemplated hereby and thereby, will not
(A) violate or conflict with any law of the State of New York, the Delaware
General Corporation Law, or any Federal law of the United States of America
having applicability to the Company or the Scheduled Subsidiaries, or any rule,
regulation or order known to such counsel of any governmental body or any court
having jurisdiction over the Company, any Scheduled Subsidiary or any of their
respective properties, (B) to such counsel's knowledge, and except as set forth
in the Prospectus, breach the provisions of, or cause a default, or result in
the imposition or creation of (or the obligation to create or impose) a lien
under any agreement or instrument listed in Schedule C hereto, which agreements
the Company has certified to such counsel are the only agreements of the Company
which are material to the Company and its subsidiaries on a consolidated basis
taken as a whole, or (C) violate any provision of the charter, by-laws or any
other constitutive document of the Company or any such Scheduled Subsidiary;
(ix) The statements in the Prospectus under the caption
"Description of Capital Stock" insofar as such statements constitute summaries
of the laws, regulations, legal matters, agreements or other legal documents
referred to therein, are accurate in all material respects and fairly summarize
the matters referred to therein; and
(x) The Registration Statement was declared effective
under the Securities Act as of the date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to the subparagraph of Rule
424(b) specified in such opinion on the date specified therein, and, to the best
of the knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Securities Act, and the Registration Statement, as of its effective
date, and the Prospectus, as of its date, complied as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder (except that such counsel need express no opinion or
12
belief as to the financial statements and the notes related thereto and other
financial data included or incorporated by reference in the Registration
Statement or the Prospectus, or to that part of the Registration Statement that
constitutes the Statement of Eligibility (Form T-1) under the Trust Indenture
Act).
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that, based on the procedures set forth in
said opinion, nothing which came to such counsel's attention in the course of
such procedures, considered in the light of such counsel's understanding of the
applicable law and the experience gained by such counsel through its practice
under the Federal securities laws, has caused such counsel to believe that the
Registration Statement, as of its effective date, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date and as of the Closing Date, contained or contains any
untrue statement of a material fact or omitted or omits to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except that such counsel need
express no opinion or belief as to the financial statements and the notes
thereto and other financial data included or incorporated by reference in the
Registration Statement or the Prospectus, or to that part of the Registration
Statement that constitutes the Statement of Eligibility (Form T-1) under the
Trust Indenture Act).
(f) The Underwriter shall have received an opinion, in form
and substance reasonably satisfactory to the Underwriter, dated the Closing
Date, of senior in-house counsel of the Company, to the effect that:
(i) The Company has an authorized capitalization as set
forth in the Prospectus, and the Securities have been duly authorized and
validly issued and are fully paid and non-assessable;
(ii) Each Scheduled Subsidiary of the Company (x) other
than those Scheduled Subsidiaries specified in clause (y) below, has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, and has corporate power and
authority to own its property and to conduct its business as described in the
Prospectus (y) that is not a corporation is a limited liability company, has
been duly formed and is validly existing as a limited liability company in good
standing under the laws of the jurisdiction of its formation, and has full power
and authority to own its property and to conduct its business as described in
the Prospectus;
(iii) The Company and each of the Scheduled Subsidiaries
possess adequate certificates, authorities, licenses or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business as
now operated by them as described in the Prospectus, except where the failure to
possess the same would not reasonably be expected to have a Material Adverse
Effect, and such counsel is not aware of the receipt of any notice of
proceedings relating to the revocation or modification of any such certificate,
authority, license or permit that, if determined adversely to the Company or any
of the Scheduled Subsidiaries, would individually or in the aggregate have a
Material Adverse Effect;
(iv) The contracts and agreements of the Company and the
Scheduled Subsidiaries and affiliates incorporated by reference in the
Prospectus (including in the Exchange Act Reports incorporated by reference in
the Prospectus) conform in all material respects to the descriptions thereof
contained in the Prospectus (or such Exchange Act Reports), and the statements
under the captions "Summary -- Recent Developments" in the Prospectus and
"Business -- Recent Developments," "Legal Proceedings," "Executive
Compensation," "Security
13
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters" and "Certain Relationships and Related Transactions" in the 10-K/A,
insofar as such statements constitute summaries of the legal matters, documents
and governmental proceedings referred to therein, are accurate in all material
respects and fairly summarize and present the information referred to therein;
(v) To such counsel's knowledge, the Company and each of
its subsidiaries (i) is in material compliance with any and all applicable
Environmental Laws, (ii) has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its business and
(iii) is in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a Material Adverse Effect;
(vi) To such counsel's knowledge, based on the conduct
of the Company's businesses described in the Prospectus, neither the Company nor
any "subsidiary company," as that term is defined in PUHCA, of the Company is
(i) a "holding company" or a "subsidiary company" of a holding company or a
"public utility company" under Section 2(a) of PUHCA (except that Androscoggin
Energy LLC, which is a QF, and Arcadia Power Partners, which is an EWG, are
subsidiary companies of holding companies;
(vii) Each of the power generation projects in which the
Company or its subsidiaries has an interest which is subject to the requirements
of PURPA and the regulations of the FERC promulgated thereunder, as amended from
time to time, necessary to be a "qualifying cogeneration facility" and/or a
"qualifying small power production facility" meets such requirements, except
where the failure to meet such requirements would not have a Material Adverse
Effect;
(viii) Each of the Company's subsidiaries that is a
public utility under the FPA has validly-issued orders from the FERC, not
subject to any pending challenge, investigation, or proceeding, (i) authorizing
such subsidiary to engage in wholesale sales of electricity, ancillary services
and, to the extent permitted under its market-based rate tariff, other services
at market-based rates, and (ii) granting such waivers and blanket authorizations
as are customarily granted to entities with market-based rate authority, except
where the failure to have such orders would not have a Material Adverse Effect;
(ix) With respect to each of the Company's subsidiaries
that is a public utility under the FPA, the FERC has not imposed any rate caps
or mitigation measures other than rate caps and mitigation measures generally
applicable to similarly situated marketers or generators selling electricity,
ancillary services or other services at wholesale in the geographic market where
such subsidiary conducts its business;
(x) Each of the Company's subsidiaries that owns and/or
operates an Eligible Facility within the meaning of Section 32 of PUHCA, has
received a determination from FERC, not subject to any pending challenge or
appeal, that it is an EWG, within the meaning of Section 32 of PUHCA.
(xi) Each of the Company's subsidiaries providing retail
electric service in the ERCOT has validly issued orders from the TPUC, not
subject to any pending challenge, investigation, or proceeding, authorizing such
subsidiary to engage in sales of
14
electricity at retail under the laws of the State of Texas, except where the
failure to have such orders would not have a Material Adverse Effect. Each of
the Company's subsidiaries that is participating in the Texas wholesale electric
market has registered with the TPUC and the TPUC has not imposed on any such
subsidiary any specific rate cap or mitigation measures;
(xii) The execution, delivery and performance of the
Company Agreements and the issuance and delivery of the Securities, and
compliance by the Company with the terms and provisions hereof and thereof, and
the consummation of the transactions contemplated hereby and thereby, will not
(A) violate any statute, rule, regulation or order of which such counsel is
aware of any governmental agency or body or any court having jurisdiction over
the Company or any Scheduled Subsidiary of the Company or any of their
respective properties, (B) to such counsel's knowledge, breach the provisions
of, or cause a default, or result in the imposition or creation of (or the
obligation to create or impose) a lien under any agreement or instrument to
which the Company or any such Scheduled Subsidiary is a party or by which the
Company or any such Scheduled Subsidiary is bound or to which any of the
properties of the Company or any such Scheduled Subsidiary is subject, or (C)
violate any provision of the charter, by-laws or any other constitutive document
of the Company or any such Scheduled Subsidiary.
In giving such opinion, such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of
California, the federal law of the United States and the corporate law of the
State of Delaware, upon opinions of other counsel, who shall be counsel
reasonably satisfactory to counsel for the Underwriter, in which case the
opinion of such other counsel shall also be addressed to the Underwriter.
(g) The Underwriter shall have received from ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, special counsel to the Underwriter, and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special
counsel to the Underwriter, such letters or opinions, dated the Closing Date,
with respect to such matters as the Underwriter may require, and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(h) The Underwriter shall have received a certificate, dated
the Closing Date, of the President or any Vice President or a principal
financial or accounting officer of the Company in which such officer, to the
best of his or her knowledge after reasonable investigation, shall state that
the representations and warranties of the Company in this Agreement are true and
correct as of the Closing Date; the Company has complied with all agreements and
satisfied all conditions on their part to be performed or satisfied hereunder at
or prior to the Closing Date; and, subsequent to the date of the most recent
financial statements in the Prospectus, there has been no material adverse
change, nor any development or event involving a prospective material adverse
change, in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole, whether or
not arising in the ordinary course of business, except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(i) The Securities have been duly listed, subject to notice of
issuance, on The New York Stock Exchange.
(j) The Company shall have delivered executed copies of the
Company Agreements to the Underwriter, in each case in form and substance
reasonably satisfactory to the Company and the Underwriter.
15
(k) The Company will furnish the Underwriter with conformed
copies of such other opinions and certificates, letters and documents as the
Underwriter reasonably requests. The Underwriter may in its sole discretion
waive compliance with any conditions to the obligations of the Underwriter
hereunder.
6. Indemnification and Contribution. (a) The Company will indemnify
and hold harmless the Underwriter, its affiliates participating in the
distribution of the Securities, its partners, directors and officers and each
person, if any, who controls the Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Underwriter may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related Preliminary
Prospectus or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and will reimburse the Underwriter for any
legal or other expenses reasonably incurred by the Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use therein.
(b) The Underwriter will indemnify and hold harmless the
Company and its directors, officers and trustees and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which the Company may become subject, under the Securities Act or
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related Preliminary Prospectus or arise out of or are based upon
the omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by the Underwriter
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under subsection (a) or (b) above. In case any
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense
16
thereof, the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of an indemnified party.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Underwriter, on the other, from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Underwriter, on
the other, in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriter, on the other, shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total discounts and commissions received by the
Underwriter from the Company under this Agreement. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities purchased by it were resold exceeds the amount of any damages
which the Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
the Underwriter within the meaning of the Securities Act or the Exchange Act;
and the obligations of the Underwriter under this Section shall be in addition
to any liability which the Underwriter may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act.
7. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or their officers and of the Underwriter set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of the Underwriter and the Company or any of their respective
officers or directors or any controlling
17
person, and will survive delivery of and payment for the Securities. If for any
reason the purchase of the Securities by the Underwriter is not consummated, the
Company shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 4 and the respective obligations of the Company and the
Underwriter pursuant to Section 6 shall remain in effect, and if any Securities
have been purchased hereunder the representations and warranties in Section 2
and all obligations under Section 4 shall also remain in effect. If the purchase
of the Securities by the Underwriter is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to a default
by the Underwriter, the Company will reimburse the Underwriter for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Securities.
8. Information Supplied by the Underwriter. The statements set forth
in (i) the second sentence of the second paragraph (appearing directly under the
pricing table) on the cover page; (ii) the fifth paragraph on the cover page,
(iii) the third sentence under "Risk Factors -- The effect of the issuance of
our shares of common stock pursuant to the share lending agreement and upon
conversion of the convertible notes being offered concurrently, including sales
of our common stock in short sale transactions by purchasers of the convertible
notes may have a negative effect on the market price of our common stock," (iv)
the second sentence of the ninth paragraph under "Concurrent Offering of
Convertible Notes," and (v) paragraphs 1, 2, 4, 6, and 7 under the caption
"Underwriting" in the Prospectus (to the extent such statements relate to the
Underwriter) constitute the only information furnished by the Underwriter to the
Company for the purposes of Section 2(b) and Section 6 hereof.
9. Notices. All communications hereunder will be in writing and, if
sent to the Underwriter, will be mailed, delivered, telegraphed and confirmed or
faxed and confirmed to Deutsche Bank Securities Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Desk; or, if sent to the Company, will be
mailed, delivered, telegraphed and confirmed or faxed and confirmed to it at
Calpine Corporation, ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: General Counsel.
10. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 6, and no other
person will have any right or obligation hereunder.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
12. Applicable Law. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
[Signature page follows.]
18
If the foregoing is in accordance with the Underwriter's
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement between the
Company and the Underwriter in accordance with its terms.
Very truly yours,
CALPINE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Senior Vice President
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S-1
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
DEUTSCHE BANK AG LONDON
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director, ECM
DEUTSCHE BANK SECURITIES INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Managing Director
S-2
SCHEDULE A
SCHEDULED SUBSIDIARIES
- Androscoggin Energy, Inc.
- Calpine Administrative Services, Inc.
- Calpine International Holdings, Inc.
- Calpine Finance Company
- Calpine Fuels Corporation
- Calpine Energy Services Holdings, Inc.
- Calpine Northbrook Corporation of Maine, Inc.
- Calpine Operating Management Company, Inc.
- Calpine Power Company
- ▇▇▇▇▇▇▇▇ Canada Holdings LLC
SCHEDULE B
CAPITAL STOCK MATTERS
I. Encumbrances, Liens and Defects.
Permitted Liens (as defined in the indentures governing the
Company's second-priority senior secured notes) and liens granted pursuant
to the issuance of the Company's $785 million aggregate principal amount
of first priority senior secured notes due 2014.
II. Registration Rights.
1. Stockholder Rights Agreement, dated as of October 12, 2000,
among the Company and the parties listed therein, executed pursuant to the
Stock and Note Purchase Agreement, dated as of June 23, 2000, among the
Company, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Trusts, ▇▇▇▇▇▇ Energy Corporation and SkyGen Energy Holdings LLC.
2. Amended and Restated Rights Agreement, dated as of
September 19, 2001, as amended on September 28, 2004 between the Company
and Equiserve Trust Company, N.A., as rights agent, related to the grant
of preferred stock purchase rights in connection with the Company's 1996
Stock Incentive Plan and 2000 Employee Stock Purchase Plan
3. Registration Rights Agreement, dated November 14, 2003,
between the Company and Deutsche Bank in connection with the offering of
4.75% Contingent Convertible Notes due 2023.
4. Share Lending Agreement, dated the date hereof, between the
Company and Deutsche Bank AG London, acting through Deutsche Bank.
SCHEDULE C
MATERIAL AGREEMENTS
1. The documents identified by the following numbers on the Company's Annual
Report on Form 10-K/A for the year ended December 31, 2003 (filed with the
Commission on September 22, 2004): 4.1.1 through 4.25.38 inclusive;
10.1.3; and 10.2.1 through 10.2.4 inclusive.
2. The documents identified by the following numbers on the Company's
Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2004
(filed with the Commission on September 13, 2004): 4.1.1 through 4.10
inclusive; 10.1.1; and 10.3.1 through 10.5 inclusive.
3. The documents identified by the following numbers on the Company's
Quarterly Report on Form 10-Q for the Quarter ended June 30, 2004
(filed with the Commission on August 9, 2004): 4.1.1 through 4.6
inclusive.
4. Indenture, dated as of September 30, 2004, between the Company and
Wilmington Trust Company, as Trustee, relating to $785,000,000 in
aggregate principal amount of the Company's 9.625% First Priority Senior
Secured Notes due 2014.
5. Letter of Credit Agreement, dated as of September 30, 2004, between the
Company, as borrower, and Bayerische Landesbank, as issuer.
6. Amendment, dated as of September 30, 2004, to the Letter of Credit
Agreement, dated as of July 16, 2003, among the Company, as borrower,
certain commercial lending institutions, as lenders, and The Bank of Nova
Scotia, as administrative agent.