EXHIBIT 10.3.1

 
April 7, 2008

Chuck Clark
3616 Richmond Ave.
Apt 1615
Houston, TX 77046

Re.           Employment Separation

Dear Chuck:

Your employment with Calpine will end effective May 30, 2008.  This letter
agreement (the “Agreement”) confirms the terms of your separation from
employment with Calpine Corporation, a Delaware corporation or one or more of
its subsidiaries (collectively, “Calpine”) and offers you the following benefits
in exchange for a release of all claims.

1.           Separation Date.  Your employment with Calpine will be terminated
effective May 30, 2008 (the “Separation Date”).

2.           Additional Payment and Benefits.  In exchange for the waiver and
release described in Paragraphs 7 and 8 below, Calpine agrees to provide you
with an additional payment and benefits as described in the Calpine Corporation
Change in Control and Severance Benefits Plan (“the Plan”) and the Severance
Benefit Summary Sheet provided to you with this letter.  By signing this
Agreement, you also warrant that you understand and have read the terms of the
Plan.

3.           Participation in 401(k) and Life and Disability Insurance
Plans.  As you will no longer be a Calpine employee after the Separation Date,
you will not participate in Calpine’s life and disability insurance plans after
the Separation Date. Distribution options under Calpine’s 401(k) plan will be
pursuant to the plan rules, and you will be provided with notice of such options
by separate letter.

4.           Return of Company Property.  You warrant that, by the Separation
Date, you will return to your manager or human resources representative all
Calpine property or data of any type, including computer and e-mail passwords,
that are in your possession or control, without retaining any copies, notes or
extracts thereof.  However, if you and Calpine enter into a Consulting Agreement
effective immediately after your separation from employment by Calpine, you may
retain the Calpine laptop computer and home fax machine/printer in your
possession, as well as your Calpine email address, during the term of any such
Consulting Agreement.

5.           References.  You should direct all requests for employment
references to John Moore in Calpine’s Human Resources Department, or his
successor.  Human Resources will respond to all such inquiries by stating that,
as a matter of company policy, Calpine declines to provide any information
regarding former employees other than the former employee’s dates of employment
and job title, and with written authorization from the employee, the former
employee’s salary.

 
 

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March 21,
2008                                                                                                Page
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6.           Confidential Information; Use of Confidential Information to
Compete.  By signing below, you acknowledge that as a result of your employment
with Calpine you have had access to Confidential Information of Calpine (for the
purposes of this Agreement, Confidential Information includes but is not limited
to trade secrets, inventions, marketing plans, product plans, business
strategies, financial information, forecasts, personnel information, customer
lists, customer information, and any other information which gives Calpine an
opportunity to obtain advantage over competitors who do not know or use it) and
that you will hold all such Confidential Information in strictest confidence and
will not disclose to any person or entity or make use, directly or indirectly,
of such Confidential Information, except to Calpine for its exclusive
benefit during the term of any consulting agreement between you and
Calpine.  You confirm that you will deliver to your manager or human resources
representative, within ten (10) days of the Separation Date, all diskettes,
documents and data of any nature pertaining to any such Confidential Information
and that you have not taken or retained any such diskettes, documents or data or
any reproductions.  Nor shall you directly or indirectly use Confidential
Information of Calpine to compete with Calpine, or disclose Confidential
Information to a competitor of Calpine or to any other person or entity.

7.           Release of Claims.  You acknowledge that you have no claims against
Calpine based on your employment with Calpine or the separation of that
employment, except for claims that are specifically excluded from this release
by Paragraph 8, below.  By signing below, you release Calpine and forever
discharge Calpine from all claims, demands, causes of action, damages and
liabilities, known or unknown, that you have ever had, now have or may claim to
have had relating to or arising from your employment with or separation from
Calpine, except for claims that are specifically excluded from this release by
Paragraph 8, below.

You expressly waive the benefits of Section 1542 of the Civil Code of the State
of California (and under other state and federal provisions of similar effect)
which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

8.           Waiver of Claims Including Employment-Related Claims. You
understand that the release you are providing releases and waives any and all
claims you may have against Calpine and its owners, agents, officers,
shareholders, employees, directors, attorneys, subscribers, subsidiaries,
affiliates, insurers, successors and assigns, whether known or not known,
including, without limitation, claims under any employment laws, including, but
not limited to, claims of unlawful discharge, breach of contract, breach of the
covenant of good faith and fair dealing, retaliation, harassment, fraud,
violation of public policy, defamation, physical injury, emotional distress,
claims for compensation

 
 

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March 21,
2008                                                                                                 Page
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or benefits arising out of your employment or your separation of employment,
claims under Title VII of the 1964 Civil Rights Act, as amended, the California
Fair Employment and Housing Act, and any other laws and/or regulations relating
to employment or employment discrimination, including, without limitation,
claims based on age or under the Age Discrimination in Employment Act or Older
Workers Benefit Protection Act, provided, that this waiver and release does not
extend to: claims for breach of this agreement; claims for legally required
indemnification; claims for unemployment compensation benefits, workers’
compensation benefits, or state and/or long term disability benefits; charges
filed with the Equal Employment Opportunity Commission that do not seek monetary
or other personal relief for you; claims asserted in Calpine’s Chapter 11
bankruptcy proceeding for unpaid vacation pay, unpaid deferred compensation, or
indemnity, contribution or reimbursement or claims for acts occurring after the
Separation Date.  Nothing in this Agreement is intended to interfere with your
right to make or participate in a complaint or claim with a federal or state
administrative agency including, for example, the National Labor Relations
Board, the Department of Labor, the Equal Employment Opportunity Commission or
the Department of Fair Employment and Housing.  However, by signing this
release, you hereby waive the right to recover any monetary or other relief in
such a proceeding.  This release is not intended to release any claims that are
unlawful to release.

9.           Covenant Not to Prosecute.  You agree never, individually or with
any person or in any way, to commence, prosecute or cause or permit to be
commenced or prosecuted against Calpine, any legal action or other proceeding
based upon any claim, demand, cause of action, damage or liability which is
released by this Agreement, except as required by law.  If such action has been
filed on your behalf, you agree to immediately cause the dismissal of such
action with prejudice and without any further right of appeal.

10.           Review of Severance Agreement and Timing of Payment.  You
acknowledge your understanding that you may take up to twenty-one (21) days to
consider this Agreement and, by signing below, affirm that you were advised to
consult with an attorney before signing this Agreement.  You further acknowledge
that you understand you may revoke this Agreement within seven (7) days of
signing it, by e-mailing a written revocation signed by you to John Moore,
jmoore@calpine.com, so that your e-mail is received by Mr. Moore by the end of
that seven (7) day period.  You further agree that the severance pay to be
provided to you, identified in paragraph 2 above, in exchange for your agreement
will be paid consistent with the terms of the Plan and only after the seven (7)
day revocation period and after Calpine receives this original signed Agreement,
and that this Agreement will not become effective or enforceable until the
revocation period has expired.  This Agreement will be irrevocable after seven
(7) days have passed from the date you sign the Agreement.

11.           Legal and Equitable Remedies.  Both you and Calpine have the right
to enforce this Agreement and its provisions by injunction, specific performance
or other relief without prejudice to any other rights or remedies you may have
at law or in equity for breach of this Agreement. You understand and have read
the terms of the Plan and

 
 

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2008                                                                                                Page
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understand that under the terms of the Plan, with respect to claims relating in
any way to benefits provided under the Plan, you may be required to follow the
Dispute Resolution procedures identified in the Plan.

12.           Attorneys’ Fees.  Except as provided in the Dispute Resolution
procedures identified in the Plan, if any legal action is brought to enforce the
terms of this Agreement, the prevailing party will be entitled to recover its
reasonable attorneys’ fees, costs, and expenses from the other party, in
addition to any other relief to which such prevailing party may be entitled.

13.           Assignment, Successors and Assigns.  Calpine and you understand
that this Agreement will benefit and be binding upon you and your heirs,
successors, permitted assigns, and agents.  This Agreement will not benefit any
other person or entity except as specifically described in this Agreement.

14.           Confidentiality.  You agree to keep the contents, terms and
conditions of this Agreement confidential.  You may disclose this information to
your spouse, immediate family, accountants, or attorneys, provided that they
first agree not to disclose any information concerning the contents, terms and
conditions of this Agreement to anyone.  You also may disclose the contents,
terms and conditions of this Agreement to the IRS or other taxing authorities or
as required by subpoena or court order. Any breach of this confidentiality
provision, or of any other obligation by you set forth in this Agreement, will
be deemed a material breach of this Agreement.

15.           Non-Solicitation and Non-Disparagement.  For a two (2) year period
after the date of this letter, you agree not to directly or indirectly solicit
any employee of Calpine to perform services for another business entity, and not
to make any disparaging or derogatory statements about Calpine or its directors,
officers, agents or employees.

16.           Cooperation.  Consistent with the terms of any consulting
agreement between you and Calpine, you agree to the following: to cooperate with
Calpine in the orderly transfer of your responsibilities to other person(s); to
make yourself reasonably available to Calpine following the Separation Date; to
advise Calpine upon request about matters and disputes with third parties as to
which you have knowledge; to cooperate fully with Calpine in connection with the
ongoing SEC inquiry regarding our financial statements and internal controls
over financial reporting, as well as those of CalGen; to cooperate fully with
Calpine in connection with pending or threatened or possible litigation,
arbitration, and similar proceedings; and to provide testimony in any such
proceedings, as your testimony may be relevant and/or discoverable.  Calpine
agrees to reimburse you for reasonable out-of-pocket travel expenses incurred at
the instruction of Calpine in connection with the activities described in this
paragraph.

17.           No Admission of Liability.  This Agreement is not and may not be
contended by you to be an admission or evidence of any wrongdoing or liability
on Calpine’s part.

 
 

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March 21,
2008                                                                                                Page 5

This Agreement will be afforded the maximum protection allowable under
California Evidence Code Section 1152 and/or other state or Federal provisions
of similar effect.

18.           Entire Agreement.  This Agreement constitutes the entire agreement
between you and Calpine with respect to the subject matter of this
Agreement.  It supersedes all prior negotiations and agreements, whether written
or oral, relating to this subject matter except those provisions of prior
written agreements that expressly extend beyond the term of your
employment.  You acknowledge that neither Calpine nor its agents have made any
promise or representation either express or implied, written or oral, which is
not contained in this Agreement for the purpose of inducing you to sign this
Agreement, and you acknowledge that you have signed this Agreement relying only
on the promises and representations stated herein.

19.           Modification.  This Agreement may not be altered, amended, or
otherwise changed except by another written agreement that specifically refers
to this Agreement, signed by you and by Calpine or its authorized
representative.

20.           Governing Law.  This Agreement is governed by and will be
interpreted according to the laws of the State of California.  If any term of
this Agreement is deemed invalid or unenforceable, the remainder of this
Agreement will remain in full force and effect.

21.           Your Understanding.  By signing below, you acknowledge that you
have read this Agreement and fully understand and agree to it.

PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS, EXCEPT AS SPECIFIED IN THIS AGREEMENT.

 
CALPINE CORPORATION
           
Dated: April 11, 2008
By:
   /s/  John Moore
 
John Moore
 
SVP of Human Resources

I have read the above Agreement, have had an opportunity to obtain legal advice,
and by signing below voluntarily accept and agree to its terms including the
release of all claims, known and unknown, except as specified in this Agreement.

 
EMPLOYEE
     
Dated: April 11, 2008
By:
   /s/  Chuck Clark
   
Chuck Clark