EMPLOYMENT AGREEMENT

1

Term of Employment.

2

Position and Responsibilities.

(a)

Executive shall devote all of his full business time and his best efforts, skill, and attention to the Company’s business and affairs and to promoting the Company’s best interests.

(b)

Notwithstanding the foregoing, nothing herein shall preclude Executive from (i) serving on the board of directors of one other corporation (subject to the approval of the Chief Executive Officer, such approval not to be unreasonably withheld), (ii) serving on the board of directors of one charitable organization (subject to the approval of the Chief Executive Officer, such approval not to be unreasonably withheld), (iii) engaging in charitable activities and community affairs, and (iv) managing his personal investments and affairs, provided that any such activities listed in (i), (ii) and (iii) above do not interfere in more than a de minimis manner with the proper performance of his duties and responsibilities hereunder and comply with the limitations set forth in paragraph 5.a.

3

Compensation.

(a)

Base Salary . Executive’s annual base salary shall be $500,000 (as may be increased from time to time, the "Base Salary"). The Chief Executive Officer and Board (or a committee thereof) will review the Base Salary at least annually and may increase it at any time for any reason, in their sole discretion; however, they shall have no obligation to do so.

(b)

Bonus . In addition to Executive’s Base Salary, Executive shall be eligible to receive an annual cash performance bonus (the "Bonus") for each fiscal year ending during the Term of Employment if, and to the extent that, Executive remains employed by the Company on the last day of such fiscal year and corporate performance objectives established by the Chief Executive Officer and the Board are achieved, as determined by the Chief Executive Officer and the Board (or a committee thereof), in their sole discretion. Payment of the Bonus shall be made at the same time that other senior-level executives receive their bonuses, and no later than March 15th of the calendar year after the calendar year in which the Bonus is earned. The target level for Executive’s Bonus shall be established by the Board (or a committee thereof) in their sole discretion, provided that the minimum target level for any year shall be 90% of the Base Salary (the "Target Annual Bonus").

(c)

Benefits . Executive shall be eligible to participate in all Company benefit plans and programs as are generally available for its senior executives, and Executive’s benefits shall be based on the terms of the applicable plan as established by the Company from time to time; provided, however, that the Executive shall not be eligible for benefits under the Calpine Corporation U.S. Severance Program. Nothing in this Agreement shall restrict the Company’s ability to change or terminate any or all of its employee benefit plans and programs from time to time; nor shall anything in this Agreement prevent any such change from affecting Executive.

(d)

Success Fee . When a plan of reorganization that is confirmed by the Bankruptcy Court becomes effective (the "Plan Effective Date") during Executive’s tenure as Company’s EVP – Power Operations, Executive shall be eligible to receive a one-time payment of a Success Fee at the sole discretion of the Chief Executive Officer of the Company as part of the Company’s Emergence Incentive Plan.

(e)

Guaranteed Minimum Success Fee . Executive shall be entitled to receive the guaranteed minimum success fee (the "Guaranteed Minimum Success Fee") described in this paragraph 3.e; provided, however, that this paragraph 3.e shall not apply after the Plan Effective Date. The Guaranteed Minimum Success Fee shall be deemed earned as of the date this Agreement is approved by the Bankruptcy Court.

(i)

Amount and Payment Schedule . Executive’s Guaranteed Minimum Success Fee shall be an annual amount equal to the two times his annual Base Salary as of the earlier of (a) the date his term of employment under this Agreement terminates or (b) the Plan Effective Date. The Guaranteed Minimum Success Fee shall be paid to Executive on the earliest of (y) the date Executive is terminated by the Company without Cause, and (z) the date Executive terminates his employment for Good Reason. The Guaranteed Minimum Success Fee shall be paid ratably on the same payment schedule that applied to Executive’s salary as of such date.

(ii)

Timing . To the extent necessary to comply with the restriction in Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended (the "Code") concerning payments to specified employees, the first Guaranteed Minimum Success Fee payment (if the Guaranteed Minimum Success Fee is paid ratably) to Executive shall be made on the first installment date (determined under paragraph 3.e.i, above) that is at least six months after Executive’s termination date. The first payment shall include any installments that would have been paid previously under paragraph 3.e.i were it not for this special timing rule, plus interest on the delayed installments at an annual rate (compounded monthly) equal to the federal short-term rate (as in effect under Section 1274(d) of the Code on Executive’s termination date).

4

Termination.

(a)

Termination of Employment .

(i)

Termination by the Company for Cause . The Board or Chief Executive Officer may terminate Executive’s employment for Cause at any time. "Cause" means any of the following: (1) Executive’s breach of any material term of this Agreement that is not corrected within 10 days after delivery of a termination notice to Executive with respect to such breach; (2) Executive’s commission of, or formal prosecutorial charge or indictment alleging commission of, a felony or any crime of similar status, any crime involving fraud or any crime involving moral turpitude (other than motor vehicle related) (it being agreed that in the

case of a crime involving moral turpitude, only to the extent such crime materially and adversely affects the business, standing or reputation of the Company or any other member of the Group); (3) Executive’s breach of fiduciary duty to the Company or any other member of the Group that has any material and adverse impact on the Company that is not corrected within 10 days after delivery of a termination notice to Executive with respect to such breach; (4) Executive’s misappropriation of funds or material property of the Company or any other member of the Group; (5) Executive’s refusal to follow the lawful directives of the Chief Executive Officer or Board without a materially valid business justification that is not corrected within 10 days after delivery of a termination notice to Executive with respect to such refusal; (6) Executive’s fraud related to the Company; (7) Executive’s material dishonesty, disloyalty, gross negligence or willful misconduct, where such dishonesty, disloyalty, gross negligence or willful misconduct is reasonably likely to result, in substantial and material damage to the Company or any other member of the Group; (8) Executive’s willful and material violation of any of the Company’s Code of Conduct or employment policies; or (9) Executive’s material violation of any federal, state or local laws that could result in a direct or indirect financial loss to the Company or any other member of the Group or damage the reputation of the Company or any other member of the Group.

For this definition, no act or omission by the Executive will be "willful" unless it is made by him in bad faith or without a reasonable belief that Executive’s act or omission was in the best interests of the Company or the Group. Any act, or failure to act, based upon the advice of counsel to the Company or any member of the Group shall be presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company and the Group.

(ii)

Termination by the Company without Cause . The Company may terminate Executive’s employment under this Agreement without Cause upon at least 20 days’ prior written notice to Executive.

(iii)

Death or Disability . Executive’s employment by the Company will immediately terminate upon Executive’s death and at the option of either Executive or the Company, exercisable upon written notice to the other party, may terminate upon the Executive’s Disability. For purposes of this Agreement, "Disability" will occur if (A) Executive becomes eligible for benefits under a long-term disability policy provided by the Company, if any, or (B) Executive has become unable, due to physical or mental illness or incapacity, to substantially perform the essential duties of Executive’s employment with reasonable accommodation for a period of 90 days or an aggregate of 180 days during any consecutive 12 month

period, as determined by an independent physician approved by the Company and Executive.

(iv)

Termination by Executive for Good Reason . Executive may terminate his employment for Good Reason at any time. "Good Reason" shall mean the occurrence, during the Term of Employment, of any of the following actions or failures to act, but in each case only if it is not consented to by Executive in writing: (A) a material adverse change in Executive’s duties, reporting responsibilities, titles or elected or appointed offices as in effect immediately prior to the effective date of such change; (B) any reduction or failure to pay when due the Executive’s Base Salary or Bonus earned; (C) the Company’s failure to renew this Agreement; (D) the Company’s breach of any material term of this Agreement that is not corrected within 10 days after delivery of a notice to the Company with respect to such breach or (E) the failure of the Company to obtain the assumption in writing of this Agreement by any successor to or an acquirer of all or substantially all of the assets of the Company on or prior to a merger, consolidation, sale or similar transaction. For purposes of this definition, none of the actions described i