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                                                                  EXHIBIT 10.3.4

                               CALPINE CORPORATION
                              EMPLOYMENT AGREEMENT

         This Amended and Restated Employment Agreement (this "Agreement") has
been entered into, effective as of January 1, 2000, between CALPINE CORPORATION,
a Delaware corporation (the "Company"), and Ann B. Curtis ("Executive") to
provide for the employment of Executive on the terms and conditions set forth
herein.

         WHEREAS, Executive has served as Executive Vice President and Chief
Financial Officer of the Company since August 1998; and

         WHEREAS, the Company wishes to assure itself of the continued
employment efforts of Executive for the period provided in this Agreement, and
Executive is willing to continue to serve in the employ of the Company on a
full-time basis for said period upon the terms and conditions hereinafter
provided.

         NOW, THEREFORE, in consideration of the mutual agreements herein
contained, intending to be legally bound, the Company and Executive agree as
follows:

         1. Definitions. The capitalized terms in this Agreement shall have the
meanings set forth in this Agreement or in Appendix A hereto.

         2. Employment. The Company hereby employs Executive, and Executive
hereby accepts such employment by the Company, upon the terms and conditions
herein provided.

         3. Term of Employment. Executive's employment with the Company pursuant
to this Agreement commenced on January 1, 2000 and shall continue through July
31, 2004, unless such employment is sooner terminated or subsequently extended
as hereinafter provided. The Company and Executive may agree to extend the
Employment Period beyond the initial term upon the terms and conditions of this
Agreement or upon other terms, but neither the Company nor Executive is under
any obligation to do so. The period during which this Agreement continues in
effect shall constitute the "Employment Period".

         4. Positions and Responsibilities.

                  (a) Position. During the Employment Period, Executive shall
serve as the Company's Executive Vice President and Chief Financial Officer and
shall be responsible for leading the Company's business management and regional
affairs, reporting to the President and Chief Executive Officer of the Company
(CEO).

                  (b) Duties. During the Employment Period, and subject to the
control of the CEO, Executive shall have general executive powers and active
management and supervision over all business management and regional affairs of
the Company and shall perform such other executive and/or administrative duties
consistent with the office of Executive Vice President and Chief Financial
Officer as from time to time may be assigned to Executive by the CEO, but
subject to the conditions in this Agreement. Executive shall devote
substantially Executive's full business time and attention to, and exert
Executive's best efforts in, the performance of Executive's duties

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hereunder, so as to promote the business of the Company. Executive agrees that,
during Executive's employment with the Company, Executive will not provide
consulting services to or become an employee of, any other firm or person
engaged in a business in any way competitive with the Company.

         5. Compensation. For all services rendered by Executive pursuant to
this Agreement, the Company shall pay Executive, and Executive agrees to accept,
the salary, bonuses and other benefits described below in this Section 5.

                  (a) Salary. The Company shall pay Executive an annual base
salary ("Base Salary") as determined by the CEO in accordance with this Section
5, payable at periodic intervals in accordance with the Company's payroll
practices for salaried employees. Executive's Base Salary as of the effective
date hereof is three hundred seventy-five thousand dollars ($375,000.00) per
annum. In accordance with Section 5(c) hereof, the amount of the Base Salary
shall be reviewed by the CEO and approved by the Board of Directors, if
required, on at least an annual basis, and any increases will be effective as of
the date determined appropriate by the CEO. Executive's Base Salary may be
increased for any reason, including to reflect inflation or such other
adjustments as the CEO may deem appropriate; provided, however, that Executive's
Base Salary, as currently in effect as stated above or as so increased, may not
be subsequently decreased, except with the prior written consent of Executive.

                  (b) Bonuses. In addition to Base Salary, Executive shall be
entitled to receive, for each fiscal year of the Company ending with or within
the Employment Period, an annual bonus ("Bonus"), whether pursuant to a formal
bonus or incentive plan or program of the Company. or otherwise. Subject to this
Section 5(b) and Section 5(c) hereof, such Bonus shall be based on such criteria
as are in good faith deemed appropriate by the CEO. Any Bonus earned by
Executive for service or performance rendered in any fiscal year within the
Employment Period shall be paid to Executive in accordance with the applicable
plan or program and the Company's policies governing such matters. For the year
ending December 31, 2000 and for all future years hereunder, Executive shall be
entitled to participate in and receive a Bonus in accordance with the terms and
conditions set forth in the Company's Annual Management Incentive Plan provided,
however, that the target bonus for Executive as set forth in the current Annual
Management Incentive Plan shall be eighty-five percent (85%). In the event of
Executive's death or Disability during the Employment Period, the Company shall
pay to Executive or Executive's estate the pro rata portion of the Bonus that
Executive would have earned in respect of the portion of the year prior to
Executive's death or Disability.

                  (c) Annual Compensation Review. Notwithstanding anything
herein to the contrary, Executive's compensation, consisting of salary, bonus
and stock option grants, shall be reviewed annually by the CEO.

                  (d) Life Insurance. During the Employment Period, the Company
shall provide to Executive a life insurance policy in accordance with the terms
of the current policy maintained by the Company for Executive, as further
described in Section 8(b).

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                  (e) Health Care. During the Employment Period, Executive shall
be eligible to participate in any health insurance programs and medical plans
available to officers or employees of the Company.

                  (f) Participation in Benefit and Equity Compensation Plans.
During the Employment Period, Executive shall be eligible to receive all
benefits, including those under equity participation and bonus programs, to
which key employees are or become eligible under such plans or programs as may
be established by the Company. In addition to any other plans or programs
established by the Company, Executive shall be entitled to participate in the
Company's 1996 Stock Incentive Plan and any similar or replacement plan or
program (the "Stock Option Program").

                  (g) 401(k) Plan Benefits. In addition to the other benefits to
which Executive shall be entitled to under this Agreement, Executive shall be
entitled to participate in the Company's 401(k) Plan and shall be entitled to
receive the full benefit of contributions to be made by the Company for the
benefit of Executive under the terms of the 401(k) Plan.

         6. Vacation. During the Employment Period, Executive shall be entitled
to vacation in accordance with the Company's Vacation Policy in effect for
executives. In no event shall such entitlement be less than twenty (20) business
days in each year, with full salary. Furthermore, Executive shall accrue paid
vacation benefits during the Employment Period in accordance with the Company's
Vacation Policy in effect for executives.

         7. Indemnification. The Company shall indemnify Executive pursuant to
the provisions of the Company's Articles of Incorporation and Bylaws to the
fullest extent of California law and all other applicable law, and shall provide
Executive with indemnification pursuant to the Company's standard
indemnification agreement and any director's and officer's liability insurance
policy maintained by the Company.

         8.       Benefits Payable Upon Disability or Death.

                  (a) Disability Benefits. In the event of the Disability of
Executive, the Company shall continue to pay Executive the salary payable to
Executive in accordance with Section 5 hereof during the period of Executive's
Disability; provided, however, that, in the event that Executive is disabled for
a continuous period exceeding six (6) calendar months, the Company may elect at
the expiration of this six (6) month period to terminate this Agreement and pay
Executive the greater of (i) Executive's available monthly benefits from any
existing Company-sponsored long-term disability plan; or (ii) sixty seven
percent (67%) of the salary provided in Section 5(a) for the duration of the
Employment Period.

                  (b) Death Benefits. In the event of Executive's death during
Executive's Disability or otherwise during the Employment Period, the Company
shall cause payment to be made to Executive's most recently designated
beneficiary (which, absent specific designation of a beneficiary for purposes of
this provision, shall be Executive's most recently designated beneficiary under
the Company's group life insurance program) a sum equal to three (3) times
Executive's Base Salary. This obligation of the Company shall be discharged to
the extent benefits are actually paid pursuant to the Company's group life
insurance program, with the balance of said obligation to be

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discharged either by a cash payment from the Company, or, if the Company so
elects, by supplementary life insurance policies to be obtained and maintained
by the Company.

         9.       Severance Benefits.

                  (a) Termination of Employment. In the event Executive's
employment terminates for any reason, except as provided in Section 9(b) in
connection with a Change of Control, then Executive shall be entitled to receive
severance benefits as follows:

                           (i) Voluntary Resignation. If Executive's employment
terminates by reason of Executive's voluntary resignation (and such termination
is not an Involuntary Termination or a termination for Cause), then Executive
shall not be entitled to receive severance or other benefits except for those
(if any) to which Executive may be entitled under this Agreement or any separate
agreement with the Company or as may then be established under the Company's
then existing severance and benefit plans and policies at the time of such
termination.

                           (ii) Involuntary Termination Other Than For Cause. If
Executive's employment is terminated as a result of an Involuntary Termination
other than for Cause, then the following severance benefits shall be paid or
otherwise provided to Executive: (A) the Company shall pay to Executive in the
form of a lump sum payment, in cash, a severance payment equal to the greater of
(I) three (3) times Executive's Base Salary or (II) Executive's Base Salary
multiplied by the the number of years (or any portion thereof, calculated on a
daily basis) remaining under this Agreement had Executive's employment not been
terminated, however, in no event shall such payment equal less than 100% of
Executive's Base Salary, which shall be paid to Executive within ten (10) days
after the date of termination; (B) until the earlier of (I) the date this
Agreement would otherwise have terminated had Executive's employment not been
terminated (the "Remaining Term") or (II) the expiration of the three (3) year
period measured from the date of Executive's termination of employment. The
Company shall at its sole cost and expense provide Executive (and Executive's
eligible dependents, if any) with life, disability, and medical insurance
benefits substantially similar to those benefits that Executive (and Executive's
dependents) were receiving immediately prior to Executive's termination of
employment; provided, however, that the benefits otherwise receivable by
Executive pursuant to this Section 9(a)(ii)(B) shall be reduced to the extent
comparable benefits are concurrently received by Executive (or Executive's
dependents) pursuant to a similar plan or program of another employer, and any
such other benefits actually received by Executive (or Executive's dependents)
must be reported to the Company; and provided further, however, that the
insurance coverage provided by the Company pursuant to this Section 9(a)(ii)(B)
shall be in lieu of any other continued coverage to which Executive or
Executive's dependents would otherwise, at Executive's own expense, be entitled
in accordance with the requirements of Internal Revenue Code of 1986, as amended
("Code"), Section 4980B ("COBRA"), by reason of Executive's termination of
employment; (C) all stock options, warrants, rights and other Company
stock-related awards granted to Executive by the Company that would otherwise
have vested or become exercisable at any time in the future shall become fully
vested and nonforfeitable upon the date of Executive's termination of
employment, the Company's repurchase rights, if any, with respect to those
vested shares shall immediately lapse, and each such stock option, to the extent
vested, shall remain exercisable for the vested option shares until the
expiration or sooner termination of the option term in accordance with the
provisions of the agreement evidencing such option; and (D) the Company shall
pay or reimburse

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Executive for any and all expenses incurred by Executive for outplacement
services selected by the Executive and approved by the Company, which approval
will not be unreasonably withheld, until the earlier of (I) the first
anniversary of the date of termination of employment or (II) the date on which
Executive commences employment with another employer.

                           (iii) Termination for Cause. If Executive's
employment is terminated for Cause, then Executive shall not be entitled to
receive any severance payments or other severance benefits under this Section 9.
Executive's benefits will be continued under the Company's then existing benefit
plans and policies in accordance with such plans and policies in effect on the
date of termination and in accordance with the requirements of COBRA.

                  (b) Termination As a Result of a Change of Control. If
Executive's employment with the Company is terminated as a result of a Change of
Control then Executive shall be entitled to receive severance benefits as
follows:

                           (i) Voluntary Resignation. If as a result of a Change
of Control, Executive's Base Salary is reduced within twelve (12) months of the
Change of Control and, or, Executive's position is relocated to a place more
than one hundred (100) miles from the Executive's current place of employment
within six (6) months of the Change of Control, and as a result of these changes
Executive's employment terminates by reason of voluntary resignation (and such
termination is not an Involuntary Termination or a Termination for Cause), then
the following severance benefits shall be paid or otherwise provided to
Executive: (A) the Company shall pay to Executive in the form of a lump sum
payment, in cash, a severance payment equal to the greater of (I) two (2) times
Executive's Base Salary or (II) Executive's Base Salary multiplied by the number
of years (or any portion thereof, calculated on a daily basis) remaining under
this Agreement had Executive's employment not been terminated, however, in no
event shall such payment equal less than 100% of Executive's Base Salary, which
shall be paid to Executive within ten (10) days after the date of termination;
(B) until the earlier of (I) the date this Agreement would otherwise have
terminated had Executive's employment not been terminated (the "Remaining Term")
or (II) the expiration of the three (3) year period measured from the date of
Executive's termination of employment. The Company shall at its sole cost and
expense provide Executive (and Executive's eligible dependents, if any) with
life, disability and medical insurance benefits substantially similar to those
benefits that Executive (and Executive's dependents) were receiving immediately
prior to Executive's termination of employment; provided, however, that the
benefits otherwise receivable by Executive pursuant to this subsection
9(b)(i)(B) shall be reduced to the extent comparable benefits are concurrently
received by Executive (or Executive's dependents) pursuant to a similar plan or
program of another employer, and any such other benefits actually received by
Executive (or Executive's dependents) must be reported to the Company; and
provided further, however, that the insurance coverage provided by the Company
pursuant to this Section 9(b)(i)(B) shall be in lieu of any other continued
coverage to which Executive or Executive's dependents would otherwise, at
Executive's own expense, be entitled accordance with the requirements of COBRA
by reason of Executive's termination of employment; and (C) all stock options,
warrants, rights and other Company stock-related awards granted to Executive by
the Company that would otherwise have vested or become exercisable at any time
in the future shall become fully vested and nonforfeitable upon the date of
Executive's termination of employment, the Company's repurchase rights, if any,
with respect to those vested shares shall immediately lapse, and each such stock
option, to the extent vested, shall

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remain exercisable for the vested option shares until the expiration or sooner
termination of the option term in accordance with the provisions of the
agreement evidencing such option.

                           (ii) Involuntary Termination Other Than For Cause. If
as a result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment is terminated as a result of an Involuntary
Termination other than for Cause, then the Company shall pay or otherwise
provide to Executive the severance benefits described in Section 9(a)(ii)
hereof.

                           (iii) Termination for Cause. If Executive's
employment is terminated for Cause, then Executive shall not be entitled to
receive any severance payments or other severance benefits under this Section 9.
Executive's benefits will be continued under the Company's then existing benefit
plans and policies in accordance with such plans and policies in effect on the
date of termination.

                           (iv) Involuntary Termination Other Than For Cause. If
as a result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment is terminated as a result of an Involuntary
Termination other than for Cause, then the Company shall pay or otherwise
provide to Executive the severance benefits described in Section 9(a)(ii)
hereof.

                  (c) Parachute Payments. If all or any portion of the amounts
payable to Executive under this Agreement or otherwise are subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code (the "Code") (or
similar state tax and/or assessment), Company shall pay to Executive an amount
necessary to place Executive in the same after tax position as Executive would
have been in had no such excise tax been imposed. The amount payable pursuant to
the preceding sentence shall be increased to the extent necessary to pay income
and excise taxes due on such amount. The determination of the amount of any such
additional amount shall be made by the independent accounting firm then employed
by the Company.

         10. Nondisclosure of Proprietary Information and Company Documents and
Materials.

         (a)      Executive understands that the Company possesses and will
                  possess Proprietary Information which is important to its
                  business. All Proprietary Information is and shall be the sole
                  property of the Company. Executive understands that
                  Executive's employment creates a relationship of confidence
                  and trust between the Company and Executive with respect to
                  Proprietary Information. At all times, both during Executive's
                  employment by the Company and after its termination, Executive
                  shall keep in confidence and trust and will not use or
                  disclose any Proprietary Information or anything relating to
                  it without the prior written consent of the President, except
                  as may be necessary in the ordinary course of performing
                  Executive's duties to the Company.

         (b)      Executive understands that the Company possesses or will
                  possess Company Documents and Materials which are important to
                  its business. All Company Documents and Materials are and
                  shall be the sole property of the Company. Executive agrees
                  that during Executive's employment by the Company, Executive
                  will not remove any Company Documents and Materials from the
                  business premises

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                  of the Company or deliver any Company Documents and Materials
                  to any person or entity outside the Company, except as
                  Executive is required to do in connection with performing the
                  duties of Executive's employment. Executive agrees that,
                  immediately upon the termination of Executive's employment by
                  Executive or by the Company for any reason, or during
                  Executive's employment if so requested by the Company,
                  Executive will return all Company Documents and Materials,
                  apparatus, equipment and other physical property, or any
                  reproduction of such property, excepting only (i) Executive's
                  personal copies of records relating to Executive's
                  compensation; (ii) Executive's personal copies of any
                  materials previously distributed generally to stockholders of
                  the Company; and (iii) Executive's copy of this Agreement.

         11. Non-Solicitation of Company Employees. During the term of this
Agreement and for a period of twelve (12) months thereafter, the Executive
agrees to not encourage or solicit any employee of the Company to leave the
Company for any reason or to accept employment with any other company. As part
of this restriction, the Executive agrees to not interview or provide any input
to any third party regarding any such person during the period in question.
However, this obligation shall not affect any responsibility the Executive has
with respect to the bona fide hiring and firing of Calpine personnel.

         12. Consulting. Executive and the Company may, but are not required to,
enter into an agreement pursuant to which Executive will provide consulting
services to the Company after the date of Executive's retirement or termination.
Any consulting fees paid to Executive will be in addition to any retirement or
severance payments.

         13. Failure to Comply. If, for any reason other than Executive's death,
Disability or Involuntary Termination, Executive shall cease to render services
as required by this Agreement without the written consent of the Company, or if
Executive shall breach the provisions of Sections 10 or 11 hereof, then,
Executive will thereby relinquish all rights to any benefits hereunder,
including future salary payments and death benefits, and the Company shall
reserve whatever rights, if any, it may have against Executive under this
Agreement or otherwise.

         14. Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) or to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and shall perform the
obligations under this Agreement in the same manner and to the same extent as
the Company would be required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of Executive's rights hereunder
shall inure to the benefit of, and be enforceable by, Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

         15. Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Executive shall be
addressed to Executive at the home address from which Executive most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be

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addressed to its corporate headquarters, and all notice shall be directed to the
attention of its Secretary.

         16.      Miscellaneous Provisions.

                  (a) No Duty to Mitigate. Executive shall not be required to
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking new employment or in any other manner), nor shall any such payment be
reduced by earnings that Executive may receive from any other source.

                  (b) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Executive and by an authorized officer or
representative of the Company (other than Executive). No waiver by either party
of any breach of, or of compliance with, any condition or provision of this
Agreement by the other party shall be considered a waiver of any other condition
or provision or of the same condition or provision of another time.

                  (c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

                  (d) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California.

                  (e) Severability. If any term or provision of this Agreement
or the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity of
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
unenforceable, and a suitable and equitable term or provision shall be
substituted therefor to carry out, insofar as may be valid and enforceable, the
intent and purpose of the invalid or unenforceable term or provision.

                  (f) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement may be settled by arbitration in the County of
San Francisco, California, in accordance with the rules of the American
Arbitration Association then in effect. Such arbitration proceedings shall be
nonbinding and any claim with respect to this Agreement, whether or not
previously the subject of an arbitration proceeding, may be brought in any court
of competent jurisdiction.

                  (g) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.

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                  (h) Assignment by Company. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may assign its rights
under this Agreement to another affiliate of the Company; provided, however,
that if there is any such assignment, the Company will guarantee all payments
and the performance of all obligations under this Agreement. In the case of any
such assignment, the term "Company" when used in a section of this Agreement
shall mean the corporation or other entity that actually employs Executive.

                  (i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.

         16. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as of the date hereof and supersedes any
prior understandings, agreements, or representations by or between the Company
and the Executive, written or oral, to the extent that they have related in any
way to the subject matter hereof.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this day and year first above written.

CALPINE CORPORATION:                                EXECUTIVE:

By:
         Peter Cartwright, President,               Ann B. Curtis
         Chief Executive Officer and Chairman       Executive Vice President and
         of the Board                               Chief Financial Officer

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                                   APPENDIX A

                                   DEFINITIONS

                  Cause. "Cause" shall mean (i) material breach of any material
terms of this Agreement, (ii) conviction of a felony, (iii) repeated unexplained
or unjustified absence, (iv) willful breach of fiduciary duty under this
Agreement or (v) gross negligence or willful misconduct where such gross
negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries.

                  Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:

                  (i) a change in ownership or control of the Company effected
         through either of the following transactions:

                           (A) any "person" (as such term is used in Sections
                 13(d) and 14(d) of the Securities Exchange Act of 1934, as
                 amended (the "Exchange Act")), other than the Company's current
                 stockholders or a trustee or other fiduciary holding securities
                 under an employee benefit plan of the Company or any
                 corporation owned, directly or indirectly, by the Company's
                 stockholders in substantially the same proportions as their
                 ownership of the Company's stock, becomes the "beneficial
                 owner" (as defined in Rule 13d-3 under the Exchange Act),
                 directly or indirectly, of securities of the Company
                 representing fifty percent (50%) or more of the total combined
                 voting power of the Company's then outstanding securities
                 pursuant to a tender or exchange offer made directly to the
                 Company's stockholders which the Board does not recommend such
                 stockholders to accept; or

                           (B) a change in the composition of the Board over a
                  period of thirty-six (36) consecutive months or less such that
                  the majority of the members of the Board ceases to be
                  comprised of individuals who are Continuing Members; for such
                  purpose, a "Continuing Member" shall mean an individual who is
                  a member of the Board on the date of this Agreement and any
                  successor of a Continuing Member who is elected to the Board
                  or nominated for such election by action of a majority of
                  Continuing Members then serving on the Board; or

                  (ii) either of the following stockholder-approved transactions
         to which the Company is a party:

                           (A) a merger or consolidation of the Company with any
                 other corporation, other than a merger or consolidation which
                 would result in the voting securities of the Company
                 outstanding immediately prior thereto continuing to represent
                 (either by remaining outstanding or by being converted into
                 voting securities of the surviving entity) at least fifty
                 percent (50%) of the total voting power represented by the
                 voting securities of the Company or such surviving entity
                 outstanding immediately after such merger or consolidation; or

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                  (B) the sale, transfer or complete liquidation or dissolution
         of the Company of all or substantially all of the Company's assets.

                  Company Documents and Materials. "Company Documents and
Materials" shall mean documents or other media or tangible items that contain or
embody Proprietary Information or any other information concerning the business,
operations or plans of the Company, whether such documents, media or items have
been prepared by Executive or others.

                  Disability. "Disability" shall mean the inability of Executive
to perform all the material duties of Executive's position as determined by an
independent physician selected with the approval of the Company and Executive.

                  Involuntary Termination. "Involuntary Termination" shall mean
termination by the Company of Executive's employment for any reason other than
for Cause, and shall include Executive's voluntary resignation following (i) the
material breach by the Company of one or more of its obligations under this
Agreement which are not otherwise corrected within ten (10) days following
Executive's written notice to the Company of such breach, or the Executive's
annual base salary is materially reduced.

                  Proprietary Information. "Proprietary Information" shall mean
information that was developed, created, or discovered by or on behalf of the
Company, or which became or will become known by, or was or is conveyed to the
Company, which has commercial value in the Company's business; including, but
not limited to, trade secrets, designs, technology, know-how, processes, data,
ideas, techniques, inventions (whether patentable or not), works of authorship,
formulas, business and development plans, customer lists, software programs and
subroutines, source and object code, algorithms, terms of compensation and
performance levels of Company employees, and other information concerning the
Company's actual or anticipated business, research or development, or which is
received in confidence by or for the Company from any other person.

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                                                                  EXHIBIT 10.3.5

                               CALPINE CORPORATION

                              EMPLOYMENT AGREEMENT

      This Employment Agreement (this "Agreement") has been entered into,
effective as of January 1, 2000, between CALPINE CORPORATION, a Delaware
corporation (the "Company"), and Ron A. Walter ("Executive") to provide for the
employment of Executive on the terms and conditions set forth herein.

      WHEREAS, Executive has served as Senior Vice President-Business
Development of the Company since January 1998; and

      WHEREAS, the Company wishes to assure itself of the continued employment
efforts of Executive for the period provided in this Agreement, and Executive is
willing to continue to serve in the employ of the Company on a full-time basis
for said period upon the terms and conditions hereinafter provided.

      NOW, THEREFORE, in consideration of the mutual agreements herein
contained, intending to be legally bound, the Company and Executive agree as
follows:

      1. Definitions. The capitalized terms in this Agreement shall have the
meanings set forth in this Agreement or in Appendix A hereto.

      2. Employment. The Company hereby employs Executive, and Executive hereby
accepts such employment by the Company, upon the terms and conditions herein
provided.

      3. Term of Employment. Executive's employment with the Company pursuant to
this Agreement commenced on January 1, 2000 and shall continue through July 31,
2004, unless such employment is sooner terminated or subsequently extended as
hereinafter provided. The Company and Executive may agree to extend the
Employment Period beyond the initial term upon the terms and conditions of this
Agreement or upon other terms, but neither the Company nor Executive is under
any obligation to do so. The period during which this Agreement continues in
effect shall constitute the "Employment Period".

      4. Positions and Responsibilities.

            (a) Position. During the Employment Period, Executive shall serve as
the Company's Senior Vice President-Business Development and shall be
responsible for leading the Company's business development affairs, reporting to
the President and Chief Executive Officer (CEO) of the Company.

            (b) Duties. During the Employment Period, and subject to the control
of the CEO, Executive shall have general executive powers and active management
and supervision over the business development affairs of the Company and shall
perform such other executive and/or administrative duties consistent with the
office of Senior Vice President-Business Development as from time to time may be
assigned to Executive by the CEO, but subject to the conditions in this
Agreement. Executive shall devote substantially Executive's full business time
and attention to, and exert Executive's best efforts in, the performance of
Executive's duties hereunder, so as to promote

                                       1
<PAGE>
the business of the Company. Executive agrees that, during Executive's
employment with the Company, Executive will not provide consulting services to
or become an employee of, any other firm or person engaged in a business in any
way competitive with the Company.

      5. Compensation. For all services rendered by Executive pursuant to this
Agreement, the Company shall pay Executive, and Executive agrees to accept, the
salary, bonuses and other benefits described below in this Section 5.

            (a) Salary. The Company shall pay Executive an annual base salary
("Base Salary") as determined by the CEO in accordance with this Section 5,
payable at periodic intervals in accordance with the Company's payroll practices
for salaried employees. Executive's Base Salary as of the effective date hereof
is two hundred seventy-five thousand dollars ($275,000.00) per annum. In
accordance with Section 5(c) hereof, the amount of the Base Salary shall be
reviewed by the CEO and approved by the Board of Directors, if required, on at
least an annual basis, and any increases will be effective as of the date
determined appropriate by the CEO. Executive's Base Salary may be increased for
any reason, including to reflect inflation or such other adjustments as the CEO
may deem appropriate; provided, however, that Executive's Base Salary, as
currently in effect as stated above or as so increased, may not be subsequently
decreased, except with the prior written consent of Executive.

            (b) Bonuses. In addition to Base Salary, Executive shall be entitled
to receive, for each fiscal year of the Company ending with or within the
Employment Period, an annual bonus ("Bonus"), whether pursuant to a formal bonus
or incentive plan or program of the Company. or otherwise. Subject to this
Section 5(b) and Section 5(c) hereof, such Bonus shall be based on such criteria
as are in good faith deemed appropriate by the CEO. Any Bonus earned by
Executive for service or performance rendered in any fiscal year within the
Employment Period shall be paid to Executive in accordance with the applicable
plan or program and the Company's policies governing such matters. For the year
ending December 31, 2000 and for all future years hereunder, Executive shall be
entitled to participate in and receive a Bonus in accordance with the terms and
conditions set forth in the Company's Annual Management Incentive Plan provided,
however, that the target bonus for Executive as set forth in the current Annual
Management Incentive Plan shall be sixty-eight percent (68%). In the event of
Executive's death or Disability during the Employment Period, the Company shall
pay to Executive or Executive's estate the pro rata portion of the Bonus that
Executive would have earned in respect of the portion of the year prior to
Executive's death or Disability.

            (c) Annual Compensation Review. Notwithstanding anything herein to
the contrary, Executive's compensation, consisting of salary, bonus and stock
option grants, shall be reviewed annually by the CEO.

            (d) Life Insurance. During the Employment Period, the Company shall
provide to Executive a life insurance policy in accordance with the terms of the
current policy maintained by the Company for Executive, as further described in
Section 8(b).

            (e) Health Care. During the Employment Period, Executive shall be
eligible to participate in any health insurance programs and medical plans
available to officers or employees of the Company.

                                       2
<PAGE>
            (f) Participation in Benefit and Equity Compensation Plans. During
the Employment Period, Executive shall be eligible to receive all benefits,
including those under equity participation and bonus programs, to which key
employees are or become eligible under such plans or programs as may be
established by the Company. In addition to any other plans or programs
established by the Company, Executive shall be entitled to participate in the
Company's 1996 Stock Incentive Plan and any similar or replacement plan or
program (the "Stock Option Program").

            (g) 401(k) Plan Benefits. In addition to the other benefits to which
Executive shall be entitled to under this Agreement, Executive shall be entitled
to participate in the Company's 401(k) Plan and shall be entitled to receive the
full benefit of contributions to be made by the Company for the benefit of
Executive under the terms of the 401(k) Plan.

      6. Vacation. During the Employment Period, Executive shall be entitled to
vacation in accordance with the Company's Vacation Policy in effect for
executives. In no event shall such entitlement be less than twenty (20) business
days in each year, with full salary. Furthermore, Executive shall accrue paid
vacation benefits during the Employment Period in accordance with the Company's
Vacation Policy in effect for executives.

      7. Indemnification. The Company shall indemnify Executive pursuant to the
provisions of the Company's Articles of Incorporation and Bylaws to the fullest
extent of California law and all other applicable law, and shall provide
Executive with indemnification pursuant to the Company's standard
indemnification agreement and any director's and officer's liability insurance
policy maintained by the Company.

      8. Benefits Payable Upon Disability or Death.

            (a) Disability Benefits. In the event of the Disability of
Executive, the Company shall continue to pay Executive the salary payable to
Executive in accordance with Section 5 hereof during the period of Executive's
Disability; provided, however, that, in the event that Executive is disabled for
a continuous period exceeding six (6) calendar months, the Company may elect at
the expiration of this six (6) month period to terminate this Agreement and pay
Executive the greater of (i) Executive's available monthly benefits from any
existing Company-sponsored long-term disability plan; or (ii) sixty seven
percent (67%) of the salary provided in Section 5(a) for the duration of the
Employment Period.

            (b) Death Benefits. In the event of Executive's death during
Executive's Disability or otherwise during the Employment Period, the Company
shall cause payment to be made to Executive's most recently designated
beneficiary (which, absent specific designation of a beneficiary for purposes of
this provision, shall be Executive's most recently designated beneficiary under
the Company's group life insurance program) a sum equal to three (3) times
Executive's Base Salary. This obligation of the Company shall be discharged to
the extent benefits are actually paid pursuant to the Company's group life
insurance program, with the balance of said obligation to be discharged either
by a cash payment from the Company, or, if the Company so elects, by
supplementary life insurance policies to be obtained and maintained by the
Company.

      9. Severance Benefits.

                                       3
<PAGE>
            (a) Termination of Employment. In the event Executive's employment
terminates for any reason, except as provided in Section 9(b) in connection with
a Change of Control, then Executive shall be entitled to receive severance
benefits as follows:

                  (i) Voluntary Resignation. If Executive's employment
terminates by reason of Executive's voluntary resignation (and such termination
is not an Involuntary Termination or a termination for Cause), then Executive
shall not be entitled to receive severance or other benefits except for those
(if any) to which Executive may be entitled under this Agreement or any separate
agreement with the Company or as may then be established under the Company's
then existing severance and benefit plans and policies at the time of such
termination.

                  (ii) Involuntary Termination Other Than For Cause. If
Executive's employment is terminated as a result of an Involuntary Termination
other than for Cause, then the following severance benefits shall be paid or
otherwise provided to Executive: (A) the Company shall pay to Executive in the
form of a lump sum payment, in cash, a severance payment equal to the greater of
(I) three (3) times Executive's Base Salary or (II) Executive's Base Salary
multiplied by the sum of the number of years (or any portion thereof, calculated
on a daily basis) remaining under this Agreement had Executive's employment not
been terminated, however, in no event shall such payment equal less than 100% of
Executive's Base Salary, which shall be paid to Executive within ten (10) days
after the date of termination; (B) until the earlier of (I) the date this
Agreement would otherwise have terminated had Executive's employment not been
terminated (the "Remaining Term") or (II) the expiration of the three (3) year
period measured from the date of Executive's termination of employment. The
Company shall at its sole cost and expense provide Executive (and Executive's
eligible dependents, if any) with life, disability, and medical insurance
benefits substantially similar to those benefits that Executive (and Executive's
dependents) were receiving immediately prior to Executive's termination of
employment; provided, however, that the benefits otherwise receivable by
Executive pursuant to this Section 9(a)(ii)(B) shall be reduced to the extent
comparable benefits are concurrently received by Executive (or Executive's
dependents) pursuant to a similar plan or program of another employer, and any
such other benefits actually received by Executive (or Executive's dependents)
must be reported to the Company; and provided further, however, that the
insurance coverage provided by the Company pursuant to this Section 9(a)(ii)(B)
shall be in lieu of any other continued coverage to which Executive or
Executive's dependents would otherwise, at Executive's own expense, be entitled
in accordance with the requirements of Internal Revenue Code of 1986, as amended
("Code"), Section 4980B ("COBRA"), by reason of Executive's termination of
employment; (C) all stock options, warrants, rights and other Company
stock-related awards granted to Executive by the Company that would otherwise
have vested or become exercisable at any time in the future shall become fully
vested and nonforfeitable upon the date of Executive's termination of
employment, the Company's repurchase rights, if any, with respect to those
vested shares shall immediately lapse, and each such stock option, to the extent
vested, shall remain exercisable for the vested option shares until the
expiration or sooner termination of the option term in accordance with the
provisions of the agreement evidencing such option; and (D) the Company shall
pay or reimburse Executive for any and all expenses incurred by Executive for
outplacement services selected by the Executive and approved by the Company,
which approval will not be unreasonably withheld, until the earlier of (I) the
first anniversary of the date of termination of employment or (II) the date on
which Executive commences employment with another employer.

                                       4
<PAGE>
                  (iii) Termination for Cause. If Executive's employment is
terminated for Cause, then Executive shall not be entitled to receive any
severance payments or other severance benefits under this Section 9. Executive's
benefits will be continued under the Company's then existing benefit plans and
policies in accordance with such plans and policies in effect on the date of
termination and in accordance with the requirements of COBRA.

            (b) Termination As a Result of a Change of Control. If Executive's
employment with the Company is terminated as a result of a Change of Control
then Executive shall be entitled to receive severance benefits as follows:

                  (i) Voluntary Resignation. If as a result of a Change of
Control, Executive's Base Salary is reduced within twelve (12) months of the
Change of Control and, or, Executive's position is relocated to a place more
than one hundred (100) miles from the Executive's current place of employment
within six (6) months of the Change of Control, and as a result of these changes
Executive's employment terminates by reason of voluntary resignation (and such
termination is not an Involuntary Termination or a Termination for Cause), then
the following severance benefits shall be paid or otherwise provided to
Executive: (A) the Company shall pay to Executive in the form of a lump sum
payment, in cash, a severance payment equal to the greater of (I) two (2) times
Executive's Base Salary or (II) Executive's Base Salary multiplied by the number
of years (or any portion thereof, calculated on a daily basis) remaining under
this Agreement had Executive's employment not been terminated, however, in no
event shall such payment equal less than 100% of Executive's Base Salary, which
shall be paid to Executive within ten (10) days after the date of termination;
(B) until the earlier of (I) the date this Agreement would otherwise have
terminated had Executive's employment not been terminated (the "Remaining Term")
or (II) the expiration of the three (3) year period measured from the date of
Executive's termination of employment. The Company shall at its sole cost and
expense provide Executive (and Executive's eligible dependents, if any) with
life, disability and medical insurance benefits substantially similar to those
benefits that Executive (and Executive's dependents) were receiving immediately
prior to Executive's termination of employment; provided, however, that the
benefits otherwise receivable by Executive pursuant to this subsection
9(b)(i)(B) shall be reduced to the extent comparable benefits are concurrently
received by Executive (or Executive's dependents) pursuant to a similar plan or
program of another employer, and any such other benefits actually received by
Executive (or Executive's dependents) must be reported to the Company; and
provided further, however, that the insurance coverage provided by the Company
pursuant to this Section 9(b)(i)(B) shall be in lieu of any other continued
coverage to which Executive or Executive's dependents would otherwise, at
Executive's own expense, be entitled accordance with the requirements of COBRA
by reason of Executive's termination of employment; and (C) all stock options,
warrants, rights and other Company stock-related awards granted to Executive by
the Company that would otherwise have vested or become exercisable at any time
in the future shall become fully vested and nonforfeitable upon the date of
Executive's termination of employment, the Company's repurchase rights, if any,
with respect to those vested shares shall immediately lapse, and each such stock
option, to the extent vested, shall remain exercisable for the vested option
shares until the expiration or sooner termination of the option term in
accordance with the provisions of the agreement evidencing such option.

                  (ii) Involuntary Termination Other Than For Cause. If as a
result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment

                                       5
<PAGE>
is terminated as a result of an Involuntary Termination other than for Cause,
then the Company shall pay or otherwise provide to Executive the severance
benefits described in Section 9(a)(ii) hereof.

                  (iii) Termination for Cause. If Executive's employment is
terminated for Cause, then Executive shall not be entitled to receive any
severance payments or other severance benefits under this Section 9. Executive's
benefits will be continued under the Company's then existing benefit plans and
policies in accordance with such plans and policies in effect on the date of
termination.

                  (iv) Involuntary Termination Other Than For Cause. If as a
result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment is terminated as a result of an Involuntary
Termination other than for Cause, then the Company shall pay or otherwise
provide to Executive the severance benefits described in Section 9(a)(ii)
hereof.

            (c) Parachute Payments. If all or any portion of the amounts payable
to Executive under this Agreement or otherwise are subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code (the "Code") (or similar
state tax and/or assessment), Company shall pay to Executive an amount necessary
to place Executive in the same after tax position as Executive would have been
in had no such excise tax been imposed. The amount payable pursuant to the
preceding sentence shall be increased to the extent necessary to pay income and
excise taxes due on such amount. The determination of the amount of any such
additional amount shall be made by the independent accounting firm then employed
by the Company.

      10. Nondisclosure of Proprietary Information and Company Documents and
Materials.

      (a)   Executive understands that the Company possesses and will possess
            Proprietary Information which is important to its business. All
            Proprietary Information is and shall be the sole property of the
            Company. Executive understands that Executive's employment creates a
            relationship of confidence and trust between the Company and
            Executive with respect to Proprietary Information. At all times,
            both during Executive's employment by the Company and after its
            termination, Executive shall keep in confidence and trust and will
            not use or disclose any Proprietary Information or anything relating
            to it without the prior written consent of the CEO, except as may be
            necessary in the ordinary course of performing Executive's duties to
            the Company.

      (b)   Executive understands that the Company possesses or will possess
            Company Documents and Materials which are important to its business.
            All Company Documents and Materials are and shall be the sole
            property of the Company. Executive agrees that during Executive's
            employment by the Company, Executive will not remove any Company
            Documents and Materials from the business premises of the Company or
            deliver any Company Documents and Materials to any person or entity
            outside the Company, except as Executive is required to do in
            connection with performing the duties of Executive's employment.
            Executive agrees that, immediately upon the termination of
            Executive's employment by Executive or by the Company for any
            reason, or during Executive's employment if so requested by the
            Company, Executive will return all Company Documents and Materials,
            apparatus,

                                       6
<PAGE>
            equipment and other physical property, or any reproduction of such
            property, excepting only (i) Executive's personal copies of records
            relating to Executive's compensation; (ii) Executive's personal
            copies of any materials previously distributed generally to
            stockholders of the Company; and (iii) Executive's copy of this
            Agreement.

      11. Non-Solicitation of Company Employees. During the term of this
Agreement and for a period of twelve (12) months thereafter, the Executive
agrees to not encourage or solicit any employee of the Company to leave the
Company for any reason or to accept employment with any other company. As part
of this restriction, the Executive agrees to not interview or provide any input
to any third party regarding any such person during the period in question.
However, this obligation shall not affect any responsibility the Executive has
with respect to the bona fide hiring and firing of Calpine personnel.

      12. Consulting. Executive and the Company may, but are not required to,
enter into an agreement pursuant to which Executive will provide consulting
services to the Company after the date of Executive's retirement or termination.
Any consulting fees paid to Executive will be in addition to any retirement or
severance payments.

      13. Failure to Comply. If, for any reason other than Executive's death,
Disability or Involuntary Termination, Executive shall cease to render services
as required by this Agreement without the written consent of the Company, or if
Executive shall breach the provisions of Sections 10 or 11 hereof, then,
Executive will thereby relinquish all rights to any benefits hereunder,
including future salary payments and death benefits, and the Company shall
reserve whatever rights, if any, it may have against Executive under this
Agreement or otherwise.

      14. Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise)
or to all or substantially all of the Company's business and/or assets shall
assume the obligations under this Agreement and shall perform the obligations
under this Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a succession.
The terms of this Agreement and all of Executive's rights hereunder shall inure
to the benefit of, and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

      15. Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Executive shall be
addressed to Executive at the home address from which Executive most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notice shall
be directed to the attention of its Secretary.

      16. Miscellaneous Provisions.

            (a) No Duty to Mitigate. Executive shall not be required to mitigate
the amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any

                                       7
<PAGE>
other manner), nor shall any such payment be reduced by earnings that Executive
may receive from any other source.

            (b) Waiver. No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by Executive and by an authorized officer or representative
of the Company (other than Executive). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or provision or
of the same condition or provision of another time.

            (c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

            (d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.

            (e) Severability. If any term or provision of this Agreement or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity of unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions of this Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid or unenforceable,
and a suitable and equitable term or provision shall be substituted therefor to
carry out, insofar as may be valid and enforceable, the intent and purpose of
the invalid or unenforceable term or provision.

            (f) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement may be settled by arbitration in the County of
San Francisco, California, in accordance with the rules of the American
Arbitration Association then in effect. Such arbitration proceedings shall be
nonbinding and any claim with respect to this Agreement, whether or not
previously the subject of an arbitration proceeding, may be brought in any court
of competent jurisdiction.

            (g) Employment Taxes. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes.

            (h) Assignment by Company. The Company may assign its rights under
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company; provided, however, that if
there is any such assignment, the Company will guarantee all payments and the
performance of all obligations under this Agreement. In the case of any such
assignment, the term "Company" when used in a section of this Agreement shall
mean the corporation or other entity that actually employs Executive.

            (i) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.

                                       8
<PAGE>
      16. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as of the date hereof and supersedes any
prior understandings, agreements, or representations by or between the Company
and the Executive, written or oral, to the extent that they have related in any
way to the subject matter hereof.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
day and year first above written.

CALPINE CORPORATION:                          EXECUTIVE:

By:
    ------------------------------------      ----------------------------------
    Peter Cartwright, President,              Ron A. Walter
    Chief Executive Officer and Chairman      Senior Vice President-Business
    of the Board                              Development

                                       9
<PAGE>
                                   APPENDIX A

                                  DEFINITIONS

            Cause. "Cause" shall mean (i) material breach of any material terms
of this Agreement, (ii) conviction of a felony, (iii) repeated unexplained or
unjustified absence, (iv) willful breach of fiduciary duty under this Agreement
or (v) gross negligence or willful misconduct where such gross negligence or
willful misconduct has resulted or is likely to result in substantial and
material damage to the Company or its subsidiaries.

            Change of Control. "Change of Control" shall mean the occurrence of
any of the following events:

            (i) a change in ownership or control of the Company effected through
      either of the following transactions:

                  (A) any "person" (as such term is used in Sections 13(d) and
            14(d) of the Securities Exchange Act of 1934, as amended (the
            "Exchange Act")), other than the Company's current stockholders or a
            trustee or other fiduciary holding securities under an employee
            benefit plan of the Company or any corporation owned, directly or
            indirectly, by the Company's stockholders in substantially the same
            proportions as their ownership of the Company's stock, becomes the
            "beneficial owner" (as defined in Rule 13d-3 under the Exchange
            Act), directly or indirectly, of securities of the Company
            representing fifty percent (50%) or more of the total combined
            voting power of the Company's then outstanding securities pursuant
            to a tender or exchange offer made directly to the Company's
            stockholders which the Board does not recommend such stockholders to
            accept; or

                  (B) a change in the composition of the Board over a period of
            thirty-six (36) consecutive months or less such that the majority of
            the members of the Board ceases to be comprised of individuals who
            are Continuing Members; for such purpose, a "Continuing Member"
            shall mean an individual who is a member of the Board on the date of
            this Agreement and any successor of a Continuing Member who is
            elected to the Board or nominated for such election by action of a
            majority of Continuing Members then serving on the Board; or

            (ii) either of the following stockholder-approved transactions to
      which the Company is a party:

                  (A) a merger or consolidation of the Company with any other
            corporation, other than a merger or consolidation which would result
            in the voting securities of the Company outstanding immediately
            prior thereto continuing to represent (either by remaining
            outstanding or by being converted into voting securities of the
            surviving entity) at least fifty percent (50%) of the total voting
            power represented by the voting securities of the Company or such
            surviving entity outstanding immediately after such merger or
            consolidation; or

                                       10
<PAGE>
                  (B) the sale, transfer or complete liquidation or dissolution
            of the Company of all or substantially all of the Company's assets.

            Company Documents and Materials. "Company Documents and Materials"
shall mean documents or other media or tangible items that contain or embody
Proprietary Information or any other information concerning the business,
operations or plans of the Company, whether such documents, media or items have
been prepared by Executive or others.

            Disability. "Disability" shall mean the inability of Executive to
perform all the material duties of Executive's position as determined by an
independent physician selected with the approval of the Company and Executive.

            Involuntary Termination. "Involuntary Termination" shall mean
termination by the Company of Executive's employment for any reason other than
for Cause, and shall include Executive's voluntary resignation following (i) the
material breach by the Company of one or more of its obligations under this
Agreement which are not otherwise corrected within ten (10) days following
Executive's written notice to the Company of such breach, or the Executive's
annual base salary is materially reduced.

            Proprietary Information. "Proprietary Information" shall mean
information that was developed, created, or discovered by or on behalf of the
Company, or which became or will become known by, or was or is conveyed to the
Company, which has commercial value in the Company's business; including, but
not limited to, trade secrets, designs, technology, know-how, processes, data,
ideas, techniques, inventions (whether patentable or not), works of authorship,
formulas, business and development plans, customer lists, software programs and
subroutines, source and object code, algorithms, terms of compensation and
performance levels of Company employees, and other information concerning the
Company's actual or anticipated business, research or development, or which is
received in confidence by or for the Company from any other person.

                                       11

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