Document:

ex10-2_7.htm

     

    
      EXHIBIT 10.2.7

       

      CALPINE
CORPORATION

       

      EXECUTIVE
EMPLOYMENT AGREEMENT

       

      

       

      THIS
AGREEMENT (this “Agreement”) is hereby entered into as of August 11, 2008
(the “Effective Date”), by and between Calpine Corporation (the “Company”) and
Thaddeus Miller (“Executive”) (hereinafter collectively referred to as “the
parties”).

       

      In
consideration of the respective agreements of the parties contained herein, it
is agreed as follows:

       

      
        	
                1.

              	
                Term.  The
      initial term of this Agreement shall be for the period commencing on the
      Effective Date and ending, subject to earlier termination as set forth in
      Section 6, on the fifth (5th)
      anniversary of the Effective Date (the “Employment
  Term”).

              

      

       

      
        	
                2.

              	
                Employment.  During
      the Employment Term:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Executive
      shall be employed as Executive Vice President and Chief Legal Officer
      of the Company.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Executive
      shall report directly to the President and Chief Executive
      Officer. Executive shall perform the duties, undertake the
      responsibilities and exercise the authority customarily performed,
      undertaken and exercised by persons situated in a similar executive
      capacity. Unless otherwise consented to by Executive, Executive’s
      principal place of employment shall be at the Company’s headquarters in
      Houston, Texas.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Executive
      shall devote substantially full-time attention to the business and
      affairs of the Company.  Executive may serve on the boards of
      directors of other companies, subject to the approval of the Board (which
      approval shall be deemed given in respect of service on boards on which
      Executive serves as of the Effective Date), and may serve on civil or
      charitable boards or committees.  Executive may manage personal
      and family investments, participate in industry or charitable
      organizations and otherwise engage in charitable activities and deliver
      lectures at educational institutions, so long as such activities do
      not materially interfere with the performance of
      Executive’s responsibilities
hereunder.

              

      

       

      
        	
                3.

              	
                Annual
      Compensation.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Base
      Salary.  The Company agrees to pay or cause to be
      paid to Executive during the Employment Term a base salary at
      the rate of $700,000 per annum or such increased amount as the
      Board may from time to time determine (hereinafter referred to as the
      “Base Salary”). Such Base Salary shall be payable in accordance with
      the Company’s customary practices applicable to its executives.
       Such Base

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Salary
shall be reviewed at least annually by the Compensation Committee of
the Board (the “Committee”), and may be increased in the sole
discretion of the Committee, but not decreased (any increased amount thereupon
being the Base Salary hereunder).

       

      
        	
                 
      

              	
                (b)

              	
                Incentive
      Compensation.  For each fiscal year of the Company ending
      during the Employment Term, beginning with the 2008 fiscal year,
      Executive shall be eligible to receive a target annual cash bonus of
      90% of the Base Salary (the “Target Bonus”) with the opportunity to
      receive a maximum annual cash bonus of 200% of the Base Salary, as
      recommended and approved by the Committee, if the Company and Executive,
      as applicable, achieve reasonable performance targets set by the Committee
      in consultation with Executive (“Incentive Compensation”).  With
      respect to fiscal year 2008, Executive shall be entitled to a prorated
      annual cash bonus (based on the period of Executive’s employment during
      such year) (the “2008 Bonus”) which shall be based on an annual bonus
      determined based on actual achievement of 2008 performance targets, but
      shall in no event be less than the amount of the prorated Target
      Bonus (or, if greater, the bonus that would have become payable based on
      the Company’s plan as of the Effective Date).  Incentive
      Compensation shall be paid (i) in accordance with, and subject to
      those terms and conditions of, the Company’s annual incentive compensation
      plan which are administrative or, except with respect to the 2008
      Bonus, which are required for compliance with Section 162(m) of the
      Internal Revenue Code of 1986 (the “Code”); provided that nothing in the
      Company’s plan shall apply adversely with respect to Executive to the
      extent inconsistent with the express terms of this Agreement; and (ii) in
      no event later than the 15th day of the third month following the end of
      the taxable year (of the Company or Executive, whichever is later) in
      which the performance targets have been achieved (or, for 2008, no later
      than such day of 2009). Executive shall be required to repay any
      after-tax portion of Incentive Compensation received in respect of any
      year in which Executive commits a willful (as defined in
      the last sentence of Section 6(c)) and intentional act which directly
      results in a material restatement of the Company’s
      earnings.  The Company shall have three years from the date on
      which such Incentive Compensation is paid to seek such
      clawback.

              

      

       

      
        	
                4.

              	
                Sign-On
      Compensation

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Initial Equity
      Grant.

              

      

       

      
        	
                 
      

              	
                (i)

              	
                Sign-On Option Grant.  Effective
      as of the Effective Date, the Company shall grant Executive stock options
      (the “Sign On Options”).  Executive shall be granted 1,678,000
      fully paid and nonassessable shares of the Company’s Common Stock, par
      value $.001 per share, of which (i) 1,250,000 shares shall be granted
      under the Calpine Corporation 2008 Equity Incentive Plan (the “Equity
      Plan”) and (ii) 428,000 shares shall be granted outside of the Equity
      Plan, but shall be subject to the same terms and conditions as are set
      forth in the Equity Plan.  The Sign On Options shall be granted
      in four (4) tranches.  The corresponding number of
      shares

              

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      of
Company Common Stock and the corresponding exercise price per share for each
tranche shall be as follows:  the first tranche of 345,000 shares
shall have a per share exercise price of $16.60; the second tranche of 394,000
shares shall have a per share exercise price of $19.19; the third tranche of
443,000 shares shall have a per share exercise price of $21.59; and the fourth
tranche of 496,000 shares shall have a per share exercise price of
$23.99.  The Sign On Options shall have a term of seven
years.  Except to the extent provided in Section 8 or in this Section,
the Sign On Options shall vest ratably over a five year period, 20% on each
anniversary of the date of grant, provided Executive is employed on such dates
by the Company.  Upon a Change in Control (as defined below),
each Sign On Option shall become fully vested and shall immediately be
cancelled, and, in exchange therefor, Executive 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 Sign On Option.  Executive
shall in all cases be entitled to receive such amount fully in cash. Within
30 days of the Effective Date, the Company shall file with the Securities and
Exchange Commission a registration statement on Form S-8 with respect to all
shares of Company Common Stock issuable pursuant to the Sign On Options and
shall cause such registration statement to remain in effect for so long as any
of the Sign On Options remain outstanding.

       

      
        	
                 
      

              	
                (ii)

              	
                In
      the event Executive commits a willful (as defined in the last sentence of
      Section 6(c)) and intentional act which directly results in a material
      restatement of the Company’s earnings, Executive shall be required to
      repay any after-tax portion of income realized from the exercise of a Sign
      On Option which vested in the year affected by the restatement.
       Executive shall be permitted to return the after-tax portion of the
      underlying stock in kind.  The Company shall have three years from
      the date of the relevant vesting time to seek such clawback.  To the
      extent affected options are not exercised at the end of such three year
      period, they shall be forfeited. Executive will continue to hold
      common stock equal to at least fifty percent (50%) of the after tax
      proceeds of each Sign On Option exercise until Executive’s termination of
      employment; provided that the requirement in this sentence shall not apply
      in any case where the above clawback applies.  All Sign On
      Options shall be subject to the terms and conditions set forth in the
      applicable plan and applicable award agreement attached as Exhibit
      A hereto, to the extent not inconsistent with the express terms of
      this Agreement (without regard to Exhibit
A).

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Sign-On
      Bonus.  Within two (2) business days following the
      Effective Date, the Company shall pay Executive a lump sum cash signing
      bonus of $150,000.

              

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      
        	
                5.

              	
                Other
      Benefits.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Employee
      Benefits.  During
      the Employment Term, Executive shall be entitled to participate in
      all employee benefit plans, practices and programs maintained by the
      Company and made available to employees generally, including, without
      limitation, all pension, retirement, profit sharing, savings,
      medical, hospitalization, disability, dental, life or travel accident
      insurance benefit plans, to the extent Executive is eligible under the
      terms of such plans.  Executive’s participation in such plans,
      practices and programs shall be on the same basis and terms as are
      applicable to senior executive officers of the Company
      generally.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Executive
      Benefits.  During the Employment Term, Executive
      shall be entitled to participate in all executive benefit or
      incentive compensation plans now maintained or hereafter established
      by the Company for the purpose of providing compensation
      and/or benefits to senior executives of the Company including, but
      not limited to, the Company’s deferred compensation plans and
      any supplemental retirement, deferred compensation, supplemental
      medical or life insurance or other bonus or incentive compensation
      plans.  No additional compensation provided under any of such plans
      shall be deemed to modify or otherwise affect the terms of this
      Agreement or any of Executive’s entitlements
    hereunder.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Excess
      Taxes.  In the event that Executive shall become entitled
      to payments or benefits provided by this Agreement or any other amounts in
      the “nature of compensation,” whether pursuant to the terms of this
      Agreement or any other plan, arrangement or agreement with the Company
      (collectively, the “Total Payments”), and such Total Payments are subject,
      by reason of or in connection with Executive’s employment hereunder, to
      any state, local or foreign taxes or charges that may hereafter be imposed
      by any taxing authority that is in excess of Executive’s federal taxes and
      taxes on such Total Payments imposed by the state and locality of
      Executive’s residence (the “Excess Taxes”), then the Company shall pay to
      Executive an additional amount (the “Excess Tax Gross-Up Payment”) such
      that the net amount retained by Executive, after deduction of any such
      Excess Taxes on the Total Payments and any federal, state and local income
      and employment taxes and Excess Taxes upon the Excess Tax Gross-Up
      Payment, and after taking into account the phase out of itemized
      deductions and personal exemptions attributable to the Excess Tax Gross-Up
      Payment, shall be equal to the Total Payments as if no such Excess Taxes
      had been imposed.  Any Excess Tax Gross-Up Payments shall be
      made within ten (10) business days of the date of notification that such
      Excess Tax is due and payable.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Business
      Expenses.  Upon submission of proper invoices in
      accordance with the Company’s normal procedures, Executive shall be
      entitled to receive prompt reimbursement of all reasonable
      out-of-pocket business, entertainment and travel expenses incurred
      by Executive in connection with the performance
      of Executive’s
duties hereunder.

              

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (e)

              	
                Office and
      Facilities.  During the Employment Term Executive shall
      be provided with an appropriate office at the Company’s headquarters,
      with such secretarial and other support facilities as are
      commensurate with Executive’s status with the Company, which
      facilities shall be adequate for the performance of Executive’s
      duties hereunder.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                Vacation and Sick
      Leave.  Executive shall be entitled, without loss
      of pay, to absent himself voluntarily from the performance
      of Executive’s  employment under this Agreement,
      pursuant to the following:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                Commencing
      on January 10, 2009, Executive shall be entitled to 30 days of
      vacation per year in accordance with the vacation policies of the
      Company as in effect from time to time (except that Executive shall be
      entitled to no more than 15 vacation days for 2008 which may be used any
      time prior to January 10, 2009); vacation must be taken at such time
      or times as approved by the Board;
and

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                Executive
      shall be entitled to sick leave (without loss of pay) in accordance
      with the Company’s policies as in effect from time to
      time.

              

      

       

      
        	
                6.

              	
                Termination.  The
      Employment Term and Executive’s employment hereunder may be terminated
      under the circumstances set forth
below.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Disability.  The
      Company may terminate Executive’s employment, on written notice to
      Executive after having reasonably established Executive’s Disability.
      For purposes of this Agreement, Executive will be deemed to have a
      “Disability” if, as a result of any medically determinable physical or
      mental impairment that can be expected to result in death or is reasonably
      expected to last for a continuous period of not less than twelve
      (12) months, Executive is unable to perform the core functions of
      Executive’s position (with or without reasonable accommodation) for a
      period of six consecutive months or more, or is receiving income
      replacement benefits, for a period of six consecutive months or more under
      an accident and health plan covering employees of the
      Company.  Executive shall be entitled to the compensation
      and benefits provided for under this Agreement for any period
      prior to Executive’s termination by reason of Disability during which
      Executive is unable to work due to a physical or mental infirmity in
      accordance with the Company’s policies for similarly-situated
      executives.  If any question shall arise as to whether, during
      any period Executive is disabled so as to be unable to perform the core
      functions of Executive’s then existing position with or without reasonable
      accommodation, Executive may, and at the request of the Company shall,
      submit to the Company a certification in reasonable detail by a physician
      selected by the Company, to whom Executive or Executive’s guardian has no
      reasonable objection, as to whether Executive is so disabled and how long
      such disability is expected to continue, and such certification shall for
      the purposes of this Agreement be conclusive of the
      issue.  Executive shall cooperate with any reasonable request of
      the physician in connection with such certification.  If such
      question shall arise and
Executive

              

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      shall
fail to submit such certification, the Company’s determination of such issue
shall be binding on Executive.  Nothing in this Section 6(a) shall be
construed to waive Executive’s rights, if any, under existing law including,
without limitation, the Family and Medical Leave Act of 1933, 29 U.S.C. ss.2601
et seq. and the Americans With Disabilities Act, 424 S.C. ss.12101 et
seq.

       

      
        	
                 
      

              	
                (b)

              	
                Death.  Executive’s
      employment shall be terminated as of the date of Executive’s
      death.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Cause.  The Company may
      terminate
      Executive’s employment for “Cause,” effective as of the date of the
      Notice of Termination (as defined in Section 7 below). “Cause” shall mean, for purposes of this
      Agreement: (a) Executive’s act of fraud, dishonesty,
      misappropriation, or embezzlement with respect to the Company;
      (b) Executive’s conviction of, or plea of
      guilty or no contest to, any felony; (c) Executive’s violation of the
      Company’s drug policy or anti-harassment
      policy; (d) Executive’s admission of liability of, or
      finding by a court or the US Securities and Exchange
      Commission (or a
      similar agency of any applicable state) of liability for, the violation of
      any “Securities Laws” (as hereinafter defined)
      (excluding any technical violations of the Securities Laws which are not
      criminal in nature).
      As used herein, the term “Securities Laws” means any Federal or state law,
      rule or regulation governing the issuance or exchange of securities,
      including without limitation the Securities Act of 1933, the Securities
      Exchange Act of 1934 and the rules and regulations promulgated
      thereunder; (e) Executive’s failure after reasonable prior
      written notice from the Company to comply with any valid and legal
      directive of the Board that is not remedied within thirty (30) days of
      Executive being provided written notice thereof from the
      Company or Executive’s willful gross negligence in performance,
      or willful non-performance, of any of Executive’s duties and responsibilities
      with respect to the Company that is not remedied within thirty (30) days
      of Executive being provided written notice
      thereof from the Company; or (f) other than as provided in clauses (a)
      through (e) above,
      Executive’s material breach of any material
      provision of the employment agreement that is not remedied within thirty
      (30) days of Executive being provided written notice
      thereof.  Executive shall not have acted, and shall not be deemed for
      purposes of this Agreement to have acted, in a “willful” manner if Executive acted, or failed to act, in a
      manner that he believed in good faith to be in, or not opposed to, the best
      interests of the Company.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Without
      Cause.  The Company may terminate Executive’s
      employment without Cause.  The Company shall deliver to
      Executive a Notice of Termination (as defined in Section 7 below) not
      less than sixty (60) days prior to the termination of Executive’s
      employment without Cause and the Company shall have the option of
      terminating Executive’s duties and responsibilities prior to
      the expiration of such sixty-day notice
  period.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Good
      Reason.  Executive may terminate employment with the
      Company for Good Reason (as defined below) by delivering to the Company a
      Notice of Termination (as defined in Section 7 below) not less than sixty
      (60) days prior to the

              

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

      termination
of Executive’s employment for Good Reason. The Company shall have the option of
terminating Executive’s duties and responsibilities prior to the expiration of
such sixty-day notice period.  For purposes of this Agreement, “Good
Reason” means any of the following, in each case only if it occurs when
Executive is employed by the Company and then only if not consented to by
Executive in writing: (a) assignment of a position that is of a lesser rank
than held by Executive prior to the assignment and that results in Executive
ceasing to be an executive officer of a company with securities registered under
the Securities Exchange Act of 1934, or ceasing to be Executive Vice President
and Chief Legal Officer; (b)
a diminution of Executive’s duties or responsibilities; (c) the
assignment of duties inconsistent with Executive’s title or responsibilities;
(d) failure to cause a successor to the Company’s business or substantially all
of the Company’s assets to assume the Employment Agreement; (e) a material
reduction in such Executive’s base salary or target bonus opportunity (including
an adverse change in performance criteria or a decrease in ultimate target bonus
opportunity); or (f) any change of more than thirty (30) miles in the location
of the principal place of employment of such Executive immediately prior to the
effective date of such change.
 For purposes
of this definition, none of the actions described in clauses (a), (b) and
(c) above shall constitute “Good Reason” with respect to Executive if it
was an isolated and inadvertent action not taken in bad faith by the Company and
if it is remedied by the Company within thirty (30) days after receipt of
written notice thereof given by Executive (or, if the matter is not capable of
remedy within thirty (30) days, then within a reasonable period of time
following such thirty (30) day period, provided that the Company has commenced
such remedy within said thirty (30) day period); provided that “Good Reason”
shall cease to exist for any action described in clauses (a) through (f) above
on the sixtieth (60th) day following the later of the occurrence of such action
or Executive’s knowledge thereof, unless such Executive has given the Company
written notice thereof prior to such date.

       

      
        	
                 
      

              	
                (f)

              	
                Without Good
      Reason.  Executive
      may voluntarily terminate Executive’s employment without Good Reason
      by delivering to the Company a Notice of Termination not less than
      sixty (60) days prior to the termination of Executive’s employment
      and the Company shall have the option of terminating Executive’s
      duties and responsibilities prior to the expiration of such sixty-day
      notice period.

              

      

       

      
        	
                7.

              	
                Notice of
      Termination.  Any purported termination by the Company or
      by Executive shall be communicated by written Notice of Termination to the
      other party hereto. For purposes of this Agreement, a “Notice of
      Termination” shall mean a notice that indicates a termination date, the
      specific termination provision in this Agreement relied upon and sets
      forth in reasonable detail the facts and circumstances claimed to provide
      a basis for termination of Executive’s employment under the provision so
      indicated. For purposes of this Agreement, no such purported termination
      of Executive’s employment hereunder shall be effective without such Notice
      of Termination (unless waived by the party entitled to receive such
      notice).

              

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

      
        	
                8.

              	
                Compensation Upon
      Termination.  Upon termination of Executive’s employment
      during the Employment Term, Executive shall be entitled to the benefits
      described in Section 8.  The benefits described in this Section
      8 shall be in lieu of and not in addition to any benefits Executive may
      become entitled to under any of the Company’s severance plans or policies
      as in effect from time to time.  For the avoidance of doubt,
      Executive shall not be eligible to participate in the Calpine Corporation
      Change in Control and Severance Benefits
Plan.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Termination
      by the
      Company for Cause or by Executive Without Good Reason. If
      Executive’s employment is terminated by the Company for Cause or
      by Executive without Good Reason, the Company shall pay Executive all
      amounts earned or accrued hereunder through the termination date,
      including:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                any
      accrued and unpaid Base Salary;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                any
      Incentive Compensation earned but unpaid in respect of any completed
      fiscal year preceding the termination
date;

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                reimbursement
      for any and all monies advanced or expenses incurred in connection
      with Executive’s employment for reasonable and necessary expenses
      incurred by Executive on behalf of the Company for the period ending
      on the termination date; and

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                any
      accrued and unpaid vacation pay;

              

      

       

      (the
foregoing items in Sections 8(a)(i) through 8(a)(iv) being collectively referred
to as the “Accrued Compensation”).

       

      
        	
                 
      

              	
                (b)

              	
                Termination by the
      Company for Disability or by Reason of
      Death. If Executive’s employment is terminated by the Company
      for Disability, the Company shall pay Executive (or, if Executive’s
      employment is terminated by reason of Executive’s death, Executive’s
      beneficiaries or estate):

              

      

       

      
        	
                 
      

              	
                (i)

              	
                the
      Accrued Compensation; and

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                an
      amount equal to the Incentive Compensation that Executive would have
      been entitled to receive in respect of the fiscal year in
      which Executive’s termination date occurs, had Executive continued in
      employment until the end of such fiscal year, which amount shall be
      determined based on the Company’s actual performance for such year
      relative to the target performance goals applicable to Executive and shall
      be paid at the time it would otherwise have become payable;
      and

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                the
      Sign On Options shall become immediately vested and exercisable and shall
      remain exercisable for their full original term;
  and

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                the
      Company shall provide Executive (or, if Executive’s employment is
      terminated by reason of Executive’s death, Executive’s dependents)
      with

              

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

      continued
coverage under any health, medical, dental, vision or life insurance program or
policy in which Executive was eligible to participate as of the
time of Executive’s employment termination for the remainder of the
original Employment Term on terms no less favorable to Executive
and Executive’s dependents (including with respect to payment for the
costs thereof) than those in effect for executive officers of the Company
immediately prior to such termination, which coverage shall become secondary to
any coverage provided to Executive by a subsequent employer and to any Medicare
coverage for which Executive becomes eligible.

       

      
        	
                 
      

              	
                (c)

              	
                Termination by the
      Company Without Cause or by Executive for Good Reason Other
      Than in Connection with a Potential Change in
      Control
      or a Change in
      Control.  If Executive’s employment by the Company shall
      be terminated by the Company without Cause or by Executive for Good
      Reason, in each case other than in the circumstances described in
      Section 8(d), then, subject to Section 15(e) of this Agreement, Executive
      shall be entitled to the benefits provided in this Section
      8(c):

              

      

       

      
        	
                 
      

              	
                (i)

              	
                the
      Company shall pay to Executive the Accrued
  Compensation;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                the
      Company shall pay to Executive an amount equal to the Incentive
      Compensation that Executive would have been entitled to receive in respect
      of the fiscal year in which Executive’s termination date occurs, had
      Executive continued in employment until the end of such fiscal year, which
      amount, determined based on the Company’s actual performance for such year
      relative to the performance goals applicable to Executive, shall be
      multiplied by a fraction (A) the numerator of which is the number of days
      in such fiscal year through termination date and (B) the denominator of
      which is 365 (the “Pro-Rata
Bonus”);

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                the
      Company shall pay to Executive as severance pay and in lieu of any further
      Base Salary or other compensation and benefits for periods subsequent to
      the termination date, an amount in cash, which amount shall be payable in
      a lump sum payment within seventy (70) days following such termination
      (subject to Section 10), equal to one and one-half (1.5) times the sum of
      (A) Executive’s highest Base Salary in the three (3) years preceding
      Executive’s date of termination and (B) the Target Bonus with respect to
      the year of termination;

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                the
      Company shall provide Executive with continued coverage under any health,
      medical, dental, vision or life insurance program or policy in which
      Executive was eligible to participate as of the
      time of Executive’s employment termination for eighteen (18)
      months following such termination on terms no less favorable to
      Executive and Executive’s dependents (including with respect to
      payment for the costs thereof) than those in effect for executive officers
      of the Company immediately prior
to

              

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

      such termination,
which coverage shall become secondary to any coverage provided to Executive by a
subsequent employer and to any Medicare coverage for which Executive becomes
eligible;

       

      
        	
                 
      

              	
                (v)

              	
                outplacement
      services at the Company’s expense for a period of eighteen (18) months
      following Executive’s date of termination;
and

              

      

       

      
        	
                 
      

              	
                (vi)

              	
                those
      Sign On Options scheduled to vest within a period of thirty-six (36)
      months following Executive’s date of termination shall become immediately
      vested and exercisable and shall remain exercisable for a period of two
      (2) years following Executive’s date of termination but in no event beyond
      their original term; the remaining Sign On Options shall be forfeited as
      of the date of Executive’s
termination.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Termination by the
      Company Without Cause or by Executive
      for Good Reason Following a
      Change in
      Control.  If Executive’s employment by the Company shall
      be terminated by the Company without Cause or by Executive for Good Reason
      within twenty-four (24) months following a Change in Control or within six
      (6) months following a Potential Change in Control provided a Change in
      Control occurs within nine (9) months following the Potential Change in
      Control, then in lieu of the amounts due under Section 8(c) above,
      Executive shall be entitled to the benefits provided in this Section
      8(d).

              

      

       

      
        	
                 
      

              	
                (i)

              	
                the
      Company shall pay Executive any Accrued
  Compensation;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                the
      Company shall pay Executive any Pro-Rata
Bonus;

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                the
      Company shall pay Executive as severance pay and in lieu of any further
      Base Salary or other compensation and benefits for periods subsequent to
      the termination date, an amount in cash, which amount shall be payable in
      a lump sum payment within seventy (70) days following such termination
      (subject to Section 10), equal to three (3) times the sum of (A)
      Executive’s highest Base Salary in the three (3) years preceding
      Executive’s date of termination and (B) the Target Bonus with respect
      to the year of termination, or the year of the Change in Control, if
      higher; and

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                the
      Company shall provide Executive with continued coverage under any health,
      medical, dental, vision or life insurance program or policy in which
      Executive was eligible to participate as of the time of Executive’s
      employment termination for three (3) years following such termination on
      terms no less favorable to Executive and Executive’s dependents (including
      with respect to payment for the costs thereof) than those in effect for
      executive officers of the Company immediately prior to such
      termination, which coverage shall become secondary to any coverage
      provided to Executive by a subsequent employer;
  and

              

      

       

      
        	
                 
      

              	
                (v)

              	
                outplacement
      services at the Company’s expense for a period of eighteen (18) months
      following Executive’s date of
termination.

              

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (e)

              	
                No
      Mitigation.  Executive shall not be required to mitigate
      the amount of any payment provided for under this Section 8 by
      seeking other employment or otherwise and, except as provided in Section
      8(c)(iv) or 8(d)(iv)above, no such payment shall be offset or reduced by
      the amount of any compensation or benefits provided to Executive in
      any subsequent employment.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                Section 280G
      Excise
      Tax Gross-up.  Whether or not Executive becomes entitled
      to the severance payments, if any of the payments or benefits received or
      to be received by Executive (including without limitation any payment
      or benefits received in connection with a Change in Control or Executive’s
      termination of employment, whether pursuant to the terms of this Agreement
      or any other plan, arrangement or agreement, or otherwise) (all such
      payments and benefits, excluding the Gross-Up Payment, being hereinafter
      referred to as the “Total 280G Payments”) will be subject to the Excise
      Tax, the Company shall pay to Executive an additional amount (the “280G
      Gross-Up Payment”) such that the net amount retained by Executive, after
      deduction of any Excise Tax on the Total 280G Payments and any federal,
      state and local income and employment taxes and Excise Tax upon the 280G
      Gross-Up Payment, and after taking into account the phase out of itemized
      deductions and personal exemptions attributable to the 280G Gross-Up
      Payment, shall be equal to the Total 280G Payments.  Any 280G
      Gross-Up Payments shall be made within ten (10) business days of the date
      of notification that such Excise Tax is due and
  payable.

              

      

       

      
        	
                9.

              	
                Change in
      Control.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                “Change
      in Control” means and shall be deemed to have occurred upon the first of
      the following events to occur:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                any
      person, entity or “group” (within the meaning of Sections 13(d)(3) or
      14(d)(2) of the Securities Exchange Act of 1934, but excluding, for this
      purpose, the Company or its subsidiaries, or any employee benefit plan of
      the Company or its subsidiaries which acquires beneficial ownership of
      voting securities of the Company) becomes the beneficial owner (within the
      meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
      1934) of a majority of either the then-outstanding shares of the Company’s
      common stock or the combined voting power of the Company’s
      then-outstanding voting securities entitled to vote generally in the
      election of directors; or

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                individuals
      who, as of the Effective Date, constitute the Board of Directors (as of
      such date, the “Incumbent Board”) cease for any reason to constitute at
      least a majority of the Board; provided, however, that any person becoming
      a director subsequent to such date whose election, or nomination for
      election, was approved by a vote of at least a majority of the directors
      then constituting the Incumbent Board or was effected in satisfaction of a
      contractual requirement that was approved by at least a majority of
      the directors when constituting the Incumbent Board (in
    each

              

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      case,
other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of directors of the Company) shall be, for purposes of
this clause (ii), considered as though such person were a member of the
Incumbent Board; or

       

      
        	
                 
      

              	
                (iii)

              	
                the
      consummation of a reorganization, merger, consolidation or share exchange,
      in each case with respect to which persons who were the stockholders of
      the Company immediately prior to such reorganization, merger,
      consolidation or share exchange do not, immediately thereafter, own more
      than fifty percent (50%) of the combined voting power entitled to vote
      generally in the election of directors of the reorganized, merged,
      consolidated or other surviving entity’s then-outstanding voting
      securities, or approval by the stockholders of the Company of a
      liquidation or dissolution of the Company or consummation of the sale of
      all or substantially all of the assets of the Company (determined on a
      consolidated basis).

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Notwithstanding
      the foregoing, a “Change in Control” shall not be deemed to have occurred
      by virtue of the consummation of any transaction or series of integrated
      transactions immediately following which the record holders of the common
      stock of the Company immediately prior to such transaction or series of
      transactions continue to have substantially the same proportionate
      ownership in an entity which owns all or substantially all of the assets
      of the Company immediately following such transaction or series of
      transactions.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                A
      “Potential Change in Control” shall be deemed to have occurred if the
      event set forth in any one of the following shall have
      occurred:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                the
      Company enters into an agreement, the consummation of which would result
      in the occurrence of a Change in Control;
or

              

      

       

       

      
        	
                 
      

              	
                (ii)

              	
                the
      Company or any person, entity or “group” (within the meaning of Sections
      13(d)(3) or 14(d)(2) of the Exchange Act, but excluding, for this purpose,
      the Company or its subsidiaries, or any employee benefit plan of the
      Company or its subsidiaries which acquires beneficial ownership of voting
      securities of the Company) publicly announces an intention to take or to
      consider taking actions which, if consummated, would constitute a Change
      in Control; or

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                the
      acquisition (other than from the Company) by any person, entity or “group”
      (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act,
      but excluding, for this purpose, the Company or its subsidiaries, or any
      employee benefit plan of the Company or its subsidiaries which acquires
      beneficial ownership of voting securities of the Company) of beneficial
      ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
      Act) of fifteen percent (15%) or more of either the then-outstanding
      shares

              

      

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      of common
stock or the combined voting power of the Company’s then-outstanding voting
securities entitled to vote generally in the election of directors;
or

       

      
        	
                 
      

              	
                (iv)

              	
                the
      Committee adopts a resolution to the effect that a Potential Change in
      Control has occurred.

              

      

       

       

      
        	
                10.

              	
                Section
      409A.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                To
      the extent applicable, it is intended that this Agreement comply with the
      provisions of Code Section 409A and this Agreement will be administered
      and interpreted in a manner consistent with this
      intent.  Notwithstanding anything contained herein to the
      contrary, for all purposes of this Agreement, Executive shall not be
      deemed to have had a termination of employment unless Executive has
      incurred a separation from service from the Company within the meaning of
      Code Section 409A and, to the extent required to avoid accelerated
      taxation and/or tax penalties under Code Section 409A, payments under this
      Agreement that would otherwise be payable during the six-month period
      after the date of termination shall instead be paid on the first business
      day after the expiration of such six-month period.  In addition,
      for purposes of this Agreement, each amount to be paid and each
      installment payment shall be construed as a separate identified payment
      for purposes of Code Section 409A.  With respect to expenses
      eligible for reimbursement under the terms of this Agreement, (i) the
      amount of such expenses eligible for reimbursement in any taxable year
      shall not affect the expenses eligible for reimbursement in another
      taxable year and (ii) any reimbursements of such expenses shall be made no
      later than the end of the calendar year following the calendar year in
      which the related expenses were incurred, except, in each case, to the
      extent that the right to reimbursement does not provide for a “deferral of
      compensation” within the meaning of Code Section 409A.  With
      respect to any payments of tax gross ups, including without limitation the
      Gross-Up Payment, to which Executive becomes entitled under the terms of
      this Agreement, such payments shall be made by the Company no later than
      the end of the calendar year following the calendar year in which
      Executive remits the related tax, except to the extent earlier payment is
      provided for herein.

              

      

       

      Notwithstanding
the foregoing, in the event that any payments, benefits, or distributions (or
any acceleration of any payments, benefits, or distributions) (collectively, the
“Section 409A Payments”) made or provided to Executive under this Agreement
(or any other plan, policy, arrangement, or agreement of the Company) become
subject to the interest and additional tax imposed by Code Section 409A(a)(1)(B)
(the “Section 409A Tax”), the Company shall pay to Executive an additional
amount (the “Section 409A Gross-Up Payment”) such that the net amount retained
by Executive, after deduction of the Section 409A Tax on the Section 409A
Payments and any federal, state and local income and employment taxes and
Section 409A Tax upon the Section 409A Gross-Up Payment, and after taking into
account the phase out of itemized deductions and personal exemptions
attributable to the Section 409A Gross-Up Payment, shall be equal to the Section
409A Payments.  Any Section 409A Gross-Up Payment shall be made within
ten

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      (10)
business days of the date of notification that such Section 409A Tax is due and
payable.

       

      
        	
                11.

              	
                Proprietary
      Information and Records.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                “Proprietary
      Information” means confidential or proprietary information, knowledge or
      data concerning (1) the businesses, strategies, operations, financial
      affairs, organizational matters, personnel matters, budgets, business
      plans, marketing plans, studies, policies, procedures, products, ideas,
      processes, software systems, trade secrets and technical know-how of the
      Company and its affiliates (the “Group”), (2) any other matter relating to
      the Group, (3) any matter relating to clients of the Group or other third
      parties having relationships with the Group and (4) any confidential
      information from which the Group derives business advantage or economic
      value.  Proprietary Information includes (A) the names, addresses,
      phone numbers and buying habits and preferences and other information
      concerning clients and prospective clients of the Group, and (B)
      information and materials concerning the personal affairs of employees of
      the Group.  In addition, Proprietary Information may include
      information furnished to Executive orally or in writing (whatever the form
      or storage medium) or gathered by inspection, in each case before or after
      the date of this Agreement. Proprietary Information does not include
      information (X) that was or becomes generally available to Executive on a
      non-confidential basis, if the source of this information was not
      reasonably known to Executive to be bound by a duty of confidentiality,
      (Y) that was or becomes generally available to the public, other than as a
      result of a disclosure by Executive, directly or indirectly, or (Z) that
      Executive can establish was independently developed by Executive without
      reference to Proprietary
Information.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Executive
      acknowledges that he will obtain or create Proprietary Information in the
      course of Executive’s involvement in the Group’s activities and may
      already have Proprietary Information. Executive agrees that the
      Proprietary Information is the exclusive property of the Group. In
      addition, nothing in this Agreement will operate to weaken or waive any
      rights the Group may have under statutory or common law, or any other
      agreement, to the prohibition of unfair competition or the protection of
      trade secrets, confidential business information and other confidential
      information.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Executive
      will use and disclose Proprietary Information only for the Group’s benefit
      and in accordance with any restrictions placed on its use or disclosure by
      the Group.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                After
      the termination of Executive’s employment, Executive will not use or
      disclose any Proprietary Information for any purpose. For the avoidance of
      doubt, but without limitation of the foregoing, after termination of
      Executive’s employment, Executive will not directly or indirectly use
      Proprietary Information from which the Group derives business advantage or
      economic benefit to solicit, impair or interfere with, or attempt to
      solicit, impair or interfere with, any
person

              

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

      or
entity, who, at the time of the termination of Executive’s employment, is then a
customer, vendor or business relationship of the Group (or who Executive knew
was a potential customer, vendor or business relationship of the Company within
the six months prior to the termination of Executive’s Employment).

       

      
        	
                 
      

              	
                (e)

              	
                Within
      five (5) business days following the termination of Executive’s employment
      hereunder, Executive will on request return to the Company all
      written Proprietary Information that has been provided to Executive
      and Executive will destroy all copies of any analyses,
      compilations, studies or other documents prepared by Executive or for
      Executive’s use containing or reflecting any Proprietary Information
      (provided that Executive may retain a copy of his contacts list and the
      contents thereof).

              

      

       

      
        	
                12.

              	
                Covenant Not to
      Solicit, Not to Disparage and to Cooperate in
      Litigation.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Covenant Not to
      Solicit.  During the Employment Term and for period of
      twelve (12) months after termination of Executive’s employment, Executive
      will not directly or indirectly, (i) solicit or attempt to solicit anyone
      who, at the time of the termination of Executive’s employment, is then an
      employee of the Group (or who was an employee of the Group within the six
      months prior to the termination of Executive’s Employment) to resign from
      the Group or to apply for or accept employment with any company or other
      enterprise, (ii) solicit any Customer to transact business with a
      Competitive Enterprise or to reduce or refrain from doing any business
      with the Company, (iii) transact business with any Customer that would
      cause Executive to be a Competitive Enterprise, or (iv) interfere with or
      damage any relationship between the Group and a Customer.  For
      purposes of this Agreement, (i) a “Customer” means any customer of
      the Group or prospective customer of the Group contacted and materially
      and specifically pursued during Exectuive’s employment by the Group to
      whom Executive provided services, or for whom Executive transacted
      business, or whose identity became known to Executive in connection with
      Executive ‘s relationship or employment with the Group, and
      (ii) “Solicit” means any communication of any kind, regardless
      of who initiates it, that in any invites, advises, encourages or requests
      any person to take or refrain from taking any action. The provisions of
      this Section 12(a) shall not apply following a Change in
      Control.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Nondisparagement.  During
      and after Executive’s employment with the Company, the parties mutually
      covenant and agree that neither will directly or indirectly disparage the
      other, or make or solicit any comments, statements, or the like to any
      clients, competitors, suppliers, employees or former employees of the
      Company, the press, other media, or others that may be considered
      derogatory or detrimental to the good name or business reputation of the
      other party.  Nothing herein shall be deemed to constrain either
      party’s cooperation in any Board authorized investigation or governmental
      action, or to prohibit competition otherwise permitted hereunder.  In
      the event of Executive’s termination or the non-renewal of this Agreement,
      Executive and Company shall agree on any press release relating to such
      termination or non-renewal and the Company
and

              

      

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      Executive
shall not publicly discuss or comment on Executive’s termination or non-renewal
in any manner other than as mutually agreed in the press release.

       

      
        	
                 
      

              	
                (c)

              	
                Cooperation in Any
      Investigations and Litigation.  For
      a period of no more than one year after termination of employment,
      Executive agrees that Executive will reasonably cooperate with the
      Company, and its counsel, in connection with any investigation, inquiry,
      administrative proceeding or litigation relating to any matter in which
      Executive was involved or of which Executive has knowledge as a result of
      Executive’s service with the Company by providing truthful
      information.  The Company agrees promptly to reimburse Executive
      for reasonable expenses reasonably incurred by Executive, together with
      hourly charges at the rate of $1,000 per hour, in connection with
      Executive’s cooperation pursuant to this Section 12(c).  Nothing
      herein shall require Executive to devote more than six (6) hours per week
      or four (4) days per month of time to such matters, to travel
      material distances in connection therewith or to take any action that
      would materially interfere with Executives duties for a subsequent
      recipient of his services.  Executive agrees that, in the
      event Executive is subpoenaed by any person or entity (including, but not
      limited to, any government agency) to give testimony (in a deposition,
      court proceeding or otherwise) which in any way relates to Executive’s
      employment by the Company, Executive will, to the extent not legally
      prohibited from doing so, give prompt notice of such request to the Chief
      Legal Officer of the Company so that the Company may contest the right of
      the requesting person or entity to such disclosure before making such
      disclosure.  Nothing in this provision shall require Executive
      to violate Executive’s obligation to comply with valid legal
      process.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Work
      Product.  Executive agrees that all programs, inventions,
      innovations, improvements, developments, methods, designs, analyses,
      reports and all similar or related information which relate to the
      business of the Group, actual or anticipated, or to any actual or
      anticipated research and development conducted in connection with the
      business of the Group, and all existing or future products or
      services, which are conceived, developed or made by Executive (alone or
      with others) during the term of this Agreement for the Group (“Work
      Product”) belong to the Company.  Executive will reasonably cooperate
      fully, without cost to Executive, in the establishment and
      maintenance of all rights of the Group in such Work Product.  The
      provisions of this Section 12(d) will survive termination of this
      Agreement indefinitely to the extent necessary to require actions to be
      taken by Executive after the termination of this Agreement with respect to
      Work Product created during the term of this
  Agreement.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Blue
      Pencil.  It is the
      intent and desire of Executive and the Company that the provisions of
      this Section 12 be enforced to the fullest extent permissible under
      the laws and public policies as applied in each jurisdiction in which
      enforcement is sought. If any particular provision of this Section 12
      shall be determined to be invalid or unenforceable, such covenant shall
      be amended, without any action on the part of either party hereto, to
      delete therefrom the portion so determined to
  be

              

      

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

       

      invalid
or unenforceable, such deletion to apply only with respect to the operation
of such covenant in the particular jurisdiction in which such adjudication
is made.

       

      
        	
                 
      

              	
                (f)

              	
                Survive.  Executive’s
      obligations under this Section 12 shall survive, in accordance with
      its terms, the termination of the Employment
  Term.

              

      

       

      
        	
                13.

              	
                Remedies for Breach of
      Obligations under Sections 11 or 12 hereof.  Executive
      acknowledges that the Company will suffer irreparable injury, not readily
      susceptible of valuation in monetary damages, if Executive breaches
      Executive’s obligations under Sections 11 or 12 hereof. Accordingly,
      Executive agrees that the Company will be entitled, in addition to any
      other available remedies, to obtain injunctive relief against any breach
      or prospective breach by Executive of Executive’s obligations under
      Sections  11 or 12
hereof.

              

      

       

      
        	
                14.

              	
                Representations and
      Warranties by Executive.  Executive represents and
      warrants to the Company that the execution and delivery by Executive of
      this Agreement do not, and the performance by Executive of Executive’s
      obligations hereunder will not, with or without the giving of notice or
      the passage of time, or both: (a) violate any judgment, writ, injunction,
      or order of any court, arbitrator, or governmental agency applicable to
      Executive; or (b) conflict with, result in the breach of any provisions of
      or the termination of, or constitute a default under, any agreement to
      which Executive is a party or by which Executive is or may be
      bound.

              

      

       

      
        	
                15.

              	
                Miscellaneous.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Successors and
      Assigns.

              

      

       

      
        	
                 
      

              	
                (i)

              	
                This
      Agreement shall be binding upon and shall inure to the benefit of the
      Company, its successors and permitted assigns and the Company shall
      require any successor or assign to expressly assume and agree to
      perform this Agreement in the same manner and to the same extent that
      the Company would be required to perform if no such succession or
      assignment had taken place. The Company may not assign or delegate
      any rights or obligations hereunder except to a successor (whether
      direct or indirect, by purchase, merger, consolidation or otherwise)
      to all or substantially all of the business and/or assets of
      the Company. The term “the Company” as used herein shall include a
      corporation or other entity acquiring all or substantially all the
      assets and business of the Company (including this Agreement) whether
      by operation of law or otherwise.

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                Neither
      this Agreement nor any right or interest hereunder shall be
      assignable or transferable by Executive, Executive’s beneficiaries or
      legal representatives, except by will or by the laws of descent and
      distribution. This Agreement shall inure to the benefit of and be
      enforceable by Executive’s legal personal
      representatives.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Notice.  For
      the purposes of this Agreement, notices and all other communications
      provided for in this Agreement (including the Notice of Termination)
      shall be in

              

      

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

       

      writing
and shall be deemed to have been duly given when personally delivered or
sent by Certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to the
other, provided that all notices to the Company shall be directed to
the attention of the Chief Legal Officer of the Company with a copy to the
Chairman of the Compensation Committee of the Board and a copy to Regina Olshan,
Esq., Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, NY
10036.  All notices to Executive shall be delivered to him at the address
on record with the Company with a copy to Andrew L. Oringer, Esq., John M.
Reiss, Esq. and Michael S. Shenberg, Esq., White & Case LLP, 1155
Avenue of the Americas, New York, NY 10036.  All notices and
communications shall be deemed to have been received on the date of
delivery thereof or on the third business day after the mailing thereof,
except that notice of change of address shall be effective only
upon receipt.

       

      
        	
                 
      

              	
                (c)

              	
                Indemnification, D&O
      Coverage.  The Company shall indemnify Executive, to the
      fullest extent permitted by applicable law, against all costs, charges and
      expenses incurred or sustained by Executive, including the cost and
      expenses of legal counsel, in connection with any action, suit or
      proceeding to which Executive may be made a party by reason of Executive
      being or having been an officer, director, or employee of the Company or
      any of its subsidiaries or affiliates (“Proceeding”). Such
      indemnification shall continue as to Executive even if he has ceased to be
      a director, officer, member, employee, agent, manager, trustee, consultant
      or representative of the Company and shall inure to the benefit of his
      heirs, executors and administrators.  Executive shall be
      entitled to prompt advancement of any and all costs and expenses
      (including, without limitation, attorneys’ and other professional fees and
      charges) reasonably incurred by him in connection with any such
      Proceeding, any such advancement to be made within 15 days after Executive
      gives written notice, supported by reasonable documentation, requesting
      such advancement.  Such notice shall include an undertaking by
      Executive to repay the amounts advanced to the extent that he is
      ultimately determined not to be entitled to indemnification against such
      costs and expenses.  Nothing in this Agreement or elsewhere
      shall operate to limit or extinguish any right to indemnification,
      advancement of expenses, or contribution that Executive would otherwise
      have (including, without limitation, by agreement or under applicable
      law). Executive shall be covered during the Employment Term and thereafter
      for as long as any executive is covered (but in no event for less than six
      (6) years) by officer and director liability insurance, in amounts and on
      terms no less favorable than those in effect on the Effective Date, which
      insurance shall be paid by the
Company.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Withholding.  The
      Company shall be entitled to withhold the amount, if any, of all
      taxes of any applicable jurisdiction required to be withheld by
      an employer with respect to any amount paid to Executive hereunder.
      The Company, in its sole and absolute discretion, shall make all
      determinations as to whether it is obligated to withhold any taxes
      hereunder and the amount
hereof.

              

      

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (e)

              	
                Release of
      Claims.  The termination benefits described in Section
      8(c) of this Agreement shall be conditioned on Executive delivering to the
      Company, a signed release of claims in the form of Exhibit B hereto
      within sixty (60) days following Executive’s termination date, and
      not revoking Executive’s consent to such release of claims within seven
      (7) days of such execution; provided, however, that Executive shall not be
      required to release any rights Executive may have to be indemnified
      by the Company under Section 15(c) of this
  Agreement.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                Modification.  No
      provision of this Agreement may be modified, waived or discharged
      unless such waiver, modification or discharge is agreed to in writing
      and signed by Executive and the Company. No waiver by either
      party hereto at any time of any breach by the other party hereto of,
      or compliance with, any condition or provision of this Agreement to
      be performed by such other party shall be deemed a waiver of similar
      or dissimilar provisions or conditions at the same or at any prior or
      subsequent time. No agreement or representations, oral or otherwise,
      express or implied, with respect to the subject matter hereof have
      been made by either party which are not expressly set forth in
      this Agreement.

              

      

       

      
        	
                 
      

              	
                (g)

              	
                Attorneys’ Fees and Professional
      Fees.  The Company shall pay all reasonable legal and
      consulting fees and related expenses, up to a maximum amount of $35,000,
      incurred by Executive in connection with the negotiation of this
      Agreement. Executive acknowledges that he has had the opportunity to
      consult with legal counsel of his choice in connection with the drafting,
      negotiation and execution of this Agreement and related employment
      arrangements.  The Company shall pay, at least monthly, all
      costs and expenses, including without limitation attorneys’ fees and
      disbursements, of the Company and Executive in connection with any legal
      proceeding or other action, whether or not instituted by the Company or
      the Executive, relating to the enforcement of any of the provisions of
      this Agreement, or the obtaining of money damages for the breach thereof;
      provided that, if the Company prevails (as affirmatively determined by the
      judge or other decisionmaker presiding over the proceeding) on each and
      every material issue, then the Executive shall pay his own costs and
      expenses and promptly (and in no event more than 60 days after demand
      therefor by the Company) return to the Company any amounts previously paid
      by the Company under this sentence.

              

      

       

      
        	
                 
      

              	
                (h)

              	
                Governing
      Law.  This Agreement shall be governed by and construed
      and enforced in accordance with the laws of the State of
      Delaware applicable to contracts executed in and to be performed
      entirely within such State, without giving effect to the conflict of
      law principles thereof.

              

      

       

      
        	
                 
      

              	
                (i)

              	
                No
      Conflicts.  Executive represents and warrants to the
      Company that Executive is not a party to or otherwise bound by
      any agreement or arrangement (including, without limitation, any
      license, covenant, or commitment of any nature), or subject to any
      judgment, decree, or order of any court or administrative
      agency, that would conflict with or will be in conflict with or in
      any way preclude, limit or

              

      

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

       

      inhibit
Executive’s ability to execute this Agreement or to carry out Executive’s
duties and responsibilities hereunder.

       

      
        	
                 
      

              	
                (j)

              	
                Severability.  The
      provisions of this Agreement shall be deemed severable and the
      invalidity or unenforceability of any provision shall not affect the
      validity or enforceability of the other provisions
  hereof.

              

      

       

      
        	
                 
      

              	
                (k)

              	
                Certain Tax
      Assumptions.  For purposes of determining the amount of
      the Excess Tax Gross-Up Payment, the 280G Gross-Up Payment and the Section
      409A Gross-Up Payment, Executive shall be deemed to pay U.S. federal
      income taxes at the highest marginal rate of U.S. federal income taxation
      in the calendar year in which any of the foregoing gross-up payments are
      to be made and state and local income taxes at the highest marginal
      rate of taxation in the state and locality of Executive’s residence for
      the calendar year in which any of the foregoing gross-up payments are to
      be made, net of the maximum reduction in U.S. federal income taxes which
      could be obtained from deduction of such state and local taxes if paid in
      such year.

              

      

       

      
        	
                 
      

              	
                (l)

              	
                Entire
      Agreement.  This Agreement constitutes the entire
      agreement between the parties hereto and supersedes all prior
      agreements, if any, understandings and arrangements, oral or written,
      between the parties hereto with respect to the subject matter
      hereof.

              

      

       

      
        	
                 
      

              	
                (m)

              	
                Counterparts.  This
      Agreement may be executed in one or more counterparts, each of which will
      be deemed to be an original copy of this Agreement and all of which, when
      taken together, will be deemed to constitute one and the same
      agreement.

              

      

       

      

       

      [SIGNATURE
PAGE FOLLOWS]

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

       

      IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and Executive has executed this Agreement as of the day
and year first above written.

      

      

      
        	 
      	
                CALPINE
      CORPORATION

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/  William J.
      Patterson

              
	 
      	 
      	
                Title:    

              
	 
      	 
      	
                    William
      J. Patterson

              
	 
      	 
      	 
      
	 
      	
                EXECUTIVE

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/  W. Thaddeus
      Miller

              
	 
      	 
      	
                Name:  W.
      Thaddeus Miller

              

      

      

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

      EXHIBIT
A

       

      

       

       

      CALPINE
CORPORATION

       

      EXECUTIVE
SIGN ON

       

      NON-QUALIFIED
STOCK OPTION AGREEMENT

       

      

       

      OPTION
granted on August 11, 2008 (the “Grant Date”), by
Calpine Corporation, a Delaware corporation (the “Company”), to Thaddeus Miller
(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 11, 2008 (the “Employment
      Agreement”), and (except as otherwise provided herein) the Plan (as
      defined below), 1,678,000 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

              	
                345,000

              	
                $16.60

              
	 
      	 
      	 
      
	
                Tranche
      2

              	
                394,000

              	
                $19.19

              
	 
      	 
      	 
      
	
                Tranche
      3

              	
                443,000

              	
                $21.59

              
	 
      	 
      	 
      
	
                Tranche
      4

              	
                496,000

              	
                $23.99

              

      

       

      Options
in Tranches 1, 2 and 3, and 68,000 of those Options in Tranche 4 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 shall 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

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      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

              

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      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.

              

      

       

       

      [SIGNATURE
PAGE FOLLOWS]

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      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/   W. Thaddeus
      Miller
	 
      	 
      W. Thaddeus Miller
	 
      	
                Grantee

              

      

      

      

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      EXHIBIT
B

      

       

      FORM
OF RELEASE AGREEMENT

       

       

      THIS
RELEASE AGREEMENT (the “Release”) is made as
of this ____ day of _________, ____, by and between ______________ (“Executive”) and
Calpine Corporation (the “Company”).

       

       

      
        	
                1.

              	
                FOR
      AND IN CONSIDERATION of the payments and benefits provided in the
      Employment Agreement between Executive and the Company dated as of [_____________, 2008],
      (the “Employment Agreement”), Executive, for himself and his successors
      and assigns, executors and administrators, now and forever hereby releases
      and discharges the Company, together with all of its past and present
      parents, subsidiaries, and affiliates, together with each of their
      officers, directors, stockholders, partners, employees, agents,
      representatives and attorneys, and each of their subsidiaries, affiliates,
      estates, predecessors, successors, and assigns (hereinafter collectively
      referred to as the “Releasees”)
      from any and all rights, claims, charges, actions, causes of action,
      complaints, sums of money, suits, debts, covenants, contracts, agreements,
      promises, obligations, damages, demands or liabilities of every kind
      whatsoever, in law or in equity, whether known or unknown, suspected or
      unsuspected (collectively, “Claims”) which Executive or Executive’s
      executors, administrators, successors or assigns ever had, now has or may
      hereafter claim to have by reason of any matter, cause or thing
      whatsoever:  (i) arising from the beginning of time up to the
      date of the Release including, but not limited to (a) any such Claims
      relating in any way to Executive’s employment relationship with the
      Company or any of the Releasees, and (b) any such Claims arising under any
      federal, local or state statute or regulation, including, without
      limitation, the Age Discrimination in Employment Act of 1967, as amended
      by the Older Workers Benefit Protection Act, Title VII of the Civil Rights
      Act of 1964, the Americans with Disabilities Act of 1990, the Employee
      Retirement Income Security Act of 1974, and/or the applicable state law
      against discrimination, each as amended, (ii) the termination of
      Executive’s employment relationship with the Company or any of the
      Releasees; (iii) arising under or relating to the Employment Agreement;
      (iv) relating to wrongful employment termination; or (v) arising under or
      relating to any policy, agreement, understanding or promise, written or
      oral, formal or informal, between the Company and any of the Releasees and
      Executive; provided, however, that
      notwithstanding the foregoing, nothing contained in the Release shall in
      any way diminish or impair:  (A) any rights Executive may
      have, from and after the date the Release is executed, under Section 8 of
      the Employment Agreement; (B) any rights to indemnification or
      advancement that may exist from time to time under the Company’s
      certificate of incorporation or bylaws, or state law or under any policy
      or agreement (and, without limiting the foregoing, any and all rights
      under Section 12(b) of the Employment Agreement); (C) any rights
      Executive may have to benefits under employee benefit plans or incentive
      compensation plans of the Company in accordance with their terms; (D)
      Executive’s ability to bring appropriate proceedings to enforce the
      Release; (E) any rights under the provisions of the Employment Agreement
      or the Stock

              

      

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      Option
Agreement referred to therein which in accordance with their terms continue in
effect or otherwise apply after the date hereof (including without limitation
rights under the gross-up provisions of the Employment Agreement and rights
under Section 12(f) of the Employment Agreement); or (F) any Claims Executive
may have that cannot be waived under applicable law (collectively, the “Excluded Claims”).
 Executive further
acknowledges and agrees that, except with respect to Excluded Claims, the
Company and the Releasees have fully satisfied any and all obligations
whatsoever owed to Executive arising out of Executive’s employment with the
Company or any of the Releasees, and that no further payments or benefits are
owed to Executive by the Company or any of the Releasees.

       

      
        	
                2.

              	
                Executive
      understands and agrees that, except for the Excluded Claims, Executive has
      knowingly relinquished, waived and forever released any and all rights to
      any personal recovery in any action or proceeding that may be commenced on
      Executive’s behalf arising out of the aforesaid employment relationship or
      the termination thereof, including, without limitation, claims for
      backpay, front pay, liquidated damages, compensatory damages, general
      damages, special damages, punitive damages, exemplary damages, costs,
      expenses and attorneys’ fees.

              

      

       

      
        	
                3.

              	
                Executive
      acknowledges and agrees that Executive has been advised to consult with an
      attorney of Executive’s choosing prior to signing the
      Release.  Executive understands and agrees that Executive has
      the right and has been given the opportunity to review the Release with an
      attorney of Executive’s choice should Executive so
      desire.  Executive also agrees that Executive has entered into
      the Release freely and voluntarily. Executive further acknowledges and
      agrees that Executive has had at least [twenty-one (21)] [forty-five (45)]
      calendar days to consider the Release, although Executive may sign it
      sooner if Executive wishes.  In addition, once Executive has
      signed the Release, Executive shall have seven (7) additional days from
      the date of execution to revoke Executive’s consent and may do so by
      writing to:  ___________.  The Release shall not be
      effective, and no payments shall be due hereunder, until the eighth (8th)
      day after Executive shall have executed the Release and returned it to the
      Company, assuming that Executive had not revoked Executive’s consent to
      the Release prior to such date.

              

      

       

      
        	
                4.

              	
                It
      is understood and agreed by Executive that the payment made to Executive
      is not to be construed as an admission of any liability whatsoever on the
      part of the Company or any of the other Releasees, by whom liability is
      expressly denied.

              

      

       

      
        	
                5.

              	
                The
      Release is executed by Executive voluntarily and is not based upon any
      representations or statements of any kind made by the Company or any of
      the other Releasees as to the merits, legal liabilities or value of
      Executive’s claims.  Executive further acknowledges that
      Executive has had a full and reasonable opportunity to consider the
      Release and that Executive has not been pressured or in any way coerced
      into executing the Release.

              

      

       

      
        	
                6.

              	
                The
      exclusive venue for any disputes arising hereunder shall be the state or
      federal courts located in the State of Delaware, and each of the parties
      hereto irrevocably waives, to the fullest extent permitted by law, any
      objection which it may now or hereafter have to
  the

              

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      laying of
the venue of any such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.  Each of the parties hereto also agrees that any final and
unappealable judgment against a party hereto in connection with any action, suit
or other proceeding may be enforced in any court of competent jurisdiction,
either within or outside of the United States.  A certified or
exemplified copy of such award or judgment shall be conclusive evidence of the
fact and amount of such award or judgment.

       

      
        	
                7.

              	
                The
      Release and the rights and obligations of the parties hereto shall be
      governed and construed in accordance with the laws of the State of
      Delaware.  If any provision hereof is unenforceable or is held
      to be unenforceable, such provision shall be fully severable, and this
      document and its terms shall be construed and enforced as if such
      unenforceable provision had never comprised a part hereof, the remaining
      provisions hereof shall remain in full force and effect, and the court
      construing the provisions shall add as a part hereof a provision as
      similar in terms and effect to such unenforceable provision as may be
      enforceable, in lieu of the unenforceable
  provision.

              

      

       

      
        	
                8.

              	
                The
      Release shall inure to the benefit of and be binding upon the Company and
      its successors and assigns.

              

      

       

      

       

      IN
WITNESS WHEREOF, Executive and the Company have executed the Release as of the
date and year first written above.

      

      
        	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                CALPINE
      CORPORATION

              	 
      	
                EXECUTIVE

              

      

       

       

      3ex10-2_9.htm

     

    EXHIBIT 10.2.9

    

    

    

    CALPINE
CORPORATION

    

    2008
Calpine Incentive Plan

    

    

    I.             
Effective
Date

    

    The 2008
Calpine Incentive Plan (the “CIP” or the “Plan”) is effective as of
January 1, 2008.

    

    II.           
Plan
Purpose

    

    The CIP
is a key element of Calpine Corporation's ("Company") total compensation program
and is designed to attract, motivate, retain and reward eligible employees. The
plan rewards eligible employees by allowing them to receive bonuses based upon
both how well the Company performs against certain financial objectives as well
as how the individual personally performs.  In order for any bonuses
to be earned and paid, the Company must meet minimally acceptable performance
targets.  If those targets are not met, no bonuses will be
paid.  If those targets are met, then bonuses will be paid based on a
combination of Company performance and individual performance.

    

    III.           Plan
Eligibility

    

    Participants
eligible to participate in the Plan are defined in Exhibit
A.

    

    IV.           Bonus Pool
Determination

    

    The
aggregate CIP bonus pool amount approved by the Compensation Committee of the
Board of Directors (the “Committee”), is determined in the following
steps:

    

    
      	
               
      

            	
              1.

            	
              Prior
      to the start of, or early in each performance period, the Company shall
      confirm the business/performance goals for the Company ("Corporate Goals")
      and/or for various departments ("Department Goals") for that
      period.  The Corporate Goals and Department Goals for the
      current performance period are attached hereto as Exhibit
    B.

            

    

    

    
      	
               
      

            	
              2.

            	
              During
      the fiscal quarter following the performance period (which is the entire
      calendar year), the Plan Administrator shall review how the actual results
      for the period compared to the Corporate Goals and Department Goals for
      that period and determine the level of achievement of the various goals,
      expressed as a percentage.  As required, the Committee will
      review and approve, modify, adjust or cancel the achievement in its sole
      discretion.

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              3.

            	
              The
      sum each participant's "Annual Cash Bonus Target" which is each
      participant’s Target Percentage (described in Section V (1) below)
      multiplied by his or her base salary, for the calendar year to which
      Corporate Goals and/or Department Goals (as defined in Section IV(1)
      above) and Individual Goals (as defined in Section V(4)) apply ("Base
      Salary"), establishes the target aggregate CIP bonus pool ("Aggregate
      Target CIP Bonus Pool").

            

    

    

    
      	
               
      

            	
              4.

            	
              The
      percentage of goal achievement shall be applied to the Aggregate Target
      CIP Bonus Pool, and may result in a final actual aggregate CIP bonus pool
      ("Final Aggregate CIP Bonus Pool") greater than, or less than, the sum
      each participant's Annual Cash Bonus Target.  As a general rule,
      the level of the Final Aggregate CIP Bonus Pool shall be consistent with
      the Company’s level of Corporate Goal and/or Department Goals
      achievement.

            

    

    

    Based
upon the achievement of the Corporate Goals and/or Department Goals, the
Committee may adjust the Aggregate Target CIP Bonus Pool up or down based on
unplanned circumstances or events.

    

    V.           
Participant Bonus
Determination

    

    Although
participant bonus determinations are completely at the discretion of the Plan
Administrator and subject to the achievement of Corporate Goals and/or
Department Goals, many factors are taken into consideration in determining an
individual participant’s earned bonus under the Plan.

    

    The bonus
amount allocated to a participant ("Earned Bonus") is generally determined by
the following factors:

    

    
      	
               
      

            	
              1.

            	
              Position – Each
      eligible position is associated with a job code that is assigned a target
      percentage based on the level of responsibility and market practices for
      the position ("Target Percentage").  The Target Percentage,
      which is based on market data and internal/Calpine discretion (provided
      that a 16B officer's is based on market data and the discretion of the
      Board of Directors of Calpine), will be communicated to each participant
      upon hire, placement in, or promotion to any CIP eligible
      position.

            

    

    

    
      	
               
      

            	
              2.

            	
              Base
      Salary – The amount of a participant's Base Salary earned
      in a CIP eligible position during a performance period is directly related
      to a participant's Earned Bonus.  The "Base Salary" for a
      participant shall be prorated for any partial service on account of
      disability, leaves, promotions or any other position
    changes.

            

    

    

    
      	
               
      

            	
              3.

            	
              Company
      Performance – The level of Corporate Goal achievement and
      the resulting funding level as determined by the Committee and described
      in Section IV is one factor used in determining a participant’s
      Earned Bonus.

            

    

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              4.

            	
              Department
      Performance – The level of a Department Goal achievement
      and the resulting funding level as determined by the Committee as
      described in Section IV is another factor in determining a participant's
      Earned Bonus.

            

    

    

    
      	
               
      

            	
              5.

            	
              Participant Job
      Performance – An additional component in calculating a
      participant's Earned Bonus is the attainment of specific individual goals
      and objectives, which are established by the participant along with the
      participant's respective manager at the beginning of the measurement
      period ("Individual Goals").

            

    

    

    
      	
               
      

            	
              6.

            	
              Corporate
      Initiatives – Each Plan year the Company will define
      several key corporate goals that participants can influence through their
      performance.  The 2008 corporate initiatives are listed on
      Exhibit B.

            

    

    

    
      	
               
      

            	
              7.

            	
              Mix of Corporate Goals,
      Department Goals and Individual Goals – Earned Bonuses
      are determined based on a combination, or mix, of the achievement of
      Corporate Goals, Department Goals, Corporate Initiatives and Individual
      Goals that is determined by Job Level, and is included in Exhibits A and B
      attached hereto.

            

    

    

    
      	
               
      

            	
              8.

            	
              Other Factors
      Considered:

            

    

     

    
      
        	
                 
      

              	
                Ÿ

              	
                Foremost
      are Calpine’s overriding principles of ethical conduct and
      integrity.  It is expected that each participant will conduct
      Calpine's business in an open and honest fashion and actions, and that
      decisions will represent the Company with honor and distinction in the
      face of public scrutiny.

              

      

      

      
        	
                 
      

              	
                Ÿ

              	
                Furthermore,
      a participant’s compliance with all applicable laws and Company policies,
      procedures and standards (including, but not limited to, the Code of
      Conduct, the Risk Management Procedures Manual, the Antitrust Policy, the
      Safety and Health Policy, and the Equal Employment Opportunity Policy) is
      an essential consideration in determining bonus eligibility and
      amount.  In addition, a participant’s Earned Bonus under the
      Plan may be adjusted for his or her individual performance and
      contribution, as determined by the participant’s
  manager.

              

      

       

    

    VI.           Payment of Earned
Bonus

    

    Each
Earned Bonus under the Plan will be calculated based on attainment of goals and
paid as follows:

     

    
      
        	
                 
      

              	
                Ÿ

              	
                Provided
      the Corporate Goals and/or Department Goals are achieved as set forth in
      Exhibit A, the Earned Bonus will be paid within 75 days after the end of
      the Plan Year –
December 31.

              

      

    

     

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

     

    
      
        	
                 
      

              	
                Ÿ

              	
                Participants
      in the Transition Incentive Award program of the CIP:  The CIP
      also provides a limited number of awards to participants under the
      Transition Incentive Provision (“Exhibit C”).  These employees
      are engaged in activities such as asset sales, plant closings, etc. which
      may, by the nature of the activity, result in the elimination of their
      jobs. Employees in this classification will be advised of their respective
      participation based on criteria determined by the Company from time to
      time.

              

      

      

      
        	
                 
      

              	
                Ÿ

              	
                In
      all cases, bonus payments will be subject to all applicable taxes and any
      applicable and appropriate deductions for garnishments, 401(k) Retirement
      Savings Plan, and other deductions or
  withholdings.

              

      

       

    

    VII.         Transfers and New
Hires

    

    In the
event that a participant transfers from one position to another during the
course of the performance period, or is a new hire, his/her Plan bonus for the
year will be calculated on a pro-rated basis to reflect the actual time spent in
each position and the bonus target for each position during the performance
period.  An employee hired between November 1 and December 31 is not
eligible to participate in the CIP for the calendar year in which he or she was
hired.

    

    VIII.        Retirements, Disability,
Death and Terminations

    

    Except as
provided below, participants are eligible to receive a bonus under this Plan
provided they remain actively employed on the day bonus payments are
paid.  Participants in the Transition Incentive Award program of the
CIP are exempt from this provision.

    

    Notwithstanding
the foregoing, in the event of a participant’s retirement (provided such
participant qualified under the Company’s retirement policy), long-term
disability or death during a Plan year, his/her Earned Bonus will be pro-rated
to reflect the actual time in active service during the Plan year. If a Plan
participant dies, retires or becomes subject to long-term disability after the
conclusion of a performance period, but prior to the bonus payout for such
period, he or she will still be eligible to receive the entire Earned Bonus
under the Plan for such period.

    

    Except as
otherwise provided hereunder, any participant whose employment is terminated by
the Company for any reason (including such termination by the Company after a
participant becomes eligible for retirement) or who voluntarily resigns (except
for retirement) prior to the Earned Bonus payout is not eligible to receive a
bonus payment under such program.

    

    IX.          Administration

    

    The Plan
will be administered by the Plan Administrator who shall be Calpine’s Chief
Executive, or the Company officer designated by the Chief Executive Officer
from

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    time to
time (i.e., SVP Human Resources, etc.).  The Plan Administrator shall
have broad authority to interpret the terms and conditions of the Plan, subject
to the following decisions reserved for the Committee:

    

    1.      As
required, the approval of the Company’s financial and non-financial goals
discussed in Section IV above; and

    

    2.      Interpretation
of the Plan on any matters in which the Chief Executive Officer or the Plan
Administrator is not a disinterested party.

    

    Furthermore,
the Plan Administrator must approve any modifications, amendments, or
adjustments to the Plan or any of its key provisions and all bonus
payments.  In addition, all bonus payments under this Plan are subject
to the review and the approval of the Chief Executive Officer.  Any
decisions of the Plan Administrator in the interpretation of the Plan may be
appealed in writing to the Committee.  However, any decision of the
majority of the Committee is final and binding on all parties.

    

    X.           Disputes

    

    If a Plan
participant disputes a bonus payment or the absence of a payment under such
program, he or she must submit a claim in writing describing the claim to the
Plan Administrator.  The Plan Administrator will respond to the claim
within a reasonable time.  Any decisions of the Plan Administrator may
be appealed in writing to the Committee.  However, any decision of a
majority of the Committee is final and binding on all parties.

    

    XI.          Discretion in
Amendment/Termination

    

    Distribution
and payout of all Earned Bonus amounts under the CIP are at the sole discretion
of the Plan Administrator. The Plan Administrator may at any time and for any
reason, amend, alter, suspend or terminate this Plan, subject to the approval of
the Committee.  Any amendment, supplement, or exception to this Plan
must be in writing and will be communicated to all eligible
participants.  Likewise, any superseding management incentive plan
must be in writing and expressly state that it supersedes this
Plan.  The Committee may in its discretion suspend any and all
payments under the Plan.

    

    XII.         No Employment
Rights

    

    Notwithstanding
anything to the contrary herein, each Plan participant’s employment with the
Company is and shall continue to be at-will.  A participant’s
employment with the Company may be terminated at any time by the participant or
the Company, with or without cause and with or without notice, as permitted by
law.

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    XIII.        Governing
Law

    

    The
validity, interpretation, construction and performance of this Plan shall be
governed in accordance with Texas law, except for its conflict of laws
provisions, unless a superseding federal law is applicable or, in the case of
Canada, unless a superseding law under Canadian jurisdiction is
applicable.

    

    XIV.        No
Assignment

    

    Without
the written consent of the Plan Administrator, no participant may assign any
right or obligation under this Plan to any other person or
entity.  Notwithstanding the foregoing, the terms of this Plan and all
rights of the participant hereunder shall inure to the benefit of, and be
enforceable by, the participant’s personal and legal representatives, executors,
administrators, successors, heirs, distributes, devisees or
legatees.

    

    XV.          Integration

    

    This
document and each exhibit hereto represent the entire agreement and
understanding between the Company and the participants in the Plan as to the
subject matter herein, and therefore supersede all prior or contemporaneous
agreements, whether written or oral.

    

    XVI.        Severability

    

    The
invalidity of unenforceability of any provision or provisions of this Plan shall
not affect the validity or enforceability of any other provision hereof, which
shall remain in full force and effect.

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
A

    2006

    Calpine Incentive Plan –
Eligible Participants

    

    

    I.          Power Operations, Central
Operations and Corporate Staff as listed below

     

                
Participants in the Calpine Incentive Plan (“CIP”) will include employees at the
following levels:

    

    Ÿ      Executive
Vice President

    Ÿ      Senior
Vice President

    Ÿ      Vice
President and equivalent

    Ÿ      Director
and equivalent

    Ÿ      Managers
and equivalent

    Ÿ      Individual
Contributors as determined by the Plan Administrator

     

    Eligible
participants will be notified by the Plan Administrator and will receive a plan
document at the time they are nominated for participation.

    

    II.          Earned Bonus and Annual
Goals

    

    The
Earned Bonus will be determined upon attainment of the annual Corporate Goals
and/or Department Goals as described in Exhibit B. Payout will occur within 75
days after the end of the Plan year (12/31).

     

    Participants’
Earned Bonus will be determined by the achievement of Corporate Goals,
Department Goals, Corporate Initiatives and Individual
Goals.

    

    

    

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
B

    2006

    

    Pool Funding and CIP Bonus
Plan Goals/Metrics

    

    

    

    Pool
Funding

     

    
      
        	
                 
      

              	
                Ÿ

              	
                Each
      plan participant has an Annual Cash Bonus Target that equals the product
      of his/her Base Salary times the Target Percentage associated with his/her
      job level (see table in Exhibit A).  The Aggregate Target CIP
      Bonus Pool equals the sum of the participants’ Annual Cash Bonus
      Targets.

              

      

      

      
        	
                 
      

              	
                Ÿ

              	
                Based
      upon results, the Bonus Pool may be adjusted upward or downward based on
      unplanned extra ordinary
events.

              

      

    * * * * *

    

     

    
      
        	
                 
      

              	
                Ÿ

              	
                Corporate
      Goal:  The Company must meet a minimum threshold
      performance of at least 80 percent of budgeted EBITDAR in order for the
      CIP program to be funded in 2008.  For 2008, the budgeted
      EBITDAR target is $1.694 billion dollars.  Eighty percent of
      this target is $1.355 billion.  The Corporate Goal will account for 50
      percent of the Plan funding.  To receive any funding for this
      half of the goal, the Company must achieve a minimum of 90 percent of the
      budgeted EBITDAR, which equates to $1.524 billion.  As
      previously noted, this number could be adjusted for unplanned
      circumstances or events.

              

      

      

      
        	
                 
      

              	
                Ÿ

              	
                Departmental
      Goal:  This will account for 50 percent of the Plan
      funding.  A departmental expense budget was established for each
      CEO direct report during the 2008 budget process.  If a
      department exceeds its expense budget by more than 10 percent, the
      department will receive no funding for this portion of the CIP
      program.  If a department is over its expense budget but does
      not exceed the 10 percent above budget cap as previously described,
      funding of this portion of the CIP will be reduced one percent for each
      percent the department's actual expense performance is above its expense
      budget target.  If a department performs at or under budget, it
      will receive the full 50 percent funding for this portion of the
      Plan.

              

      

    

     

     

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    

    
      
        
          
            
              	
                      Department
      Goal

                    	
                      Corporate
      Goal

                    	
                      Result

                    
	 
      	
                       

                      Below
      80 percent

                      budgeted
      EBITDAR

                    	
                       

                      Neither
      goal funded

                    
	
                       

                      Meet
      or below expense

                      budget

                    	
                       

                      90
      percent or above

                      budgeted
      EBITDAR

                    	
                       

                       

                      Both
      goals funded proportionately

                    
	
                       

                      Meet
      or below expense

                      budget

                    	
                       

                      Below
      90 percent

                      budgeted
      EBITDAR

                    	
                       

                      Department
      goal funded

                      proportionately

                    
	
                       

                      Exceeded
      expense budget by

                      less
      than 10 percent

                    	
                       

                      90
      percent or above

                      budgeted
      EBITDAR

                    	
                       

                       

                      Both
      goals funded proportionately

                    
	
                       

                      Exceeded
      expense budget by

                      more
      than 10 percent

                    	
                       

                      90
      percent or above

                      budgeted
      EBITDAR

                    	
                       

                      Corporate
      goal funded

                      proportionately

                    

            

          

        

      

    

    

    

    With the
exception of awards paid under the Transition Incentive program (Exhibit C) that
may involve the elimination of a participant’s own position, participants must
be actively employed on the date of the payment of the Earned Bonus in order to
receive payment.

    

    

    * * * *
*

    

    Corporate
Initiatives for 2008

     

    
      
        	
                 
      

              	
                Ÿ

              	
                The Company will work to
      improve corporate fundamentals with emphasis on both corporate culture and
      corporate operations.  Using tools such as ACE and SPRC,
      the Company will continue the cultural transformation that is under
      way.  The Company will also focus on improved retention,
      recruitment and training.  The Company will also enhance its
      performance management reporting using such tools as dashboard snapshots
      of performance as well as key performance
  indices.

              

      

      

      
        	
                 
      

              	
                Ÿ

              	
                The Company will work to
      improve performance above the 2008 business plan target of $1,239 million
      in gross profit.  Calpine Commercial Operations will be
      focusing on trading optimization and Calpine Plant Operations will be
      focusing on improving efficiency and
  reliability.

              

      

      

      
        	
                 
      

              	
                Ÿ

              	
                The Company will work to
      improve performance above the 2008 business plan EBITDAR of $1,694 billion
      and $19 million in cash flow.  Key areas of focus will
      include managing reorganization costs, reducing controllable expenses and
      managing construction projects to achieve on-time and on-budget
      results.

              

      

    

     

     

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
C

    2006

    Transition Incentive
Plans

    

    

    

    In
connection with activities necessary to the successfully disposition of assets,
closing of plants and similar activities designed to support the restructuring
of Calpine, there may be a number of employees who, by the nature of their
activities, eliminate their respective jobs.  The Transition Incentive
Plans provide a program that rewards these participants for their work in
completing assignments and specific transactions that enhance Calpine’s
value.

    

    

    A.  Transaction/Transition
Bonus

    

    To be
paid to CIP eligible employees who are working on a specific assignment with a
targeted end date.  In the majority of cases, the completion of the
assignment will result in the affected employee’s lay-off.  Generally,
the Earned Bonus for an affected employee will be calculated based upon his/her
Annual Cash Bonus Target.  Any Earned Bonus may be paid during the
assignment or specific transaction, upon the assignment's or transaction's
completion, or both.  The Transaction/Transition bonus is paid in lieu
of a CIP bonus.  An Earned Bonus shall be paid with 75 days of the
assignment's or transaction's completion.

    

    Subject
to a written agreement, an employee who voluntarily resigns or is terminated by
the Company for any reason prior to successful completion of the specified
assignment will not be eligible for a Transaction/Transition bonus
payout.

    

    B.  Construction
Completion Bonus

    

    To be
paid to construction, engineering and commissioning employees at the level of
Director and below (including designated employees who are not eligible for the
CIP) assigned to specific capital or construction projects.  Each
specified project will have a construction completion bonus pool assigned to
it.  An Earned Bonus will be made on a discretionary basis by
management based upon an employee’s contribution to that project.  An
Earned Bonus may be paid during the project, upon completion of the construction
project or both.  Each Earned Bonus may be paid to employees who are
no longer employed with Calpine at the time the entire construction project is
completed as long as management deems their services to have been satisfactorily
completed and no longer needed at some time prior to the project’s completion
date.

    

    Subject
to a written agreement, an employee who voluntarily resigns or is terminated by
the Company for any reason prior to completion of the construction project will
not be eligible for a Construction Completion Earned Bonus payout.

     

     

    10

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