<SUBMISSION>
<ACCESSION-NUMBER>0000950134-05-007434
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20050525
<FILING-DATE>20050414
<DATE-OF-FILING-DATE-CHANGE>20050414
<EFFECTIVENESS-DATE>20050414
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CALPINE CORP
<CIK>0000916457
<ASSIGNED-SIC>4911
<IRS-NUMBER>770212977
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>001-12079
<FILM-NUMBER>05750524
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>50 WEST SAN FERNANDO ST
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
<PHONE>4089955115
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>50 W SAN FERNANDO
<STREET2>SUITE 500
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>f04973dedef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="center" style="font-size: 10pt"><B>SCHEDULE 14A INFORMATION</B>



<P align="center" style="font-size: 10pt"><B>PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934</B>



<P align="left" style="font-size: 10pt">Filed by the Registrant <FONT face="Wingdings">&#254;</FONT>



<P align="left" style="font-size: 10pt">Filed by a Party other than the Registrant <FONT face="Wingdings">&#111;</FONT>



<P align="left" style="font-size: 10pt">Check the appropriate box:



<P align="left"><FONT size="1">

</FONT>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><FONT face="Wingdings">&#111;</FONT>&nbsp;</TD>
    <TD>Preliminary Proxy Statement</TD>
</TR>
</TABLE>
<DIV align="left"><FONT size="1">

</FONT></DIV>
<P align="left"><FONT size="1">

</FONT>

<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><FONT face="Wingdings">&#254;</FONT>&nbsp;</TD>
    <TD>Definitive Proxy Statement</TD>
</TR>
</TABLE>
<DIV align="left"><FONT size="1">

</FONT></DIV>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><FONT face="Wingdings">&#111;</FONT>&nbsp;</TD>
    <TD>Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2))</TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><FONT face="Wingdings">&#111;</FONT>&nbsp;</TD>
    <TD>Definitive Additional Materials</TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><FONT face="Wingdings">&#111;</FONT>&nbsp;</TD>
    <TD>Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><B>Calpine Corporation</B>



<P align="center" style="font-size: 10pt"><B>(Name of Registrant as Specified In Its Charter)</B>



<P align="center" style="font-size: 10pt"><B>(Name of Person(s) Filing Proxy Statement, if other than the Registrant)</B>



<P align="left" style="font-size: 10pt">Payment of Filing Fee (Check the appropriate box):



<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><FONT face="Wingdings">&#254;</FONT>&nbsp;</TD>
    <TD>Fee not required.</TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><FONT face="Wingdings">&#111;</FONT>&nbsp;</TD>
    <TD>Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(1)&nbsp;&nbsp;</TD>
    <TD>Title of each class of securities to which transaction applies:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(2)&nbsp;&nbsp;</TD>
    <TD>Aggregate number of securities to which transaction applies:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(3)&nbsp;&nbsp;</TD>
    <TD>Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule&nbsp;0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(4)&nbsp;&nbsp;</TD>
    <TD>Proposed maximum aggregate value of transaction:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(5)&nbsp;&nbsp;</TD>
    <TD>Total fee paid:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><FONT face="Wingdings">&#111;</FONT>&nbsp;</TD>
    <TD>Fee paid previously with preliminary materials.</TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="2" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>
<TR valign="top">
    <TD nowrap><FONT face="Wingdings">&#111;</FONT>&nbsp;</TD>
    <TD>Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.</TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(1)&nbsp;&nbsp;</TD>
    <TD>Amount Previously Paid:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(2)&nbsp;&nbsp;</TD>
    <TD>Form, Schedule or Registration Statement No.:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(3)&nbsp;&nbsp;</TD>
    <TD>Filing Party:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(4)&nbsp;&nbsp;</TD>
    <TD>Date Filed:</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
 <IMG src="f04973decalbw.gif" alt="(CALPINE LOGO)">
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALPINE CORPORATION</B>
</DIV>

<DIV align="center" style="font-size: 14pt;">
<B>50 West San&nbsp;Fernando Street</B>
</DIV>

<DIV align="center" style="font-size: 14pt;">
<B>San&nbsp;Jose, California 95113</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 30%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTICE OF 2005 ANNUAL MEETING OF STOCKHOLDERS</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>To be held on Wednesday, May&nbsp;25, 2005</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
NOTICE IS HEREBY GIVEN that the 2005 Annual Meeting of
Stockholders of Calpine Corporation, a Delaware corporation (the
&#147;Company&#148;), will be held at Calpine&#146;s Metcalf
Energy Center, located at One Blanchard Road, San&nbsp;Jose,
California 95013, at 10:00&nbsp;a.m., Pacific Daylight Time, on
Wednesday, May&nbsp;25, 2005, for the purpose of considering and
voting upon the following matters:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>1.&nbsp;</TD>
    <TD align="left">
    To elect three Class&nbsp;III Directors to the Board of
    Directors, each for a term of three years;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>2.&nbsp;</TD>
    <TD align="left">
    To act upon a proposal to amend the Company&#146;s Amended and
    Restated Certificate of Incorporation to declassify the election
    of the Board of Directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>3.&nbsp;</TD>
    <TD align="left">
    To ratify the appointment of PricewaterhouseCoopers LLP as
    independent accountants for the Company for the fiscal year
    ending December&nbsp;31, 2005;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>4.&nbsp;</TD>
    <TD align="left">
    To transact such other business as may properly come before the
    meeting and any adjournments or postponements thereof.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of these matters is more fully described in the Proxy
Statement accompanying this Notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Only stockholders of record at the close of business on
April&nbsp;1, 2005 are entitled to notice of and to vote at the
2005 Annual Meeting of Stockholders and at any and all
adjournments or postponements thereof. A list of stockholders
entitled to vote at the meeting will be available for inspection
at the office of the Secretary of the Company, which is located
at the corporate headquarters at Calpine Corporation, 50 West
San&nbsp;Fernando Street, San&nbsp;Jose, California 95113, for
at least 10&nbsp;days prior to the meeting, and will also be
available for inspection at the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The presence in person or representation by proxy of the holders
of at least a majority of all outstanding shares of Common Stock
of the Company is required to constitute a quorum. Accordingly,
it is important that your shares be represented at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE. Should you receive more than one proxy
because your shares are registered in different names and
addresses, each proxy should be signed and returned to assure
that all your shares will be voted. Your proxy may be revoked at
any time prior to the time it is voted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Please read the proxy material carefully. Your vote is important
and the Company appreciates your cooperation in considering and
acting on the matters presented.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    By Order of the Board of Directors</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT style="font-variant:SMALL-CAPS">Peter Cartwright
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>Chairman of the Board, President</I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>and Chief Executive Officer</I></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
April&nbsp;14, 2005
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
San&nbsp;Jose, California
</DIV>

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<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">INFORMATION CONCERNING SOLICITATION AND VOTING</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">MATTERS TO BE CONSIDERED AT THE 2005 ANNUAL MEETING OF STOCKHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">PROPOSAL ONE: ELECTION OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">PROPOSAL TWO: AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE STAGGERED BOARD OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">PROPOSAL THREE: RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">OTHER MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">EXECUTIVE COMPENSATION AND OTHER INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">EXECUTIVE COMPENSATION REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">AUDIT COMMITTEE REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">STOCK PERFORMANCE GRAPH</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014">ANNUAL REPORT</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 14pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALPINE CORPORATION</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>50 West San&nbsp;Fernando Street</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>San&nbsp;Jose, California 95113</B>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROXY STATEMENT</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>2005 ANNUAL MEETING OF STOCKHOLDERS</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>OF</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>CALPINE CORPORATION</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>To Be Held On Wednesday, May&nbsp;25, 2005</B>
</DIV>

<!-- link1 "INFORMATION CONCERNING SOLICITATION AND VOTING" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INFORMATION CONCERNING SOLICITATION AND VOTING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>General</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Proxy Statement is being furnished to the stockholders of
Calpine Corporation, a Delaware corporation (&#147;Calpine&#148;
or the &#147;Company&#148;), in connection with the solicitation
of proxies by the Board of Directors for use at the 2005 Annual
Meeting of Stockholders of the Company, to be held at
10:00&nbsp;a.m., Pacific Daylight Time, on Wednesday,
May&nbsp;25, 2005, at Calpine&#146;s Metcalf Energy Center,
located at One Blanchard Road, San&nbsp;Jose, California 95013,
and at any and all adjournments or postponements thereof. At the
2005 Annual Meeting of Stockholders, the stockholders of the
Company are being asked to consider and vote upon (i)&nbsp;the
election of three Class&nbsp;III Directors, each for a term of
three years on the Board of Directors; (ii)&nbsp;a proposal to
amend the Company&#146;s Amended and Restated Certificate of
Incorporation to declassify the election of the Board of
Directors; and (iii)&nbsp;the ratification of the appointment of
PricewaterhouseCoopers LLP as independent accountants for the
Company for the year ending December&nbsp;31, 2005.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Proxy Statement and the enclosed form of proxy are being
mailed to stockholders of the Company on or about April&nbsp;14,
2005. The Company&#146;s 2004 Annual Report to Stockholders,
which includes audited financial statements, is being mailed to
stockholders of the Company concurrently with this Proxy
Statement. Additional copies of the 2004 Annual Report to
Stockholders are available without charge upon request. The 2004
Annual Report to Stockholders is not to be regarded as proxy
soliciting material or as a communication by means of which any
solicitation of proxies is to be made. Requests for copies of
the 2004 Annual Report to Stockholders should be directed to the
Senior Vice President&nbsp;&#151; Investor Relations of the
Company at the corporate headquarters at the following address:
Calpine Corporation, 50 West San&nbsp;Fernando Street,
San&nbsp;Jose, California 95113.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Record Date, Voting and Quorum</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The close of business on April&nbsp;1, 2005 is the record date
(the &#147;Record Date&#148;) for stockholders entitled to
notice of and to vote at the 2005 Annual Meeting of
Stockholders. At the close of business on the Record Date,
538,017,458&nbsp;shares of Common Stock were outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each stockholder will be entitled to one vote per share, in
person or by proxy, for each share of Common Stock held in such
stockholder&#146;s name as of the Record Date on any matter
submitted to a vote of stockholders at the 2005 Annual Meeting
of Stockholders. Directors will be elected by a plurality of the
votes cast for the election of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An affirmative vote of the holders of two-thirds of the issued
and outstanding shares of Common Stock is required for the
approval of the amendment of the Amended and Restated
Certificate of Incorporation. For purposes of this vote, neither
abstentions nor proxies as to which a broker, bank or other
nominee does not have discretionary voting authority and has not
received voting instructions from the beneficial owner of the
shares (&#147;broker non-votes&#148;) can be voted for the
proposal and, therefore, will have the effect of a vote against
the proposal.
</DIV>

<P align="center" style="font-size: 10pt;">
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An affirmative vote of the holders of a majority of the shares
of Common Stock present, in person or by proxy, and entitled to
vote at the meeting is required for approval of each of the
other items being submitted to the stockholders for a vote at
the meeting. On each of these other items, (i)&nbsp;abstentions
will be treated as present and entitled to vote and, therefore,
will have the effect of a vote against the proposal and
(ii)&nbsp;broker non-votes as to any particular proposal will be
treated as shares not present and therefore, not entitled to
vote for purposes of the vote on that proposal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The presence, either in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding on the Record
Date is necessary to constitute a quorum at the 2005 Annual
Meeting of Stockholders. All abstentions and broker non-votes
will be included as shares that are present and are entitled to
vote for purposes of determining the presence of a quorum at the
meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Admission Requirements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All stockholders are invited to attend the 2005 Annual Meeting
of Stockholders. For admission to the 2005 Annual Meeting of
Stockholders, stockholders of record must bring the section of
their proxy card entitled Admission Ticket to the check-in desk,
where their ownership will be verified. Those who have
beneficial ownership of shares of Common Stock held by a bank,
brokerage firm or other nominee must bring account statements or
letters from their banks or brokers showing ownership of shares
of Common Stock in order to be admitted to the 2005 Annual
Meeting of Stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Proxies and Solicitation Costs</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shares of Common Stock represented by properly executed proxies
received in time for voting at the 2005 Annual Meeting of
Stockholders will, unless such proxy subsequently is revoked, be
voted in accordance with the instructions indicated thereon. In
the absence of specific instructions as to how the shares
represented thereby are to be voted, the persons named in the
accompanying form of proxy intend to vote all properly executed
proxies received by them (i)&nbsp;FOR the election as
Class&nbsp;III Directors of the nominees of the Board of
Directors, (ii)&nbsp;FOR the amendment of the Amended and
Restated Certificate of Incorporation to declassify the Board of
Directors, and (iii)&nbsp;FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as the independent
accountants for the Company for the year ending
December&nbsp;31, 2005. No business other than as set forth in
the accompanying Notice of Annual Meeting is expected to come
before the 2005 Annual Meeting of Stockholders, but should any
other matter requiring a vote of stockholders be properly
brought before the 2005 Annual Meeting of Stockholders, it is
the intention of the persons named in the enclosed form of proxy
to vote all proxies in accordance with their best judgment on
such matters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This solicitation is being made by the Company. The entire cost
of soliciting proxies will be borne by the Company. Solicitation
will be made by mail, and may be made personally or by telephone
or electronically by officers and other employees of the Company
who will not receive additional compensation for such
solicitation. Arrangements will be made with brokerage houses
and other custodians, nominees and fiduciaries to send proxies
and proxy material to the beneficial owners of the Common Stock,
and such persons will be reimbursed for their expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Revocability of Proxies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any person giving a proxy pursuant to this solicitation has the
power to revoke it at any time before it is voted. It may be
revoked by filing with the Secretary of the Company at the
corporate headquarters at Calpine Corporation, 50 West
San&nbsp;Fernando Street, San&nbsp;Jose, California 95113, a
written notice of revocation or a duly executed proxy bearing a
later date, or it may be revoked by attending the 2005 Annual
Meeting of Stockholders and voting in person. Attendance at the
2005 Annual Meeting of Stockholders will not, by itself, revoke
a proxy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Stockholder Proposals</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any stockholder who wishes to have a proposal included in the
Company&#146;s proxy statement for the 2006 Annual Meeting of
Stockholders must ensure that the proposal is received by the
Company no later than
</DIV>

<P align="center" style="font-size: 10pt;">2
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
December&nbsp;15, 2005 in order to be considered for inclusion
in the proxy statement and form of proxy relating to that
meeting. The proposal must be mailed to the Secretary of the
Company at the corporate headquarters at Calpine Corporation, 50
West San&nbsp;Fernando Street, San&nbsp;Jose, California 95113.
Stockholder proposals may be included in the proxy statement
only if they comply with certain rules and regulations
promulgated by the Securities and Exchange Commission.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under our bylaws, in order for a stockholder to properly bring
an item of business before an Annual Meeting of Stockholders
that is not included in the proxy statement relating to that
meeting, notice of the matter must be received by the Company
not less than 90&nbsp;days nor more than 120&nbsp;days prior to
the date of the meeting, except if less than 105&nbsp;days&#146;
advance notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the
stockholder must be received not later than the close of
business on the 15th day following the date on which such notice
of the date of the annual meeting was mailed or such public
disclosure was made, whichever occurs earlier.
</DIV>

<!-- link1 "CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company is committed to having sound corporate governance
policies. Having such principles is essential to running the
Company&#146;s business efficiently and to maintaining the
Company&#146;s integrity in the marketplace. The Company&#146;s
Corporate Governance Guidelines and Code of Conduct are
available on the Company&#146;s website at www.calpine.com, and
are also available in print upon written request addressed to
the Senior Vice President&nbsp;&#151; Investor Relations of the
Company at the corporate headquarters at the following address:
Calpine Corporation, 50 West San&nbsp;Fernando Street,
San&nbsp;Jose, California 95113.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Board Independence</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors of the Company (the &#147;Board of
Directors&#148; or the &#147;Board&#148;) has determined that a
majority of the members of the Company&#146;s Board of Directors
has no material relationship with the Company (either directly
or as partners, stockholders or officers of an organization that
has a relationship with the Company) and is
&#147;independent&#148; within the meaning of the New York Stock
Exchange (&#147;NYSE&#148;) director independence standards.
Peter Cartwright, Chairman of the Board, President and Chief
Executive Officer of the Company; Ann B. Curtis, Vice Chairman
of the Board, Executive Vice President and Corporate Secretary
of the Company; and George Stathakis, who provides consulting
services to the Company, are not considered to be independent.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Furthermore, the Board has determined that each of the members
of the Audit Committee, the Compensation Committee and the
Nominating and Governance Committee has no material relationship
to the Company (either directly or as a partner, stockholder or
officer of an organization that has a relationship with the
Company) and is &#147;independent&#148; within the meaning of
the NYSE&#146;s director independence standards. In addition,
the Board has determined that as of December&nbsp;10, 2004, in
accordance with the Executive Committee&#146;s charter, two of
the three members of the Executive Committee have no material
relationship to the Company and are independent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Board of Directors Meetings and Committees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s Board of Directors held 12 meetings and acted
by unanimous written consent twice in 2004. The Board of
Directors has an Audit Committee, a Compensation Committee, a
Nominating and Governance Committee, an Executive Committee and
an Indenture Committee.
</DIV>

<P align="center" style="font-size: 10pt;">3

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table provides membership information for 2004 for
each of the Board Committees:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Nominating and</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Audit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Governance</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Executive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Indenture</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter Cartwright</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD align="left" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD align="left" valign="top" nowrap>*</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ann B. Curtis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Kenneth T. Derr</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD align="left" valign="top" nowrap>**</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gerald Greenwald</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jeffrey E. Garten</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD align="left" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Susan C. Schwab</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD align="left" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    George J. Stathakis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Susan Wang</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD align="left" valign="top" nowrap>**</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    John O. Wilson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD align="left" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>X</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp; *&nbsp;</TD>
    <TD align="left">
    Committee Chairperson</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>**&nbsp;</TD>
    <TD align="left">
    On December&nbsp;10, 2004, the Board of Directors appointed
    Mr.&nbsp;Derr and Ms.&nbsp;Wang to replace Mr.&nbsp;Stathakis
    and Mr.&nbsp;Wilson on the Executive Committee.</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each director attended at least 75% of all Board and committee
meetings (of those committees of which he/she is a committee
member).
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Below is a description of each committee of the Board of
Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Audit Committee.</I> The Audit Committee meets with the
Company&#146;s finance and accounting managers and its
independent public accountants to review the adequacy of
internal controls and the results and scope of the audit and
other services provided by the independent auditors. The Audit
Committee is comprised of John O. Wilson (Chair), Jeffrey E.
Garten, Kenneth T. Derr and Susan Wang. Ms.&nbsp;Wang serves on
the audit committee of three other publicly traded companies.
The Board has made a determination that Ms.&nbsp;Wang&#146;s
simultaneous service on the audit committee of such other
companies does not impair Ms.&nbsp;Wang&#146;s ability to
effectively serve on the Company&#146;s Audit Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee held 10&nbsp;meetings and did not act by
unanimous written consent in 2004. Further information
concerning the Audit Committee is set forth below under the
heading &#147;Audit Committee Report.&#148; The charter of the
Audit Committee is available on the Company&#146;s website at
www.calpine.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Compensation Committee.</I> The Compensation Committee
administers salaries, incentives and other forms of compensation
for executive officers of the Company, as well as certain
incentive compensation and benefit plans of the Company. For a
more detailed discussion of the Compensation Committee&#146;s
responsibilities, please refer to the Executive Compensation
Report set forth below. The Compensation Committee is comprised
of Jeffrey E. Garten (Chair), Susan C. Schwab and Gerald
Greenwald. The Compensation Committee held six meetings and did
not act by unanimous written consent in 2004. The charter of the
Compensation Committee is available on the Company&#146;s
website at www.calpine.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Nominating and Governance Committee.</I> The Nominating and
Governance Committee is responsible for reviewing and assessing
the Company&#146;s corporate governance guidelines, evaluating
Board performance, setting eligibility requirements for
candidates for election to the Board of Directors and evaluating
and making recommendations for new director candidates. The
Nominating and Governance Committee is responsible for reviewing
with the Board the appropriate skills and experience required of
Board members in light of the current skills, experience and
backgrounds existing on the Board. The Board assessment includes
a review of the diversity of candidates, in addition to their
skills and experience. In case of new director candidates, the
Nominating and Governance Committee also determines whether the
nominee must be independent, which determination is made based
on applicable NYSE listing standards, applicable Securities and
Exchange Commission rules and regulations and under the advice
of counsel, if necessary. Board members are expected to make
sure that other commitments do not interfere with the devotion
of time needed to understand the Company&#146;s business and to
review materials for, attend and fully participate in each
meeting. The Nominating
</DIV>

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<DIV align="left" style="font-size: 10pt;">
and Governance Committee regularly assesses the appropriate size
of the Board, and whether any vacancies on the Board are
expected due to retirement or otherwise. In the event that
vacancies are anticipated, or otherwise arise, the Nominating
and Governance Committee considers various potential candidates.
Candidates may come to the attention of the Nominating and
Governance Committee through current Board members, professional
search firms, stockholders or other persons. These candidates
are evaluated at regular or special meetings of the Nominating
and Governance Committee, and may be considered at any point
during the year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Nominating and Governance Committee will consider properly
submitted recommendations for director candidates from
stockholders of the Company. A stockholder interested in making
such a recommendation should submit a written recommendation
identifying the candidate and explaining his or her
qualifications. The recommendation should be mailed to the
Secretary of the Company at the corporate headquarters at
Calpine Corporation, 50 West San&nbsp;Fernando Street,
San&nbsp;Jose, California 95113. The Nominating and Governance
Committee is comprised of Susan C. Schwab (Chair), Kenneth T.
Derr and Gerald Greenwald. The Nominating and Governance
Committee held four meetings and did not act by unanimous
written consent in 2004. The charter of the Nominating and
Governance Committee is available on the Company&#146;s website
at www.calpine.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2004, the Compensation Committee and the Nominating and
Governance Committee held two joint meetings and did not act by
joint unanimous written consent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Executive Committee.</I> The Executive Committee is empowered
to take actions on behalf of the Board of Directors,
particularly in the event such actions are necessary on short
notice. During the greater part of 2004, the Executive Committee
was comprised of Mr.&nbsp;Cartwright (Chair), Mr.&nbsp;Stathakis
and Mr.&nbsp;Wilson. On December&nbsp;10, 2004, the Board of
Directors appointed Mr.&nbsp;Derr and Ms.&nbsp;Wang to replace
Mr.&nbsp;Stathakis and Mr.&nbsp;Wilson on the Executive
Committee. The Executive Committee held three meetings and acted
by unanimous written consent twice in 2004. The charter of the
Executive Committee is available on the Company&#146;s website
at www.calpine.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Indenture Committee.</I> The Indenture Committee is empowered
to take actions on behalf of the Board with respect to certain
indentures and debt facilities of the Company. The Indenture
Committee is comprised of Peter Cartwright (Chair) and Ann B.
Curtis. The Indenture Committee did not hold any meetings and
acted by unanimous written consent three times in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Lead Director</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The independent directors of the Board have appointed Kenneth T.
Derr, as Lead Director. The Lead Director&#146;s duties include:
(i)&nbsp;presiding at all executive sessions of the Board,
(ii)&nbsp;coordinating communications among the independent
directors, (iii)&nbsp;presiding at Board meetings when the
Chairman of the Board and the Vice Chairman of the Board are not
in attendance, and (iv)&nbsp;performing such other duties as the
Board deems appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Executive Sessions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The non-management directors of the Company meet in executive
session of the Board without management at each regular board
meeting and at each regular meeting of the Audit Committee,
Compensation Committee and Nominating and Governance Committee,
and as otherwise scheduled from time to time. The Lead Director
presides at all executive sessions of the Board. The Chair of
each of the Audit Committee, Compensation Committee, and
Nominating and Governance Committees presides at the executive
sessions of his or her respective committee. Interested parties
who would like to communicate with the non-management directors
or any individual non-management director may do so by sending a
letter to the Lead Director in care of the General Counsel of
the Company at the corporate headquarters at Calpine
Corporation, 50 West San&nbsp;Fernando Street, San&nbsp;Jose,
California 95113.
</DIV>

<P align="center" style="font-size: 10pt;">5
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Communications with the Board</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Individuals may communicate with the Board in writing by
submitting a letter addressed to the &#147;Board of
Directors&#148; or to any of the directors by name in care of
the General Counsel of the Company at the corporate headquarters
at Calpine Corporation, 50&nbsp;West San&nbsp;Fernando Street,
San&nbsp;Jose, California 95113. The communication should
indicate the name(s) of any specific director(s) for whom it is
intended, or the &#147;Board of Directors&#148; as a whole. All
communications will be compiled by the General Counsel of the
Company and submitted as appropriate to the Board or specified
directors on a periodic basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Annual Meeting of Stockholders</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Directors are encouraged to attend the Company&#146;s annual
meetings of stockholders. All directors attended the 2004 Annual
Meeting of Stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Director Compensation</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2004, non-employee members of the Board of Directors were
each paid an annual retainer fee of $42,000 and were reimbursed
for all expenses incurred in attending meetings of the Board of
Directors or any committee thereof. The chairs of the
Compensation Committee and the Nominating and Governance
Committee received an additional annual fee of $8,000. The chair
of the Audit Committee received an additional annual fee of
$10,000. Additionally, each non-employee Board member received
$2,000 for attendance of each of the regular quarterly Board
meetings. Members of the Audit Committee received an additional
$2,000 for attendance of each of the regular quarterly Audit
Committee Meetings. Members of the Nominating and Governance
Committee and of the Compensation Committee received $1,000 for
attendance of each of the regular quarterly Compensation and
Nominating and Governance Committee meetings. Each non-employee
member of the Executive Committee received an additional $1,000
for serving on the Executive Committee. Fees are generally not
paid for special telephonic Board or committee meetings except
as otherwise specifically approved by the Chairperson of the
Board or Committee, as applicable, and notice of the same is
provided to the Board. Beginning in 2005, non-employee members
of the Board of Directors will be paid an annual retainer fee of
$50,000 and will be reimbursed for all expenses incurred in
attending meetings of the Board of Directors or any committee
thereof. Board members will not receive meeting attendance fees
nor fees for service on the Executive Committee. The chairs of
the Compensation Committee and the Nominating and Governance
Committee will each receive an additional annual fee of $15,000.
The chair of the Audit Committee will receive an additional
annual fee of $20,000 and members of the Audit Committee
(including the Chair) will each receive an additional annual fee
of $10,000 for serving on the Audit Committee. The Lead Director
will receive an annual fee of $20,000 for serving as Lead
Director.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon initial election or appointment to the Board of Directors,
each non-employee member of the Board was automatically granted
an option grant to purchase&nbsp;20,000&nbsp;shares of Common
Stock under the Automatic Option Grant Program in effect under
the Company&#146;s 1996 Stock Incentive Plan. Such initial
option grant vests in a series of four successive annual
installments upon the optionee&#146;s completion of each year of
service on the Board of Directors over the four-year period
measured from the grant date. Each option granted under the
Automatic Option Grant Program has an exercise price per share
equal to the fair market value per share of Common Stock on the
grant date and a term of ten years, subject to earlier
termination upon the optionee&#146;s cessation of Board service.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each option is immediately exercisable for all the option
shares, but any shares purchased upon exercise of the option
will be subject to repurchase by the Company, at the option
exercise price paid per share, upon the optionee&#146;s
cessation of Board service prior to vesting in those shares.
However, option shares issuable upon exercise of options granted
will immediately vest on an accelerated basis upon certain
changes in control of the Company or upon the retirement, death
or disability of the optionee while serving as a Board member.
Beginning in 2005, upon initial election or appointment to the
Board of Directors, each non-employee member of the Board will
be automatically granted an option grant to
purchase&nbsp;50,000&nbsp;shares of Common Stock (under various
option grant programs in effect under the Company&#146;s 1996
Stock Incentive Plan) on the terms and with such vesting as
described above.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">6

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, in 2004, each non-employee member of the Board
received an annual option grant to
purchase&nbsp;3,500&nbsp;shares of Common Stock under the
Automatic Option Grant Program. Such annual option grant vests
upon the optionee&#146;s completion of one year of Board service
measured from the grant date. Beginning in 2005, each
non-employee member of the Board will receive as his or her
annual option grant an option to
purchase&nbsp;25,000&nbsp;shares of Common Stock (under various
option grant programs in effect under the Company&#146;s 1996
Stock Incentive Plan). Such annual option grant will vest upon
the optionee&#146;s completion of one year of Board service
measured from the grant date and will have similar terms as
described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2004, non-employee members of the Board were eligible to
participate in the Director Fee Option Grant Program in effect
under the 1996 Stock Incentive Plan, pursuant to which they
could elect to apply all or a portion of their annual retainer
fee towards the acquisition of special options. For each
director electing to participate, the number of shares of Common
Stock subject to these options was determined by dividing
(i)&nbsp;the portion of the annual retainer fee the director
elects to apply toward the acquisition of options by
(ii)&nbsp;66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the fair market value per share of Common Stock on the grant
date. Each option had an exercise price per share equal to
33<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the fair market value per share of Common Stock on the grant
date. The options granted under the Director Fee Option Grant
Program in 2004 became fully exercisable on December&nbsp;31,
2004. The options have a term of ten years, subject to earlier
termination two years following cessation of Board service.
George Stathakis, who is a former employee of the Company, does
not participate in the Automatic Option Grant Program or the
Director Fee Option Grant Program. Instead, Mr.&nbsp;Stathakis
receives an annual stock option grant from the Company under the
Discretionary Stock Option Program in an amount equal to that
received by the non-employee directors and under similar terms.
Mr.&nbsp;Stathakis&#146; compensation is discussed in greater
detail under Certain Relationships and Related Transactions. The
Director Fee Option Grant Program will not be available in 2005
due to the potential effect of the American Jobs Creation Act of
2004.
</DIV>

<!-- link1 "MATTERS TO BE CONSIDERED AT THE 2005 ANNUAL MEETING OF STOCKHOLDERS" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>MATTERS TO BE CONSIDERED AT THE 2005 ANNUAL MEETING OF
STOCKHOLDERS</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<!-- link1 "PROPOSAL ONE: ELECTION OF DIRECTORS" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="center" style="font-size: 10pt;">
<B>PROPOSAL&nbsp;ONE: ELECTION OF DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>General</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s Bylaws provide that the number of directors
that shall constitute the Board of Directors shall not be less
than one, with the actual number to be fixed from time to time
by resolution of the Board of Directors. The authorized number
of directors is currently set at nine. The Company&#146;s
Amended and Restated Certificate of Incorporation provides that
the Board of Directors shall be divided into three classes, with
each class having a three-year term. Three seats have been
designated as Class&nbsp;III Board seats, with the term of the
directors occupying such seats expiring as of the 2005 Annual
Meeting of Stockholders. Three seats have been designated as
Class&nbsp;I Board seats and three seats have been designated as
Class&nbsp;II Board seats. The directors elected to Class&nbsp;I
Board seats will continue to hold office until the 2006 Annual
Meeting of Stockholders and until such directors&#146;
successors have been elected and qualified or until the earlier
of their death, resignation or removal. The directors elected to
Class&nbsp;II Board seats will continue to hold office until the
2007 Annual Meeting of Stockholders and until such
directors&#146; successors have been elected and qualified or
until the earlier of their death, resignation or removal.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the 2005 Annual Meeting of Stockholders, the Company intends
to nominate Peter Cartwright, Susan C. Schwab and Susan Wang for
election as Class&nbsp;III Directors, each of whom has consented
to be named in this Proxy Statement and to serve if elected.
Each of Mr.&nbsp;Cartwright, Ms.&nbsp;Schwab and Ms.&nbsp;Wang
currently serves as a Class&nbsp;III Director. Each would be
elected to serve for a three-year term ending at the 2008 Annual
Meeting of Stockholders and until their respective successors
are elected and qualified or until the earlier of their death,
resignation or removal. However, if the Company&#146;s proposal
to declassify the election of the Board of Directors described
below in Proposal&nbsp;Two is approved, each nominee for
election as a director, including any directors whose term has
not yet expired and directors standing for re-election, will be
elected for a one-year term beginning at the 2006 Annual Meeting
of Stockholders.
</DIV>

<P align="center" style="font-size: 10pt;">7
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The proxy holders intend to vote all proxies received by them
for each of the nominees for election as a Class&nbsp;III
Director unless instructions to the contrary are marked on the
proxy. In the event that a nominee is for any reason unable to
serve as a director at the time of the 2005 Annual Meeting of
Stockholders and the Board of Directors designates a replacement
nominee, the proxies will be voted for the replacement nominee.
If the Board of Directors does not designate a replacement
nominee, the number of directors to be elected will be reduced.
As of the date of this Proxy Statement, the Board of Directors
is not aware that any nominee is unable or will decline to serve
as a director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth in the table below is a list of the Company&#146;s
directors, together with certain biographical information.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal Occupation</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Class</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter Cartwright</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Chairman of the Board, President and Chief Executive Officer of
    the Company</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>III</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ann B. Curtis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Executive Vice President, Vice Chairman of the Board and
    Corporate Secretary of the Company</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>II</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Kenneth T. Derr*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Retired, Former Chairman and Chief Executive Officer of Chevron
    Corporation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>II</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jeffrey E. Garten*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dean of the Yale School of Management</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>I</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gerald Greenwald*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Managing Partner, Greenbriar Equity Group</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>II</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Susan C. Schwab*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    President and Chief Executive Officer, University System of
    Maryland Foundation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>III</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    George J. Stathakis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Chief Executive Officer, George J. Stathakis&nbsp;&#38;
    Associates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>I</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Susan Wang*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Retired, Former Executive Vice President and Chief Financial
    Officer of Solectron Corporation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>III</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    John O. Wilson*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Professor, University of California, Berkeley</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>I</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    Independent director as independence is defined by the listing
    standards of the New York Stock Exchange.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Class&nbsp;III Directors with Terms Expiring in 2005</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Peter Cartwright </I>founded the Company in 1984 and has
since served as a director and as the Company&#146;s President
and Chief Executive Officer. Mr.&nbsp;Cartwright became Chairman
of the Board of Directors of the Company in September 1996. From
1979 to 1984, Mr.&nbsp;Cartwright was Vice President and General
Manager of Gibbs&nbsp;&#38; Hill, Inc.&#146;s Western Regional
Office. From 1960 to 1979, Mr.&nbsp;Cartwright worked for
General Electric Corporation&#146;s Nuclear Energy Division. His
responsibilities included plant construction, project management
and new business development. He served on the Board of
Directors of nuclear fuel manufacturing companies in Germany,
Italy and Japan. Mr.&nbsp;Cartwright was responsible for General
Electric&#146;s technology development and licensing programs in
Europe and Japan. Mr.&nbsp;Cartwright obtained a Master of
Science degree in Civil Engineering from Columbia University in
1953 and a Bachelor of Science degree in Geological Engineering
from Princeton University in 1952.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Susan C. Schwab </I>became a director of the Company in
January 1997. Dr.&nbsp;Schwab is President and Chief Executive
Officer of the University System of Maryland Foundation. She
served as Dean of the University of Maryland School of Public
Policy from August 1995 to August 2003. Dr.&nbsp;Schwab served
as Director, Corporate Business Development for Motorola, Inc.,
an electronics manufacturer, from July 1993 to August 1995. She
also served as Assistant Secretary of Commerce for the U.S. and
Foreign Commercial Service from March 1989 to May 1993.
Dr.&nbsp;Schwab serves as a director of Adams Express Co. and
Petroleum&nbsp;&#38; Resources Corp.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Susan Wang </I>became a director of the Company in June 2003.
From January 2001 to February 2002, Ms.&nbsp;Wang served as
Executive Vice President and Chief Financial Officer for
Solectron Corporation, an electronics manufacturing services
company, and from August 1989 to February 2002, she served as
its Chief Financial Officer. Prior to that she was the Director
of Finance from October 1984 to August 1989. From May 1977 to
October 1984 she was Manager, Financial Services for Xerox
Corporation, a document and equipment
</DIV>

<P align="center" style="font-size: 10pt;">8

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<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
services provider. Ms.&nbsp;Wang obtained a Master of Business
Administration degree from University of Connecticut in 1981 and
a Bachelor of Business Administration degree in accounting from
the University of Texas in 1972. Ms.&nbsp;Wang is a certified
public accountant in New York and served as chairman of the
Financial Executive Research Foundation from 1998 to 1999.
Ms.&nbsp;Wang serves as a director of Altera Corp., Avanex Corp.
and Nektar Therapeutics.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Continuing Class&nbsp;I Directors with Terms Expiring in
2006</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Jeffrey E. Garten </I>became a director of the Company in
January 1997. Mr.&nbsp;Garten has served as Dean of the Yale
School of Management and as the William S. Beinecke Professor in
the Practice of International Trade and Finance since November
1995. Mr.&nbsp;Garten served as Undersecretary of Commerce of
International Trade from November 1993 to October 1995. He was a
managing director of The Blackstone Group, an investment banking
firm, from October 1990 to October 1992. Prior thereto,
Mr.&nbsp;Garten founded and managed The Eliot Group, a small
investment bank, from November 1987 to October 1990, and served
as managing director of Lehman Brothers, an investment banking
firm, from January 1979 to November 1987. Mr.&nbsp;Garten serves
as a director of CarMax, Inc. and Aetna Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>George J. Stathakis </I>became a director of the Company in
September 1996 and has served as a Senior Advisor to the Company
since December 1994. Mr.&nbsp;Stathakis is also the Chief
Executive Officer of George J. Stathakis&nbsp;&#38; Associates.
He has been providing financial, business and management
advisory services to numerous corporations since 1985. He also
served as Chairman of the Board and Chief Executive Officer of
Ramtron International Corporation, an advanced technology
semiconductor company, from 1990 to 1994. From 1986 to 1989, he
served as Chairman of the Board and Chief Executive Officer of
International Capital Corporation, a subsidiary of American
Express. Prior to 1986, Mr.&nbsp;Stathakis served 32&nbsp;years
with General Electric Corporation in various management and
executive positions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>John O. Wilson </I>became a director of the Company in
January 1997. Mr.&nbsp;Wilson has served as a faculty member at
the University of California at Berkeley since September 1979.
Mr.&nbsp;Wilson served as a Senior Research Fellow at the
Berkeley Roundtable on the International Economy and as
Executive Vice President and Chief Economist of SDR Capital
Management from January 1999 through December 2001.
Mr.&nbsp;Wilson served as Executive Vice President and Chief
Economist at Bank of America from August 1984 to January 1999.
He joined Bank of America in June 1975 as Director of
Economics-Policy Research. Mr.&nbsp;Wilson served on the faculty
at the University of Connecticut from September 1974 to June
1975, and at Yale University from January 1967 to September
1970. Mr.&nbsp;Wilson also served as Director of Regulatory
Analysis of the U.S.&nbsp;Atomic Energy Commission from April
1972 to October 1972, as Director of Welfare Reform of the
Department of Health, Education and Welfare from April 1971 to
April 1972, and as Assistant Director of the U.S.&nbsp;Office of
Economic Opportunity from August 1969 to April 1971.
Mr.&nbsp;Wilson serves as a director of The Ryland Group, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Continuing Class&nbsp;II Directors with Terms Expiring in
2007</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Ann B. Curtis </I>has served as Executive Vice President of
the Company since August 1998, and before that had been Senior
Vice President of the Company since September 1992. She has been
employed by the Company since its inception in 1984.
Ms.&nbsp;Curtis became a director of the Company in September
1996 and became Vice Chairman of the Board of Directors in March
2002. She is responsible for overseeing the Company&#146;s
administrative functions, including the functions of general
counsel, human resources, public relations and investor
relations. Ms.&nbsp;Curtis also serves as Corporate Secretary
for the Company. From the Company&#146;s inception in 1984
through 1992, she served as the Company&#146;s Vice President
for Management and Financial Services. Additionally, from 1984
through March 2002, Ms.&nbsp;Curtis served in the role of Chief
Financial Officer. Prior to joining the Company, Ms.&nbsp;Curtis
was Manager of Administration for Gibbs&nbsp;&#38; Hill, Inc.,
an architect/engineering firm that specialized in power
engineering projects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Kenneth T. Derr </I>became a director of the Company in May
2001. Mr.&nbsp;Derr retired as the Chairman and Chief Executive
Officer of Chevron Corporation, an international oil company, in
1999, a position that he held since 1989, after a 39-year career
with the company. Mr.&nbsp;Derr obtained a Master of Business
Administration
</DIV>

<P align="center" style="font-size: 10pt;">9

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<DIV align="left" style="font-size: 10pt;">
degree from Cornell University in 1960 and a Bachelor of Science
degree in Mechanical Engineering from Cornell University in
1959. Mr.&nbsp;Derr serves as a director of AT&#38;T Corp.,
Citigroup, Inc. and Halliburton Co.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Gerald Greenwald </I>became a director of the Company in July
2001. Mr.&nbsp;Greenwald is a managing partner of the Greenbriar
Equity Group, a private equity investor in the transportation
industry, which he co-founded in 1999. Mr.&nbsp;Greenwald was
the Chairman and Chief Executive Officer of UAL Corporation and
United Airlines (UAL), its principal subsidiary, from 1994 until
his retirement in 1999. From 1979 to 1990, Mr.&nbsp;Greenwald
held various executive positions with Chrysler Corporation, an
automotive manufacturer, serving as Vice Chairman of the Board
from 1989 to May 1990 and as Chairman of Chrysler Motors from
1985 to 1988. In 1990, Mr.&nbsp;Greenwald was selected to serve
as Chief Executive Officer of United Employee Acquisition
Corporation in connection with the proposed 1990 employee
acquisition of UAL. From 1991 to 1992, he was a Managing
Director of Dillon Read&nbsp;&#38; Co., Inc., an investment
banking firm, and, from 1992 to 1993, he was President and
Deputy Chief Executive Officer of Olympia&nbsp;&#38; York
Developments Ltd., a Canadian real estate company.
Mr.&nbsp;Greenwald served as Chairman and Managing Director of
Tatra Truck Company, a truck manufacturer in the Czech Republic,
from 1993 to 1994. Mr.&nbsp;Greenwald is a trustee of the Aspen
Institute and serves as a director of Aetna Inc. and Sentigen
Holding Corp.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Recommendation of the Board of Directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors recommends that the stockholders vote
&#147;FOR&#148; the election of the Class&nbsp;III Director
nominees listed above.
</DIV>

<!-- link1 "PROPOSAL TWO: AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE STAGGERED BOARD OF DIRECTORS" -->
<DIV align="left"><A NAME="004"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSAL&nbsp;TWO: AMENDMENT OF THE AMENDED AND RESTATED
CERTIFICATE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>OF INCORPORATION TO DECLASSIFY THE STAGGERED BOARD OF
DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Background</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Article&nbsp;SEVENTH subsection&nbsp;(b)&nbsp;of the
Company&#146;s Amended and Restated Certificate of
Incorporation, the Board of Directors is divided into three
classes of directors serving staggered three-year terms, with
each class being as nearly equal in number as possible. The
Company has had a staggered board of directors since it became a
public company in 1996.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Proposal</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors has adopted the following resolution,
declaring it advisable that Article&nbsp;SEVENTH
subsection&nbsp;(b)&nbsp;of the Company&#146;s Amended and
Restated Certificate of Incorporation be amended to eliminate
classification of the Board of Directors (the
&#147;Declassification Amendment&#148;):
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    WHEREAS, the Board of Directors believes that it is advisable
    and in the best interests of the Company to declassify the Board;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    NOW, THEREFORE, BE IT RESOLVED, that the Amended and Restated
    Certificate of Incorporation of the Company be amended by:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Deleting therefrom the current Article&nbsp;SEVENTH
    subsection&nbsp;(b)&nbsp;in its entirety and substituting
    therefore the following new Article&nbsp;SEVENTH
    subsection&nbsp;(b):</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;(b)&nbsp;Except as otherwise provided by law, each
    Director shall be elected at the annual meeting of stockholders
    to serve a one-year term and until such Director&#146;s
    successor is elected and qualified.&#148;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the Declassification Amendment is approved, each nominee for
election as a director, including any directors whose term has
not yet expired and directors standing for re-election, will be
elected for a one-year term beginning at the 2006 Annual Meeting
of Stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with paragraph&nbsp;(d)&nbsp;of
Article&nbsp;SEVENTH of the Restated Certificate of
Incorporation, adoption of the amendment to the Amended and
Restated Certificate of Incorporation requires the affirmative
vote of the holders of two-thirds of the outstanding shares of
Common Stock.
</DIV>

<P align="center" style="font-size: 10pt;">10

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Reasons for the Amendment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors has considered the relative merits of
annually elected and classified boards. Classified boards
promote stability by ensuring that a majority of directors will
have had prior experience with, and in-depth knowledge of, the
Company&#146;s business and industry. A classified board also
helps protect the interests of stockholders by encouraging
potential acquirers to enter into arms-length negotiations with
the Board of Directors. Notwithstanding these important
benefits, the Board of Directors recognizes that the election of
directors is a primary means for stockholders to influence
corporate governance and ensure that management is accountable
to stockholders. The Board of Directors believes that providing
the Company&#146;s stockholders with the opportunity annually to
register their views on the performance of individual directors
and the Board of Directors collectively will further the
Company&#146;s goal of maintaining best practices in corporate
governance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Recommendation of the Board of Directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors recommends that the stockholders vote
&#147;FOR&#148; the amendment to the Company&#146;s Amended and
Restated Certificate of Incorporation to provide for the
declassification of the election of the Board of Directors.
</DIV>

<!-- link1 "PROPOSAL THREE: RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS" -->
<DIV align="left"><A NAME="005"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSAL&nbsp;THREE: RATIFICATION OF APPOINTMENT</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>OF INDEPENDENT PUBLIC ACCOUNTANTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee of the Board of Directors appointed the firm
of PricewaterhouseCoopers LLP
(&#147;PricewaterhouseCoopers&#148;) to serve as the independent
public accountants to audit the financial statements of the
Company for the year ended December&nbsp;31, 2005, and has
directed that management submit the selection of the independent
public accountants for ratification by the stockholders at the
2005 Annual Meeting of Stockholders. The Audit Committee made
this decision after evaluating the qualifications, performance
and independence of PricewaterhouseCoopers, including
considering whether PricewaterhouseCoopers&#146; quality
controls are adequate and whether the performance of permitted
non-audit services by PricewaterhouseCoopers is compatible with
maintaining its independence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Representatives of PricewaterhouseCoopers are expected to be
present at the 2005 Annual Meeting of Stockholders, will have
the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PricewaterhouseCoopers was appointed as the Company&#146;s
independent public accountants for the year ended
December&nbsp;31, 2003, by the Board of Directors and the Audit
Committee of the Board of Directors to replace the firm of
Deloitte&nbsp;&#38; Touche LLP (&#147;Deloitte&nbsp;&#38;
Touche&#148;), which had served as the independent public
accountants for the Company for the year ended December&nbsp;31,
2002. On April&nbsp;10, 2003, Deloitte&nbsp;&#38; Touche and the
Company each made the decision to cease their client-auditor
relationship. On that date, Deloitte&nbsp;&#38; Touche notified
the chairman of the Audit Committee of the Board of Directors
that Deloitte&nbsp;&#38; Touche resigned as independent
accountants of the Company. On that same date, the Board of
Directors and the Audit Committee met and determined to no
longer utilize the audit services of Deloitte&nbsp;&#38; Touche
and approved the appointment of PricewaterhouseCoopers as the
Company&#146;s independent auditors for the year ended
December&nbsp;31, 2003.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deloitte&nbsp;&#38; Touche has not included, in any report on
the Company&#146;s financial statements, an adverse opinion or a
disclaimer of opinion, or a qualification or modification as to
uncertainty, audit scope, or accounting principles with respect
to the Company&#146;s financial statements. During the fiscal
year of the Company ended December&nbsp;31, 2002, and the
subsequent interim period through April&nbsp;10, 2003,
(i)&nbsp;other than described in the paragraph immediately
following this paragraph, there were no disagreements between
the Company and Deloitte&nbsp;&#38; Touche on any matter of
accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements,
if not resolved to Deloitte&nbsp;&#38; Touche&#146;s
satisfaction, would have caused Deloitte&nbsp;&#38; Touche to
make reference to the subject matter of the
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">11

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<DIV align="left" style="font-size: 10pt;">
disagreement in connection with its reports of the
Company&#146;s financial statements, and (ii)&nbsp;there were no
reportable events (as defined in Item&nbsp;304(a)(1)(v) of
Regulation&nbsp;S-K).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company had a disagreement with Deloitte&nbsp;&#38; Touche,
which was satisfactorily resolved, related to the interpretation
of certain provisions of power sales agreements associated with
two power plants for which the Company had utilized
sale-leaseback transactions. The Company had previously
accounted for these sale-leaseback transactions as qualifying
for operating lease accounting treatment. Deloitte&nbsp;&#38;
Touche concluded that the provisions of the power sales
agreements precluded operating lease accounting treatment. The
Company recorded adjustments related to these matters in the
2000 and 2001 consolidated financial statements and adjusted the
previously announced unaudited financial statements for 2002.
The Audit Committee of the Company&#146;s Board of Directors
discussed the subject matter of the disagreement with
Deloitte&nbsp;&#38; Touche. The Company has authorized
Deloitte&nbsp;&#38; Touche to respond fully to the inquiries of
PricewaterhouseCoopers concerning the subject matter of the
foregoing disagreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal years ended December 2001 and 2002, and the
subsequent interim period through April&nbsp;10, 2003, neither
the Company nor anyone on the Company&#146;s behalf consulted
PricewaterhouseCoopers regarding the application of accounting
principles to a specified transaction, either completed or
proposed, regarding the type of audit opinion that might be
rendered on the Company&#146;s financial statements or regarding
&#147;disagreements&#148; or any &#147;reportable events&#148;
(each as defined in Item&nbsp;304(a) of Regulation&nbsp;S-K).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Audit Fees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fees billed by PricewaterhouseCoopers for performing the
Company&#146;s audit were approximately $10.5&nbsp;million
during the fiscal year ended December&nbsp;31, 2004 and
approximately $2.6&nbsp;million during the fiscal year ended
December&nbsp;31, 2003. The fees billed by
PricewaterhouseCoopers relating to the review of the
Company&#146;s financial statements included in the
Company&#146;s Quarterly Reports on Form&nbsp;10-Q were
approximately $0.9&nbsp;million during the fiscal year ended
December&nbsp;31, 2004 and approximately $1.1&nbsp;million
during the fiscal year ended December&nbsp;31, 2003. Its fees
billed for performing audits and reviews of certain of the
Company&#146;s subsidiaries were approximately $2.7&nbsp;million
during the fiscal year ended December&nbsp;31, 2004 and
approximately $1.6&nbsp;million during the fiscal year ended
December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Audit-Related Fees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fees billed by PricewaterhouseCoopers for audit-related
services were approximately $0.7&nbsp;million for the fiscal
year ended December&nbsp;31, 2004 and approximately
$4.1&nbsp;million for the fiscal year ended December&nbsp;31,
2003. Such audit-related fees consisted primarily of re-audit
and comfort letter services relating to business acquisitions
and divestitures and other attestation services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Tax Fees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PricewaterhouseCoopers did not provide the Company with any tax
compliance and tax consulting services during the fiscal years
ended December&nbsp;31, 2004 and December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>All Other Fees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The aggregate amount of fees billed by PricewaterhouseCoopers
for all services rendered, other than as described above under
the headings Audit Fees, Audit-Related Fees and Tax Fees, was
approximately $0.8&nbsp;million during the fiscal year ended
December&nbsp;31, 2004 and approximately $1.2&nbsp;million
during the fiscal year ended December&nbsp;31, 2003. Such fees
primarily consisted of advisory services related to compliance
with the Sarbanes-Oxley Act of 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee is responsible for pre-approving all
auditing services and permitted non-audit services to be
performed by the independent auditors (including the fees and
other terms thereof). Under the Company policy relating to the
approval of audit services and non-audit services provided by
its independent public accountant, pre-approval is not required
for the provision of non-audit services if (i)&nbsp;the
aggregate amount of all such non-audit services constitute no
more than 5% of the total amount of revenues paid by the
</DIV>

<P align="center" style="font-size: 10pt;">12

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<DIV align="left" style="font-size: 10pt;">
Company to the auditors during the fiscal year in which the
non-audit services are provided, (ii)&nbsp;such services were
not recognized by the Company at the time of engagement to be
non-audit services and (iii)&nbsp;such services are promptly
brought to the attention of the Audit Committee and approved
prior to the completion of the audit. The Audit Committee
pre-approved all auditing services and permitted non-audit
services to be performed by the independent auditors during the
fiscal year ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Recommendation of the Board of Directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors recommends that stockholders vote
&#147;FOR&#148; the ratification of the appointment of
PricewaterhouseCoopers as the Company&#146;s independent public
accountants for the year ending December&nbsp;31, 2005.
</DIV>

<!-- link1 "OTHER MATTERS" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OTHER MATTERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors does not know of any matters to be
presented at the 2005 Annual Meeting of Stockholders other than
those set forth in the Notice of Annual Meeting accompanying
this Proxy Statement. However, if any other matters properly
come before the meeting, the persons named in the enclosed form
of proxy intend to vote on such matters in accordance with their
best judgment. This discretionary authority is granted by the
execution of the enclosed form of proxy.
</DIV>

<P align="center" style="font-size: 10pt;">13

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<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth certain information known to the
Company regarding the beneficial ownership of the Common Stock
as of December&nbsp;31, 2004, or as such later date as indicated
below, by (i)&nbsp;each person known by the Company to be the
beneficial owner of more than five percent of the outstanding
shares of Common Stock, (ii)&nbsp;each director of the Company,
(iii)&nbsp;each executive officer of the Company listed in the
Summary Compensation Table below, and (iv)&nbsp;all executive
officers and directors of the Company as a group.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percentage of Shares</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Name and Address of Beneficial Owner</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Beneficially Owned(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Beneficially Owned(1)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Massachusetts Financial Services Company(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>38,802,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>7.23%</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    500 Boylston Street<BR>
    Boston, MA 02116</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mellon Financial Corporation(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>33,637,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6.27%</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    One Mellon Center<BR>
    Pittsburgh, PA 15258</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter Cartwright(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>11,536,074</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2.11%</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ann B. Curtis(5)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1,112,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Kenneth T. Derr(6)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>47,923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jeffrey E. Garten(7)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>135,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gerald Greenwald(8)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>50,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert D. Kelly(9)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1,811,305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. James Macias(10)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>261,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thomas R. Mason(11)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>582,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Susan C. Schwab(12)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>133,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    George J. Stathakis(13)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>301,540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Susan Wang(14)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    John O. Wilson(15)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>231,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All executive officers and directors as a group (17 persons)(16)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>18,157,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3.29%</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*</TD>
    <TD align="left">
    Less than one percent</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Beneficial ownership is determined in accordance with the rules
    of the Securities and Exchange Commission and consists of either
    or both voting or investment power with respect to securities.
    Shares of Common Stock issuable upon the exercise of options or
    warrants or upon the conversion of convertible securities that
    are immediately exercisable or convertible or that will become
    exercisable or convertible within the next 60&nbsp;days are
    deemed beneficially owned by the beneficial owner of such
    options, warrants or convertible securities and are deemed
    outstanding for the purpose of computing the percentage of
    shares beneficially owned by the person holding such
    instruments, but are not deemed outstanding for the purpose of
    computing the percentage of any other person. Except as
    otherwise indicated by footnote, and subject to community
    property laws where applicable, the persons named in the table
    have reported that they have sole voting and sole investment
    power with respect to all shares of Common Stock shown as
    beneficially owned by them. The number of shares of Common Stock
    outstanding as of December&nbsp;31, 2004 was 536,509,231.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    According to an amendment to Schedule&nbsp;13G filed with the
    Securities and Exchange Commission on February&nbsp;9, 2005,
    Massachusetts Financial Services Company possesses sole voting
    power over 37,009,537&nbsp;shares of Common Stock and sole
    dispositive power over 38,802,927&nbsp;shares of Common Stock.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">14

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<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    According to an amendment to Form&nbsp;13G filed with the
    Securities and Exchange Commission on February&nbsp;15, 2005,
    Mellon Financial Corporation possesses sole voting power over
    28,950,503&nbsp;shares of Common Stock, shared voting power over
    296,605&nbsp;shares of Common Stock, sole dispositive power over
    33,158,769&nbsp;shares of Common Stock and shared dispositive
    power over 309,755&nbsp;shares of Common Stock.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;9,399,237&nbsp;shares of
    Common Stock issuable upon the exercise of options outstanding
    as of December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;1,048,038&nbsp;shares of
    Common Stock issuable upon the exercise of options outstanding
    as of December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;42,923&nbsp;shares of Common
    Stock issuable upon the exercise of options outstanding as of
    December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;132,978&nbsp;shares of Common
    Stock issuable upon the exercise of options outstanding as of
    December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;39,903&nbsp;shares of Common
    Stock issuable upon the exercise of options outstanding as of
    December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(9)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;1,324,362&nbsp;shares of
    Common Stock issuable upon the exercise of options outstanding
    as of December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(10)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;238,397&nbsp;shares of Common
    Stock issuable upon the exercise of options outstanding as of
    December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(11)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;519,993&nbsp;shares of Common
    Stock issuable upon the exercise of options outstanding as of
    December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(12)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;128,650&nbsp;shares of Common
    Stock issuable upon the exercise of options outstanding as of
    December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(13)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;277,540&nbsp;shares of Common
    Stock issuable upon the exercise of options outstanding as of
    December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(14)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;5,000&nbsp;shares of Common
    Stock issuable upon the exercise of options outstanding as of
    December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(15)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;201,032&nbsp;shares of Common
    Stock issuable upon the exercise of options outstanding as of
    December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(16)&nbsp;</TD>
    <TD align="left">
    Includes options to purchase&nbsp;15,246,849&nbsp;shares of
    Common Stock issuable upon the exercise of options outstanding
    as of December&nbsp;31, 2004 or within 60&nbsp;days thereafter.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">15

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<!-- link1 "EXECUTIVE COMPENSATION AND OTHER INFORMATION" -->
<DIV align="left"><A NAME="008"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXECUTIVE COMPENSATION AND OTHER INFORMATION</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth in the table below is a list of the Company&#146;s
executive officers serving as of April&nbsp;1, 2005 who are not
directors, together with certain biographical information.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Other Executive Officers</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Position</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert D. Kelly</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President and Chief Financial Officer, and
    President, Calpine Finance Company</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thomas R. Mason</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President and President, Calpine Power Company</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. James Macias</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Lisa M. Bodensteiner</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President and General Counsel</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bulent A. Berilgen</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President and President, Calpine Fuels Company</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Charles B. Clark, Jr</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President, Chief Accounting Officer and Corporate
    Controller</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Eric N. Pryor</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President, Deputy Chief Financial Officer and
    Corporate Risk Officer</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Robert D. Kelly </I>has served as Executive Vice President
and Chief Financial Officer since March 2002, and as
President&nbsp;&#151; Calpine Finance Company since March 2001.
Previously, Mr.&nbsp;Kelly served as the Company&#146;s Senior
Vice President&nbsp;&#151; Finance from January 1998 to March
2002 and as Vice President, Finance from April 1994 to January
1998. Mr.&nbsp;Kelly&#146;s responsibilities include all project
and corporate finance activities. From 1992 to 1994,
Mr.&nbsp;Kelly served as Director&nbsp;&#151; Project Finance
for the Company, and from 1991 to 1992, he served as Project
Finance Manager. Prior to joining the Company, from 1990 to
1991, he was the Marketing Manager of Westinghouse Credit
Corporation. From 1989 to 1990, Mr.&nbsp;Kelly was Vice
President of Lloyds Bank PLC. From 1982 to 1989, Mr.&nbsp;Kelly
was employed in various positions with The Bank of Nova Scotia.
He obtained a Master of Business Administration degree from
Dalhousie University, Canada in 1980 and a Bachelor of Commerce
degree from Memorial University, Canada, in 1979.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Thomas R. Mason </I>has served as Executive Vice President
since August 1999 and President&nbsp;&#151; Calpine Power
Company since November 2002. Previously, Mr.&nbsp;Mason served
as a Senior Vice President of the Company from March 1999 until
August 1999. Mr.&nbsp;Mason is responsible for managing Calpine
Power Company&#146;s profits and losses. From March 1995 to
February 1999, prior to joining the Company, Mr.&nbsp;Mason was
President and Chief Operating Officer of CalEnergy Operating
Services Inc., a wholly-owned subsidiary of MidAmerica Energy
Holdings Company. He obtained a Master of Business
Administration degree from the University of Chicago in 1970 and
a Bachelor of Science degree in Electrical Engineering from
Purdue University in 1966.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>E.&nbsp;James Macias </I>has served as Executive Vice
President since November 2002. As head of Commercial Operations
he directs the activities of Calpine&#146;s energy services and
marketing and sales organizations and integrates their
activities with the power generation and natural gas businesses.
Mr.&nbsp;Macias served as Executive Vice President and Chief
Operating Officer from March 2002 to November 2002 and as Senior
Vice President of Calpine&#146;s Power and Industrial Marketing
from April 2001 to March 2002. Prior to joining Calpine,
Mr.&nbsp;Macias was a Senior Vice President with Pacific
Gas&nbsp;&#38; Electric, where he managed the utility&#146;s
electricity and gas transmission systems, gas supply program and
power generation business from 1997 to 2000. He obtained a
Bachelor of Science degree in Mechanical Engineering from
California Polytechnic State University, San&nbsp;Luis Obispo in
1976, and graduated from the Harvard University Graduate School
of Business, Program for Management Development in 1998.
</DIV>

<P align="center" style="font-size: 10pt;">16

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Lisa M. Bodensteiner </I>has served as Executive Vice
President and General Counsel since December 2002. She is
responsible for all corporate legal and insurance affairs. She
also functions as Assistant Secretary for the Company.
Ms.&nbsp;Bodensteiner served as Senior Vice President and
General Counsel from March 2001 to December 2002, and from 1999
to 2001 she served as Vice President and General Counsel.
Ms.&nbsp;Bodensteiner joined the Company in 1996 as Associate
Counsel. Prior to joining the Company, Ms.&nbsp;Bodensteiner was
an Associate with Thelen, Reid&nbsp;&#38; Priest from 1994 to
1996. She obtained a Bachelor of Science degree in Business
Administration and Accounting from the University of Nevada in
1985 and a Juris Doctor degree from Santa&nbsp;Clara University
School of Law in 1989.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Bulent A. Berilgen </I>has served as Executive Vice President
since January 2003 and as President&nbsp;&#151; Calpine Power
Fuels Company since January 2003. Previously he served as Senior
Vice President&nbsp;&#151; Natural Gas from October 1999 to
January 2003. Mr.&nbsp;Berilgen was President and Chief
Executive Officer of Sheridan Energy, a public oil and gas
company, from June 1997 until October 1999 when it was acquired
by the Company. From 1984 until 1997, Mr.&nbsp;Berilgen held
several positions with Forest Oil, including Vice President and
Chief Technical Officer. Mr.&nbsp;Berilgen attended the
University of Oklahoma on a Mobil Oil scholarship, receiving a
Bachelor of Science degree in Petroleum Engineering in 1970 and
a Masters of Science degree in Industrial Engineering/
Management Science in 1973.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Charles B. Clark,&nbsp;Jr.</I> has served as the
Company&#146;s Senior Vice President since September 2001 and
Corporate Controller since May 1999. He was the Director of
Business Services for the Company&#146;s Geysers operations from
February 1999 to April 1999. He also served as a Vice President
of the Company from May 1999 until September 2001. Prior to
joining the Company, Mr.&nbsp;Clark served as the Chief
Financial Officer of Hobbs Group, LLC from March 1998 to
November 1998. Mr.&nbsp;Clark also served as Senior Vice
President&nbsp;&#151; Finance and Administration of CNF
Industries, Inc. from February 1997 to February 1998. He served
as Vice President and Chief Financial Officer of Century
Contractors West, Inc. from May 1988 to January 1997.
Mr.&nbsp;Clark obtained a Master of Business Administration
degree, with a concentration in Finance, from Harvard Graduate
School of Business Administration in 1976 and a Bachelor of
Science degree in Mathematics from Duke University in 1969.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Eric N. Pryor </I>has served as Senior Vice President, Deputy
Chief Financial Officer and Corporate Risk Officer since March
2002. He plays a key role in leading the Company&#146;s
financial operations and in assessing and managing business risk
for the Company. From July 1999 to April 2001 he served as Vice
President&nbsp;&#151; Finance. From January 1998 to June 1999 he
served as Director&nbsp;&#151; Finance. From January 1997 to
December 1997 he served as Senior Analyst. Prior to joining the
Company, Mr.&nbsp;Pryor served as Enterprise Tax Specialist with
Arthur Andersen from 1990 to 1995. He obtained a Bachelor of
Arts degree in Economics from the University of California,
Davis in 1988 and a Master of Business Administration degree
also from the University of California, Davis in 1990.
Mr.&nbsp;Pryor is a certified public accountant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Summary of Cash and Certain Other Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table provides certain information concerning the
compensation for services rendered to the Company in all
capacities during each of the fiscal years ended
December&nbsp;31, 2002, 2003 and 2004 by the Company&#146;s
Chief Executive Officer and each of the four other most
highly-compensated executive officers of
</DIV>

<P align="center" style="font-size: 10pt;">17

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<DIV align="left" style="font-size: 10pt;">
the Company in 2004 (based on combined salary and bonus) who
were serving as executive officers as of December&nbsp;31, 2004.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Summary Compensation Table</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Long-Term Compensation</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Annual Compensation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Securities Underlying</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>All Other</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Name and Principal Position</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Salary(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Bonus(2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation(3)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter Cartwright</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>119,865</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman of the Board,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,018,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83,782</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President and Chief</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>682,884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,393</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ann B. Curtis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>547,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,276</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>475,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>660,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>350,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,180</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Vice Chairman of the</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>475,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>127,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,627</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Board and Corporate Secretary</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert D. Kelly</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>548,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,045</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>470,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>368,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,270</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chief Financial Officer,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>470,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,470</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    and President, Calpine Finance Company</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. James Macias</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>490,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,006</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>467,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>418,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,840</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thomas R. Mason</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>499,074</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,044</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>475,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,030</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    and President,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>475,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>131,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,866</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Power Company</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Salary figures include the amount of salary deferral reflected
    in the following stock option grants under the Salary Investment
    Option Grant Program of the 1996 Stock Incentive Plan:</TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Option Grant</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Salary Deferral</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter Cartwright</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>50,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ann B. Curtis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert D. Kelly</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. James Macias</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,622</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thomas R. Mason</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,000</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
These stock option grants are also included in the amounts
listed as Securities Underlying Options.
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    An Employee Service Recognition bonus was paid to Ann B. Curtis
    in 2004 in recognition of her 20th year of service with the
    Company. All Company employees are eligible to participate in
    the Employee Service Recognition bonus program.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">18

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    For the named executive officers, this column includes the
    following payments by the Company:</TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Term Life</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Insurance</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>401(k)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Payment</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter Cartwright</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>111,665</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,782</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,393</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ann B. Curtis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,076</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,180</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,627</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert D. Kelly</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,845</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,003</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,958</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. James Macias</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,806</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,840</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thomas R. Mason</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,844</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,030</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,866</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Stock Options</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth certain information concerning
grants of stock options during the fiscal year ended
December&nbsp;31, 2004 to each of the executive officers named
in the Summary Compensation Table above. The table also sets
forth hypothetical gains or &#147;option spreads&#148; for the
options at the end of their respective 10-year terms. These
gains are based on the assumed rates of annual compound stock
price appreciation of 5% and 10% from the date the option was
granted over the full option term. No stock appreciation rights
were granted during the fiscal year ended December&nbsp;31, 2004.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Option Grants in Last Fiscal Year</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Individual Grants(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Potential Realizable Value at Assumed</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percentage of Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Annual Rates of Stock Price Appreciation</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Granted</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options Granted to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>For Option Term(3)</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(No. of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Employees in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price per</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Expiration</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD align="left" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fiscal Year(2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Share</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Date</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>0%</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>5%</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>10%</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter Cartwright</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,090</TD>
    <TD align="left" valign="bottom" nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.27</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1/2/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>97,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>169,550</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter Cartwright</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>900,000</TD>
    <TD align="left" valign="bottom" nowrap>(5)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2/25/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,146,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,975,087</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ann B. Curtis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,018</TD>
    <TD align="left" valign="bottom" nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1/2/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,910</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ann B. Curtis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>252,000</TD>
    <TD align="left" valign="bottom" nowrap>(6)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2/25/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>881,157</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,233,024</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert D. Kelly</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>288,000</TD>
    <TD align="left" valign="bottom" nowrap>(6)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2/25/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,007,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,552,028</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. James Macias</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,622</TD>
    <TD align="left" valign="bottom" nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1/2/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,696</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. James Macias</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180,000</TD>
    <TD align="left" valign="bottom" nowrap>(6)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2/25/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>629,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,595,017</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thomas R. Mason</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,000</TD>
    <TD align="left" valign="bottom" nowrap>(6)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2/25/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>503,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,276,014</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Unless otherwise noted herein, the following applies to each
    option set forth in the table. Each option has a term of
    10&nbsp;years, subject to earlier termination upon the executive
    officer&#146;s termination of service with the Company. Each
    option has an exercise price equal to the fair market value of
    the Common Stock on the date of grant. Each option will become
    exercisable for 25% of the option shares upon the officer&#146;s
    completion of each additional one year of service measured from
    the grant date. Each option will immediately become exercisable
    for all of the option shares (i)&nbsp;upon an acquisition of the
    Company by merger or asset sale unless the options are assumed
    by the successor corporation, or (ii)&nbsp;upon retirement of
    the executive officer at least 12&nbsp;months after the option
    grant date, if the executive officer is at least</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">19

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    55&nbsp;years of age at retirement and if the sum of the
    executive officer&#146;s age and years of service at retirement
    is at least 70.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The Company granted options to
    purchase&nbsp;5,573,902&nbsp;shares of Common Stock during the
    fiscal year ended December&nbsp;31, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    The 5% and 10% assumed annual rates of compound stock price
    appreciation from the exercise date are mandated by the rules of
    the Securities and Exchange Commission and do not represent the
    Company&#146;s estimate or a projection by the Company of future
    stock prices. The column headed 0% shows the
    &#147;in-the-money&#148; value at grant date of the options
    granted with an exercise price below the market price at the
    date of grant.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    These options were granted under the Salary Investment Option
    Grant Program of the 1996 Stock Incentive Plan. The options
    vested in equal monthly installments over the 12 calendar months
    of 2004. The number of shares of Common Stock subject to these
    options is determined by dividing (i)&nbsp;the amount of
    compensation elected by the executive officer for deferral,
    which amount may not exceed $50,000, by
    (ii)&nbsp;66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
    of the fair market value per share of Common Stock on the grant
    date. The exercise price per share of each option is equal to
    33<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
    of the fair market value per share of Common Stock on the grant
    date.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    These options were granted under the Discretionary Option Grant
    Program of the 1996 Stock Incentive Plan. The options vest in
    equal annual installments over a two-year period following the
    date of grant.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    These options were granted under the Discretionary Option Grant
    Program of the 1996 Stock Incentive Plan. The options vest in
    equal annual installments over a four-year period following the
    date of grant.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Stock Option Exercises and Holdings</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth certain information concerning
the exercise of options during the fiscal year ended
December&nbsp;31, 2004, and the number of shares subject to
exercisable and unexercisable stock options held as of
December&nbsp;31, 2004, by the executive officers named in the
Summary Compensation Table above. No stock appreciation rights
were exercised by such executive officers in the fiscal year
ended December&nbsp;31, 2004 and no stock appreciation rights
were outstanding at the end of that year,
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Aggregated Option Exercises in Last Fiscal Year and</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Fiscal Year-End Option Values</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Options at December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Value of Unexercised</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>In-the-Money Options</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(No. of Shares)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>at December&nbsp;31, 2004(1)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares Acquired</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>on Exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Realized(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercisable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unexercisable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercisable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unexercisable</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter Cartwright</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,675,944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,671,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,449,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,407,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,006,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ann B. Curtis</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>888,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>539,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>473,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robert D. Kelly</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>201,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>571,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,156,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>573,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,507,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. James Macias</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>126,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>380,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thomas R. Mason</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>437,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>281,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Based upon the closing selling price ($3.94&nbsp;per share) of
    the Common Stock on December&nbsp;31, 2004, less the option
    exercise price payable per share.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Employment Agreements, Termination of Employment and Change
In Control Arrangements</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;9, 2005, the Company entered into a new employment
agreement with Mr.&nbsp;Cartwright. The term of the agreement is
two years (until December&nbsp;31, 2006) and is renewable for
three successive one-year terms upon the mutual agreement of the
Board and Mr.&nbsp;Cartwright. Mr.&nbsp;Cartwright&#146;s
employment agreement provides for the payment of a base salary,
which is subject to periodic adjustment by the Nominating and
Governance Committee and the Compensation Committee of the Board
of Directors, acting jointly; annual
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center" style="font-size: 10pt;">20

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<DIV align="left" style="font-size: 10pt;">
bonuses under the Company&#146;s bonus plans; and participation
in all benefit and equity plans. Pursuant to the agreement, on
March&nbsp;9, 2005, Mr.&nbsp;Cartwright received an option to
purchase&nbsp;1,250,000&nbsp;shares of the Company&#146;s Common
Stock under the Discretionary Stock Option Grant Program of the
Company&#146;s 1996 Stock Incentive Plan. The option has a
six-year term and an exercise price of $3.80&nbsp;per share. The
option will vest upon the earlier of (i)&nbsp;the Company&#146;s
common stock closing price equaling at least $10.00&nbsp;per
share for four consecutive trading days and
(ii)&nbsp;December&nbsp;31, 2009. Except in certain
circumstances, the option will be forfeited if
Mr.&nbsp;Cartwright ceases to be employed as the Company&#146;s
Chief Executive Officer before the option vests. The employment
agreement also provides for other employee benefits such as life
insurance and health care, in addition to certain disability and
death benefits. Severance benefits, including severance pay, the
acceleration of outstanding options, life insurance and health
care, and outplacement services, are payable upon in the event
of (i)&nbsp;resignation for good cause, (ii)&nbsp;an involuntary
termination other than for cause or (iii)&nbsp;the agreement is
not renewed for any of the three one-year renewal terms. Such
severance pay will be equal to the sum of
Mr.&nbsp;Cartwright&#146;s base salary and target bonus at the
time of the termination of his employment, paid for the shorter
of (i)&nbsp;two years and (ii)&nbsp;the period from his
termination date to December&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s employment agreements with Ms.&nbsp;Curtis,
Mr.&nbsp;Kelly and Mr.&nbsp;Mason terminated in 2004. The change
in control agreement with Mr.&nbsp;Macias also terminated in
2004.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the terms of the 1996 Stock Incentive Plan, should the
Company be acquired by merger or asset sale, then all
outstanding options and shares of restricted stock held by the
Chief Executive Officer and the other executive officers under
the 1996 Stock Incentive Plan will automatically accelerate and
vest in full, except to the extent those options and shares of
restricted stock are to be assumed by the successor corporation.
In addition, the Compensation Committee, as plan administrator
of the 1996 Stock Incentive Plan, has the authority to provide
for the accelerated vesting of the shares of Common Stock
subject to outstanding options held by the Chief Executive
Officer or any other executive officer or any unvested shares of
Common Stock acquired by such individual, in connection with the
termination of that individual&#146;s employment following
(i)&nbsp;a merger or asset sale in which these options are
assumed or are assigned or (ii)&nbsp;certain hostile changes in
control of the Company.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<!-- link1 "EXECUTIVE COMPENSATION REPORT" -->
<DIV align="left"><A NAME="009"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXECUTIVE COMPENSATION REPORT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Summary Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Compensation Committee of the Board of Directors (the
&#147;Committee&#148;) believes that the total compensation
package for executives provides the incentives and rewards for
achievement of those financial goals and principal objectives
that are critical to the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company faced a challenging environment in 2004 as
electricity prices continued to recover slowly. The Company
failed to meet the earnings per share goal established by the
Committee at the beginning of the year. Therefore, no bonuses
were awarded under the annual Management Incentive Plan. It is
the view of the Committee that the management team has
consistently demonstrated the highest level of integrity and
environmental stewardship in the management of the Company. In
reviewing the actions taken by management during 2004, the
Committee believes that there were significant accomplishments
that will form the foundation for a stronger Company and which
will be reflected through growth in stockholder value over the
next several years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In recognition of these accomplishments and in light of the
Company&#146;s pay-for-performance philosophy, the Committee
granted executives performance-based restricted stock that
provides a reward based on the future impact of executives&#146;
actions taken in 2004 and beyond. These grants will vest only
when the Company&#146;s stock price reaches specified price
targets. Therefore, the executives will only benefit from the
performance-based restricted stock grants if the stockholders
realize significant gains.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The performance-based restricted stock award is detailed as part
of the description of the overall executive compensation program
that follows.
</DIV>

<P align="center" style="font-size: 10pt;">21

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Compensation Governance</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee and the Nominating and Governance Committee
determine the compensation of Calpine&#146;s Chief Executive
Officer (&#147;CEO&#148;). The Committee is also responsible for
approving compensation paid to the Company&#146;s executive
officers. The Committee is responsible to the Company&#146;s
Board of Directors and stockholders. Generally, the role of the
Committee is to oversee the Company&#146;s compensation and
benefit plans and policies, annually review and approve all
executive officers&#146; compensation, and administer all equity
plans, including reviewing and approving equity grants to the
CEO and the executive officers. The Committee is appointed by
the Board and is composed exclusively of three independent
directors. The Committee operates pursuant to a written charter,
which is available on the Company&#146;s website. To assist in
its review of the compensation of the CEO and the executive
officers, the Committee has retained an independent compensation
consultant. In addition, on an annual basis, the Committee
performs a self-evaluation to assess the Committee&#146;s
performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Compensation Philosophy and Objectives</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee&#146;s philosophy is to provide a total
compensation package that attracts, motivates, and retains
talented executives with such package delivering higher rewards
for excellent performance and corollary results for
underperformance. The Committee&#146;s fundamental philosophy is
to link the executive officers&#146; compensation with the
achievement of annual and long-term performance goals. This is
achieved by providing a balanced mix of cash and equity-based
compensation that the Committee believes is appropriate to align
the short- and long-term interests of the executives with the
stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Achievement of short-term objectives is rewarded through base
salary and annual incentive bonuses. Achievement of long-term
objectives is rewarded using equity-based incentive grants. The
annual incentive awards are based on achievement of financial
objectives that are important to the Company. In 2004, the
Company focused on earnings per share. The Company&#146;s
compensation program also takes into account individual
executive performance. This allows the Committee to
differentiate among the executives and emphasize the personal
accomplishments of each executive. The Company operates in the
extremely competitive and rapidly changing power industry. As
such, all of the compensation programs are developed and
implemented with reference to the market in which the Company
operates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To ensure that the Company&#146;s compensation programs are
properly benchmarked, the Committee compares its compensation
practices to companies in the utility industry, as well as with
executive positions in a range of other industries that have
similar characteristics to the positions held by executives at
the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The positions of the Company&#146;s CEO and its other executive
officers are compared with those of other companies, and the
market compensation levels for comparable positions are examined
to determine base salary, target incentives, cash compensation,
and total remuneration. In addition, the Company analyzes other
companies&#146; practices concerning long-term incentives,
including stock option grants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
More specifically, the Committee considers the following in
determining executive compensation under the Company&#146;s
compensation plans:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The Company&#146;s actual annual financial performance as
    compared to its annual budgeted performance goals, measured by
    earnings per share in 2004;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    An executive&#146;s individual performance;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The Company&#146;s performance compared to other companies in
    its sector;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The Company&#146;s ability to recruit and retain executive
    talent.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In designing the compensation program, the Committee has
determined that up to approximately 75% of the executives&#146;
compensation, including the CEO&#146;s, is targeted to be
performance-based incentive compensation, delivered in both
equity and cash that is directly related to the overall
performance of the Company. Should the Company&#146;s
performance goals not be achieved, this performance-based
incentive compensation is at risk.
</DIV>

<P align="center" style="font-size: 10pt;">22

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A more detailed description of each component of an
executive&#146;s compensation is provided in the following
sections of this Compensation Committee Report. The Summary
Compensation Table included on page&nbsp;18 of this proxy
outlines in detail the annual compensation and long-term
incentive compensation of the CEO and each of the four other
most highly compensated executive officers of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Compensation Components and Process</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The three major components of the CEO&#146;s and the executive
officers&#146; compensation include: (i)&nbsp;base salary;
(ii)&nbsp;annual variable incentive awards under the annual
Management Incentive Plan (the &#147;MIP&#148;); and
(iii)&nbsp;long-term, equity-based incentive awards under the
1996 Stock Incentive Plan (the &#147;SIP&#148;). The Company
also maintains a Nonqualified Deferred Compensation Plan that
allows certain employees, including the CEO and the executive
officers, to defer receipt of their salaries and/or their annual
incentive bonuses. The Company does not provide the CEO and the
executive officers any type of supplemental retirement benefits
or other perquisites such as company provided automobiles or
memberships in country clubs.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Base Salary.</I> The Committee annually reviews and
determines the base salaries for the CEO and the senior
executive officers reporting to the CEO. The Committee reviews
the following qualitative factors when determining base
salaries: the executive&#146;s individual performance, level of
responsibility, tenure, prior experience, and a comparison to
base salaries paid for comparable positions both within and
outside of the Company. Base salaries for the covered officers
were increased by a median of 3.75% in 2004, with the executives
receiving an average raise of 4.23%. The CEO&#146;s base salary
was not increased in 2004.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Annual Incentive Awards.</I> To reinforce the attainment of
Company goals, the Committee believes that a substantial portion
of the annual compensation of each executive officer should be
in the form of variable incentive pay. Annual incentives are
tied to the Company&#146;s performance as well as the
performance of each executive and his or her business unit. For
2004, the Committee established a set of corporate goals and
objectives. A target incentive, expressed as a percentage of
base salary, is set for each executive officer. The actual
incentive payment for each executive officer is determined based
on his or her contribution to the achievement of the corporate
goals and objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Annual incentive award payments are made from a pool that is
funded based on the Company&#146;s performance against
pre-established goals and objectives. The performance targets
are established by the Committee at the beginning of the year.
The Committee retains discretion to make adjustments when
necessary to meet the Company&#146;s compensation objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company did not pay incentive awards under the MIP to the
CEO and its executive officers for 2004, as it failed to meet
the pre-established financial goal set earlier in the year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Long-Term, Equity-Based Incentive Awards.</I> The 1996 Stock
Incentive Plan (&#147;SIP&#148;) provides the Company with
various types of equity-based awards that it may grant to
employees, non-employee directors, and certain independent
contractors of the Company. More specifically, the SIP enables
the Company to grant stock options, stock appreciation rights,
restricted stock, and other equity awards, based on the
Company&#146;s Common Stock. The long-term incentives assist the
Company in focusing executive efforts on attaining performance
goals over a number of years, a focus that is integral to the
Company&#146;s continued success. The SIP has a 10-year term;
thus, the Company intends to submit a new equity plan to its
stockholders at the annual meeting in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The SIP is divided into five separate equity programs:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Discretionary Option Grant Program: Under this program, eligible
    individuals may be granted options to purchase shares of the
    Company&#146;s Common Stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Salary Investment Option Grant Program: Under this program,
    eligible employees may elect to have a portion of their base
    salary invested each year in special non-statutory option grants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Stock Issuance Program: Under this program, eligible individuals
    may be issued shares of the Company&#146;s Common Stock either
    through the immediate purchase of such shares or as a bonus for
    services rendered to the Company.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">23

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Automatic Option Grant Program; Under this program, eligible
    non-employee members of the Board of Directors receive
    non-statutory option grants at periodic intervals to purchase
    shares of the Company&#146;s Common Stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Director Fee Option Grant Program: Under this program,
    non-employee members of the Board of Directors may elect to have
    all or any portion of their annual retainer fee otherwise
    payable in cash applied to a special non-statutory option grant.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>2004 and 2005 Equity Grants.</I> With the help of an
independent executive compensation consultant, the Committee
determines the value of the equity award to be granted to each
executive officer. The incentive awards under the SIP are made
in the form of stock options or restricted stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Discretionary Option Grant Program.</I> In 2004, executive
officers received a total of 2,484,000 options to purchase the
Company&#146;s Common Stock at an exercise price of
$5.56&nbsp;per share. Of this amount, 900,000 options with
2-year vesting and a 10-year term were granted to the CEO and
the remaining 1,584,000 options with 4-year vesting and a
10-year term were granted to the other executive officers. In
2005, executive officers(1) were awarded a total of 2,400,500
options with 4-year vesting and a 7-year term to purchase the
Company&#146;s Common Stock at an exercise price of
$3.32&nbsp;per share. Of this amount, 350,500 options were
granted to CEO and the remaining 2,050,000 options were granted
to the other executive officers. All options are granted with an
exercise price equal to the fair market value of the
Company&#146;s Common Stock on the date of grant, and option
repricing is expressly prohibited by the terms of the SIP.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Salary Investment Option Grant Program.</I> Under the Salary
Investment Option Grant Program, the CEO, executive officers,
and other highly compensated employees may elect to have between
$10,000 and $50,000 of their base salaries invested each year in
special option grants. Under this program,
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the fair market value of the shares of Common Stock
underlying the grant on the date of the grant is paid by the
participating executive through base salary reduction. Upon
exercise of the options, the remaining
33<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the fair market value of the shares is paid in cash by the
executive. The number of shares of Common Stock subject to the
option is determined by dividing the dollar amount of the
approved salary reduction by a number equal to
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the fair market value per share of Common Stock on the grant
date. The options vest monthly over a period of one year from
the date of grant and have a maximum term of ten years. In 2004,
six executives participated in the program. The Committee froze
the Salary Investment Option Grant Program in 2005 until the
impact of IRS Code Section&nbsp;409A can be fully assessed.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Stock Issuance Program.</I> As discussed, the Committee did
not award annual incentive bonuses to the executive officers for
2004. The Committee recognized that there were significant
achievements during the course of the year that will enhance the
value of the Company going forward. Specifically, actions
related to reductions in operating and overhead costs, as well
as improvements in liquidity, will serve to strengthen the
Company over the long term. To provide executives with the
ability to participate in the fruits of these actions, the
Committee decided to grant performance-based restricted stock to
the executives. Executives will vest in these awards only when
the stock price reaches a specified target and remains at that
level over a specified period of time. By tying the vesting of
the performance-based restricted stock to target stock prices,
the executives will only be rewarded if stockholders benefit
through increased share price. There is no ability to earn
shares under this grant of restricted stock without future
performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The total number of performance-based restricted shares granted
was 1,247,427 including the CEO; 840,800 to executive officers
excluding the CEO award described below. The closing price was
$3.32&nbsp;per share of Common Stock on the date of the grant.
The restricted stock has the following performance-based
vesting: 50% of the performance-based restricted stock shall
vest when the Company&#146;s stock price is equal to or greater
than $5.00&nbsp;per share for four consecutive trading days. The
remaining 50% of the restricted stock shall vest when the
Company&#146;s stock price is equal to or greater than
$10.00&nbsp;per share for four consecutive trading days.
</DIV>

<P>
<DIV align="left" style="font-size: 3pt; margin-top: 0pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>

<DIV align="left" style="font-size: 10pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1&nbsp;Executive officer Ronald A. Walter received a stock
option grant of 144,000&nbsp;shares in 2004. Mr.&nbsp;Walter
retired on December&nbsp;31, 2004 and is not included among the
2005 stock option grant recipients.
</DIV>

<P align="center" style="font-size: 10pt;">24

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<DIV align="left" style="font-size: 10pt;">
The restricted stock does not include a time-based vesting
feature. The grant shall terminate on December&nbsp;31, 2009.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Deferred Compensation Plan.</I> In 2004 the Company
maintained a Nonqualified Deferred Compensation Plan that
allowed certain employees, including the CEO and the executive
officers, to defer a portion of their salaries and/or annual
incentive payments into various investment options. Participants
were allowed to defer up to 100% of salary and 100% of annual
incentive awards until the date(s) they specified. The Committee
froze the Nonqualified Deferred Compensation Plan during 2005
until the impact of IRS Code Section&nbsp;409A can be fully
assessed.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Plan is not funded by the Company, and participants have an
unsecured contractual commitment by the Company to pay the
amounts due under its provisions. When such payments are due,
the deferred compensation will be distributed from the
Company&#146;s general assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Compensation of the Chief Executive Officer</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Cartwright&#146;s total compensation is presented in
the Summary Compensation Table and in the table captioned
&#147;Option Grants in Last Fiscal Year&#148; on pages&nbsp;18
and 19 of this proxy. The following paragraphs provide
background and the Committee&#146;s rationale for compensation
paid to Mr.&nbsp;Cartwright.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Base Salary.</I> Under his original employment agreement,
Mr.&nbsp;Cartwright&#146;s base salary for 2004 was $1,000,000.
The Board of Directors determined that this base salary was
appropriate on the basis of Mr.&nbsp;Cartwright&#146;s extensive
industry experience, his level of responsibility, and on the
salary levels paid to chief executive officers among companies
in the utility industry and other industries. In setting the
compensation payable to Mr.&nbsp;Cartwright, it has been the
philosophy of the Committee to tie a significant percentage of
Mr.&nbsp;Cartwright&#146;s total compensation to the
Company&#146;s performance and long-term stock price
appreciation.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Employment Agreement.</I> The Company&#146;s Chairman,
President, and CEO, Peter Cartwright, had an employment
agreement with the Company with a five-year term that ended on
December&nbsp;31, 2004. On March&nbsp;9, 2005, the Company
entered into a new two-year agreement with Mr.&nbsp;Cartwright.
Mr.&nbsp;Cartwright&#146;s new employment agreement is discussed
in greater detail under the section headed &#147;Employment
Agreements, Termination of Employment and Change in Control
Arrangements&#148; on page&nbsp;20 of this proxy.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Annual Incentive Award.</I> The Committee did not award
Mr.&nbsp;Cartwright an annual incentive under the MIP for 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>2004-Stock Option Grant.</I> In 2004, the Committee approved
a stock option grant to Mr.&nbsp;Cartwright that was made in
January 2004 under the Discretionary Option Grant Program of the
SIP to purchase&nbsp;900,000&nbsp;shares of Common Stock, as
more fully described in the table captioned &#147;Option Grants
in the Last Fiscal Year&#148; on page&nbsp;19 of this proxy
statement. The stock options have an exercise price of
$5.56&nbsp;per share, the market price of the Common Stock on
the date of the grant, a ten-year term, and vest in equal annual
installments over a two-year period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>2004-Salary Investment Option Grant Program.</I> In January
of 2004 Mr.&nbsp;Cartwright participated in the Company&#146;s
Salary Investment Option Grant Program. Mr.&nbsp;Cartwright
elected to have $50,000 of his base salary deferred under the
terms of the program described above and, as a result, holds an
option to purchase&nbsp;15,090&nbsp;shares at an exercise price
of $1.655&nbsp;per share.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>2005-Stock Option Grants.</I> On March&nbsp;8, 2005, the
Committee awarded Mr.&nbsp;Cartwright an option to
purchase&nbsp;350,500&nbsp;shares of the Company&#146;s Common
Stock under the Discretionary Stock Option Grant Program of the
Company&#146;s SIP. The option has a seven-year term and an
exercise price of $3.32&nbsp;per share. The option vests over a
four-year period, with 25% becoming exercisable on each
anniversary of the grant date.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Mr.&nbsp;Cartwright&#146;s new employment agreement, on
March&nbsp;9, 2005, Mr.&nbsp;Cartwright received an option to
purchase&nbsp;1,250,000&nbsp;shares of the Company&#146;s Common
Stock under the Discretionary Stock Option Grant Program of the
Company&#146;s SIP. The option has a six-year term and an
exercise price of $3.80&nbsp;per share.
</DIV>

<P align="center" style="font-size: 10pt;">25

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<DIV align="left" style="font-size: 10pt;">
The option will vest upon the earlier of (i)&nbsp;the
Company&#146;s common stock closing price equaling at least
$10.00&nbsp;per share for four consecutive trading days and
(ii)&nbsp;December&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>2005-Restricted Stock Grant.</I> On March&nbsp;8, 2005,
Mr.&nbsp;Cartwright was awarded a grant of 406,627&nbsp;shares
of restricted stock under the Stock Issuance Program of the SIP
with performance-based vesting. The fair market value of such
grant is $3.32&nbsp;per share of Common Stock and the restricted
stock grant was issued in consideration for past services. The
restricted stock grant has the following performance-based
vesting: 50% of the restricted stock shall vest at such time as
the Company&#146;s stock price is equal to or greater than
$5.00&nbsp;per share for four consecutive trading days and the
remaining 50% of the restricted stock shall vest at such time as
the Company&#146;s stock price is equal to or greater than
$10.00&nbsp;per share for four consecutive trading days. The
grant shall terminate on December&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Compliance with Section&nbsp;162(m) of the Internal Revenue
Code</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Section&nbsp;162(m) of the Internal Revenue Code, the
Company is not permitted to deduct for federal income tax
purposes any compensation in excess of $1,000,000 paid to its
CEO or to any of its four other most highly compensated
executive officers, unless the compensation qualifies as
performance-based compensation within the meaning of
Section&nbsp;162(m). In order to maintain flexibility to adjust
annual incentive payments to reflect business and individual
performance, the Company to date has not qualified the MIP to
meet the requirements for exemption from the deduction limit,
but is considering obtaining stockholder approval of its
Management Incentive Plan at the 2006 Annual Meeting of
Stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2004, none of the compensation paid to the executive officers
named in the Summary Compensation Table was nondeductible by
reason of Section&nbsp;162(m). The restricted stock grants made
to the Company&#146;s executive officers in 2005 as described
above, will be counted against the Section&nbsp;162(m) deduction
limits for a given year, if and when, the shares of restricted
stock vest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Stock Ownership Guidelines</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2005 the Company is introducing Stock Ownership and Holding
Period Guidelines for its executive officers and members of the
Board of Directors. The stock ownership guidelines will be
designed to further align the interests of executive officers
and directors with those of our stockholders. Under the
guidelines, executive officers and directors are expected to
acquire and hold a certain amount of Common Stock. Stock
ownership under this program is defined as direct ownership of
Company Common Stock, including sole ownership and other
accounts over which the individual has direct or indirect
ownership or control. This includes shares held in a 401(k)
account, shares purchased by an executive officer pursuant to
the Company&#146;s Employee Stock Purchase Plan and vested
shares of restricted stock. This definition does not include
unexercised stock options and unvested shares of restricted
stock held by the executive. Executive officers and directors
are expected to meet their ownership guidelines within five
years of becoming subject to the guidelines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Submitted on behalf of the Compensation Committee of the Board
of Directors.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Compensation Committee:</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Jeffrey E. Garten (Chair)</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Gerald Greenwald</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Susan C. Schwab</TD>
</TR>

</TABLE>

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<!-- link1 "AUDIT COMMITTEE REPORT" -->
<DIV align="left"><A NAME="010"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AUDIT COMMITTEE REPORT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following Report of the Audit Committee shall not be deemed
incorporated by reference by any general statement incorporating
this Proxy Statement into any filing under the Securities Act or
under the Securities Exchange Act except to the extent the
Company specifically incorporates this information by reference
and shall not otherwise be deemed filed under such acts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee of the Board of Directors is primarily
responsible for assisting the Board of Directors in carrying out
its duties as they relate to the Company&#146;s accounting
policies and its internal control and financial reporting
practices, including monitoring the progress and results of
management&#146;s internal control assessment pursuant to
Section&nbsp;404 of the Sarbanes-Oxley Act of 2002. The Audit
Committee manages the Company&#146;s relationship with its
independent auditors, who report directly to the Audit
Committee. The Audit Committee has the authority to obtain
advice from outside legal, accounting or other advisors as the
Audit Committee deems necessary to carry out its duties and
receive appropriate funding, as determined by the Audit
Committee, from the Company for such advice and assistance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee was established in 1996 following the
Company&#146;s initial public offering. The Audit Committee
serves under a charter adopted by the Board of Directors that
specifies the responsibilities of the Audit Committee. The Audit
Committee is comprised entirely of outside directors, each of
whom is independent as defined by the rules of the NYSE. All
members of the Audit Committee are financially literate within
the meaning of the NYSE rules and all members of the Audit
Committee are &#147;audit committee financial experts&#148; as
that term is defined by the rules of the Securities and Exchange
Commission adopted pursuant to the Sarbanes-Oxley Act of 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As provided in the Audit Committee Charter, the Audit Committee
of the Board of Directors assists the Board of Directors in
fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing, and financial reporting
practices of the Company. During the fiscal year ended
December&nbsp;31, 2004, the Audit Committee met 10 times. The
Audit Committee chairman, as representative of the Audit
Committee, periodically discussed the interim financial
information contained in each quarterly earnings announcement
with the Company&#146;s Chief Financial Officer, its corporate
controller and its independent auditors prior to public release.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In discharging its oversight responsibility as to the audit
process, the Audit Committee obtained from the Company&#146;s
independent auditors a formal written statement describing all
relationships between the auditors and the Company that might
bear on the auditors&#146; independence consistent with
Independence Standards Board Standard No.&nbsp;1,
&#147;Independence Discussions with Audit Committees,&#148;
discussed with the auditors any relationship that may impact
their objectivity and independence and satisfied itself as to
the auditors&#146; independence. The Audit Committee also
discussed with management, the internal auditors and the
independent auditors the quality and adequacy of the
Company&#146;s internal controls, including deficiencies
identified in the internal control environment and the reporting
of such deficiencies in the Company&#146;s financial statements
for the fiscal year ended December&nbsp;31, 2004. The Audit
Committee reviewed with both the independent and the internal
auditors their audit plans, audit scope and identification of
audit risks and the internal audit function&#146;s organization,
responsibilities, budget and staffing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee has established a procedure for receiving
and addressing anonymous complaints regarding financial or
accounting irregularities. The Audit Committee has set up a
toll-free ethics and compliance hotline managed by an
independent third party. Such hotline is available 24&nbsp;hours
a day, 7&nbsp;days a week to enable employees to communicate
concerns to management without fear of retaliation. The calls
received by the hotline are reviewed by the appropriate
personnel in the Company, including the Office of the General
Counsel. The Audit Committee has delegated to the Office of the
General Counsel of the Company the responsibility and authority
to conduct prompt and thorough investigations of any allegations
or suspicions of violations of laws, rules and regulations, the
Code of Conduct or any other policy. The Office of the General
Counsel shall (i)&nbsp;evaluate the gravity and credibility of
any alleged violation, (ii)&nbsp;initiate informal inquiries or
formal investigations as appropriate, (iii)&nbsp;report the
results of such inquiry or investigation to senior management or
the Audit Committee, as appropriate, and (iv)&nbsp;recommend
appropriate action against violators, including but not limited
to termination of employment.
</DIV>

<P align="center" style="font-size: 10pt;">27

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee discussed and reviewed with the independent
auditors all communications required by generally accepted
auditing standards, including those described in Statement of
Auditing Standards No.&nbsp;61, as amended, &#147;Communication
with Audit Committees&#148; and, both with and without
management present, discussed and reviewed the results of the
independent auditors&#146; examination of the financial
statements. The Audit Committee also discussed the results of
the internal audit examinations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee has reviewed and discussed the audited
financial statements of the Company as of and for the fiscal
year ended December&nbsp;31, 2004, with management and the
independent auditors. Management has the responsibility for the
preparation of the Company&#146;s financial statements and the
independent auditors have the responsibility for the examination
of those statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on the above-mentioned review and discussions with
management and the independent auditors, the Audit Committee
recommended to the Board of Directors that the Company&#146;s
audited financial statements be included in its Annual Report on
Form&nbsp;10-K for the fiscal year ended December&nbsp;31, 2004,
which has been filed with the Securities and Exchange Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Submitted on behalf of the Audit Committee of the Board of
Directors.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Audit Committee:</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    John O. Wilson (Chair)</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Kenneth T. Derr</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Jeffrey E. Garten</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Susan Wang</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">28

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<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->
<DIV align="left"><A NAME="011"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 1999, the Company made an interest-free, five-year loan
to Thomas R. Mason, Executive Vice President of the Company, in
a principal amount of $500,000, secured by a deed of trust on
Mr.&nbsp;Mason&#146;s residence. The loan was made to assist
Mr.&nbsp;Mason on purchasing a new residence in connection with
his relocation to a new principal place of work upon his
beginning his employment with the Company. This loan has been
repaid in full by Mr.&nbsp;Mason.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since January 2000, the Company has entered into an annual
Consulting Agreement with George J. Stathakis, who is a member
of the Board of Directors, to provide advice and guidance on
various management issues to the Chief Executive Officer and
members of the Chief Executive Officer&#146;s senior staff.
Pursuant to the terms of the Consulting Agreement, in 2004 the
Company paid Mr.&nbsp;Stathakis a consulting fee of $5,000 per
month and issued Mr.&nbsp;Stathakis a stock option grant in
January 2004 under the Discretionary Option Grant Program for
10,000&nbsp;shares of Common Stock at an exercise price of $4.97
per share. Such options were fully vested at the end of 2004.
Mr.&nbsp;Stathakis, who is a former employee of the Company,
also receives an annual stock option grant from the Company
under the Discretionary Option Grant Program in an amount equal
to and on similar terms as the grants issued to the other
non-employee directors of the Company. Accordingly, in May 2004,
Mr.&nbsp;Stathakis received a stock option grant to
purchase&nbsp;3,500&nbsp;shares of Common Stock at an exercise
price of $3.67 per share and such options were fully vested at
the end of 2004.
</DIV>

<!-- link1 "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934" -->
<DIV align="left"><A NAME="012"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMPLIANCE WITH SECTION&nbsp;16(a) OF</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>THE SECURITIES EXCHANGE ACT OF 1934</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;16(a) of the Securities Exchange Act requires the
Company&#146;s directors and executive officers, and persons who
own more than 10% of a registered class of the Company&#146;s
equity securities, to file with the Securities and Exchange
Commission initial reports of beneficial ownership and reports
of changes in beneficial ownership of Common Stock and other
equity securities of the Company and to provide the Company with
a copy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based solely upon review of the copies of such reports furnished
to the Company and written representations that no other reports
were required, the Company is not aware of any instances of
noncompliance with the Section&nbsp;16(a) filing requirements by
any executive officer, director or greater than 10% beneficial
owners during the year ended December&nbsp;31, 2004, except as
follows: a late Form&nbsp;4 was filed by George J. Stathakis on
January&nbsp;30, 2004 to report a stock option grant on
January&nbsp;5, 2004 for 10,000&nbsp;shares of Common Stock,
described above.
</DIV>

<P align="center" style="font-size: 10pt;">29

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<!-- link1 "STOCK PERFORMANCE GRAPH" -->
<DIV align="left"><A NAME="013"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>STOCK PERFORMANCE GRAPH</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following performance graph shall not be deemed incorporated
by reference by any general statement incorporating this Proxy
Statement into any filing under the Securities Act or under the
Securities Exchange Act except to the extent the Company
specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such acts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;20, 1996, the Company issued Common Stock in
its initial public offering. The Common Stock trades on the New
York Stock Exchange under the symbol &#147;CPN.&#148; The
following graph compares for the period of December&nbsp;31,
1999 through December&nbsp;31, 2004, the total return on the
Common Stock with the cumulative weighted average total return
assuming reinvestment of dividends of (i)&nbsp;the
Standard&nbsp;&#38; Poor&#146;s 500 Stock Index (&#147;S&#38;P
500&#148;) and (ii)&nbsp;an index of comparable peer issuers
(the &#147;Peer Group&#148;) consisting of AES Corp., Dynegy,
Inc., and Reliant Resources Inc. In accordance with the rules of
the Commission the returns are indexed to a value of $100 at
December&nbsp;31, 1999 and the returns of each company in each
Peer Group has been weighted according to its market
capitalization as of the beginning of the period.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMPARISON OF CUMULATIVE TOTAL EARNINGS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>1999-2004 MEASUREMENT PERIOD</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="f04973def0497300.gif" alt="(PERFORMANCE CHART)">
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="24" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>1999</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2000</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>


<TR valign="bottom" style="font-size: 1px">
    <TD colspan="24" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;CALPINE CORP</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>100.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>281.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>104.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>20.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>30.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24.63</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;S&#38;P500</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>100.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>90.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>80.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>62.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>80.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>89.02</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;PEER GROUP</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>100.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>166.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>60.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35.31</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">30

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<!-- link1 "ANNUAL REPORT" -->
<DIV align="left"><A NAME="014"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ANNUAL REPORT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s 2004 Annual Report to Stockholders is being
mailed to stockholders concurrently with this Proxy Statement
and does not form a part of the proxy solicitation material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Securities and Exchange Commission rules brokers and banks
that hold stock for the account of their customers are permitted
to deliver a single annual report and proxy statement (as well
as other shareholder communications from the issuer) to two or
more stockholders who share the same address. If you and other
residents at your mailing address own Common Stock through a
broker or bank, you may have received only a single copy of this
Proxy Statement and the 2004 Annual Report to Stockholders. Upon
written or oral request to the Senior Vice President&nbsp;&#151;
Investor Relations of the Company at the corporate headquarters
at Calpine Corporation, 50&nbsp;West San Fernando Street, San
Jose, California 95113, (408)&nbsp;995-5115, the Company will
delivery promptly a separate copy of the Proxy Statement and the
2004 Annual Report to Stockholders to any stockholder at a
shared address to which a single copy of this Proxy Statement
and the 2004 Annual Report to Stockholders was delivered.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By written or oral request to the same address or phone number
stated above, a stockholder may notify the Company that the
stockholder wishes to receive a separate Annual Report or Proxy
Statement in the future. Your notice should include the name of
your brokerage firm or bank and your account number. If you hold
your shares of Common Stock through a broker or bank and are
receiving multiple copies of the Proxy Statement and Annual
Report at your address and would like to receive only one copy
for your household, please contact your broker or bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
It is important that your shares be represented at the meeting,
regardless of the number of shares which you hold. YOU ARE,
THEREFORE, URGED TO EXECUTE PROMPTLY AND RETURN THE ACCOMPANYING
PROXY IN THE ENVELOPE WHICH HAS BEEN ENCLOSED FOR YOUR
CONVENIENCE. Stockholders who are present at the meeting may
revoke their proxies and vote in person or, if they prefer, may
refrain from voting in person and allow their proxies to be
voted.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    By Order of the Board of Directors</TD>
</TR>

<TR>
    <TD style="font-size: 48pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Peter Cartwright</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>Chairman of the Board, President and</I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>Chief Executive Officer</I></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
April&nbsp;14, 2005
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="font-size: 10pt;">
San Jose, California
</DIV>

<P align="center" style="font-size: 10pt;">31
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P><DIV style="position: relative; float: left; margin-right: 1%; width: 38%">

<P align="left" style="font-size: 10pt"><IMG src="f04973decalpinelogo.gif" alt="(CALPINE LOGO)"><BR>
<B>CALPINE CORPORATION<BR>
50 WEST SAN FERNANDO STREET<BR>
SAN JOSE, CA 95113</B>

</DIV>

<DIV style="position: relative; float: right; margin-left: 1%; width: 58%">


<P align="left" style="font-size: 9pt"><B>VOTE BY INTERNET &#151; www.proxyvote.com<BR></B>
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59&nbsp;P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the
web site and follow the instructions to obtain your records and to create an electronic voting
instruction form.


<P align="left" style="font-size: 9pt"><B>VOTE BY PHONE &#151; 1-800-690-6903<BR></B>
Use any touch-tone telephone to transmit your voting instructions up until
11:59&nbsp;P.M. Eastern Time the day before the cut-off date or meeting date. Have
your proxy card in hand when you call and then follow the
instructions.


<P align="left" style="font-size: 9pt"><B>VOTE BY MAIL<BR></B>
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Calpine Corporation, c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.


</DIV>
<BR clear="all"><BR>

<P align="left" style="font-size: 9pt">TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:


<DIV align="right" style="font-size: 8pt"><B>CALPN1</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>KEEP THIS PORTION FOR YOUR RECORDS</B>
<HR size="1" noshade width="100%" align="right">
</DIV>

<DIV align="right" style="font-size: 8pt"><B>DETACH AND RETURN THIS PORTION ONLY</B>
</DIV>

<P align="left" style="font-size: 9pt"><B>BY THE ORDER OF THE BOARD
OF DIRECTORS OF CALPINE CORPORATION (the &#147;Company&#148;)</B>



<P align="left" style="font-size: 9pt"><B>Vote On Directors</B>


<DIV style="position: relative; float: left; margin-right: 1%; width: 58%">

<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To elect three Class&nbsp;II Directors
to the Board of Directors, each
for a term of three years:<BR>
01) Peter Cartwright
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>For<br>
All</B><br>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Withhold<br>
All</B><br>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>For All<br>
Except<BR></B>
<FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">02) Susan C. Schwab</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">03) Susan Wang</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>

<DIV style="position: relative; float: right; margin-left: 1%; width: 38%">
<P align="left" style="font-size: 9pt">&nbsp;<BR>
To withhold authority to vote, mark &#147;For All Except&#148; and write the number of
one or more nominees on the line below.


<P align="left" style="font-size: 10pt"><HR size="1" noshade width="100%" align="center">


</DIV>
<BR clear="all"><BR>

<P align="left" style="font-size: 9pt"><B>Vote On Proposals</B>

<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><B>For</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><B>Against</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><B>Abstain</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To act upon a Company proposal regarding the
amendment of the Company&#146;s Amended
and Restated Certificate of Incorporation to declassify the election of the Board;
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To ratify the appointment of
PricewaterhouseCoopers LLP as independent accountants for the Company
for the fiscal year ending December&nbsp;31, 2005; and
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To transact such other business as may properly come before the meeting and any adjournments or postponements thereof.
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>



<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 9pt"><B>THIS PROXY CARD IS VALID ONLY
WHEN SIGNED AND DATED. THIS PROXY WILL BE VOTED
AS DIRECTED. WHERE NO CHOICE IS SPECIFIED, THIS PROXY WILL CONFER
DISCRETIONARY AUTHORITY AND WILL BE VOTED IN FAVOR OF PROPOSALS ONE, TWO,
THREE AND FOUR.</B>


<P><DIV style="position: relative; float: left; margin-right: 1%; width: 48%">
<P align="left" style="font-size: 9pt">For comments, please check this box and write them on the back where indicated&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>

<DIV style="position: relative; float: left; margin-right: 1%; width: 100%">
<DIV align="center">

<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Please indicate whether you would
like to keep your vote confidential under the current
policy
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Yes</B><br>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>No</B><br>
<FONT face="Wingdings">&#111;</FONT>
</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 9pt">Please sign exactly as your name(s) appear on proxy.
If held in joint tenancy,
all persons must sign. Trustees, Administrators, etc., should include title and
authority.


<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="75%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" style="border-top: 1px solid black; border-left: 1px solid black; border-bottom: 1px solid black; font-size: 20pt">&nbsp;</TD>
    <TD style="font-size: 20pt; border-top: 1px solid black; border-bottom: 1px solid black">&nbsp;</TD>
    <TD align="left" valign="top" style="font-size: 20pt; border-top: 1px solid black; border-right: 1px solid black; border-bottom: 1px solid black">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" style="font-size: 10pt">Signature &#091;PLEASE SIGN WITHIN BOX&#093;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="font-size: 10pt">Date</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>
</DIV>

</DIV>
<BR clear="all">

<DIV style="float: left; margin-left: 0%; width: 48%">

<P>&nbsp;<BR>
&nbsp;<BR>
&nbsp;<BR>
&nbsp;<BR>
&nbsp;

<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="75%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" style="font-size: 20pt; border-top: 1px solid black; border-left: 1px solid black; border-bottom: 1px solid black">&nbsp;</TD>
    <TD style="font-size: 20pt; border-top: 1px solid black; border-bottom: 1px solid black">&nbsp;</TD>
    <TD align="left" valign="top" style="font-size: 20pt; border-top: 1px solid black; border-right: 1px solid black; border-bottom: 1px solid black">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" style="font-size: 10pt"><DIV style="margin-left:0px; text-indent:-0px">Signature (Joint Owners)
</DIV></TD>
    <TD style="font-size: 10pt">&nbsp;</TD>
    <TD style="font-size: 10pt" align="left" valign="top">Date</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>
<BR clear="all"><BR>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>(MAP)</B>

</DIV>
<P align="left" style="font-size: 10pt"><B>From San Francisco Bay Area/San Jose<BR></B>

<P align="left"><FONT size="1">

</FONT>
<P align="center" style="font-size: 10pt"><B>ADMISSION TICKET<BR>
2005 Annual Meeting of Stockholders<BR>
Wednesday, May&nbsp;25, 2005 at 10:00&nbsp;a.m.<BR>
Metcalf Energy Center, One Blanchard Road, San Jose, California 95013</B>
<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="left" style="font-size: 10pt">You must present this admission ticket in order to gain
admittance to the
meeting. This ticket admits only the stockholder(s) listed on the reverse side
and is not transferable. If your shares are held in the name of the broker,
trustee, bank or other nominee, you must bring a proxy or letter from the
broker, trustee, bank or nominee confirming your beneficial ownership of the
shares.



<BR clear="all"><BR>

<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%" align="CENTER">



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned appoints Peter Cartwright and Ann B. Curtis, and each of them,
proxies with full power of substitution, to vote all the shares of common stock
of Calpine Corporation that the undersigned may be entitled to vote at the 2005
Annual Meeting of Stockholders of Calpine Corporation, a Delaware corporation
(the &#147;Company&#148;), to be held at Calpine&#146;s Metcalf Energy Center, located at One Blanchard Road, San Jose, California 95013, at
10:00&nbsp;a.m., Pacific
Daylight Time, on
Wednesday, May&nbsp;25, 2005, for the purpose of considering and voting upon the matters stated
on the reverse side.

<P align="left" style="font-size: 10pt">Comments:


<P align="left" style="font-size: 10pt"><HR size="1" noshade width="100%" align="CENTER">


<P align="left" style="font-size: 10pt"><HR size="1" noshade width="100%" align="CENTER">


<P align="left" style="font-size: 10pt"><HR size="1" noshade width="100%" align="CENTER">


<DIV align="center" style="font-size: 10pt">(If you noted any comments above, please check the corresponding box on the reverse side.)</DIV>




<P align="center" style="font-size: 10pt">&nbsp;


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