ex10-2.htm


     

    EXHIBIT
10.2

    

 

    CALPINE
CORPORATION

     

     

    ANNUAL
EXECUTIVE

    NON-QUALIFIED
STOCK OPTION AGREEMENT

    (Pursuant
to the 2008 Equity Incentive Plan)

    


     

    OPTION granted December 17, 2008 (the "Grant
Date"), by Calpine Corporation, a Delaware corporation (the "Corporation"), to
ZAMIR RAUF (the
"Grantee") pursuant to this Non-Qualified Stock Option Agreement ("Stock Option
Agreement").

     

    1.   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 100,000 fully paid and
nonassessable shares ("Total Shares") of the Corporation's Common Stock, par
value $.001 per share, at the option price of $8.01 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.

     

    2.   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
foregoing, upon a termination of employment or service with the Corporation, the
Option shall expire in accordance with Section 13 of the Plan.

     

    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.  The Option is cumulatively exercisable ("vested") in
installments in accordance with the following schedule, provided the Grantee has
been continuously employed by the Corporation through the anniversary dates of
the Grant Date set forth below:

     

    
      
        	 
      	
                Fiscal
      Year Beginning on the

              	 
      	
                Cumulative
      Percentage

              
	 
      	
                Grant
      Date and the Anniversary

              	 
      	
                of
      Total Shares Subject

              
	 
      	
                Date
      of the Grant Date

              	 
      	
                to
      Option Purchasable

              
	 
      	 
      	 
      	 
      
	 
      	
                First

              	 
      	
                33-1/3%

              
	 
      	
                Second

              	 
      	
                66-2/3%

              
	 
      	
                Third

              	 
      	
                100%

              


      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Continuous
employment includes any paid leave of absence and any unpaid leave of absence up
to 30 days, but does not include any unpaid leave of absence after 30
days.

     

    Notwithstanding
any other provision herein to the contrary, upon the occurrence of a Change in
Control (as defined in the Plan), the Option shall become immediately vested in
full.

     

    4.   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.

     

    5.   METHOD OF EXERCISE OF
OPTION.  Subject to the provisions of the Plan and Section 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 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.


    
      
         


      

      
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    6.   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.

     

    7.   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.

     

    8.   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.

     

    9.   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.

     

    10.   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, 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.  

     

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

     


    
      
         


      

      
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    Subject
to Section 9 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/  Jack
      Fusco

            
	 
      	 
      	
              Jack
      Fusco

            
	 
      	 
      	
              President
      and Chief Executive Officer

            


    

    


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

    


    


    
      	 
      	
              /s/  Zamir
      Rauf

            
	 
      	 
      
	 
      	
              Zamir
      Rauf

            


    

    


     

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