exv10w5w16



 





Exhibit 10.5.16




Via Hand Delivery




January 08, 2007




Eric Pryor

119 Fairwood Court

Danville, CA 94506




Dear Eric,



As previously discussed with your manager, your position is currently among those scheduled to be
relocated to Houston. This letter and attachments provide additional information regarding this
very important transition for you and our company.



One of our goals with the consolidation of certain functions in Houston is to accelerate the
creation of a more integrated culture and leadership team for the new Calpine with a unified vision
of who we are, where we are going, and how we are going to get there.



We believe this is an exciting opportunity for you to be part of a new beginning with Calpine. We
hope you will seriously consider joining us in Houston. If you choose to relocate with your
position to Houston prior to September 3, 2007, you are eligible for level 4 relocation assistance
as outlined in the attached Relocation Summary. All business travel to Houston prior to your
permanent relocation on or before September 3, 2007, will be treated as usual and customary
business expenses.



If your decision is to not relocate with your position at this time, Calpine is offering you the
option of commuter status. While you are in commuter status, Calpine will reimburse you for the
following reasonable and customary commuting expenses until September 3, 2007; airfare, lodging,
taxi/auto rental, and meals. You may continue to commute after September 3, 2007, however,
associated expenses as outlined above will be treated, for tax purposes as business expenses and
incrementally deducted from a portion of the relocation package for which you are eligible. The
total amount available for funding to support commuting expenses after September 3, 2007 is
$50,000. This amount is reflective of the estimated relocation services provided in your package,
excluding real estate costs associated with the sale of your current home and the purchase of a new
home in the Houston area. Once this $50,000 allowance for commuting expenses is exhausted, you will
be solely responsible to cover commuting costs.



Please note that beginning September 3, 2007 you will be expected to maintain a customary full-time
schedule in Houston, which generally includes full days Monday thru Friday. Prior to September 3,
2007, you will be expected to engage in travel to Houston as deemed appropriate and necessary by
your manager.



If you decide to permanently relocate to the Houston area after September 3, 2007, only the balance
remaining in the relocation package will be offered to support relocation costs incurred. If the
full $50,000 has been exhausted, only the real estate related portion, as outlined in the attached
summary, will be available.




 









 




Lastly, should you choose to leave Calpine instead of relocating to the Houston area prior to June
30, 2008, you will be eligible for severance benefits as described in the attached Severance
Policy. In addition to the severance benefits, you will be eligible for a 2006 CIP bonus, if
funded, and a 2007 Transaction Bonus equal to 100% of your CIP target. Should you choose to leave
Calpine instead of relocating to the Houston after June 30, 2008, you will be eligible for
severance benefits as determined and in place by Calpine at the time of your termination of
employment.



Calpine reserves the right to extend the September 3, 2007 date referenced above in its sole
discretion.



We appreciate your support and look forward to working with you to ensure a smooth and successful
transition. Please complete and return a copy of this letter, including the election form below,
on or before January 19, 2007. If you have questions regarding the terms and conditions outlined
above, please contact Ed Pawkett at (408)794-2411.




Sincerely,









Kelly J. Zelinski

Vice President of Human Resources



If your decision is not to relocate with your position to Houston, please consider applying for
other positions within Calpine. Should you elect not to move into another Calpine position and you
remain employed up to the scheduled transition date, you will be eligible for severance benefits as
described in the attached Severance Policy. In addition to the severance benefits, you will also
be eligible for a 2006 CIP bonus (if funded) and a 2007 Transaction Bonus equal to 100% of your CIP
target (if your transition date is sometime in 2007) for staying with Calpine until your position
relocates to Houston.




EMPLOYEE ELECTION AND AKNOWLEDGEMENT




     Check one:



                          I agree to relocate to Houston on or before September 3rd, 2007.



              X         I accept the commuter option and will decide whether to relocate at a later date.




I acknowledge and understand that the terms and conditions outlined above do not affect my
status as an “at-will” employee in any way. I further understand that if I am terminated for
cause at any point then I am not eligible for severance benefits regardless of how long I
stay with Calpine. “Cause” shall mean (i) material breach of company policy, (ii)
conviction of a felony, (iii) repeated unexplained or unjustified absence, (iv) willful
insubordination, or (v) failure to meet Calpine’s standards of competence and job
performance.



Signed /s/ Eric N. Pryor      Date