Document:

CPN_Exhibit 10.2.3.7_12.31.2013

EXHIBIT 10.2.3.7
CALPINE CORPORATION 
 
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT (this “Agreement”) is hereby entered into as of November 6, 2013, by and between Calpine Corporation (the “Company”) and John B. Hill (“Executive”) (hereinafter collectively referred to as “the parties”).  This Agreement shall be effective immediately following the Company’s 2014 annual meeting of stockholders (the date of such meeting, the “Effective Date”), provided that Executive is still an employee of the Company at such time.  Upon the Effective Date, this Agreement shall replace and supersede that certain Letter Agreement between the Company and Executive dated as of September 1, 2008 and amended as of December 21, 2012 (the “Prior Agreement”).  If Executive’s employment with the Company terminates for any reason prior to the Effective Date, this Agreement shall be null and void ab initio.     
In consideration of the respective agreements of the parties contained herein, it is agreed as follows:
		
	1.
	Term.  The initial term of this Agreement shall be for the period commencing on the Effective Date and ending, subject to earlier termination as set forth in Section 5, on the third (3rd) anniversary of the Effective Date (the “Employment Term”); provided, that the board of directors of the Company (the “Board”) may elect to extend the Employment Term for such additional period(s) as are mutually agreed upon in writing with Executive.

		
	2.
	Employment.  During the Employment Term:

		
	(a)
	Executive shall be employed as President and Chief Executive Officer of the Company.  In addition, as of the Effective Date, Executive shall serve as a member of the Board, subject to re-election in the ordinary course.  For as long as Executive is employed by the Company as the Chief Executive Officer, the Company shall use best efforts to nominate Executive for re-election to the Board.  At the time of Executive’s termination of employment with the Company for any reason, Executive shall resign from the Board if requested to do so by the Company.  Executive shall not receive any additional compensation for serving as a director of the Company or as a director or officer of any of the Company’s subsidiaries.

		
	(b)
	Executive shall report directly to the Board.  Executive shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar executive capacity.  Unless otherwise consented to by Executive, Executive’s principal place of employment shall be at the Company’s headquarters in Houston, Texas.

		
	(c)
	Executive shall devote substantially full-time attention to the business and affairs of the Company.  Executive may serve on the boards of directors of other companies, subject to the approval of the Board (which approval shall be deemed given in respect 

of service on boards on which Executive serves as of the Effective Date that are known to the Board), and may serve on civil or charitable boards or committees.  Executive may manage personal and family investments, participate in industry or charitable organizations and otherwise engage in charitable activities and deliver lectures at educational institutions, so long as such activities do not materially interfere with the performance of Executive’s responsibilities hereunder.
		
	3.
	Annual Compensation.

		
	(a)
	Base Salary.  The Company agrees to pay or cause to be paid to Executive during the Employment Term a base salary at the rate of $1,000,000 per annum or such increased amount as the Board may from time to time determine (hereinafter referred to as the “Base Salary”).  Such Base Salary shall be payable in accordance with the Company’s customary practices applicable to its senior executives.  Such Base Salary shall be reviewed at least annually by the Compensation Committee of the Board (the “Committee”), and may be increased in the sole discretion of the Committee, but not decreased (any increased amount thereupon being the Base Salary hereunder).

		
	(b)
	Annual Cash Incentive Compensation.  For each fiscal year of the Company ending during the Employment Term, beginning with the 2015 fiscal year, Executive shall be eligible to receive a target annual cash bonus of 100% of the Base Salary (the “Target Bonus”) with the opportunity to receive a maximum annual cash bonus of 200% of the Base Salary (the “Maximum Bonus”), as recommended and approved by the Committee, if the Company and Executive, as applicable, achieve reasonable performance targets set by the Committee in consultation with Executive (“Incentive Compensation”).  With respect to fiscal year 2014, Executive shall be eligible for an annual cash bonus which shall be determined based on actual achievement of 2014 performance and (i) for the portion of fiscal year 2014 that occurs prior to the Effective Date, the “Target Bonus”, maximum bonus and Base Salary amounts set forth in the Prior Agreement each multiplied by a fraction (A) the numerator of which is the number of days in fiscal year 2014 that occur prior to the Effective Date and (B) the denominator of which is 365 and (ii) for the portion of fiscal year 2014 that occurs on or after the Effective Date, the Target Bonus, Maximum Bonus and Base Salary set forth in this Agreement each multiplied by a fraction (A) the numerator of which is the number of days in fiscal year 2014 that occur on or after the Effective Date and (B) the denominator of which is 365.  Incentive Compensation (including, for the avoidance of doubt, the 2014 Bonus) shall be paid (i) in accordance with, and subject to those terms and conditions of, the Company’s annual incentive compensation plan which are administrative or which are required for compliance with Section 162(m) of the Internal Revenue Code of 1986 (the “Code”); provided that nothing in the Company’s plan shall apply adversely with respect to Executive to the extent inconsistent with the express terms of this Agreement; and (ii) in no event later than the 15th day of the third month following the end of the taxable year (of the Company or Executive, whichever is later) in which the performance targets have been achieved.  Executive shall be required to repay any after-tax portion of 

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Incentive Compensation received in respect of any year in which Executive commits a willful and intentional act which directly results in a material restatement of the Company’s earnings.  For this purpose, “willful” will have the meaning set forth in the last sentence of the definition of “Cause” contained in the Calpine Corporation Change in Control and Severance Benefits Plan, as amended from time to time (the “Severance Plan”).  The Company shall have three years from the date on which such Incentive Compensation is paid to seek such clawback.
		
	(c)
	Long-Term Incentive Compensation.  For each fiscal year during the Employment Term occurring after December 31, 2014, Executive shall be eligible to receive long-term incentive awards in such forms pursuant to such terms as may be determined by the Committee from time to time (the “LTI Award”).  The annual target value of the LTI Award shall initially be 300% of the Base Salary, with such target value subject to adjustment by the Committee from time to time in its sole discretion.  For the portion of the Employment Term occurring prior to December 31, 2014, Executive’s eligibility to receive long-term incentive compensation shall be determined by the Committee it its sole discretion.

		
	4.
	Other Benefits.

		
	(a)
	Employee Benefits.  During the Employment Term, Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company and made available to executives and employees generally, including, without limitation, all pension, retirement, profit sharing, savings, medical, hospitalization, disability, dental, life or travel accident insurance benefit plans, to the extent Executive is eligible under the terms of such plans, practices and programs.  Executive’s participation in such plans, practices and programs shall be on the same basis and terms as are applicable to senior executives of the Company generally.

		
	(b)
	Executive Benefits.  During the Employment Term, Executive shall be entitled to participate in all executive benefit and incentive compensation plans now maintained or hereafter established by the Company for the purpose of providing compensation and/or benefits to senior executives of the Company including, but not limited to, the Company’s deferred compensation plans and any supplemental retirement, deferred compensation, supplemental medical or life insurance or other bonus or incentive compensation plans.  No additional compensation provided under any of such plans shall be deemed to modify or otherwise affect the terms of this Agreement or any of Executive’s entitlements hereunder.

		
	(c)
	Business Expenses.  Upon submission of proper invoices in accordance with the Company’s normal procedures, Executive shall be entitled to receive prompt reimbursement of all reasonable out-of-pocket business, entertainment and travel expenses incurred by Executive in connection with the performance of Executive’s duties hereunder.

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	(d)
	Office and Facilities.  During the Employment Term Executive shall be provided with an appropriate office at the Company’s headquarters, with such secretarial and other support facilities as are commensurate with Executive’s status with the Company, which facilities shall be adequate for the performance of Executive’s duties hereunder.

		
	(e)
	Vacation and Sick Leave. During the Employment Term Executive shall be entitled to vacation and sick leave (without loss of pay) in accordance with the Company’s policies applicable to senior executives as in effect from time to time.

		
	5.
	Termination of Employment.  Subject to payment of any compensation due pursuant to Section 6, Executive’s employment with the Company may be terminated by either party during or after the Employment Term upon notice as set forth in Section 7 and this Agreement shall not be construed to alter the at-will status of Executive’s employment with the Company.  

		
	6.
	Compensation Upon Termination.  Upon termination of Executive’s employment during the Employment Term, Executive shall be entitled to the benefits, if any, described in this Section 6. 

		
	(a)
	Severance Plan Benefits.

		
	(i)
	Effective as of the Effective Date, Executive shall be designated as a Tier 1 participant in the Severance Plan. Executive shall be designated as a Tier 1 participant in the Severance Plan for each full and partial calendar year during the Employment Term.  Notwithstanding anything to the contrary contained in the Severance Plan, (i) the requirements of Sections 4.02 and 5.03 of the Severance Plan (or any successor provisions thereto) shall not be applicable to Executive (as such matters are covered by the Restrictive Covenant Agreement described in Section 8 below) and (ii) Executive shall not be required to execute a release of claims as a condition to payment following termination of employment in connection with a “Change in Control” (as defined in the Severance Plan) pursuant to which Executive is entitled to benefits under Article V of the Severance Plan or a successor provision thereto.  Nothing herein shall restrict the ability of the Board to amend or terminate the Severance Plan to the extent permitted pursuant to its terms; provided that, unless otherwise consented to in writing by Executive, any amendment or termination of the Severance Plan or determination by the Committee or the Board that would adversely affect the benefits and other terms provided to Executive under the Severance Plan shall not apply to Executive until the earlier to occur of (i) the two-year anniversary of the date upon which Executive is informed of such amendment or (ii) the end of the Employment Term.

		
	(ii)
	Notwithstanding anything to the contrary contained in the Severance Plan, for purposes of this Agreement and Executive’s participation in the Severance Plan, the coverage provided to Executive under any “Continued Health Care 

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Benefits” (as defined in the Severance Plan) shall become secondary to any coverage provided to Executive by a subsequent employer and to any Medicare coverage for which Executive becomes eligible.
		
	(iii)
	Notwithstanding anything to the contrary contained in the Severance Plan, for purposes of this Agreement and Executive’s participation in the Severance Plan, “Good Reason” means any of the following, in each case only if it occurs when Executive is employed by the Company and then only if not consented to by Executive in writing:  (i) assignment of a position that is of a lesser rank than that held by Executive prior to the assignment and that results in Executive ceasing to be an executive officer of a company with securities registered under the Securities Exchange Act of 1934, or ceasing to be President and Chief Executive Officer of the Company; (ii) a diminution of Executive’s duties or responsibilities; (iii) the assignment of duties inconsistent with Executive’s title or responsibilities; (iv) failure by the Company to nominate Executive for election as a Board member and use its best efforts to have him elected and re-elected; (v) failure to cause a successor to the Company’s business or substantially all of the Company’s assets to assume this Agreement; (vi) a material reduction in Executive’s Base Salary or Target Bonus (including an adverse change in performance criteria or a decrease in ultimate target bonus opportunity); or (vii) any change of more than thirty (30) miles in the location of the principal place of employment of such Executive immediately prior to the effective date of such change.  For purposes of this definition, none of the actions described in clauses (i), (ii) and (iii) 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 thirty (30) days after receipt of written notice thereof given by Executive (or, if the matter is not capable of remedy within thirty (30) days, then within a reasonable period of time following such thirty (30) day period, provided that the Company has commenced such remedy within said thirty (30) day period); provided that “Good Reason” shall cease to exist for any action described in clauses (i) through (vii) above on the sixtieth (60th) day following the later of the occurrence of such action or Executive’s knowledge thereof, unless such Executive has given the Company written notice thereof prior to such date.

		
	(b)
	Termination by the Company for Disability or by Reason of Death.  If Executive’s employment is terminated by the Company for Disability (as defined below) or if Executive dies during the Employment Term and, in either case, Executive is not otherwise entitled to receive benefits pursuant to the Severance Plan in connection with such termination, Executive shall be entitled to receive:

		
	(i)
	payment of any accrued and unpaid Base Salary; and

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	(ii)
	payment of any Incentive Compensation earned but unpaid in respect of any completed fiscal year preceding the termination date; and

		
	(iii)
	reimbursement for any and all monies advanced or expenses incurred in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive on behalf of the Company for the period ending on the termination date; and

		
	(iv)
	payment of any accrued and unpaid vacation pay (such amount, together with the amounts described in Sections 6(b)(i), (ii) and (iii), the “Accrued Amounts”); and

		
	(v)
	payment of an amount equal to the Incentive Compensation that Executive would have been entitled to receive in respect of the fiscal year in which Executive’s termination date occurs, had Executive continued in employment until the end of such fiscal year, which amount shall be determined based on the Company’s actual performance for such year relative to the target performance goals applicable to Executive and shall be paid at the time it would otherwise have become payable in accordance with Section 3(b); and

		
	(vi)
	continued coverage under any health, medical, dental, vision or life insurance program or policy in which Executive was eligible to participate as of the time of Executive’s employment termination for an eighteen (18) month period following the date of his termination on terms no less favorable to Executive and Executive’s dependents (including with respect to payment for the costs thereof) than those in effect for executive officers of the Company immediately prior to such termination, which coverage shall become secondary to any coverage provided to Executive by a subsequent employer and to any Medicare coverage for which Executive becomes eligible.  

For purposes of this Agreement, Executive will be deemed to have a “Disability” if, as a result of any medically determinable physical or mental impairment that can be expected to result in death or is reasonably expected to last for a continuous period of not less than twelve (12) months, Executive is unable to perform the core functions of Executive’s position (with or without reasonable accommodation) for a period of six (6) consecutive months or more, or is receiving income replacement benefits, for a period of six (6) consecutive months or more under an accident and health plan covering employees of the Company.  Executive shall be entitled to the compensation and benefits provided for under this Agreement for any period prior to Executive’s termination by reason of Disability during which Executive is unable to work due to a physical or mental infirmity in accordance with the Company’s policies for similarly-situated executives.  If any question shall arise as to whether, during any period Executive is disabled so as to be unable to perform the core functions of Executive’s then existing position with or without reasonable accommodation, Executive may, and at the request of the Company shall, submit to the Company a 

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certification in reasonable detail by a physician selected by the Company, to whom Executive or Executive’s guardian has no reasonable objection, as to whether Executive is so disabled and how long such disability is expected to continue, and such certification shall for the purposes of this Agreement be conclusive of the issue.  Executive shall cooperate with any reasonable request of the physician in connection with such certification.  If such question shall arise and Executive shall fail to submit such certification, the Company’s determination of such issue shall be binding on Executive.  Nothing in this Section 6(b) shall be construed to waive Executive’s rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1933, 29 U.S.C. ss.2601 et seq. and the Americans With Disabilities Act, 424 S.C. ss.12101 et seq.
		
	(c)
	Other Terminations.  If Executive’s employment is terminated in a manner other than would give rise to the payment of compensation or benefits pursuant to the Severance Plan and Section 6(a) or Section 6(b), Executive shall only be entitled under this Agreement to receive the Accrued Amounts, which shall be payable in the time set forth in Section 12(e).  

		
	7.
	Termination Notice.  

		
	(a)
	Any purported termination by the Company or by Executive shall be communicated by written Termination Notice to the other party hereto, which shall be delivered in the period proscribed in the Severance Plan with respect to such form of termination or, if no such period is proscribed in the Severance Plan, at least thirty (30) days prior to the date of termination.  For purposes of this Agreement, a “Termination Notice” shall mean a notice that indicates a termination date and otherwise meets the requirements set forth with respect to a Termination Notice in the Severance Plan.  For purposes of this Agreement, no such purported termination of Executive’s employment hereunder shall be effective without such Termination Notice (unless waived by the party entitled to receive such notice).

		
	(b)
	If the Company provides a Termination Notice to Executive upon the expiration of the Employment Term, Executive shall be entitled to benefits pursuant to the Severance Plan and Section 6(a) or Section 6(b), as applicable.

		
	8.
	Affirmation of Restrictive Covenants.  In entering into this Agreement, Executive expressly acknowledges and agrees that he is bound by those restrictions set forth in that certain Restrictive Covenant Agreement (the “Restrictive Covenant Agreement”) dated as of September 1, 2008, by and between Executive and the Company, which such restrictions Executive acknowledges and agrees are reasonable and enforceable in all respects.  Employee expressly covenants to abide by the covenants set forth in the Restrictive Covenant Agreement, which such provisions are herein incorporated by reference.  

		
	9.
	Stock Ownership Requirements; Company Policies.  Prior to the fifth (5th) anniversary of the Effective Date, Executive shall own shares of Common Stock with a value equal to at least five times the Base Salary in effect at such time.  In addition, Executive shall otherwise 

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be subject to, and expressly agrees to comply with, all other Company policies as are adopted by the Board or Committee from time to time (including, without limitation, those that relate to stock ownership); provided, that with respect to any such policies relating to stock ownership, such policies shall be in lieu of rather than in addition to the requirement described in the immediately preceding sentence..
		
	10.
	Clawback.  Without limiting Sections 3(b) or 9, to the extent required by (a) applicable law, including, without limitation, the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any Securities Exchange Commission rule or any applicable securities exchange listing standards and/or (b) any policy that may be adopted by the Board, amounts paid or payable pursuant to this Agreement shall be subject to clawback to the extent necessary to comply with such law(s) and/or policy, which clawback may include forfeiture, repurchase and/or recoupment of amounts paid or payable hereunder.

		
	11.
	Section 409A.  To the extent applicable, it is intended that this Agreement comply with the provisions of Code Section 409A and this Agreement will be administered and interpreted in a manner consistent with this intent.  Notwithstanding anything contained herein to the contrary, for all purposes of this Agreement, Executive shall not be deemed to have had a termination of employment unless Executive has incurred a separation from service from the Company within the meaning of Code Section 409A and, to the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A, payments under this Agreement that would otherwise be payable during the six-month period after the date of termination shall instead be paid on the first business day after the expiration of such six-month period.  In addition, for purposes of this Agreement, each amount to be paid and each installment payment shall be construed as a separate identified payment for purposes of Code Section 409A.  With respect to expenses eligible for reimbursement under the terms of this Agreement, (a) the amount of such expenses eligible for reimbursement in any taxable year shall not affect the expenses eligible for reimbursement in another taxable year and (b) any reimbursements of such expenses shall be made no later than the end of the calendar year following the calendar year in which the related expenses were incurred, except, in each case, to the extent that the right to reimbursement does not provide for a “deferral of compensation” within the meaning of Code Section 409A.

		
	12.
	Miscellaneous.

		
	(a)
	Successors and Assigns.

		
	(i)
	This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and permitted assigns and the Company shall require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place.  The Company may not assign or delegate any rights or obligations hereunder except to a successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company.  The term “the Company” as used herein shall 

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include a corporation or other entity acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise.
		
	(ii)
	Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by Executive, Executive’s beneficiaries or legal representatives, except by will or by the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by Executive’s legal personal representatives.

		
	(b)
	Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by Certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Chief Legal Officer of the Company with a copy (which shall not constitute notice) to the Chairman of the Compensation Committee of the Board and a copy (which shall not constitute notice) to David C. D’Alessandro, Vinson & Elkins LLP, Trammell Crow Center, 2001 Ross Avenue, Suite 3700, Dallas, TX 75201 .  All notices to Executive shall be delivered to him at the address on record with the Company with a copy (which shall not constitute notice) to Kenneth A. Raskin, King & Spalding LLP, 1185 Avenue of the Americas, New York, NY 10036.  All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt.

		
	(c)
	Indemnification, D&O Coverage.  The Company shall indemnify Executive, to the fullest extent permitted by applicable law, against all costs, charges and expenses incurred or sustained by Executive, including the cost and expenses of legal counsel, in connection with any action, suit or proceeding to which Executive may be made a party by reason of Executive being or having been an officer, director, or employee of the Company or any of its subsidiaries or affiliates (“Proceeding”).  Such indemnification shall continue as to Executive even if he has ceased to be a director, officer, member, employee, agent, manager, trustee, consultant or representative of the Company and shall inure to the benefit of his heirs, executors and administrators.  Executive shall be entitled to prompt advancement of any and all costs and expenses (including, without limitation, attorneys’ and other professional fees and charges) reasonably incurred by him in connection with any such Proceeding, any such advancement to be made within 15 days after Executive gives written notice, supported by reasonable documentation, requesting such advancement.  Such notice shall include an undertaking by Executive to repay the amounts advanced to the extent that he is ultimately determined not to be entitled to indemnification against such costs and expenses.  Nothing in this Agreement or elsewhere shall operate to limit or extinguish any right to indemnification, advancement of expenses, or 

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contribution that Executive would otherwise have (including, without limitation, by agreement or under applicable law).  Executive shall be covered during the Employment Term and thereafter for as long as any executive is covered (but in no event for less than six (6) years) by officer and director liability insurance, in amounts and on terms no less favorable than those in effect on the Effective Date, which insurance shall be paid by the Company.
		
	(d)
	Withholding.  The Company shall be entitled to withhold the amount, if any, of all taxes of any applicable jurisdiction required to be withheld by an employer with respect to any amount paid to Executive hereunder.  The Company, in its sole and absolute discretion, shall make all determinations as to whether it is obligated to withhold any taxes hereunder and the amount hereof.

		
	(e)
	Timing of Payments; Release of Claims.  The Accrued Amounts payable pursuant to Section 6 shall in all events be paid no later than 60 days following Executive’s date of termination.  Notwithstanding any provision in this Agreement or the Severance Plan to the contrary, the lump sum payment that must be paid within sixty (60) days following “Participant’s Termination Date” as set forth in the Severance Plan shall be paid on the sixtieth (60th) day following Executive’s termination of employment.  Unless otherwise set forth in Section 6(a), any payments or benefits due pursuant to the Severance Plan or Sections 6(a), 6(b)(v) or 6(b)(vi) of this Agreement shall be subject to Executive (or, if applicable, Executive’s estate) having delivered to the Company and not revoked a signed release of claims in the form of Exhibit A and any applicable revocation period shall have expired within sixty (60) days following the termination date; provided further, that Executive shall not be required to release any rights Executive may have to be indemnified by the Company under Section 12(c) of this Agreement.  If the release described in the immediately preceding sentence has not become effective and irrevocable on or prior to the 60th day following the termination date, Executive (or, if applicable, Executive’s estate) shall not be entitled to any payments or benefits pursuant to the Severance Plan or Sections 6(a), 6(b)(v) or 6(b)(vi) of this Agreement (and, in the case of the benefits described in Section 6(b)(vi) of this Agreement, such benefits shall cease to be provided at such time).

		
	(f)
	Representations and Warranties by Executive. Executive represents and warrants to the Company that the execution and delivery by Executive of this Agreement do not, and the performance by Executive of Executive’s obligations hereunder will not, with or without the giving of notice or the passage of time, or both:  (a) violate any judgment, writ, injunction, or order of any court, arbitrator, or governmental agency applicable to Executive; or (b) conflict with, result in the breach of any provisions of or the termination of, or constitute a default under, any agreement to which Executive is a party or by which Executive is or may be bound.

		
	(g)
	Attorneys’ Fees and Professional Fees.  The Company shall pay all reasonable legal and consulting fees and related expenses, up to a maximum amount of $65,000, 

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incurred by Executive in connection with the negotiation of this Agreement.  Executive acknowledges that he has had the opportunity to consult with legal counsel of his choice in connection with the drafting, negotiation and execution of this Agreement and related employment arrangements.  .  
		
	(h)
	Modification.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and the Company.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

		
	(i)
	Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts executed in and to be performed entirely within such State, without giving effect to the conflict of law principles thereof.

		
	(j)
	Dispute Resolution; Venue.  The exclusive venue for any disputes arising under this Agreement shall be the state or federal courts located in Harris County in the State of Texas, and each of the parties hereto irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  Each of the parties hereto also agrees that any final and unappealable judgment against a party hereto in connection with any action, suit or other proceeding may be enforced in any court of competent jurisdiction, either within or outside of the United States.  A certified or exemplified copy of such award or judgment shall be conclusive evidence of the fact and amount of such award or judgment. EACH OF THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR EXECUTIVE’S EMPLOYMENT WITH COMPANY OR THE TERMINATION THEREOF

		
	(k)
	No Conflicts.  Executive represents and warrants to the Company that Executive is not a party to or otherwise bound by any agreement or arrangement (including, without limitation, any license, covenant, or commitment of any nature), or subject to any judgment, decree, or order of any court or administrative agency, that would conflict with or will be in conflict with or in any way preclude, limit or inhibit Executive’s ability to execute this Agreement or to carry out Executive’s duties and responsibilities hereunder.

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	(l)
	Severability.  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

		
	(m)
	Entire Agreement.  This Agreement, together with agreements for options and other awards relating to Common Stock, constitutes the entire agreement between the parties hereto and supersedes all prior agreements (including, without limitation, the Prior Agreement), if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof.  As contemplated in Sections 4.03(b), 5.04(b), 7.01, 7.11 and 7.12 of the Severance Plan (or any successor provisions thereto), this Agreement expressly provides payments, benefits and rights in addition to those provided to Executive under the Severance Plan.

		
	(n)
	Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Executive has executed this Agreement as of the day and year first above written, to be effective upon the Effective Date.
CALPINE CORPORATION

By:  /s/ J. STUART RYAN     
      J. Stuart Ryan 
Title: Chairman

EXECUTIVE
By:  /s/ JOHN B. HILL     
Name: John B. Hill 

[Signature Page to Hill Employment Agreement]

EXHIBIT A 
 
FORM OF RELEASE AGREEMENT
 
THIS RELEASE AGREEMENT (the “Release”) is made as of this ____ day of _________, ____, by and between ______________ (“Executive”) and Calpine Corporation (the “Company”).  

		
	1.
	FOR AND IN CONSIDERATION of the payments and benefits provided in Section 6 of that certain Employment Agreement dated as of ________, 20__, by and among Executive and the Company (the “Employment Agreement”), Executive, for himself and his successors and assigns, heirs, executors and administrators, now and forever hereby releases and discharges the Company, together with all of its past and present parents, subsidiaries, and affiliates, together with each of their officers, directors, stockholders, owners, subscribers, partners, employees, agents, representatives, insurers and attorneys, and each of their subsidiaries, affiliates, estates, predecessors, successors, and assigns, as well as all employee benefit plans maintained by the Company or any of its parents, subsidiaries and affiliates and all fiduciaries and administrators of any such plans in their personal and representative capacities (hereinafter collectively referred to as the “Releasees”) from any and all rights, claims, charges, actions, causes of action, complaints, sums of money, suits, debts, covenants, contracts, agreements, promises, obligations, damages, demands, costs,  or liabilities of every kind whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected (collectively, “Claims”) which Executive or Executive’s heirs, executors, administrators, successors or assigns ever had, now has or may hereafter claim to have by reason of any matter, cause or thing whatsoever arising from the beginning of time up to the date of the Release including, but not limited to any such Claims arising out of or relating in any way to (a) Executive’s employment relationship with the Company or any of the Releasees, and (b) any federal, local or state statute or regulation, including, without limitation, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, and/or  any other federal or state law against discrimination or retaliation, each as amended, (c) the termination of Executive’s employment relationship with the Company or any of the Releasees; (d) the Employment Agreement; (iv) wrongful employment termination; or (e) any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company or any of the Releasees and Executive; provided, however, that notwithstanding the foregoing, nothing contained in the Release shall in any way diminish or impair:  (A) any rights Executive may have that arise from and after the date the Release is executed; (B) any rights Executive may have to indemnification or advancement that may exist from time to time under the express provisions of the Company’s certificate of incorporation or bylaws, or state law or under the express provisions of any policy or agreement, in each case as amended from time to time (and, without limiting the foregoing, any and all rights under Section 2(c) of the Restrictive Covenant Agreement and Section 12(c) of the Employment Agreement); (C) any rights Executive may have to vested benefits under employee benefit plans or incentive compensation plans of the Company in accordance with their terms in effect from time to time; (D) Executive’s ability to bring appropriate proceedings to enforce the Release; or (E) any rights under the provisions of Section 6 of the Employment Agreement (collectively, the “Excluded Claims”).  Further, notwithstanding the release of liability contained herein, nothing in this Release prevents 

Executive from filing any non-legally waivable claim (including a challenge to the validity of this Release) with the Equal Employment Opportunity Commission (“EEOC”) or comparable state or local agency or participating in any investigation or proceeding conducted by the EEOC or comparable state or local agency; however, Executive understands and agrees that Executive is waiving any and all rights to recover any monetary or personal relief or recovery as a result of such EEOC or comparable state or local agency proceeding or subsequent legal actions.  Executive further acknowledges and agrees that, except with respect to Excluded Claims, Executive has received all leaves (paid and unpaid) to which Executive was entitled and the Company and the Releasees have fully satisfied any and all obligations whatsoever owed to Executive arising out of or relating to Executive’s employment with the Company or any of the Releasees or the termination of such employment, and that no further payments or benefits are owed to Executive by the Company or any of the Releasees.  

		
	2.
	Executive understands and agrees that, except for the Excluded Claims, Executive has knowingly relinquished, waived and forever released any and all rights to any personal recovery in any action or proceeding that may be commenced on Executive’s behalf arising out of the aforesaid employment relationship or the termination thereof, including, without limitation, claims for backpay, front pay, liquidated damages, compensatory damages, general damages, special damages, punitive damages, exemplary damages, costs, expenses and attorneys’ fees.  Executive agrees never, individually or with any person or in any way, to commence, prosecute or cause or permit to be commenced or prosecuted against the Company or any Releasees, any legal action or other proceeding based upon any Excluded Claims.  If such action or proceeding is filed on Executive’s behalf, Executive agrees to immediately cause the dismissal of such action with prejudice and without any further right of appeal.   Executive represents that no such action or proceedings or any other charge or claim is pending in any court or before any governmental agency as of the date of this Release.

		
	3.
	Executive acknowledges and agrees that Executive has been advised to consult with an attorney of Executive’s choosing prior to signing the Release.   Executive understands and agrees that Executive has carefully read this Release and has the right and has been given an adequate opportunity to review the Release with an attorney of Executive’s choice should Executive so desire.  Executive also agrees that Executive has entered into the Release freely and voluntarily.  Executive fully understands the final and binding effect of this Release and that Executive understands and agrees to each of the terms of this Release.  Executive acknowledges that Executive is receiving, pursuant to Section 6 of the Employment Agreement, consideration in addition to anything of value to which Executive is entitled but for Executive’s execution of this Release.  Executive further acknowledges and agrees that Executive has had at least [twenty-one (21)] [forty-five (45)] calendar days to consider the Release, although Executive may sign it sooner if Executive wishes.  [Add if 45 days applies: Executive acknowledges that attached to this Release are (1) a list of the positions and ages of those employees selected for termination (or participation in the exit incentive or other employment termination program); (2) a list of the ages of those employees not selected for termination (or participation in such program); and (3) information about the unit affected by the employment termination program of which his termination was a part, including any eligibility factors for such program and any time limits applicable to such program.]  In addition, once Executive has signed the Release, Executive shall have seven (7) additional days from the date of execution to revoke 

A-2

Executive’s consent and may do so by writing to:  ___________.  The Release shall not be effective until the eighth (8th) day after Executive shall have executed the Release and returned it to the Company, assuming that Executive had not revoked Executive’s consent to the Release prior to such date.  No payments shall be made to Executive under Section 6 of the Employment Agreement or under the Severance Plan (as defined in the Employment Agreement) if Executive revokes this Release within the time provided to do so.

		
	4.
	It is understood and agreed by Executive that any payment made to Executive is not to be construed as an admission of any liability whatsoever on the part of the Company or any of the other Releasees, by whom liability is expressly denied.

		
	5.
	The Release is executed by Executive voluntarily and is not based upon any representations or statements of any kind made by the Company or any of the other Releasees.  Executive further acknowledges that Executive has had a full and reasonable opportunity to consider the Release and that Executive has not been pressured or in any way coerced into executing the Release.

		
	6.
	Executive represents that Executive has returned to Executive’s manager or human resources representative all property or data of any type, including computer and e-mail passwords, relating to the Company or any of the Releasees that are in Executive’s possession or control, without retaining any copies, notes or extracts thereof.

		
	7.
	By signing below, Executive acknowledges that as a result of Executive’s employment with the Company Executive has had access to Confidential Information of the Company and its affiliates (for the purposes of this Release, “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 the Company and its affiliates an opportunity to obtain advantage over competitors who do not know or use it) and that Executive 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.  Executive represents that Executive has delivered to Executive’s manager or human resources representative all diskettes, documents and data of any nature pertaining to any such Confidential Information and that Executive have not taken or retained any such diskettes, documents or data or any reproductions.  Nor shall Executive directly or indirectly use Confidential Information of the Company or any of its affiliates to compete with the Company or any of its affiliates, or disclose Confidential Information to a competitor of the Company or any of its affiliates or to any other person or entity.

		
	8.
	Executive agrees to keep the contents, terms and conditions of this Release confidential.  Executive may disclose this information to Executive’s spouse, immediate family, accountants, or attorneys, provided that they first agree not to disclose any information concerning the contents, terms and conditions of this Release to anyone.  Executive also may disclose the contents, terms and conditions of this Release 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 Executive set forth in this Release, will be deemed a material breach of this Release.

A-3

		
	9.
	Unless required by law, Executive agrees to refrain from making any public statements (or authorizing any statements to be reported as being attributed to him) that are critical, disparaging or derogatory about, or which injure the reputation of, any Releasee.  The Company agrees that, unless required by law, Company shall use reasonable efforts to cause its employees who report directly to Executive and the directors and officers of the Company to refrain from making any public statements (or authorizing any statements to be reported as being attributable to them) that are critical, disparaging, or derogatory about, or which injure the reputation of, Employee.

		
	10.
	The exclusive venue for any disputes arising hereunder shall be the state or federal courts located in Harris County in the State of Texas, and each of the parties hereto irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  Each of the parties hereto also agrees that any final and unappealable judgment against a party hereto in connection with any action, suit or other proceeding may be enforced in any court of competent jurisdiction, either within or outside of the United States.  A certified or exemplified copy of such award or judgment shall be conclusive evidence of the fact and amount of such award or judgment.  EACH OF THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE RELEASE, THE EMPLOYMENT AGREEMENT OR EXECUTIVE’S EMPLOYMENT WITH COMPANY OR THE TERMINATION THEREOF.

		
	11.
	The Release and the rights and obligations of the parties hereto shall be governed and construed in accordance with the laws of the State of Delaware.  If any provision hereof is unenforceable or is held to be unenforceable, such provision shall be fully severable, and this document and its terms shall be construed and enforced as if such unenforceable provision had never comprised a part hereof, the remaining provisions hereof shall remain in full force and effect, and the court construing the provisions shall add as a part hereof a provision as similar in terms and effect to such unenforceable provision as may be enforceable, in lieu of the unenforceable provision.

		
	12.
	The Release shall inure to the benefit of the Company and its successors and assigns and each of the Releasees shall be entitled to rely upon and enforce the provisions of Section 1 of this Release as if parties to this Release.

[SIGNATURE PAGE FOLLOWS]

A-4

IN WITNESS WHEREOF, Executive and the Company have executed the Release as of the date and year first written above.

	
			
	 
	 
	 

	 
	 
	 

	CALPINE
	 
	EXECUTIVE

	CORPORATION
	 
	 

A-5ex10-1masteragr2014.htm

  

  

  

Exhibit 10.1

 

HOME PROPERTIES, INC.

2011 STOCK BENEFIT PLAN

2014 RESTRICTED STOCK UNIT

MASTER AGREEMENT

 

This 2014 Restricted Stock Unit Master Agreement (the “Master Agreement”) relating to a grant (the “Award”) of Restricted Stock Units (as defined in the Home Properties, Inc. 2011 Stock Benefit Plan (the “Plan”)), dated as of the Effective Date set forth in the Award Certificate (the “Award Certificate”), is made by and between Home Properties, Inc. (together with its Subsidiaries, the “Company”) and each Participant.  The Award Certificate is included with and made part of the Master Agreement.  In the Master Agreement and each Award Certificate, unless the context otherwise requires, words and expressions shall have the meanings given to them in the Plan, except as herein defined.

 

Section 1. Definitions.  For purposes of the Award, the following terms shall have the following meanings:

 

 

(a) “Award Certificate” means the certificate given to each Participant specifying the Effective Date, Performance Period, Service-Vested Component Number of RSUs, Performance-Vested Component Number of RSUs at Target, and the Performance Component Range of RSUs for that Participant’s Award.

 

(b) “Base Salary” means, with regard to any Participant, such Participant’s annual base compensation as an employee of the Company determined immediately prior to the beginning of the Performance Period, without regard to any bonus, pension, profit sharing, equity or other compensation which the Participant either receives or is otherwise entitled to have paid on his or her behalf.

 

(c) “Board” means the Board of Directors of Home Properties, Inc.

 

(d) “Cause” means with regard to any Participant, that the Participant’s employment by or other relationship with the Company has been terminated by written notice because: (i) of his or her conviction of a felony for a crime involving an act of fraud or dishonesty; (ii) of intentional acts or omissions on such Participant’s part causing material injury to the property or business of the Company; or (iii) the Participant shall have breached any material term of any employment agreement in place between the Participant and the Company and shall have failed to correct such breach within any grace period provided for in such agreement or a Participant shall have breached any material condition of employment and shall have failed to correct that breach within a reasonable period of time.  “Cause” for termination shall not include bad judgment or any act or omission reasonably believed by the Participant, in good faith, to have been in, or not opposed to, the best interests of the Company.

 

  

  

  

 

(e) “Disability” means the Participant’s inability to perform his or her normal required services for the Company for a period of six consecutive months by reason of the individual’s mental or physical disability, as determined by the Committee in good faith in its sole discretion.

 

(f) “Effective Date” means the Effective Date set forth in the Award Certificate.

 

(g) “Final Performance-Vested Number” means, with respect to any Participant, the earned portion of the Performance-Vested Component, expressed as a number of RSUs, as determined in accordance with the methodology set forth in Schedule A at the end of the Performance Period.

 

(h) “Home Properties TSR” means the compound annual growth rate, expressed as a percentage in the value of a share of Common Stock due to stock appreciation and dividends, assuming dividends are reinvested in accordance with the Home Properties’ Dividend Reinvestment Plan, during the Performance Period.  For this purpose, the “Beginning Stock Price” means the average closing sales prices of the Company’s Common Stock on the NYSE for the trading days in the month of December immediately preceding the beginning of the Performance Period; and, the “Ending Stock Price” means the average closing sales prices of the Company’s Common Stock on the NYSE for the trading days in the month immediately preceding and including the last day of a Performance Period (or such other period as the Committee may determine).  Where “Y” is the number of fractional sharesof Common Stock resulting from the deemed reinvestment of dividends paid during the Performance Period, the Home Properties TSR is calculated as follows:

	
(

	
Ending Stock Price x (1 + Y)

Beginning Stock Price

	
)1/3

	
-1

 

(i) “Maximum Number” means the Maximum Number of RSUs pursuant to the applicable Performance Component Range of RSUs set forth in the applicable Award Certificate.

 

(j) “NAREIT Apartment Index TSR” means the compound annual growth rate in the value of the NAREIT Apartment Index during the Performance Period.  The NAREIT Apartment Index TSR is obtained from information publicly reported by the National Association of Real Estate Investment Trusts.

 

(k) “NAREIT All Equity REIT Index TSR” means the compound annual growth rate in the value of the NAREIT All Equity REIT Index during the Performance Period.  The NAREIT All Equity REIT Index TSR is obtained from information publicly reported by the National Association of Real Estate Investment Trusts.

 

(l) “Participant” means an Executive Officer of the Company to whom an Award of Restricted Stock Units has been granted under the Plan.

  

1

  

 

(m) “Performance Component Range” means, with regard to any Participant, the Threshold Number, Target Number and Maximum Number of Common Shares transferable under the Performance-Vested Component of an Award, each as set forth in a Participant’s Award Certificate.

 

(n) “Performance Goals” means the performance goal for each Performance Requirement, as set forth on Schedule A hereto.

 

(o) “Performance Period” means the three-year period specified in the Award Certificate.

 

(p) “Performance Requirements” means the performance requirements set forth on the Schedule A hereto.

 

(q) “Performance-Vested Component” means the number of RSUs subject to the attainment of the Performance Requirements pursuant to Section 2(c).

 

(r) “Relative NAREIT Apartment Index TSR” means the comparison of the Home Properties TSR to the NAREIT Apartment Index TSR.

 

(s) “Relative NAREIT All Equity REIT Index TSR” means the comparison of the Home Properties TSR to the NAREIT All Equity REIT Index TSR.

 

(t) “Retirement” means the Participant’s Termination of Employment with the Company, other than for Cause, following the date on which the sum of the following equals or exceeds 70 years: (i) the number of years of the Participant’s employment and other business relationships with the Company and any predecessor company, and (ii) the Participant’s age on the date of termination, provided that the Participant is at least 58 years old.

 

(u) “RSU” means a Restricted Stock Unit.

 

(v) “Service-Vested Component” means the number of RSUs subject to the attainment of Service Goals pursuant to Section 2(b).

 

(w) “Target Number” means the Target Number of RSUs pursuant to the applicable Performance Component Range of RSUs set forth in the applicable Award Certificate.

 

(x) “Termination of Employment” means a “separation from service” of a Participant from the Company, as defined under Section 409A.

 

(y) “Threshold Number” means the Threshold Number of RSUs pursuant to the applicable Performance Component Range of RSUs set forth in the applicable Award Certificate.

 

(z) “Vesting Date” means the Service Vesting Date, as defined in Section 2(b), with respect to the Service-Vested Component, or the Performance Vesting Date, as defined in Section 2(c), with respect to the Performance-Vested Component.

 

 

  

2

  

 

Section 2. Grant of RSUs.

 

(a) Award of Restricted Stock Units.  The Company grants to the Participant named in the Award Certificate an Award of the Service-Vested Component number of RSUs and the opportunity to earn the Performance-Vested Component Range of RSUs, as specified in the Award Certificate.

 

(b) Service-Vested Component.

 

(i) Vesting.  Subject to Section 3, one-third of the Service-Vested Component number of RSUs shall vest on each of the first, second and third anniversaries of the Effective Date (each, a “Service Vesting Date”), provided that the Participant remains in the continuous employment with the Company through each Service Vesting Date.

 

(ii) Payment.  Pursuant to Section 2(d), the applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant as soon as administratively practicable following each Service Vesting Date, but in no event later than the later of (A) the end of the calendar year in which the Service Vesting Date occurs; or (B) the 15th day of the third month following the Service Vesting Date; provided, however, that the Participant is not permitted, directly or indirectly, to designate the year of payment.

 

(c) Performance-Vested Component.

 

(i) Vesting.  Subject to Section 3, the Final Performance-Vested number of RSUs shall be reviewed and approved by the Committee in accordance with the methodology set forth in Schedule A, and shall vest on either the last day of the Performance Period or the one-year anniversary of the last day of the Performance Period, as set forth below; provided, that the Participant remains in the continuous employment with the Company through such date (the “Performance Vesting Date”).

 

(ii) Payment.  The Final Performance-Vested Number of RSUs shall be transferred to a Participant as follows:

 

(A) pursuant to Section 2(d), fifty percent of the shares of Common Stock underlying the Final Performance-Vested Number of RSUs shall be transferred to the Participant as soon as administratively practicable following the Performance Vesting Date, but in no event earlier than January 1 or later than December 31 of the year following the year in which the Performance Period ends; and

 

(B) pursuant to Section 2(d), the remaining fifty percent of the shares of Common Stock underlying the Final Performance-Vested Number of RSUs shall be transferred to the Participant as soon as administratively practicable following the one-year anniversary of the end of the Performance Period provided that the Participant remains in the continuous employment with the Company through such date, and shall in all instances be transferred  to the Participant no earlier than January 1 or later than December 31 of the second year following the year in which the Performance Period ends.

 

 

 

  

3

  

 

(d) Issuance of Common Stock.

 

(i) Conversion of RSUs.  No shares of Common Stock shall be issued to a Participant prior to the applicable Vesting Date.  After an RSU vests, the Company shall promptly cause to be registered in Participant’s name or in the name of the executor or personal representative of the Participant’s estate, as the case may be, one share of Common Stock in payment for each vested RSU.  For purposes of the Award, the date on which vested RSUs are converted into Common Stock shall be referred to as the “Conversion Date.”

 

(ii) Fractional RSUs.  In the event a Participant is vested in a fractional portion of RSUs, such portion shall be rounded down to the nearest whole number.

 

Section 3. Effects of Certain Events.

 

(a) General.  Subject to Sections 3(b) through 3(g), in the event that a Participant’s employment with the Company is terminated prior to the applicable Vesting Date, all unvested RSUs subject to the Award are automatically forfeited.

 

(b) Death.  In the event of a Participant’s Death prior to the applicable Vesting Date, such Participant shall:

 

(i) immediately vest in all of his or her Service-Vested RSUs; provided, however, that such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Service-Vested Component of the Award; and

 

(ii) immediately vest in the greater of (1) the Target Number of Participant’s Performance-Vested RSUs, or (2) a pro-rata number of the Performance-Vested RSUs based on the performance from the commencement of the Performance Period through the date of Termination of Employment; provided, however, such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

Pursuant to Section 2(d), the applicable shares of Common Stock underlying the vested RSUs shall be transferred to the executor or personal representative of the Participant’s estate by the end of the calendar year in which the Participant died, or, if later, the 15th day of the third month following the date of the Participant’s death.

 

(c) Disability.  In the event of a Participant’s Termination of Employment due to Disability prior to the applicable Vesting Date, such Participant shall:

 

(i) immediately vest in all of his or her Service-Vested RSUs; provided, however, that such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Service-Vested Component of the Award; and

  

4

  

 

(ii) immediately vest in the greater of (1) the Target Number of Participant’s Performance-Vested RSUs, or (2) a pro-rata number of the Performance-Vested RSUs based on the performance from the commencement of the Performance Period through the date of Termination of Employment; provided, however, such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

Pursuant to Section 2(d), the applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant as soon as practicable following the Participant’s Termination of Employment due to Disability, but in no event later than 90 days thereafter.

 

(d) Retirement.  In the event of a Participant’s Retirement prior to the applicable Vesting Date:

 

(A) the restrictions on the Participant’s Service-Vested RSUs shall continue to lapse and such RSUs shall continue to vest in accordance with the vesting schedule for such Service-Vested RSUs as set forth in Section 2(b)(i); provided, however, that such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Service-Vested Component of the Award; and

 

(B) such Participant shall retain his or her right to vest in Participant’s Performance-Vested RSUs as if the Retirement had not occurred, with the number of RSUs that will vest at the end of the applicable Performance Period to be based on the performance during the entire Performance Period; provided, however, such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

Pursuant to Section 2(d), the entire number of the applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant as soon as practicable following the end of the applicable Performance Period, but in no event later than 90 days thereafter.

 

(e) Involuntary Termination of Employment without Cause.  Subject to Section 3(g), in the event of a Participant’s involuntary Termination of Employment without Cause prior to the applicable Vesting Date, such Participant shall:

 

(i) immediately vest in all of his or her Service-Vested RSUs; provided, however, that such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Service-Vested Component of the Award; and

 

(ii) immediately vest in the greater of (1) the Target Number of Participant’s Performance-Vested RSUs, or (2) a pro-rata number of the Performance-Vested RSUs based on the performance from the commencement of the Performance Period through the date of Termination of Employment; provided, however, such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

 

  

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Pursuant to Section 2(d), the applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant within 30 days of the Participant’s Termination of Employment.

 

(f) Involuntary Termination for Cause.  In the event of a Participant’s involuntary Termination of Employment for Cause, all unvested RSUs subject to the Award, as well as any vested RSUs that have not yet been transferred to the Participant, are automatically forfeited as of the date of the Termination of Employment.

 

(g) Certain Terminations Following a Sale Event.  In the event of an involuntary Termination of Employment without Cause  (i) prior to the end of the Performance Period and (ii) within the 24-month period following the occurrence of a Sale Event or a Change of Control as defined in the Company’s Executive Retention Plan (including any amendments thereto), each Participant shall:

 

(i) become immediately 100% vested in the Service-Vested RSUs; provided, however, that such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Service-Vested Component of the Award; and

 

(ii) become immediately vested in the greater of (1) the Target Number of Participant’s Performance-Vested RSUs, or (2) a pro-rata number of the Performance-Vested RSUs based on the performance from the commencement of the Performance Period through the date of Termination of Employment; provided, however, the full number of Participant’s Performance Vested RSUs shall be accelerated to the extent that the underlying Performance Requirements have been met at the time of the Termination of Employment; provided further, however, such portion shall be reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

Pursuant to Section 2(d), the applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant within 30 days of the Participant’s Termination of Employment.

 

(h) Fractional Shares.  In determining the number of shares of Common Stock to be paid to a Participant (or his or her executor or personal representative) pursuant to this Section 3, such number shall be rounded down to the nearest whole number.

 

Section 4. Dividend Equivalent Rights.  In accordance with Section 8 of the Plan, each RSU granted under the Award shall have a Dividend Equivalent Right associated with it with respect to cash dividends on Common Stock that have a record date after the Effective Date and prior to the Conversion Date upon which the RSUs are settled for shares of Common Stock.

 

(a) Such Dividend Equivalent Rights shall be paid by crediting a hypothetical bookkeeping account for the Participant with an amount of cash equal to the amount of cash dividends that would have been paid on the dividend payment date with respect to the number of shares of Common Stock underlying the unsettled RSUs subject to the Award if such shares had been outstanding on the dividend record date.  A Participant’s Dividend Equivalent Rights account shall not be credited with interest or earnings.

 

 

  

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(b) Any Dividend Equivalent Rights: (i) shall be subject to the same terms and conditions applicable to the RSU to which the Dividend Equivalent Right relates, including, without limitation, the restrictions on transfer and the forfeiture conditions contained in the Master Agreement; (ii) shall vest and become payable upon the same terms and at the same time of settlement as the RSUs to which they relate; and (iii) will be denominated and payable solely in cash.  The payment of Dividend Equivalent Rights will be net of all applicable withholding taxes pursuant to Section 5(h).

 

Section 5. Miscellaneous.

 

(a) Administration.  The Award shall be administered by the Committee.  The Committee shall have authority to interpret the Award, the Award Certificate and the Master Agreement, to prescribe rules and regulations relating to the Award, the Award Certificate and the Master Agreement, to take any other actions it deems necessary or advisable for the administration of the Award, the Award Certificate and the Master Agreement and shall retain all general authority granted to it under Section 2.2 of the Plan.  At the end of the Performance Period, the Committee shall approve the Final Performance-Vested Number of RSUs awarded to a Participant under an Award, which shall be the Performance-Vested Component Number of RSUs.

 

(b) Amendment.  The terms of the Award, the Award Certificate and the Master Agreement may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, however, that no such amendment shall adversely affect in a material manner any right of a Participant under any outstanding Award without the written consent of such Participant.

 

(c) Adjustments.  Upon the occurrence of certain events relating to the Company’s stock contemplated by Section 10.2 of the Plan (including, without limitation, any reorganization, recapitalization, reclassification, Common Stock dividend, Common Stock split, reverse Common Stock split or other similar transaction), the Committee shall make adjustments in the number of RSUs then outstanding and the number and kind of securities that may be issued in respect of the Award.  No such adjustment shall be made with respect to any ordinary cash dividend paid on the Common Stock.  Furthermore, the Committee shall adjust the Performance Requirements referenced in Schedule A to the extent (if any) it determines that the adjustment is necessary or advisable to preserve the intended incentives and benefits to reflect any material change in corporate capitalization, any material corporate transaction (such as a reorganization, combination, separation, merger, acquisition, or any combination of the foregoing), or any complete or partial liquidation of the Company, or any other similar special circumstances.

 

(d) Participant is Unsecured General Creditor.  The Participant and the Participant’s heirs, successors, and assigns shall have no legal or equitable rights, interest, or claims in any specific property or assets of the Company.  Assets of the Company shall not be held under any trust for the benefit of the Participant or the Participant’s heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of the Company under the Award, the Master Agreement or the Plan.  Any and all of the Company’s assets shall be, and remain, the general unrestricted assets of the Company.  The Company’s sole obligation under the Award shall be merely that of an unfunded and unsecured promise of the Company to pay the Participant in the future, subject to the conditions and provisions of the Award, the Master Agreement and the Plan.

 

  

7

  

 

(e) No Transferability; No Assignment.  Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the RSUs or the shares of Common Stock and/or amounts, if any, payable under the Award, which are, and all rights to which are expressly declared to be, unassignable and non-transferable.  No part of the RSUs or the shares of Common Stock and/or amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

 

(f) No Right to Continued Employment.  The terms and conditions of the Award, the Award Certificate, the Master Agreement and the Plan shall not be deemed to constitute a contract of employment between the Company and a Participant.  Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, except as otherwise provided in a written employment agreement.  Nothing in the Award, the Award Certificate, the Master Agreement or the Plan shall be deemed to give a Participant the right to be retained in the service of the Company as an employee or to interfere with the right of the Company to discipline or discharge a Participant at any time.

 

(g) Limitation on Shareholder Rights.  A Participant shall have no rights as a shareholder of the Company, no dividend rights and no voting rights with respect to the RSUs and any shares of Common Stock underlying or issuable in respect of such RSUs until such shares of Common Stock are actually issued to and held of record by the Participant.  No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the shares of Common Stock.

 

(h) Tax Withholding.

 

(i) Regardless of any action the Company takes with respect to any or all federal, state or local income tax, employment tax or other tax related items (“Tax Related Items”), the Participant acknowledges that the ultimate liability for all Tax Related Items associated with the RSUs is and remains the Participant’s responsibility and that the Company: (A) makes no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant or vesting of the RSUs, the delivery of the shares of Common Stock, the subsequent sale of shares of Common Stock acquired at vesting and the receipt of any Dividend Equivalent Rights; and (B) does not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax Related Items.  Further, if Participant has relocated to a different jurisdiction between the date of grant and the date of any taxable event, Participant acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

 

  

8

  

 

(ii) Prior to the relevant taxable event, the Participant shall pay or make adequate arrangements satisfactory to the Company, in its sole discretion, to satisfy all withholding and payment on account obligations for Tax Related Items of the Company.  In this regard, the Participant authorizes the Company, in its sole discretion, to satisfy the obligations with regard to all Tax Related Items legally payable by the Participant with respect to the Award by withholding in shares of Common Stock otherwise issuable to the Participant, provided that the Company withholds only the amount of shares of Common Stock necessary to satisfy the minimum statutory withholding amount using the Fair Market Value of the shares of Common Stock on the Conversion Date.  Participant shall pay to the Company any amount of Tax Related Items that the Company may be required to withhold as a result of the Award that are not satisfied by the previously described method.  The Company may refuse to deliver the shares of Common Stock to the Participant if the Participant fails to comply with Participant’s obligations in connection with the Tax Related Items as described in this Section.

 

(i) Compensation Recovery Policy.  The compensation under the Award shall be subject to being recovered under the Company’s compensation recovery policy, if any, or any similar policy that the Company may adopt from time to time.  For avoidance of doubt, compensation recovery rights to shares of Common Stock issued under the Award shall extend to any proceeds realized by the Participant upon the sale or other transfer of such shares of Common Stock.

 

(j) Section 409A Compliance.  The Award and the shares of Common Stock and amounts payable under the Award are intended to comply with the requirements of Section 409A so as to prevent the inclusion in gross income of any benefits accrued hereunder in a taxable year prior to the taxable year or years in which such amount would otherwise be actually distributed or made available to the Participants.  The Plan shall be administered and interpreted to the extent possible in a manner consistent with that intent.  Notwithstanding the terms of Section 3, to the extent that a distribution to a Participant who is a “Specified Employee” (as defined under Section 409A) at the time of his or her Termination of Employment (other than by reason of death or Disability, but including by reason of Retirement) is required to be delayed by six months pursuant to Section 409A, such distribution shall be made on the first day of the seventh month following the Participant’s Termination of Employment.  The Company shall not be liable to any Participant for any payment made under this Plan that is determined to result in an additional tax, penalty or interest under Section 409A, nor for reporting in good faith any payment made under this Agreement as an amount includible in gross income under Section 409A.

 

(k) Section 280G of the Code.  In the event that the accelerated vesting of the RSUs or the amounts payable under the Award, together with all other payments and the value of any benefit received or to be received by the Participant, would result in all or a portion of such payment being subject to excise tax under Section 4999 of the Code (the “Excise Tax”), then the Participant’s payment shall be either (a) the full payment or (b) such lesser amount that would result in no portion of the payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state, and local employment taxes, income taxes, and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of the payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code.  Any such reduction shall be made by the Company in compliance with all applicable legal authority, including Section 409A.  All determinations required to be made under this Section shall be made by the nationally recognized accounting firm which is the Company’s outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax, which firm must be reasonably acceptable to the Participant (the “Accounting Firm”).  The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and the Participant.  Notice must be given to the Accounting Firm within 15 business days after an event entitling the Participant to a payment under Section 3.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).

 

(l) Governing Law.  The implementation and interpretation of the Award and the Master Agreement shall be governed by and enforced in accordance with the laws of the State of New York without giving effect to the conflicts of law provisions thereof, except for mandatorily applicable provisions of Maryland law.

*           *           *           *           *

 

  

9

  

HOME PROPERTIES, INC. 2011 STOCK BENEFIT PLAN

 

2014 RESTRICTED STOCK UNIT MASTER AGREEMENT

 

SCHEDULE A

 

The Committee has determined and specifies that the following shall apply to the Performance-Vested Component:

 

 

Section 1. Performance Requirements.  The Final Performance-Vested number awarded to the Participant at the end of the Performance Period is determined based on three Performance Requirements: (a) Home Properties TSR, (b) the Relative NAREIT All Equity REIT Index TSR and (c) the Relative NAREIT Apartment Index TSR.

 

Section 2. Weightings.  The respective weightings of the Performance Requirements set forth in Section 1(a) of this Schedule A applicable to the Performance-Vested Component are as follows:

 

	
Performance Requirement

	
Weighting

	
Home Properties TSR

	
50%

	
Relative NAREIT All Equity REIT Index TSR

	
25%

	
Relative NAREIT Apartment Index TSR

	
25%

 

Section 3. Performance Goals.  The Committee determines the applicable Performance Goals for each Performance Requirement, which are as follows:

	
Performance Requirements

	
Performance Goals

	
Threshold

	
Target

	
Maximum

	
Home Properties TSR

	
7%

	
9%

	
11%

	
Relative NAREIT All Equity REIT Index TSR

	
Home Properties TSR is better than -350 bps from the index return

	
Home Properties TSR is  50 bps  above the index return

	
Home Properties TSR is at least 500 bps above the index return

	
Relative NAREIT Apartment Index TSR

	
Home Properties TSR is better than -350 bps from the index return

	
Home Properties TSR is  50 bps  above the index return

	
Home Properties TSR is at least 500 bps above the index return

 

Section 4. Actual Performance.  The Committee reviews and approves the actual Home Properties TSR, the Relative NAREIT All Equity REIT Index TSR and the Relative NAREIT Apartment Index TSR for the Performance Period.

 

 

  

  

  

 

Section 5. Performance Results.

 

(a) For each Performance Requirement, the number of RSUs that vest based on the achievement of that Performance Requirement’s Performance Goals at Threshold, at Target and at Maximum is the Performance Component Range of RSUs set forth in the Participant’s Award Certificate at Threshold, at Target and at Maximum, respectively, multiplied by that Performance Requirement’s Weighting, rounded down to the nearest whole number.

 

(b) In the event that the Company’s actual performance does not meet the Threshold for a Performance Requirement, no RSUs shall be earned for such Performance Requirement.

 

(c) If the Company’s actual performance for the Performance Period is between Threshold and Target for the Performance Requirement, the number of earned RSUs for that Performance Requirement shall be determined using straight line interpolation between the Threshold Number and the Target Number from the Participant’s Performance Component Range of RSUs set forth in the Participant’s Award Certificate, rounded down to the nearest whole number.

 

(d) If the Company’s actual performance for the Performance Period is between Target and Maximum for the Performance Requirement, the number of earned RSUs for that Performance Requirement shall be determined using straight line interpolation between the Target Number and the Maximum Number from the Participant’s Performance Component Range of RSUs set forth in the Participant’s Award Certificate, rounded down to the nearest whole number.

 

(e) If the Company’s actual performance for the Performance Period is above Maximum for a Performance Requirement, the number of earned RSUs shall be the Maximum Number from the Participant’s Performance Component Range of RSUs set forth in the Participant’s Award Certificate.

 

Section 6. Performance-Vested Component Number of RSUs.  The total number of the RSUs subject to the Performance-Vested Component shall be the sum of the number of RSUs that vest for each Performance Requirement.

EXAMPLE  (for illustration purposes only)

 

Suppose a Participant received an award and his or her Award Certificate provided for a Performance-Vested Component Number of RSUs at Target of 1,000, and a Performance Component Range of RSUs as follows:

	
Total Number

	
Target Number

	
Maximum Number

	
800

	
1,000

	
1,200

 

The Performance Requirements, Weightings and Performance Goals were as set forth above in this Schedule A.

 

 

  

-ii-

  

 

Suppose the performance results for the Performance Period are as follows:

	
Performance Requirement

	
Performance Result

	
Level Achieved

	
Home Properties TSR

	
9%

	
Target

	
Relative NAREIT All Equity REIT Index TSR

	
Home Properties TSR is  500 bps above the index return

	
Maximum

	
Relative NAREIT Apartment Index TSR

	
Home Properties TSR is  -349  bps from the index return

	
Threshold

Home Properties TSR Performance Requirement Number of RSUs would be 500 (1,000 at Target x 50% Weighting).

Relative NAREIT All Equity REIT Index TSR Performance Requirement Number of RSUs would be 300 (1,200 at Maximum x 25% Weighting).

Relative NAREIT Apartment Index TSR Performance Requirement Number of RSUs would be 200 (800 at Threshold x 25% Weighting).

Performance-Vested Component Number of RSUs would be 1,000 (500 + 300 + 200).

*           *           *           *         *

  

-iii-

  

HOME PROPERTIES, INC.

2011 STOCK BENEFIT PLAN

2014 RESTRICTED STOCK UNIT AWARD CERTIFICATE

Home Properties, Inc., a Maryland corporation (together with its Subsidiaries, the “Company”), hereby grants to the Participant as of the Effective Date set forth below, a Restricted Stock Unit Award to receive Restricted Stock Units (“RSUs”) as set forth below (the “Award”).  Each RSU subject to the Award consists of a Restricted Stock Unit issued under the Home Properties, Inc. 2011 Stock Benefit Plan (the “Plan”).

Subject to attainment of the Service Requirements and Performance Requirements set forth in the 2014 Restricted Stock Unit Master Agreement (the “Master Agreement”), each RSU entitles the Participant to receive one share of Common Stock for each vested RSU, as determined pursuant to the terms and conditions set forth in the Master Agreement.

	
Participant:

 

	
 

	
Effective Date:

 

	
February 11, 2014

	
Performance Period:

 

	
January 1, 2014 through December 31, 2016

	
Service-Vested Component Number of RSUs:

 

 

	
Shares

	
 Value

	
Performance-Vested Component Number of RSUs at Target:

 

 

	
Shares

	
Value

 

	
Performance Component

 

	
Threshold Number

	
Target Number

	
Maximum Number

	
Range of RSUs:

 

	
 

	
 

	
 

	
Value $:

 

	
 

	
 

	
 

The Award is subject to the terms and conditions set forth in this Award Certificate, the Plan and the Master Agreement. All terms and provisions of the Plan and the Master Agreement, as the same may be amended from time to time, are incorporated and made part of this Award Certificate. If any provision of this Award Certificate is in conflict with the terms of the Plan or the Master Agreement, then the terms of the Plan or the Master Agreement, as applicable, shall govern. All capitalized terms used in this Award Certificate and not defined herein shall have the meanings assigned to them in the Plan or the Master Agreement. The Participant hereby expressly acknowledges receipt of a copy of the Plan and the Master Agreement.

THE PARTICIPANT KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES HIS OR HER RIGHT TO A TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW IN ANY ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE AWARD AND THE TRANSACTIONS IT CONTEMPLATES. THIS WAIVER APPLIES TO ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTICIPANT ACKNOWLEDGES THAT HE OR SHE HAS RECEIVED THE ADVICE OF COMPETENT COUNSEL, OR THE OPPORTUNITY TO DO SO.

Signature: ________________________________

PrintName:______________________________

  

-iv-

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