EXHIBIT 10.3
 
 

August 31, 2007

Eric Pryor
[Address]
 

Re.      Employment Separation

Dear Eric:

As you are aware, your employment with Calpine will end effective August 31,
2007 as a result of restructuring activities (“Qualifying Event”).  This letter
agreement (the “Agreement”) confirms the terms of your separation from
employment with Calpine Corporation, a Delaware corporation or one or more of
its subsidiaries (collectively, “Calpine”) and offers you the following benefits
in exchange for a release of all claims.

1.           Separation Date.  Your employment with Calpine will be terminated
effective August 31, 2007 (the “Separation Date”).
 
2.           Additional Payment and Benefits.  In exchange for the waiver and
release described in Paragraphs 7 and 8 below, Calpine agrees to provide you
with an additional payment and benefits as described in the Calpine Corporation
U.S. Severance Program and the Severance Benefit Summary Sheet provided to you
with this letter. By signing this Agreement, you also warrant that you
understand and have read the terms of the Calpine Corporation U.S. Severance
Program.  In addition to the payment and benefits described in the attached
Summary Sheet, you shall also be eligible to receive a one-time payment of a
success fee at the sole discretion of the Chief Executive Officer of Calpine as
part of Calpine’s emergence incentive plan.
 
3.           Participation in Stock/401(k) and Life and Disability Insurance
Plans.  As you will no longer be a Calpine employee after the Separation Date,
you will not participate in Calpine’s Employee Stock Purchase Plan and life and
disability insurance plans after the Separation Date.  Distribution options
under Calpine’s 401(k) plan will be pursuant to the plan rules, and you will be
provided with notice of such options by separate letter.

4.           Return of Company Property.  You warrant that, by the Separation
Date, you will return to your manager or human resources representative all
Calpine property or data of any type, including computer and e-mail passwords,
that are in your possession or control, without retaining any copies, notes or
extracts thereof.

5.           References.  You should direct all requests for employment
references to Kelly Zelinski in Calpine’s Human Resources Department,
kellyz@calpine.com, or her successor.  Human Resources will respond to all such
inquiries by stating that, as a matter of company policy, Calpine declines to
provide any information regarding former employees other than the former
employee’s dates of employment and job title, and with written authorization
from the employee, the former employee’s salary.

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August 31, 2007
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6.           Confidential Information; Use of Confidential Information to
Compete.  By signing below, you acknowledge that as a result of your employment
with Calpine you have had access to Confidential Information of Calpine (for the
purposes of this Agreement, Confidential Information includes but is not limited
to trade secrets, inventions, marketing plans, product plans, business
strategies, financial information, forecasts, personnel information, customer
lists, customer information, and any other information which gives Calpine an
opportunity to obtain advantage over competitors who do not know or use it) and
that you will hold all such Confidential Information in strictest confidence and
will not disclose to any person or entity or make use, directly or indirectly,
of such Confidential Information.  You confirm that you will deliver to your
manager or human resources representative, within ten (10) days of the
Separation Date, all diskettes, documents and data of any nature pertaining to
any such Confidential Information and that you have not taken or retained any
such diskettes, documents or data or any reproductions.  Nor shall you directly
or indirectly use Confidential Information of Calpine to compete with Calpine,
or disclose Confidential Information to a competitor of Calpine or to any other
person or entity.

7.           Release of Claims.  You acknowledge that you have no claims against
Calpine based on your employment with Calpine or the separation of that
employment, except for claims asserted as of February 1, 2006 in Virgil D.
Hulsey, Jr., et al. v. Calpine Corporation, et al., Case No. 1-04-CV-032103 (CA
Superior Court, Santa Clara County), if you are a class member identified in
that lawsuit, and except for other claims that are specifically excluded from
this release by Paragraph 8, below.  By signing below, you release Calpine and
forever discharge Calpine from all claims, demands, causes of action, damages
and liabilities, known or unknown, that you have ever had, now have or may claim
to have had relating to or arising from your employment with or separation from
Calpine, except for claims that are specifically excluded from this release by
Paragraph 8, below.

You expressly waive the benefits of Section 1542 of the Civil Code of the State
of California (and under other state and federal provisions of similar effect)
which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

8.           Waiver of Claims Including Employment-Related Claims. You
understand that the release you are providing releases and waives any and all
claims you may have against Calpine and its owners, agents, officers,
shareholders, employees, directors, attorneys, subscribers, subsidiaries,
affiliates, insurers, successors and assigns, whether known or not known,
including, without limitation, claims under any employment laws,

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including, but not limited to, claims of unlawful discharge, breach of contract,
breach of the covenant of good faith and fair dealing, retaliation, harassment,
fraud, violation of public policy, defamation, physical injury, emotional
distress, claims for compensation or benefits arising out of your employment or
your separation of employment, claims under Title VII of the 1964 Civil Rights
Act, as amended, the California Fair Employment and Housing Act, and any other
laws and/or regulations relating to employment or employment discrimination,
including, without limitation, claims based on age or under the Age
Discrimination in Employment Act or Older Workers Benefit Protection Act,
provided, that this waiver and release does not extend to: claims for breach of
this agreement; claims for legally required indemnification; claims for
unemployment compensation benefits, workers’ compensation benefits, or state
and/or long term disability benefits; claims asserted in Calpine’s Chapter 11
bankruptcy proceeding for unpaid accrued vacation pay, unpaid deferred
compensation, or indemnity, contribution or reimbursement; or claims for acts
occurring after the Separation Date.  This waiver and release also does not
apply to claims asserted as of February 1, 2006 in Virgil D. Hulsey, Jr., et
al., v. Calpine Corporation, et al., Case No. 1-04-CV-032103 (CA Superior Court,
Santa Clara County).

9.           Covenant Not to Prosecute.  You agree never, individually or with
any person or in any way, to commence, prosecute or cause or permit to be
commenced or prosecuted against Calpine, any legal action or other proceeding
based upon any claim, demand, cause of action, damage or liability which is
released by this Agreement, except as required by law.  If such action has been
filed on your behalf, you agree to immediately cause the dismissal of such
action with prejudice and without any further right of appeal.

10.           Review of Severance Agreement and Timing of Payment. You
acknowledge your understanding that you may take up to forty-five (45) days to
consider this Agreement and, by signing below, affirm that you were advised to
consult with an attorney before signing this Agreement.  You further acknowledge
that you understand you may revoke this Agreement within seven (7) days of
signing it, by faxing a written revocation signed by you to Kelly Zelinski, fax
number 408-794-4333, so that your fax is received by Ms. Zelinski by the end of
that seven (7) day period.  You further agree that the severance pay to be
provided to you, identified in paragraph 2 above, in exchange for your agreement
will commence one to two pay periods after the end of that seven (7) day
revocation period and only after Calpine receives this original signed
Agreement, and that this Agreement will not become effective or enforceable
until the revocation period has expired.

11.           Legal and Equitable Remedies.  Both you and Calpine have the right
to enforce this Agreement and its provisions by injunction, specific performance
or other relief without prejudice to any other rights or remedies you may have
at law or in equity for breach of this Agreement. You understand and have read
the terms of the Calpine Corporation U.S. Severance Program (“the Program”) and
understand that under the terms

 

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August 31, 2007
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of the Program, with respect to claims relating in any way to benefits provided
under the Program, you may be required to follow the claims procedures
identified in the Program.

12.           Attorneys’ Fees.  If any legal action is brought to enforce the
terms of this Agreement, the prevailing party will be entitled to recover its
reasonable attorneys’ fees, costs, and expenses from the other party, in
addition to any other relief to which such prevailing party may be entitled.

13.           Assignment, Successors and Assigns.  Calpine and you understand
that this Agreement will benefit and be binding upon you and your heirs,
successors, permitted assigns, and agents.  This Agreement will not benefit any
other person or entity except as specifically described in this Agreement.

14.           Confidentiality.  You agree to keep the contents, terms and
conditions of this Agreement confidential.  You may disclose this information to
your spouse, immediate family, accountants, or attorneys, provided that they
first agree not to disclose any information concerning the contents, terms and
conditions of this Agreement to anyone.  You also may disclose the contents,
terms and conditions of this Agreement to the IRS or other taxing authorities or
as required by subpoena or court order. Any breach of this confidentiality
provision, or of any other obligation by you set forth in this Agreement, will
be deemed a material breach of this Agreement.

15.           Non-Solicitation and Non-Disparagement.  For a two (2) year period
after the date of this letter, you agree not to directly or indirectly solicit
any employee of Calpine to perform services for another business entity, and not
to make any disparaging or derogatory statements about Calpine or its directors,
officers, agents or employees.

16.           No Admission of Liability.  This Agreement is not and may not be
contended by you to be an admission or evidence of any wrongdoing or liability
on Calpine’s part.  This Agreement will be afforded the maximum protection
allowable under California Evidence Code Section 1152 and/or other state or
Federal provisions of similar effect.

17.           Entire Agreement.  This Agreement constitutes the entire agreement
between you and Calpine with respect to the subject matter of this
Agreement.  It supersedes all prior negotiations and agreements, whether written
or oral, relating to this subject matter except those provisions of prior
written agreements that expressly extend beyond the term of your
employment.  You acknowledge that neither Calpine nor its agents have made any
promise or representation either express or implied, written or oral, which is
not contained in this Agreement for the purpose of inducing you to sign this
Agreement, and you acknowledge that you have signed this Agreement relying only
on the promises and representations stated herein.

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18.           Modification.  This Agreement may not be altered, amended, or
otherwise changed except by another written agreement that specifically refers
to this Agreement, signed by you and by Calpine or its authorized
representative.

19.           Governing Law.  This Agreement is governed by and will be
interpreted according to the laws of the State of California.  If any term of
this Agreement is deemed invalid or unenforceable, the remainder of this
Agreement will remain in full force and effect.

20.           Your Understanding.  By signing below, you acknowledge that you
have read this Agreement and fully understand and agree to it.

PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.
 

 
 
 
CALPINE CORPORATION
 
 
 
 
 
Dated:
   August 21
, 2007
By:
   /s/ Kelly J. Zelinski
 
 
 
Kelly J. Zelinski
 
 
 
Vice President of Human Resources

 

 

 

[CONTINUED ON NEXT PAGE]

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August 31, 2007
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I have read the above Agreement, have had an opportunity to obtain legal advice,
and by signing below voluntarily accept and agree to its terms including the
release of all claims, known and unknown.
 
 

 
 
 
EMPLOYEE
 
 
 
 
 
Dated:
 August 21
, 2007
By:
   /s/ Eric Pryor
 
 
 
 
Employee’s Signature
 
 
 
 
 
 
 
 
 
   Eric Pryor
 
 
 
 
Print Name
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Print Address
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Print Social Security Number

 
 
Please indicate by checking one of the boxes below, whether you choose to
receive outplacement services or Calpine subsidized benefit continuation, as
described in the Calpine Corporation U.S. Severance Program.

Outplacement Services   [  ]

Subsidized Benefit Continuation  [x]

 
 *Please note: regardless of your decision above to elect either Outplacement
Services or Subsidized Health Benefits continuation (i.e., paid for by Calpine),
if you want to continue your health benefits under COBRA you MUST complete and
return the separate COBRA enrollment form which will be mailed to your home by
United Healthcare Direct Bill 2 – 3 weeks after your termination date.
 
Calpine is not responsible for interruptions in health care coverage that result
from your failure to return the COBRA election form to UnitedHealthcare.

 

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August 31, 2007
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Affected Employees of Calpine Corporation

You and the employees listed below are eligible to receive severance benefits
from Calpine Corporation pursuant to the Calpine Corporation U.S. Severance
Program (“the Program”).  To receive benefits, you must sign the Release you
have been given and return it to Calpine Corporation, Kelly Zelinski, VP HR , 50
West San Fernando Street, San Jose, CA 95113 by the end of the forty-five (45)
day period after you receive this Agreement.

The listing below shows the number of employees eligible and ineligible for
benefits by job title.  Eligible employees are those who were notified February
01, 2006 through August 31, 2007 pursuant to the Calpine Corporation U.S.
Severance Program.  Ineligible employees are not subject to lay-off under the
Program.

The groups of individuals eligible for benefits under this Program consist of
certain employees in various job classifications listed below. The criteria used
by Calpine for determining eligibility for the reduction in workforce or
restructuring activities (“Qualifying Event”) are Calpine’s current and
anticipated business needs, and/or the skills and job performance of employees
in the affected business units.

Please note that this information is subject to change and may be affected by
future employment decisions including those decisions contemplated by the
Program.  If you have any questions about this information, contact your Human
Resources Representative.

See attached list of Eligible Employees and Ineligible Employees