ex10-2.htm


    


     

    EXHIBIT
10.2

     

    


     

    CALPINE
CORPORATION

     

    EXECUTIVE
SIGN ON

     

    NON-QUALIFIED
STOCK OPTION AGREEMENT

     

    


     

    OPTION
granted on August 10, 2008 (the “Grant Date”), by
Calpine Corporation, a Delaware corporation (the “Company”), to Jack Fusco (the
“Grantee”)
pursuant to this Non-Qualified Stock Option Agreement (“Stock Option
Agreement”).

     

    
      	
              1.

            	
              GRANT
      OF OPTION.  The Company hereby grants to the Grantee the
      irrevocable Option to purchase, on the terms and subject to the conditions
      set forth herein and in the Employment Agreement between the Company and
      the Grantee, dated August 10, 2008 (the “Employment
      Agreement”), and (except as otherwise provided herein) the Plan (as
      defined below), 5,394,000 fully paid and nonassessable shares of the
      Company’s Common Stock, par value $.001 per share.  The Company
      grants the Option to the Grantee in four (4) tranches (each a “Tranche”).  The
      corresponding number of shares of Company Common Stock and the
      corresponding exercise price per share for each Tranche is set forth
      below.

            


    

    


    


    
      	
              Tranche

            	
              Number of Shares

            	
              Exercise Price

            
	 
      	 
      	 
      
	
              Tranche
      1

            	
              1,075,000

            	
              $15.99

            
	 
      	 
      	 
      
	
              Tranche
      2

            	
              1,271,000

            	
              $19.19

            
	 
      	 
      	 
      
	
              Tranche
      3

            	
              1,435,000

            	
              $21.59

            
	 
      	 
      	 
      
	
              Tranche
      4

            	
              1,613,000

            	
              $23.99

            


    

    


     

    Options
in Tranche 1 and 175,000 of those Options in Tranche 2 which are scheduled to
vest on the first anniversary of the Grant Date in accordance with Section 3
below are granted pursuant to the Company’s 2008 Equity Incentive Plan (the
“Plan”), a copy
of which is attached hereto.  The remaining Options  shall
be granted outside of the Plan but be deemed and treated for all purposes
hereunder as though granted under the Plan and subject to its terms and
conditions to the same extent as the Options granted hereunder which are granted
pursuant to the Plan.  Except as otherwise set forth herein, the
Option is subject, or deemed subject, as applicable, 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 or as
provided in the Employment Agreement.

     

    
      	
              2.

            	
              PERIOD
      OF OPTION. The period of the Option shall commence on the Grant Date and
      shall expire on the seventh (7th) anniversary of the Grant Date (the
      “Option
      Period”). The Option (or any lesser amount thereof) may be
      exercised from time to time during the Option Period as to the number of
      Total Shares allowable under Section 3 below and the
  Plan.

            


    

     

     

    
      	
              3.

            	
              EXERCISE
      OF OPTION.  Except to the extent otherwise provided in Sections
      4 and 8 of the Employment Agreement, each Tranche of the Option shall vest
      ratably on each of the first, second, third, fourth, and fifth
      anniversaries of the Grant Date; provided, however, that
      the Grantee must be continuously employed by the Company beginning on the
      Grant Date through each applicable vesting
date.

            


    

     

     

    
      	
              4.

            	
              TERMINATION
      OF EMPLOYMENT.  In the event that the Grantee’s employment with
      the Company is terminated by the Company without Cause or by the Grantee
      for Good Reason other than in connection with a Potential Change in
      Control or a Change in Control, Section 8(c)(vi) of the Employment
      Agreement shall govern.  In the event that the Grantee’s
      employment with the Company is terminated for Disability or by reason of
      the Grantee’s death, Section 8(b)(iii) of the Employment Agreement shall
      govern.  In the event that the Grantee’s employment with the
      Company is terminated by the Company for Cause, any portion of the Option
      that remains outstanding, whether vested or unvested, shall immediately
      terminate as of the date of such termination.  In the event of
      termination of employment by the Grantee without Good Reason, any unvested
      portion of the Option shall immediately terminate, and any vested portion
      of the Option shall remain exercisable for a period of 90 days following
      such termination and shall terminate thereafter.  All
      capitalized terms in this Section 4 shall have the definitions ascribed to
      them in the Employment Agreement.

            


    

     

     

    
      	
              5.

            	
              CHANGE
      IN CONTROL.  In the event of a Change in Control (as defined in
      the Employment Agreement), Section 4(a)(i) of the Employment Agreement
      shall govern, and accordingly, each Option shall become fully vested and
      shall immediately be cancelled, and, in exchange therefor, the Grantee
      shall be entitled to receive an amount per share equal to the excess of
      the per share merger consideration, over the per share exercise price of
      such Option.  The Grantee shall in all cases be entitled to
      receive such amount fully in cash.

            


    

     

     

    
      	
              6.

            	
              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 Company shall not be obligated to issue any shares of Common Stock
      subject to any such

            


    


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


     

    Option,
if such exercise and sale or issuance would, in the opinion of counsel for the
Company, 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.

     

     

    
      	
              7.

            	
              METHOD
      OF EXERCISE OF OPTION. Subject to the provisions of the Plan and Section 6
      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) upon such reasonable terms as the
      Committee shall approve, the exercise price may be paid, in the discretion
      of the Grantee: (A) by delivery to the Company of other Common Stock, duly
      endorsed for transfer to the Company, 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 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, if such a program is in place; (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 the Option that is paid by delivery (or attestation) to the
      Company of other Common Stock acquired, directly or indirectly from the
      Company, shall be paid only by shares of the Common Stock of the Company
      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 the Grantee that involves or may involve a direct or indirect
      extension of credit or arrangement of an extension of credit by the
      Company, 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.

            


    

     

     

    
      	
              8.

            	
              OTHER
      LIMITATIONS, REQUIREMENTS, PROTECTIONS, ETC.  The Grantee shall
      be subject to all other terms and conditions relating to the Option as set
      forth in the Employment Agreement, including but not limited to, the
      clawback and share holding

            


    


    
      
         


      

      
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    requirements
set forth in Section 4(a)(ii) therein.  It is expressly acknowledged
and agreed that nothing in this Stock Option Agreement or the Plan shall be
inconsistent in a manner adverse to the Grantee with, or otherwise limit
adversely to the Grantee, the express terms of the Employment Agreement, and, in
the case of any conflict between the Employment Agreement, on the one hand, and
this Stock Option Agreement or the Plan, on the other, the Employment Agreement
shall control to the extent favorable to the Grantee.  For purposes of
the foregoing sentence, the “Employment Agreement” excludes any attachments
thereto of a form of stock option agreement, whether or not identical to this
Stock Option Agreement.  Notwithstanding any provision hereof or of
the Plan, any provision in the Plan giving the Company or any committee or other
affiliate thereof the right, authority or discretion to interpret this Stock
Option Agreement shall be of no force or effect in respect of this Stock Option
Agreement.

     

     

    
      	
              9.

            	
              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.

            


    

     

     

    
      	
              10.

            	
              BINDING
      AGREEMENT. This Stock Option Agreement shall be binding upon and shall
      inure to the benefit of any successor or assign of the Company, 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.

            


    

     

     

    
      	
              11.

            	
              ENTIRE
      AGREEMENT. This Stock Option Agreement, the Plan, and the Employment
      Agreement 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.  (Without limiting
      any protection the Grantee may otherwise have, the Plan shall not be
      amended in any way that adversely affects the Grantee or the Option
      without the prior written consent of the
  Grantee.)

            


    

     

     

    
      	
              12.

            	
              ELECTRONIC
      DELIVERY AND SIGNATURES. The Company 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. The 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
      Company or another third party designated by the Company. If the Company
      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.

            


    

     


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


     

    
      	
              13.

            	
              WITHHOLDING
      OF TAX. To the extent that the exercise of the Option or the disposition
      of shares of Company’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 Company at the time of such
      exercise or disposition such amount of money or, if the Company so
      determines, shares of Common Stock, as the Company may require to meet its
      obligation under applicable tax laws or regulations and, if the Grantee
      fails to do so, the Company 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
      Company may otherwise refuse to issue or transfer any shares otherwise
      required to be issued or transferred pursuant to the terms
      hereof.

            


    

     

     

    
      	
              14.

            	
              ADJUSTMENTS/CHANGES
      IN CAPITALIZATION. This award is subject to the adjustment provisions set
      forth in the Plan.

            


    

     

     

    Subject to Section 12 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/  William J.
      Patterson

            
	 
      	 
      	 
      William J. Patterson


    

    


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

    


    


    
      	 
      	      
      /s/ Jack Anthony Fusco
	 
      	 
      
	 
      	
              Grantee

            


    

    


    



    
      
         


      

      
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