ex10-3.htm


     

    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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              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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      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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              31, 2007

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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

                


        

        
 

      

      
 

      


      


       

      


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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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      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