EXHIBIT 10.2.3
 

CALPINE CORPORATION
 

 
CHIEF EXECUTIVE OFFICER
NON-QUALIFIED STOCK OPTION AGREEMENT
(Pursuant to the 2008 Equity Incentive Plan)

 
This OPTION is granted on March 25, 2008 (the "Grant Date"), by Calpine
Corporation, a Delaware corporation (the "Corporation"), to Robert P. May (the
"Grantee") pursuant to this Non-Qualified Stock Option Agreement ("Stock Option
Agreement").
 
1.            RELEASE.  For and in consideration of the Option granted under
this Stock Option Agreement, Grantee on Grantee's own behalf and on behalf of
Grantee's related persons, KNOWINGLY AND VOLUNTARILY RELEASES, ACQUITS AND
FOREVER DISCHARGES the Corporation from any and all claims, obligations or
liabilities related to Grantee's right to purchase 348,700 shares of
Corporation's Common Stock as set forth in the Chief Executive Officer Emergence
Non-Qualified Stock Option Agreement wherein the stated "Grant Date" was January
31, 2008 ("Former Option"), and Grantee does hereby surrender and release to the
Corporation the option to purchase 348,700 shares of Common Stock and any and
all other rights under the Former Option.
 
2.            GRANT OF OPTION.  The Corporation hereby grants to the Grantee the
irrevocable Option to purchase, on the terms and subject to the conditions set
forth herein and in the Plan (as defined below), up to 325,500 fully paid and
nonassessable shares ("Total Shares") of the Corporation's Common Stock, par
value $.001 per share, at the option price of $17.53 per share, being not less
than 100% of the fair market value of such Common Stock on the Grant Date.
 
The Option is granted pursuant to the Corporation's 2008 Equity Incentive Plan
(the "Plan"), a copy of which is attached hereto. The Option is subject in its
entirety to all the applicable provisions of the Plan as in effect on the Grant
Date, which are hereby incorporated herein by reference.  The Option is not
intended to qualify as an “incentive stock option” within the meaning of Section
422 of the Code.  Except as otherwise provided herein, or unless the context
clearly indicates otherwise, capitalized terms not otherwise defined herein
shall have the same definitions as provided in the Plan.
 
3.            PERIOD OF OPTION.  The period of the Option shall commence on the
Grant Date and expire on the tenth (10th) anniversary of the Grant Date ("Option
Period").  Notwithstanding the provisions of Section 4 below, the Option shall
become exercisable as set forth in (a) and (b) below:
 
(a)           If the Corporation terminates the Grantee's employment or service
with the Corporation before 5:00 p.m. Central Time on December 31, 2008 without
"Cause" (as defined in the Plan) or if the Grantee terminates his employment or
service with the Corporation before 5:00 p.m. Central Time on December 31, 2008
for "Good Reason" (as defined in Exhibit "A" attached hereto), then the entire
Option shall be immediately exercisable thereafter until the end of the Option
Period; and
 

 
 

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(b)           If the Grantee's employment or service with the Corporation
terminates by reason of the Grantee's death prior to 5:00 p.m. Central Time on
December 31, 2008, then the entire Option shall be immediately exercisable
thereafter until December 31, 2009, whereupon any unexercised portion of the
Option shall terminate.
 
The provisions of Section 13(a) of the Plan are not incorporated herein and
shall not apply to the Option.
 
Except as provided in Sections 3(a) and (b) above, the Option (or any lesser
amount thereof) may be exercised after 5:00 p.m. Central Time on December 31,
2008 as set forth in Section 4 below, from time to time during the remaining
Option Period with regard to the number of Total Shares.
 
4.            EXERCISE OF OPTION.  Except as provided in Sections 3(a) and 3(b)
above, the Option is exercisable ("vested") after 5:00 p.m. Central Time on
December 31, 2008, provided the Grantee has been continuously employed by the
Corporation for the period beginning on the Grant Date and ending at 5:00 p.m.
Central Time on December 31, 2008.  Continuous employment includes any paid
leaves of absence, but does not include any unpaid leaves of absence.  Except as
provided in Sections 3(a) and (b) above, if the Grantee is not continuously
employed from the Grant Date until 5 p.m. Central Time on December 31, 2008,
then, upon the Grantee's termination of employment or service with the
Corporation, the entire Option shall immediately terminate.
 
5.            SECURITIES ACT REQUIREMENTS.  In addition to the requirements set
forth herein and in the Plan, (i) the Option shall not be exercisable in whole
or in part, and the Corporation shall not be obligated to issue any shares of
Common Stock subject to any such Option, if such exercise and sale or issuance
would, in the opinion of counsel for the Corporation, violate the Securities Act
of 1933 (the "1933 Act") or other Federal or state statutes having similar
requirements, as they may be in effect at that time; and (ii) each Option shall
be subject to the further requirement that, at any time that the Committee shall
determine, in its discretion, that the listing, registration or qualification of
the shares of Common Stock subject to such Option under any securities exchange
requirements or under any applicable law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the issuance of shares of Common Stock, such Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Committee.
 
6.            METHOD OF EXERCISE OF OPTION.  Subject to the provisions of the
Plan and Sections 3 and 4 hereof, the exercise price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash or by certified or bank check at
the time the Option is exercised or (ii) in the discretion of the Committee,
upon such terms as the Committee shall approve, the exercise price may be
paid:  (A) by delivery to the Corporation of other Common Stock, duly endorsed
for transfer to the Corporation, with a Fair Market Value on the date of
delivery equal to the exercise price (or portion thereof) due for the number of
shares being acquired, or by means of attestation whereby the Grantee identifies
for delivery specific shares of Common Stock that have a Fair Market Value on
the date of attestation equal to the exercise price (or portion thereof) and
receives a
 

 
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number of shares of Common Stock equal to the difference between the number of
shares thereby purchased and the number of identified attestation shares of
Common Stock (a “Stock for Stock Exchange”); (B) a “cashless” exercise program
established with a broker; (C) by reduction in the number of shares of Common
Stock otherwise deliverable upon exercise of such Option with a Fair Market
Value equal to the aggregate exercise price at the time of exercise, or (D) in
any other form of legal consideration that may be acceptable to the
Committee.  The purchase price of Common Stock acquired pursuant to an Option
that is paid by delivery (or attestation) to the Corporation of other Common
Stock acquired, directly or indirectly from the Corporation, shall be paid only
by shares of the Common Stock of the Corporation that have been held for more
than six months (or such longer or shorter period of time required to avoid a
charge to earnings for financial accounting purposes).  Notwithstanding the
foregoing, during any period for which the Common Stock is publicly traded
(i.e., the Common Stock is listed on any established stock exchange or a
national market system) an exercise by Grantee that involves or may involve a
direct or indirect extension of credit or arrangement of an extension of credit
by the Corporation, directly or indirectly, in violation of Section 402(a) of
the Sarbanes-Oxley Act (codified as Section 13(k) of the Exchange Act) shall be
prohibited with respect to this award.
 
7.            TRANSFERABILITY.  The Option is not transferable otherwise than by
will or pursuant to the laws of descent and distribution, and is exercisable
during the Grantee's lifetime only by the Grantee.
 
8.            BINDING AGREEMENT.  This Stock Option Agreement shall be binding
upon and shall inure to the benefit of any successor or assign of the
Corporation, and, to the extent herein provided, shall be binding upon and inure
to the benefit of the Grantee's beneficiary or legal representatives, as they
case may be.
 
9.            ENTIRE AGREEMENT.  This Stock Option Agreement and the Plan set
forth the entire agreement of the parties with respect to the Option granted
hereby and may not be changed orally but only by an instrument in writing signed
by the party against whom enforcement of any change, modification or extension
is sought.
 
10.         ELECTRONIC DELIVERY AND SIGNATURES.  The Corporation may, in its
sole discretion, decide to deliver any documents related to the Option or to
participation in the Plan or to future options that may be granted under the
Plan by electronic means or to request the Grantee's consent to participate in
the Plan by electronic means.  Grantee hereby consents to receive such documents
by electronic delivery and, if requested, to agree to participate in the Plan
through an on-line or electronic system established and maintained by the
Corporation or another third party designated by the Corporation.  If the
Corporation establishes procedures of an electronic signature system for
delivery and acceptance of Plan documents (including any Award Agreement like
this Option), the Grantee hereby consents to such procedures and agrees that his
or her electronic signature is the same as, and shall have the same force and
effect as, his or her manual signature.
 
11.         WITHHOLDING OF TAX.  To the extent that the exercise of the Option
or the disposition of shares of Corporation's Common Stock acquired by exercise
of the Option results in compensation income to the Grantee for federal or state
income tax purposes, the Grantee shall pay to the Corporation at the time of
such exercise or disposition such amount of money or,
 

 
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if the Corporation so determines, shares of Common Stock, as the Corporation may
require to meet its obligation under applicable tax laws or regulations and, if
the Grantee fails to do so, the Corporation is authorized to withhold from any
cash remuneration then or thereafter payable to the Grantee, any tax required to
be withheld by reason of such resulting compensation income or the Corporation
may otherwise refuse to issue or transfer any shares otherwise required to be
issued or transferred pursuant to the terms hereof.
 
12.         ADJUSTMENTS/CHANGES IN CAPITALIZATION.  This award is subject to the
adjustment provisions set forth in the Plan.
 
Subject to Section 10 above, if the foregoing is in accordance with your
understanding and approved by you, please so confirm by signing and returning
the duplicate of this Stock Option Agreement enclosed for that purpose.
 

 

 
CALPINE CORPORATION
             
By: 
   /s/ Gregory L. Doody        Gregory L. Doody        Executive Vice President,
       General Counsel and Secretary  

 
The foregoing is in accordance with my understanding and is hereby confirmed and
agreed to as of the Grant Date.
 

     /s/  Robert P. May    
Robert P. May
 

 

 

 

 
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Exhibit A
 
"Good Reason" shall mean, when used with reference to any Employee, any of the
following actions or failures to act, but in each case only if it occurs while
such Employee is employed by the Company and then only if it is not consented to
by such Employee in writing:
 
(1)           assignment of a position that is of a lesser rank than held by the
Employee prior to the assignment and that results in such Employee ceasing to be
an executive officer of a company with securities registered under the
Securities Exchange Act of 1934;
 
(2)           a material reduction in such Employee's base salary or target
bonus opportunity (including an adverse change in performance criteria or a
decrease in ultimate target bonus opportunity) in effect the day prior to the
Effective Date of the Plan; or
 
(3)           any change of more than fifty (50) miles in the location of the
principal place of employment of such Employee immediately prior to the
effective date of such change.
 
For purposes of this definition, none of the actions described in clauses (i)
and (ii) above shall constitute "Good Reason" with respect to any Employee if it
was an isolated and inadvertent action not taken in bad faith by the Company and
if it is remedied by the Company within thirty (30) days after receipt of
written notice thereof given by such Employee (or, if the matter is not capable
of remedy within thirty (30) days, then within a reasonable period of time
following such thirty (30) day period, provided that the Company has commenced
such remedy within said thirty (30) day period); provided that "Good Reason"
shall cease to exist for any action described in clauses (i) through (iii) above
on the sixtieth (60th) day following the later of the occurrence of such action
or the Employee's knowledge thereof, unless such Employee has given the Company
written notice thereof prior to such date.
 
 
 
 
 
Exhibit A-1