Lots of interesting things in this passage:
Peavy earned $2.5 million in 2006, his fourth season. He'll earn under $5 million in 2007 and under $7 million in 2008, but the exact figure is dependent on the escalating clauses he meets. In addition, the Padres hold an option on Peavy's contract for 2009.
Amazing to me that Peavy has only played four seasons, and that he's under club control for three more years at a very reasonable price. Makes you wonder why The Padres want to trade him.