Document:

ex10-4.htm

    EXHIBIT
      10.4

     

    
       

      
         

        

        

        September
          20, 2007

        

        

        

        Mr.
          Gregory Doody

        Calpine
          Corporation

        717
          Texas Avenue

        Houston,
          TX 77002

        

        Re:        
          Calpine Emergence Compensation

        

        Dear
          Greg:

        
 

        As
          you may be aware, on May 15, 2006, Calpine Corporation (“Calpine”) and its
          debtor affiliates (collectively, the “Debtors”) received Bankruptcy Court
          approval of the Emergence Incentive Plan (the “EIP”), which provides variable
          cash awards to approximately twenty select senior employees.  Pursuant
          to the terms of the EIP, an incentive pool will be created according to
          certain
          metrics related to the valuation of Calpine both under the Debtors’ plan of
          reorganization and based on market value during a certain period after
          the
          effective date of the plan (the “EIP Pool”), which, once created, will be
          distributed to eligible employees solely at my discretion as chief executive
          officer of Calpine.

        

        This
          letter is intended to serve as notice to you that you have been chosen
          to be a
          participant in the EIP.  This letter is further intended to set forth
          my intentions regarding distributions under the EIP.  Accordingly, as
          of the date hereof, you are eligible to receive a minimum of 16% of the
          EIP Pool
          so long as the EIP Pool is funded.  The actual percentage of the EIP
          Pool that is ultimately paid out could be greater.

        

        This
          proposed distribution percentage is a final and binding decision and cannot
          be
          altered except in the event that you are terminated by Calpine for “Cause” or
          you voluntarily terminate without “Good Reason” (as each of such terms are
          defined on Exhibit A attached hereto), in which case you will forfeit any
          right to any distribution from the EIP Pool.  You will remain eligible
          to receive the proposed distribution set forth herein if you resign for
“Good
          Cause” or are terminated without “Cause,” as those terms are defined in your
          employment agreement, to the extent you have an employment
          agreement.  Any distribution out of the EIP Pool will be made during
          the 2008 calendar year.

        

        Additionally,
          we have recommended that you participate in two equity grants that we intend
          to
          make upon our emergence from bankruptcy – assuming of course that we emerge from
          bankruptcy as a publicly traded company.  The first grant will be a
          normal annual grant and the second grant will be a one-time emergence
          grant.  The specific terms and conditions of the grants – vesting
          criteria, treatment of unvested equity in various termination scenarios,
          etc.
          remain

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

                

          

        

        subject
          to the consent of our Official Committee of Unsecured Creditors (the
“OCUC”).  Therefore, your participation is not yet finalized and is
          contingent upon approval of our overall management equity plan by the
          OCUC.  With that said, the amounts below have been approved by the
          Board of Directors; however, they remain subject to the consent of the
          OCUC.

        

        Annual
          Grant
          Shares                62,400
          = 70% Stock Options/30% Restricted Stock

        

        Emergence
          Grant Shares          138,000
          = 25% Stock Options/75% Restricted Stock

        

        I
          believe the Emergence Incentive Plan allows Calpine to recognize and reward
          your
          efforts toward a successful exit from bankruptcy in amounts that are more
          than
          competitive.  I also believe the equity grants upon our emergence
          appropriately positions you to significantly share in the future success
          of the
          company.

        

        I
          look forward to our continued shared
          success.  Should you have any questions regarding the foregoing,
          please do not hesitate to contact me.

        

        Sincerely,

        

        /s/ Robert P. May

        

        Robert
          P. May

        Chief
          Executive Officerex10-5.htm

    EXHIBIT
      10.5

    Aircraft
      Travel Card Guidelines

    Effective
      date: May 20, 2007

    Page
      1 of 2

     

     

     

    Requests:

    
      	
               

            	
              ·

            	
              ALL
                requests for use of the Corporate Aircraft Travel Card will
                be
                made using the Calpine Corp. Aircraft Travel Card Request Form (“Travel
                Request Form”).

            

    

    
      	
               

            	
              o

            	
              A
                copy of the form is attached.

            

    

    
      	
               

            	
              o

            	
              The
                appropriate business purpose of the requested trip must be provided
                in
                sufficient detail to support the trip
                request.

            

    

    
      	
               

            	
              o

            	
              All
                passengers must be listed by name, title and
                company.

            

    

    
      	
               

            	
              o

            	
              The
                requestor will coordinate the specifics of the trip request with
                the
                Aircraft Travel Card
                Coordinator(s).

            

    

    
      	
               

            	
              §

            	
              Primary-
                Joy Toups, Calpine Corp. (713)
                570-4573

            

    

    
      	
               

            	
              §

            	
              Backup-
                Jean Russillo, Advanced Travel (888)
                650-4063

            

    

    
      	
               

            	
              ·

            	
              The
                employee requesting the flight must be a direct report of the Chief
                Executive Officer.

            

    

    
      	
               

            	
              ·

            	
              Final
                written approval must be obtained from the Chief Executive Officer
                or
                designee before the flight can be
                scheduled.

            

    

    
      	
               

            	
              ·

            	
              Non
                employees flying because of Calpine business are eligible
                passengers.

            

    

    
      	
               

            	
              o

            	
              Professionals
                and consultants whose travel is reimbursed by Calpine are eligible
                non
                employee passengers.

            

    

    
      	
               

            	
              o

            	
              Members
                of the Board of directors are eligible non employee
                passengers.

            

    

    
      	
               

            	
              ·

            	
              No
                passenger, whether an employee or not, is permitted to fly in a
                non-business related capacity, except
                for:

            

    

    
      	
               

            	
              o

            	
              Charitable
                causes, emergency family matters (death of a family member, illness,
                etc.), community service, disaster relief which will be considered
                on a
                case by case basis.

            

    

    
      	
               

            	
              ·

            	
              The
                EVP Shared Services will review all Travel Request Forms for appropriate
                traveler designation and coordinate with Tax and SEC Reporting as
                appropriate.

            

    

    

    Aircraft
      Utilization Guidelines:

    
      	
               

            	
              ·

            	
              For
                flights on aircraft with eight (8) or fewer passenger
                seats, five (5) passengers are required on any round-trip (belted
                lavatory
                seats are not counted).

            

    

    
      	
               

            	
              ·

            	
              For
                flights on aircraft with more than eight (8) passenger
                seats, six (6) passengers are required (belted lavatory seats are
                not
                counted).

            

    

    
      	
               

            	
              ·

            	
              Exceptions
                to the minimum passenger requirements justification must be included
                on
                the Travel Request Form and approved by the Chief Executive Officer
                before
                the travel booking process begins.

            

    

    
      	
               

            	
              ·

            	
              All
                Calpine policies, procedures and conduct of employees apply to anyone
                traveling via use of the Aircraft Travel
                Card.

            

    

    

    Aircraft:

    
      	
               

            	
              ·

            	
              The
                Calpine Aircraft Travel Card allows for the use of a wide range of
                aircraft which will be selected at the time of travel based on the
                nature
                and distance of each trip. The aircraft are grouped into three categories
                including a few examples listed as
                follows:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
          Aircraft
            Travel Card Guidelines

          Effective
            date: May 29, 2007

          Page 2 of 2        
      
    

      

    

     

    
      	
               

            	
              o

            	
              Light
                – Citation Ultra, Lear 35, Hawker
                400XP

            

    

    
      	
               

            	
              o

            	
              Mid
                – Hawker 800XP, Lear 55, Lear 60, Citation
                VII

            

    

    
      	
               

            	
              o

            	
              Heavy
                – Challenger 600, Gulfstream, Falcon
                900

            

    

     

         
      Aircraft Utilization Cost:

    
      	
               

            	
              ·

            	
              The
                aircraft are further divided into the Preferred and Select groupings
                with
                the Preferred being four to ten years old and the Select slightly
                older.

            

    

    
      	
               

            	
              o

            	
              All
                aircraft are well maintained with the Select aircraft between 20%
                - 25%
                less per hour.

            

    

    
      	
               

            	
              o

            	
              The
                hourly rates include basic catering. The Air Travel Coordinators
                will
                coordinate any required catering.

            

    

    
      	
               

            	
              o

            	
              Travelers
                are encouraged to use Select aircraft whenever
                possible.

            

    

    
      	
               

            	
              ·

            	
              All
                cost associated with the Aircraft Travel card for a particular trip
                will
                be charged to the requesting
                department.

            

    

    
      	
               

            	
              o

            	
              The
                Travel Request Form will include the estimated cost for each trip
                leg. The
                requestor will be required to obtain the equivalent round trip commercial
                airfare should the trip be booked
                commercially.

            

    

    
      	
               

            	
              ·

            	
              Our
                Aircraft Travel Card vendor will have a Traveler Profile for each
                direct
                report to assist in booking through the Aircraft Travel Card Coordinators
                other non air reservations such as car service or rental
                cars.

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