EXHIBIT 10.3
 

Addendum No. 1
 
To
 
Professional Engagement Agreement General Terms
 
Between
 
Calpine Corporation
 
And
 
PA Consulting Group, Inc.

THIS ADDENDUM NO. 1 (“Addendum No. 1”) is made and entered into as of May 2,
2008 by and between Calpine Corporation (“CALPINE”) and PA Consulting Group,
Inc. (“PROFESSIONAL”).  This Addendum No. 1 is entered into under and pursuant
to the terms of that certain Professional Engagement Agreement General Terms
Between Calpine Corporation and PA Consulting Group, Inc. dated as of May 2,
2008 (the “MSA”) by and between CALPINE and PROFESSIONAL.  Capitalized terms not
defined in this Addendum No. 1 have the meanings given to such terms in the MSA.

This Addendum No. 1 is incorporated into the MSA as if fully set forth
therein.  Except to the extent otherwise provided herein, this Addendum No. 1 is
subject to all the terms and provisions of the MSA.  Notwithstanding the
foregoing or anything else to the contrary in this Addendum No. 1 or the MSA, if
any terms or conditions in this Addendum No. 1 are inconsistent or in conflict
with the MSA, the provisions of this Addendum No. 1 shall control.

1. Purpose;
Statement of
Services;
Compensation
This Addendum No. 1 sets forth the terms and conditions on which PROFESSIONAL
will make Todd Filsinger, a Member of PROFESSIONAL’S Management Group
(“SECONDEE”), available to serve as the interim Chief Operating Officer (“COO”)
of CALPINE (the “COO Services”).  Compensation will be provided to PROFESSIONAL
for the COO Services in the fixed fee amount of $220,000 per month plus
expenses.  This fee includes the services of SECONDEE plus an additional
PROFESSIONAL consultant to support SECONDEE in this role.  In addition, it may
be necessary to use up to two additional Full Time Equivalents ( FTEs) from
PROFESSIONAL’s staff to support SECONDEE.  The two FTEs will be billed on a time
and material basis at rates provided separately.  The fees billed by these two
FTEs will be included in the COO Services budget.  SECONDEE and PROFESSIONAL
will provide other services outside of the scope of this Addendum No. 1
(litigation support and other activities) at the hourly billing rate pursuant to
the applicable Statement of Work.  PROFESSIONAL may be entitled to a success fee
at the discretion of the Chief Executive Officer.
 
2. Responsibilities,
Power and
Authority of
SECONDEE
 
SECONDEE will report to the Chief Executive Officer.  SECONDEE will have duties
and responsibilities customary for a COO, including management of the business
and affairs of, and direction and supervision of the employees of, CALPINE under
the

 
 

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direction of CALPINE’s Board of Directors and CALPINE’s Chief Executive Officer.
 
Notwithstanding anything to the contrary in the MSA (including Section 1.3
thereof), SECONDEE shall have the rights, power and authority, consistent with
that normally given to and exercised by chief operating officers in similar
corporations in CALPINE’s industry, including without limitation (i) to control
and direct the performance or activities of officers, employees and agents of,
(ii) to enter into contracts, agreements and/or arrangements of and/or for the
account of, and (iii) to incur obligations and liabilities on behalf of and/or
for the account of, CALPINE. SECONDEE agrees to abide by all of CALPINE’s posted
policies and procedures on the CALPINE Today Intranet site or its successor
Intranet site, including adherence to CALPINE’s Code of Conduct.
 
SECONDEE shall diligently and faithfully perform to the best of his abilities
all of the duties required of him as COO of CALPINE; provided, that
notwithstanding anything to the contrary in the MSA, PROFESSIONAL  shall not be
held responsible for the failure of SECONDEE to so perform. Section 4 of the MSA
shall be inapplicable to this Addendum No. 1 and the COO Services.
 
Notwithstanding anything to the contrary in this Addendum No. 1, the parties
intend that SECONDEE shall at all times remain an employee of PROFESSIONAL and
not of CALPINE.  Notwithstanding Section 5.2 of the MSA or anything else in the
MSA to the contrary, PROFESSIONAL and SECONDEE shall not be obligated to
indemnify CALPINE in the event that SECONDEE is found not to be an independent
contractor to CALPINE.  Each of PROFESSIONAL, CALPINE and SECONDEE shall be
responsible for the taxes, penalties and/or interest imposed on such party or
for which such party is individually responsible with respect to the services
provided by SECONDEE through PROFESSIONAL under the MSA and this Addendum No. 1,
or as a result of any re-characterization by any governmental entity, including
the Internal Revenue Service, of SECONDEE as other than an independent
contractor to CALPINE with respect to such services.  None of the aforementioned
parties shall be responsible for any such taxes, penalties and/or interest
imposed on any other aforementioned party or for which any other aforementioned
party is individually responsible.
 
Notwithstanding Section 5.3 of the MSA or anything else in the MSA to the
contrary, it shall be CALPINE that shall have sole discretion and control of the
COO Services and the manner in which they are performed. CALPINE may give such
orders and instructions to SECONDEE as CALPINE shall consider appropriate in its
sole discretion, and PROFESSIONAL shall have no power or authority to give any
orders or instructions to SECONDEE

 
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with respect to the COO Services.   Section 5.3 of the MSA shall be inapplicable
to this Addendum No. 1 and the COO Services.
 
3.  Term and
Termination of
COO Services
Notwithstanding Section 2 of the MSA or anything else in the MSA to the
contrary, this Addendum No. 1 shall continue in effect for the period commencing
on the first date written above and extend on a month to month basis until
terminated by either party prior to the expiration of the MSA.  In addition to
the termination rights of the parties under Section 2.2 of the MSA, either party
may terminate this Addendum No. 1 at any time after the first date written above
with thirty (30) days notice to the other party.  CALPINE shall pay PROFESSIONAL
for all authorized expenses and work performed under this Addendum No. 1 through
the date of termination.
 
4.  Release,
Waiver and
Indemnity
Notwithstanding Section 7.1 of the MSA or anything else in the MSA to the
contrary, the parties agree that Sections 7.1 shall not apply to this Addendum
No. 1, SECONDEE or the COO Services.
 
CALPINE (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless
PROFESSIONAL and its affiliates, and all of their employees, officers,
directors, shareholders, and joint ventures, including without limitation
SECONDEE (as an employee of PROFESSIONAL, individually or otherwise except not
with respect to SECONDEE individually only to the extent that SECONDEE willfully
and knowingly violates applicable law by his actions taken in his capacity as
COO)(collectively the “Indemnified Party”) from and against any and all claims,
demands, losses, damages, liabilities, expenses, obligations, judgments,
recoveries and deficiencies (collectively “Losses”), in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative arising out of, related to, or in
connection with in any way (x) SECONDEE’s serving as COO of CALPINE and/or
providing the COO Services or (y) any other acts or omissions of SECONDEE while
serving as COO of CALPINE (collectively, the “Indemnified Matters”).  The
Indemnifying Party’s obligation to indemnify hereunder is predicated upon the
Indemnified Party (a) giving prompt written notice of any Loss, (b) giving the
Indemnifying Party the opportunity to assume sole control over the defense and
settlement, if applicable, of the Loss, and (c) providing, at the Indemnifying
Party’s sole expense, all reasonably requested and relevant information,
assistance and authority to enable the Indemnifying Party to perform its
obligations hereunder. The Indemnifying Party shall be permitted to settle any
Losses except that it shall not settle any Losses in any manner which would
impose any penalty, cost or limitation whatsoever on the Indemnified Party or
negatively impact the reputation of Indemnified Party without Indemnified
Party’s written consent, which shall not be unreasonably withheld.
 

 
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CALPINE, on behalf of itself and its shareholders, employees, officers,
directors, agents, affiliates, advisors, consultants, accountants and attorneys
(collectively, “Representatives”) and their respective assigns and successors in
interest, hereby releases and forever discharges the Indemnified Parties and
their assigns and successors from and against any and all actions, causes of
action, suits, countersuits, debts, controversies, damages, claims, demands,
rights to contribution or indemnification, losses, liabilities, fees or expenses
(including attorneys’ and other experts’ fees and disbursements), in each case
of whatsoever kind or nature, whenever occurring, whether fixed or contingent or
accrued or unaccrued or choate or inchoate (collectively, “Claims”), arising out
of, related to, or in connection with the Indemnified Matters.  This release
includes any Claims that may be discovered in the future and regardless of
whether any Losses therefrom occur before or after the execution of this
Addendum No. 1, and includes claims for actual, consequential and punitive
damages, and whether arising in contract, tort, strict liability, under statute
or otherwise.
 
CALPINE AGREES TO ASSUME THE RISK OF ANY AND ALL UNKNOWN, UNANTICIPATED OR
MISUNDERSTOOD CLAIMS (AS DEFINED IN THE PRECEDING PARAGRAPH) WHICH ARE HEREBY
RELEASED, AND HEREBY WAIVES AND RELEASES ALL RIGHTS AND BENEFITS WHICH IT MIGHT
OTHERWISE HAVE UNDER THE ANY APPLICABLE LAW WITH REGARD TO THE RELEASE OF
UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD CLAIMS.  CALPINE ALSO WAIVES ANY OTHER
RIGHT WHICH IT MIGHT OTHERWISE HAVE UNDER ANY OTHER LAW OF ANY APPLICABLE
JURISDICTION WHICH MIGHT LIMIT OR RESTRICT THE EFFECTIVENESS OR SCOPE OF THIS
RELEASE.
 
 
5.  Insurance
Section 6.1 of the MSA shall not apply to SECONDEE and the COO
Services.  Notwithstanding Section 5.3 of the MSA or anything else in the MSA to
the contrary, CALPINE, and not PROFESSIONAL, shall have sole responsibility for
maintaining insurance covering SECONDEE in his capacity as COO.
 
Without limiting the scope of the foregoing, PROFESSIONAL shall cause SECONDEE
to be covered by (i) its directors’ and officers’ insurance and (ii) all other
insurance of PROFESSIONAL that may now or hereafter during the term of this
Addendum No. 1 provide coverage to officers and employees of PROFESSIONAL (in
each case, whether by rider or otherwise).
 
6.  Compliance
with Law and
Notwithstanding anything in Section 10.1 of the MSA or otherwise to the
contrary, it shall be CALPINE that shall be responsible for ensuring that all

 
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CALPINE’s
Policies
COO Services, and SECONDEE’s actions taken in his capacity as COO, comply with
applicable law (except for purposes of this Section 6 only, SECONDEE shall be
individually responsible in cases where SECONDEE willfully and knowingly
violated applicable law by his actions taken in his capacity as COO), including
the responsibility for any and all disclosures and filings required by rules and
regulations promulgated by the SEC and CALPINE’S policies and procedures (other
than CALPINE’s posted policies and procedures on the CALPINE Today Intranet site
or its successor Intranet site, including adherence to CALPINE’s Code of Conduct
as is consistent with Section 2 of this Addendum No. 1 (collectively “CALPINE’s
Policies”)).  For the avoidance of doubt, PROFESSIONAL shall be only responsible
for making SECONDEE and any of its employees providing the COO Services for
CALPINE hereunder aware of the requirement under this Addendum No. 1 to adhere
to CALPINE’s Policies - as defined above.
 
7. Survivability
In the event of expiration or termination of this Addendum No. 1 or the MSA for
any reason whatsoever, Sections 2 (last three paragraphs), 4, 5 and 6 of this
Addendum No. 1 shall survive such expiration or termination and remain in full
force and effect in accordance with their terms.
 

IN WITNESS WHEREOF, this Addendum No. 1 is executed effective as of the day and
year first above written.
 

CALPINE CORPORATION
 
PA CONSULTING GROUP, INC.
                   
By:
   /s/  R. P. May  
By:
   /s/  Todd Filsinger          
Name:  Robert May
 
Name:  Todd Filsinger
         
Title:  Chief Executive Officer
 
Title:  Managing Partner
                   
Address:
717 Texas Ave, Suite 1000
 
Address:
1700 Lincoln Street, Suite 4600
 
Houston, Texas 77002
   
Denver, Colorado 80203

 
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Accepted and Agreed to:
 

 

By:   /s/ Todd Filsinger  

Name:  Todd Filsinger
 
 
 
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