exv10w5w14



 





Exhibit 10.5.14




EMPLOYMENT AGREEMENT




          This Employment Agreement (the “Agreement”) is entered into on May 25, 2006,
between CALPINE CORPORATION, a Delaware corporation (the “Company”), and Thomas N. May
(“Executive”) to provide the terms and conditions for Executive’s employment with the Company and
its affiliates from time to time (together, the “Group”). This Agreement is conditioned upon the
following: (a) the approval of the United States bankruptcy court having jurisdiction over the
Company’s reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Bankruptcy Court”), (b)
the approval of the Company’s Compensation Committee, and (c) Executive obtains and maintains
appropriate work authorization with the U.S. Department of Homeland Security.




          The Company and Executive have agreed that Executive will be employed by the Company and will
serve as the Company’s EVP, and President CMSC, upon the terms and conditions set forth below.




          Accordingly, and in consideration of the mutual obligations set forth in this Agreement, which
Executive and the Company agree are sufficient, Executive and the Company agree as follows:





	1	 	Term of Employment.





          Subject to the provisions of paragraph 4 below, Executive’s term of employment under this Agreement (“Term of
Employment”) consists of the initial term and any subsequent term for which the Agreement is
renewed. The initial term of this Agreement (“Initial Term”) begins on May 30, 2006, and ends on
May 30, 2007. Subject to the termination provisions of paragraph 4 below, Executive’s employment
by the Company shall be automatically renewed for an additional 12 months at the end of the Initial
Term and each annual anniversary of the end of the then-current renewal term unless either party
provides written notice to the other party no less than 90 days prior to the date of any such
scheduled renewal of its or the Executive’s intention not to renew the term of Executive’s
employment.





	2	 	Position and Responsibilities.





          During the Term of Employment, Executive shall have the position and responsibilities
described below. Executive shall be employed as the Company’s EVP, and President CMSC, with the
general powers and authority that accompany those positions. Executive shall report
directly to the Chief Executive Officer and shall have the duties and responsibilities that are
typically performed by an EVP, and President CMSC, as well as any other duties consistent with
Executive’s position that are assigned to Executive by the Chief Executive Officer or the Board.
Executive agrees to comply with such lawful policies of the Company as may be adopted from time to
time. Although Executive may be reasonably required to travel from time to time for business
reasons, Executive’s principal place of employment shall be the Company’s corporate offices wherever
located.




	 	(a)	 	Executive shall devote all of his full business time and his best efforts,
skill, and attention to the Company’s business and affairs and to promoting the
Company’s best interests.
	 




 









 









	 	(b)	 	Notwithstanding the foregoing, nothing herein shall preclude Executive from (i)
serving on charitable organizations (subject to the approval of the Chief Executive
Officer, such approval not to be unreasonably withheld), (ii) engaging in charitable
activities and community affairs, and (iii) managing his personal investments and
affairs, provided that any such activities listed in (i) and (ii) above do not
interfere in more than a de minimis manner with the proper performance of his duties
and responsibilities hereunder and comply with the limitations set forth in paragraph
5.a.






	3	 	Compensation.





          For all of Executive’s services during the Term of Employment, Executive shall receive the following
compensation:





	 	(a)	 	Base Salary. Executive’s annual base salary shall be $500,000 (as may be
increased from time to time, the “Base Salary”). The Chief Executive Officer and Board
(or a committee thereof) will review the Base Salary at least annually and may increase
it at any time for any reason, in its sole discretion; however, it shall have no
obligation to do so.
	 
	 	(b)	 	Bonus. In addition to Executive’s Base Salary, Executive shall be eligible to receive
an annual cash performance bonus (the “Bonus”) for each fiscal year ending during the
Term of Employment if, and to the extent that, Executive remains employed by the
Company on the last day of such fiscal year and corporate performance objectives
established by the Chief Executive Officer and the Board are achieved, as determined by
the Chief Executive Officer and the Board (or a committee thereof), in their sole
discretion. Payment of the Bonus shall be made at the same time that other senior-level
executives receive their bonuses, and no later than March 15th of the calendar year
after the calendar year in which the Bonus is earned. The target level for Executive’s
Bonus shall be established by the Board (or a committee thereof) in their sole
discretion, provided that the minimum target level for any year shall be 100% of the
Base Salary (the “Target Annual Bonus”).
	 






	 	(i)	 	For the Company’s fiscal year ending December 31, 2006, Executive shall be
entitled to receive a minimum Bonus of $500,000, to be paid no later than March 15,
2007 but no earlier than January 1, 2007.
	 





	 	(c)	 	Benefits. Executive shall be eligible to participate in all Company benefit
plans and programs as are generally available for its senior executives, and
Executive’s benefits shall be based on the terms of the applicable plan as established
by the Company from time to time; provided, however, that the Executive shall not be
eligible for benefits under the Calpine Corporation U.S. Severance Program. Nothing in
this Agreement shall restrict the Company’s ability to change or terminate any or all of its employee benefit plans and programs from time to time;
nor shall anything in this Agreement prevent any such change from affecting
Executive.




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	 	(d)	 	Success Fee. When a plan of reorganization that is confirmed by the Bankruptcy
Court becomes effective (the “Plan Effective Date”) during Executive’s tenure as
Company’s EVP, and President CMSC, Executive shall be eligible to receive a one-time
payment of a Success Fee at the sole discretion of the Chief Executive Officer of the
Company as part of the Company’s Emergence Incentive Plan.
	 
	 	(e)	 	Guaranteed Minimum Success Fee. Executive shall be entitled to receive the
guaranteed minimum success fee (the “Guaranteed Minimum Success Fee”) described in this
paragraph 3.e; provided, however, that this paragraph 3.e shall not apply after the
Plan Effective Date. The Guaranteed Minimum Success Fee shall be deemed earned as of
the date this Agreement is approved by the Bankruptcy Court.






	 	(i)	 	Amount and Payment Schedule. Executive’s Guaranteed Minimum
Success Fee shall be an annual amount equal to two times his annual Base Salary as
of the earlier of (a) the date his term of employment under this Agreement
terminates or (b) the Plan Effective Date. The Guaranteed Minimum Success Fee
shall be paid to Executive on the earliest of (y) the date Executive is
terminated by the Company without Cause, and (z) the date Executive terminates
his employment for Good Reason. The Guaranteed Minimum Success Fee shall be
paid ratably on the same payment schedule that applied to Executive’s salary as
of such date.
	 
	 	(ii)	 	Timing. To the extent necessary to comply with the restriction
in Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended (the
“Code”) concerning payments to specified employees, the first Guaranteed
Minimum Success Fee payment (if the Guaranteed Minimum Success Fee is paid
ratably) to Executive shall be made on the first installment date (determined
under paragraph 3.e.i, above) that is at least six months after Executive’s
termination date. The first payment shall include any installments that would
have been paid previously under paragraph 3.e.i were it not for this special
timing rule, plus interest on the delayed installments at an annual rate
(compounded monthly) equal to the federal short-term rate (as in effect under
Section 1274(d) of the Code on Executive’s termination date).






	 	(f)	 	Signing Bonus. In addition to the Base Salary, Bonus and Guaranteed Minimum
Success Fee, Executive shall be entitled to receive a one-time payment of $500,000,
payable within 15 days of the effective date of this Agreement. If Executive resigns
his employment without Good Reason or Executive’s employment is terminated by the
Company for Cause, Executive shall repay a pro rata portion (based on the number of
full calendar months remaining in the Initial Term divided by twelve months) of
the signing bonus (net of any associated income and employment taxes) within 10 days after such resignation or termination of
employment. Within 10 days after the filing of Executive’s federal income tax return
for the year in which such repayment is made, Executive shall pay to the Company the
amount by which Executive’s federal and state income tax liability for such year was
reduced as a result of such




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	 	 	 	repayment. If Executive resigns for Good Reason, dies or
becomes disabled or if Executive’s employment is terminated by the Company without
Cause, Executive shall be entitled to retain the full amount of the signing bonus.
	 
	 	(g)	 	Relocation. The Company shall reimburse Executive for customary and reasonable
commuting expenses from Executive’s current residence in Princeton, NJ and temporary
furnished housing and living expenses in the area in which the Company’s headquarters
is located for a period of six months from the Start Date. In the sole discretion of
the Chief Executive Officer, this initial six-month period may be extended from time to
time. Reimbursements shall be paid monthly, on an “as incurred” basis, and in all
events before March 15 of the calendar year after the calendar year in which the
applicable expenses were incurred. Upon termination of this temporary commuting
arrangement, Executive shall be reimbursed for all reasonable transaction costs and
expenses (including any real estate brokerage fees, commissions and closing costs) and
moving expenses incurred by Executive, in each case while an employee of the Company,
in connection with relocating Executive’s spouse, dependents and personal property and
goods from Executive’s current residence to the area in which the Company’s
headquarters is located, provided that Executive provides appropriate documentation
(the “Reimbursement”). Reimbursements under this paragraph shall be paid promptly and
in all events on or before March 15 of the calendar year after the calendar year in
which the applicable expenses were incurred. In connection with such payment, during
the calendar year after the calendar year in which the applicable expenses are
incurred, the Company shall pay Executive an additional payment in an amount such that
after the actual payment by Executive of taxes, if any, imposed in connection with the
Reimbursement, Executive retains an amount equal to the Reimbursement.






	4	 	Termination.






	 	(a)	 	Termination of Employment.






	 	(i)	 	Termination by the Company for Cause. The Board or Chief
Executive Officer may terminate Executive’s employment for Cause at any time.
“Cause” means any of the following: (1) Executive’s breach of any material
term of this Agreement that is not corrected within 10 days after delivery of a
termination notice to Executive with respect to such breach; (2) Executive’s
commission of, or formal prosecutorial charge or indictment alleging commission
of, a felony or any crime of similar status, any crime involving fraud or any
crime involving moral turpitude (other than motor vehicle related) (it being
agreed that in the case of a crime involving moral turpitude, only to the
extent such crime materially and adversely affects the business, standing or reputation of the Company or any
other member of the Group); (3) Executive’s breach of fiduciary duty to the
Company or any other member of the Group that has any material and adverse
impact on the Company that is not corrected within 10 days after delivery of
a termination notice to Executive with respect to such breach; (4)
Executive’s misappropriation




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	 	 	 	of funds or material property of the Company or
any other member of the Group; (5) Executive’s refusal to follow the lawful
directives of the Chief Executive Officer or Board without a materially
valid business justification that is not corrected within 10 days after
delivery of a termination notice to Executive with respect to such refusal;
(6) Executive’s fraud related to the Company; (7) Executive’s material
dishonesty, disloyalty, gross negligence or willful misconduct, where such
dishonesty, disloyalty, gross negligence or willful misconduct is reasonably
likely to result, in substantial and material damage to the Company or any
other member of the Group; (8) Executive’s willful and material violation of
any of the Company’s Code of Conduct or employment policies; or (9)
Executive’s material violation of any federal, state or local laws that
could result in a direct or indirect financial loss to the Company or any
other member of the Group or damage the reputation of the Company or any
other member of the Group.
	 
	 	 	 	For this definition, no act or omission by the Executive will be “willful”
unless it is made by him in bad faith or without a reasonable belief that
Executive’s act or omission was in the best interests of the Company or the Group.
Any act, or failure to act, based upon the advice of counsel to the Company
or any member of the Group shall be presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of the
Company and the Group.
	 
	 	(ii)	 	Termination by the Company without Cause. The Company may
terminate Executive’s employment under this Agreement without Cause upon at
least 20 days’ prior written notice to Executive.
	 
	 	(iii)	 	Death or Disability. Executive’s employment by the Company
will immediately terminate upon Executive’s death and at the option of either
Executive or the Company, exercisable upon written notice to the other party,
may terminate upon the Executive’s Disability. For purposes of this Agreement,
“Disability” will occur if (A) Executive becomes eligible for benefits under a
long-term disability policy provided by the Company, if any, or (B) Executive
has become unable, due to physical or mental illness or incapacity, to
substantially perform the essential duties of Executive’s employment with reasonable
accommodation for a period of 90 days or an aggregate of 180 days during any
consecutive 12 month period, as determined by an independent physician approved
by the Company and Executive.
	 
	 	(iv)	 	Termination by Executive for Good Reason. Executive may
terminate his employment for Good Reason at any time. “Good Reason” shall mean
the occurrence, during the Term of Employment, of any of the following actions
or failures to act, but in each case only if it is not consented to by
Executive in writing: (A) a material adverse change in Executive’s duties,
reporting responsibilities, titles or elected or





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	 	 	 	appointed offices as in effect
immediately prior to the effective date of such change; (B) any reduction or
failure to pay when due the Executive’s Base Salary or Bonus earned; (C) the
Company’s failure to renew this Agreement; (D) the Company’s breach of any
material term of this Agreement that is not corrected within 10 days after
delivery of a notice to the Company with respect to such breach or (E) the
failure of the Company to obtain the assumption in writing of this Agreement by
any successor to or an acquirer of all or substantially all of the assets of
the Company on or prior to a merger, consolidation, sale or similar
transaction. For purposes of this definition, none of the actions described in
clauses (A) through (E) above shall constitute “Good Reason” with respect to
Executive if it was an isolated and inadvertent action not taken in bad faith
by the Company and if it is remedied by the Company within 10 days after
receipt of written notice thereof given by Executive.
	 
	 	(v)	 	Termination by Executive without Good Reason. Executive may
terminate his employment under this Agreement without Good Reason upon at least
20 days’ prior written notice to the Company.






	 	(b)	 	Consequences of Termination of Employment.






	 	(i)	 	Termination by the Company without Cause or by Executive for
Good Reason before the Plan Effective Date. Executive shall receive the
benefits described in this paragraph 4.b (excluding the severance benefits set
forth in paragraphs 4.b.ii.1 and 4.b.ii.2) if the Company terminates
Executive’s employment without Cause (under paragraph 4.a.ii) at any time
during the Term of Employment or if Executive terminates his employment at any
time during the Term of Employment for Good Reason (under paragraph 4.a.iv)
prior to the Plan Effective Date. For a period of one year following the date
of termination of Executive’s employment from the Company, the Company shall at
its sole cost and expense (but disregarding any individual tax liability of
Executive), and at the election of COBRA by Executive, provide Executive (and
his spouse and eligible dependents) with group health benefits substantially
similar to those benefits that Executive (and his spouse and eligible
dependents) were receiving immediately before his termination (which may at the
Company’s election be pursuant to reimbursement of the applicable COBRA
premium). Such coverage shall be provided to Executive as COBRA benefits and
shall terminate prior to the end of the one-year period if Executive, his
spouse or eligible dependents are no longer eligible for COBRA coverage. To the
extent possible, the benefits under this section 4.b.i.1 shall be made in a manner that is tax efficient for the
Executive so long as there is no adverse tax consequences to the Company.
	 
	 	(ii)	 	Termination by the Company without Cause or by Executive for
Good Reason after the Plan Effective Date. Executive shall receive





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	 	 	 	the benefits
described in this paragraph 4.b.ii (including the benefits set forth in
paragraph 4.b.i.) if the Company terminates Executive’s employment without
Cause (under paragraph 4.a.ii) at any time during the Term of Employment or if
Executive terminates his employment at any time during the Term of Employment
for Good Reason (under paragraph 4.a.iv) after the Plan Effective Date. If
Executive receives the benefits set forth in this paragraph 4.b.ii, Executive
shall not be eligible for severance benefits from any other plan, program or
policy of the Company then in effect.






	 	1.	 	Amount and Payment Schedule. Executive’s
severance benefit (in addition to the other payments specifically
contemplated in this Agreement) shall be an annual amount equal to two
times his annual Base Salary as of the date his employment terminates.
Subject to the timing rule described in paragraph 4.b.ii.2 below, the
severance benefit shall be paid ratably on the same payment schedule
that applied to Executive’s salary at the time of his termination.
	 
	 	2.	 	Timing. To the extent necessary to comply with
the restriction in Section 409A(a)(2)(B) of the Internal Revenue Code
of 1986, as amended (the “Code”) concerning payments to specified
employees, the first severance payment to Executive shall be made on
the first installment date (determined under paragraph 4.b.ii.1 above)
that is at least six months after Executive’s termination date. The
first payment shall include any installments that would have been paid
previously under paragraph 4.b.ii.1 were it not for this special timing
rule, plus interest on the delayed installments at an annual rate
(compounded monthly) equal to the federal short-term rate (as in effect
under Section 1274(d) of the Code on Executive’s termination date).






	 	(iii)	 	Death or Disability. In the event of termination of
Executive’s employment due to death or Disability (under paragraph 4.a.iii),
Executive shall be entitled to receive (in addition to any other payments
specifically contemplated in this Agreement) a pro rata portion of his Target
Annual Bonus for the portion of the calendar year before the date of
termination of employment, as promptly as practicable and in any event payable
on or before March 15th of the calendar year after the calendar year in which
such termination of employment occurs; but Executive shall not be eligible to
receive any other severance benefit under this paragraph 4. Executive’s
eligibility (if any) to receive a severance or retirement benefit under any other severance or retirement plan or program maintained by the
Company shall be determined by the terms of that plan or program as in
effect on Executive’s termination date.




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	 	(iv)	 	Termination for Cause or Voluntary Termination. If the Company
terminates Executive’s employment for Cause (under paragraph 4.a.i), or if
Executive terminates his employment without Good Reason (under paragraph
4.a.v), Executive shall receive accrued but unpaid base salary earned only
through Executive’s termination date, and shall not be eligible to receive any
severance benefit under this paragraph 4.b. Executive’s eligibility (if any)
to receive a severance or retirement benefit under any other severance or
retirement plan or program maintained by the Company shall be determined by the
terms of that plan or program as in effect on Executive’s termination date. The
foregoing shall not limit the remedies available to the Group, at law or in
equity, for any loss or other injury caused directly or indirectly by
Executive.
	 
	 	(v)	 	Release. The Company will not be required to make the payments
stated in this paragraph 4 unless the Executive executes and delivers to the
Company an agreement releasing from all liability (other than Executive’s
rights under this Agreement and any indemnification arrangement of the Company
with respect to Executive) the Group and any of their respective past or
present directors, officers, employees, shareholders, controlling persons or
agents of the Group. No payment will be made until the period for revocation of
the release has ended and unless Executive has not revoked the release.






	5	 	Restrictive Covenants.






	 	(a)	 	Non-Competition. During the time Executive is employed by the Company and for
12 months thereafter, Executive shall not directly or indirectly manage, operate,
participate in, be employed by, perform consulting services for, or otherwise be
connected with NRG Energy, Inc., Mirant Corporation, Reliant Energy, Dynegy Inc.,
Edison Mission Energy/Edison International, Constellation Energy Group, Inc. (FPL
Group, Inc.) and Pacific Gas & Electric Company (each a “Competitive Enterprise”); nor
shall Executive receive compensation from any other company or business during the time
Executive is employed with the Company unless the arrangement giving rise to such
compensation has been (i) disclosed to and approved by the Chief Executive Officer and
the Board in advance or (ii) is otherwise permitted by the terms of this Agreement.
Executive may invest in any Competitive Enterprise, provided that Executive and
Executive’s immediate family members (as defined in Section 1361(c)(B) of the Code) do
not own collectively more than one percent of the voting securities of any such entity
at any time. If Executive is terminated without cause or leaves for good reason,
Executive may reduce this non-compete provision from 12 months to as short as 6 months
by repaying a pro rata portion of the Guaranteed Minimum Success Fee (net of any
associate income and employment taxes) or




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	 	 	 	any severance benefits, if applicable, prior to operating, participating in, being
employed by or performing consulting services for the above referenced competitive
enterprises. Within 10 days after the filing of Executive’s federal income tax
return for the year in which such repayment is made, Executive shall pay to the
Company the amount by which Executive’s federal and state income tax liability for
such year was reduced as a result of such repayment.
	 
	 	(b)	 	Use and Disclosure of Proprietary Information.






	 	(i)	 	Definition of Proprietary Information. “Proprietary
Information” means confidential or proprietary information, knowledge or data
concerning (1) the Group’s businesses, strategies, operations, financial
affairs, organizational matters, personnel matters, budgets, business plans,
marketing plans, studies, policies, procedures, products, ideas, processes,
software systems, trade secrets and technical know-how, (2) any other matter
relating to the Group, (3) any matter relating to clients of the Group or other
third parties having relationships with the Group and (4) any confidential
information from which the Group derives business advantage or economic value.
Proprietary Information includes (A) the names, addresses, phone numbers and
buying habits and preferences and other information concerning clients and
prospective clients of the Group, and (B) information and materials concerning
the personal affairs of employees of the Group. In addition, Proprietary
Information may include information furnished to Executive orally or in writing
(whatever the form or storage medium) or gathered by inspection, in each case
before or after the date of this Agreement. Proprietary Information does not
include information (X) that was or becomes generally available to Executive on
a non-confidential basis, if the source of this information was not reasonably
known to Executive to be bound by a duty of confidentiality, (Y) that was or
becomes generally available to the public, other than as a result of a
disclosure by Executive, directly or indirectly, or (Z) that Executive can
establish was independently developed by Executive without reference to
Proprietary Information.
	 
	 	(ii)	 	Acknowledgements. Executive acknowledges that he will obtain or
create Proprietary Information in the course of Executive’s involvement in the
Group’s activities and may already have Proprietary Information. Executive
agrees that the Proprietary Information is the exclusive property of the Group.
In addition, nothing in this Agreement will operate to weaken or waive any
rights the Group may have under statutory or common law, or any other
agreement, to the prohibition of unfair competition or the protection of trade
secrets, confidential business information and other confidential information.
	 




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	 	(iii)	 	During Employment. Executive will use and disclose Proprietary Information only
for the Group’s benefit and in accordance with any restrictions placed on its use or disclosure by the Group.
	 
	 	(iv)	 	Post-Employment. After the termination of Executive’s
employment, Executive will not use or disclose any Proprietary Information for
any purpose. For the avoidance of doubt, but without limitation of the
foregoing, after termination of Executive’s employment, Executive will not
directly or indirectly use Proprietary Information from which the Group derives
business advantage or economic benefit to solicit, impair or interfere with, or
attempt to solicit, impair or interfere with, any person or entity, who, at the
time of the termination of Executive’s employment, is then a customer, vendor
or business relationship of the Group (or who Executive knew was a potential
customer, vendor or business relationship of the Company within the six months
prior to the termination of Executive’s Employment).






	 	(c)	 	Non-Solicitation of Employees. During the Term of Employment and for an 18
month period after termination of Executive’s employment, Executive will not directly
or indirectly solicit or attempt to solicit anyone who, at the time of the termination
of Executive’s employment, is then an employee of the Group (or who was an employee of
the Group within the six months prior to the termination of Executive’s Employment) to
resign from the Group or to apply for or accept employment with any company or other
enterprise.
	 
	 	(d)	 	Non-Disparagement. During and after Executive’s employment with the Company,
the parties mutually covenant and agree that neither will directly or indirectly
disparage the other, or make or solicit any comments, statements, or the like to any
clients, competitors, suppliers, employees or former employees of the Company, the
press, other media, or others that may be considered derogatory or detrimental to the
good name or business reputation of the other party. Nothing herein shall be deemed to
constrain either party’s cooperation in any Board authorized investigation or
governmental action. In the event of Executive’s termination or the non-renewal of this
Agreement, Executive and Company shall agree on any press release relating to such
termination or non-renewal and the Company and Executive shall not publicly discuss or
comment on Executive’s termination or non-renewal in any manner other than as mutually
agreed in the press release.






	6	 	Employment Taxes. All payments and other compensation under this Agreement shall be subject
to withholding of the applicable income and employment taxes.
	 
	7	 	Nonduplication of Benefits. No term or other provision of this Agreement may be interpreted
to require the Company to duplicate any payment or other compensation that Executive is
already entitled to receive under a compensation or benefit plan, program, or other
arrangement maintained by the Company.
	 
	8	 	Indemnification. To the fullest extent permitted by applicable law, the Company shall provide
indemnification for Executive under its Articles of Incorporation and Bylaws.





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	 	 	Executive shall
be covered by the Company’s standard indemnification agreement and by any director’s and
officer’s liability insurance policy maintained by the Company.
	 
	9	 	Successors. Any successor to the Company or to all or substantially all of the Company’s
business and/or assets (whether a direct or indirect successor, and whether by purchase,
lease, merger, consolidation, liquidation, or otherwise) shall assume the obligations under
this Agreement. In case of any succession, the term “Company” shall refer to the successor.
The terms of this Agreement and all of Executive’s rights hereunder shall inure to the benefit
of, and be enforceable by, Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.
	 
	10	 	No Third-Party Beneficiaries. Except as provided in paragraph 9 above, nothing in this
Agreement may confer upon any person or entity not a party to this Agreement any rights or
remedies of any nature or kind whatsoever under or by reason of this Agreement.
	 
	11	 	No Duty to Mitigate. Executive shall not be required to seek new employment or otherwise to
mitigate the payments contemplated by this Agreement. The payments contemplated by this
Agreement shall not be reduced by earnings that Executive may receive from any other source;
provided, however, that COBRA payments may cease in accordance with the provisions of this
Agreement.
	 
	12	 	Notice. Notices and other communications between the parties to this Agreement shall be
delivered in writing and shall be deemed to have been given when personally delivered or on
the third business day after mailing by U.S. registered or certified mail, return receipt
requested and postage prepaid.






	 	(a)	 	Notices and other communications to Executive shall be addressed to Executive,
at the most recent home address that he provided in writing to the Company.
	 
	 	(b)	 	Notices and other communications to the Company shall be addressed to the
Company’s corporate headquarters, to the attention of the Company’s Secretary.






	13	 	Waiver and Amendments. No provision of this Agreement may be modified, waived, or
discharged, unless the modification, waiver, or discharge is agreed to in writing signed by
Executive and by an authorized representative of the Company (other than Executive). Unless
specifically characterized as a continuing waiver, no waiver of a condition or provision at anyone time may be considered a waiver of the same provision or condition (or
any different provision or condition) at any other time.
	 
	14	 	Costs. The prevailing party in any dispute or disagreement relating to this Agreement and/or
any obligations under this Agreement shall be entitled to recover from the other party any
expenses, including reasonable attorney’s fees, incurred by the prevailing party as a result
of, or in connection with, any such dispute or disagreement. Notwithstanding anything to the
contrary, the obligation under this Section shall survive any termination of this Agreement or
Executive’s termination of employment.
	 
	15	 	Ability to Enter this Agreement. Executive represents and warrants that neither the
execution and delivery of this Agreement nor the performance of Executive’s services





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	 	 	hereunder
will conflict with, or result in a breach of any employment or other agreement to which
Executive is a party or by which Executive might be bound or affected. Executive further
represents and warrants that Executive has full right, power, and authority to enter into and
carry out the provisions of this Agreement.
	 
	16	 	Remedy at Law Inadequate. Executive acknowledges that a remedy at law for any breach or
attempted breach of the covenants described in paragraph 5 of this Agreement will be
inadequate and agrees that the Group shall be entitled to specific performance and injunctive
and other equitable relief in the case of any such breach or attempted breach.
	 
	17	 	American Jobs Creation Act of 2004. This Agreement shall be construed, administered and
interpreted in accordance with a good-faith interpretation of Section 409A of the Code and
Section 885 of the American Jobs Creation Act of 2004. If the Company or Executive determines
that any provision of this Agreement is or might be inconsistent with such provisions
(including any administrative guidance issued thereunder), the parties shall make their best
efforts in good faith to agree to such amendments to this Agreement as may be necessary or
appropriate to comply with such provisions.
	 
	18	 	Choice of Law. This Agreement (including its validity, interpretation, construction, and
performance) shall be governed by the laws of the State of New York, without regard to any
concerning conflicts or choice of law that might otherwise refer construction or
interpretation to the substantive law of another jurisdiction.
	 
	19	 	Section Headings. All headings in this Agreement are inserted for convenience only. Headings
do not constitute a part of the Agreement and may not affect the meaning or interpretation of
any term or other provision of this Agreement.
	 
	20	 	Severability and Reformation. Each substantive provision of this Agreement is a separate
agreement, independently supported by good and adequate consideration, and is severable from
the other provisions of the Agreement. If a court of competent jurisdiction determines that
any term or provision of this Agreement is unenforceable, then the other terms and provisions
of this Agreement shall remain in full force and effect, and the unenforceable terms or
provisions shall be equitably modified to the extent necessary to achieve the underlying
purpose in an enforceable way.




	21	 	Whole Agreement. This Agreement reflects the entire understanding and agreement between the
Company and Executive regarding Executive’s employment. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings, and agreements,
whether oral or written, relating to Executive’s employment with the Company. The respective
rights and obligations of the parties to this Agreement shall survive the termination of
Executive’s employment to the extent necessary to give such rights and obligations their
intended effect.
	 
	22	 	Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute a single instrument.





* * *




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IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement on May 25, 2006.










CALPINE CORPORATION:




	 	 	 	 	 	 	 	 
	 	By

	 	/s/ R.P. May
	 	 	 	 
	 	 

	 	 
	 	 	 	 
	 	Its 

	 	CEO
	 	 	 	
	 	 

	 	 
	 	 	 	 
	 	 

	 	 	 	 	 	 
	 	 

	 	 
	 	 	 	 





EXECUTIVE:




	 	 	 	 	 	 	 	 
	

	/s/ Thomas N. May
	 	 	 	 
	 

	 
	 	 	 	 
	 

	Thomas N. May
	 	 	 	 





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