UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 20, 2005
CALPINE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation)
Commission File Number: 001-12079
I.R.S. Employer Identification Number: 77-0212977
50 West San Fernando Street
San Jose, California 95113
Telephone: (408) 995-5115
(Address of principal executive offices and telephone number)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 -- ENTRY INTO A MATERIAL AGREEMENT.
On December 20, 2005, the Board of Directors (the "Board") of Calpine
Corporation (the "Company") approved an employment agreement with Robert P. May
to serve as the Company's Chief Executive Officer. The agreement is made
effective as of December 12, 2005, the date that Mr. May was appointed as Chief
Executive Officer, and includes the following provisions:
1. The initial term of the agreement is two years (until December 31,
2007) and is automatically renewable for successive 12-month terms
unless either party provides written notice to the other at least 180
days prior to the date of any such renewal of his or its intention not
to renew.
2. Mr. May will receive a base salary of $1,500,000 during the initial
and any subsequent term. The Board shall review Mr. May's base salary
at least annually, and may increase it at any time in its sole
discretion.
3. Mr. May shall be eligible to receive an annual cash performance bonus
so long as he remains employed by the Company on the last day of the
applicable fiscal year. Mr. May's target bonus will be established by
the Board but the minimum target bonus will be 100% of his base
salary, and his actual bonus may range from 0% to 200% of his base
salary as determined by the Board, except that Mr. May shall receive
minimum bonuses for the fiscal years ending December 31, 2006, and
December 31, 2007, of $2,250,000 and $1,500,000, respectively. Mr. May
shall also receive a one time signing bonus of $2,000,000, which is
payable by December 27, 2005, and shall be eligible to receive a
success fee of $12,000,000 if and when a plan of reorganization that
is confirmed by the bankruptcy court becomes effective during Mr.
May's tenure as Chief Executive Officer of the Company or within 12
months after termination of Mr. May's employment, but only if such
termination is by Mr. May for good reason or by the Company without
cause except that Mr. May shall not be entitled to the success fee if
the Company terminates his employment for cause, he resigns his
employment without good reason or his employment terminates due to
death or disability before the effective date of the plan. Mr. May
will also participate in employee benefit programs available to senior
executives of the Company.
4. Mr. May shall continue to serve as a member of the Board for as long
as he continues to be nominated and elected.
5. Mr. May is entitled to certain severance benefits as set forth in the
agreement in the event that Mr. May resigns for good reason or the
Company terminates his employment without cause. The severance
benefits include an amount equal to the sum of Mr. May's base salary
and target bonus at the time of the termination of his employment
(except that if the termination were to occur in 2006 or 2007, in lieu
of the target bonus amount, Mr. May would receive the minimum bonus
amount for such years) paid over a year. If Mr. May's employment is
terminated because of his death or disability, he or his estate will
receive a pro rata portion of his then current target bonus.
6. The Company will provide indemnification to Mr. May under its
Certificate of Incorporation and Bylaws to the fullest extent
permitted by law.
A copy of Mr. May's employment agreement is filed herewith as Exhibit 10.1.
ITEM 5.02 -- DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
(b) On December 20, 2005, director Peter Cartwright resigned from the Board
of Directors of Calpine Corporation.
ITEM 9.01 -- FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
10.1 Employment Agreement, effective as of December 12, 2005, between
the Company and Robert P. May.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALPINE CORPORATION
By: /s/ Charles B. Clark, Jr.
-------------------------------------
Charles B. Clark, Jr.
Senior Vice President, Controller and
Chief Accounting Officer
Date: December 27, 2005
EXHIBIT INDEX
Exhibit Description
- ------- --------------------------------------------------------------------
10.1 Employment Agreement, effective as of December 12, 2005, between the
Company and Robert P. May.
================================================================================
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into effective as
of December 12, 2005, between CALPINE CORPORATION, a Delaware corporation (the
"Company"), and ROBERT P. MAY ("Executive") to provide the terms and conditions
for Executive's employment with the Company and its affiliates from time to time
(together, the "Group").
The Board of Directors of the Company (the "Board") named Executive as
Chief Executive Officer of the Company and a member of the Board on December 12,
2005 (the "Start Date").
The Company and Executive have agreed that Executive will be employed by
the Company and will serve as the Company's Chief Executive Officer, upon the
terms and conditions set forth below.
Accordingly, and in consideration of the mutual obligations set forth in
this Agreement, which Executive and the Company agree are sufficient, Executive
and the Company agree as follows:
1. Term of Employment. Subject to the provisions of paragraph 4 below,
Executive's term of employment ("Term of Employment") consists of the initial
term and any subsequent term for which the Agreement is renewed. The initial
term of this Agreement begins on December 12, 2005, and ends on December 31,
2007. Subject to the termination provisions of paragraph 4 below, Executive's
employment by the Company shall be automatically renewed for an additional 12
months at the end of the initial term and each annual anniversary of the end of
the then-current renewal term unless either party provides written notice to the
other party no less than 180 days prior to the date of any such scheduled
renewal of its or his intention not to renew the term of Executive's employment.
2. Position and Responsibilities. During the Term of Employment, Executive
shall have the position and responsibilities described in this paragraph 2.
Executive shall be employed as the Company's Chief Executive Officer, with the
general executive powers and authority that accompany that position. Executive
shall report directly to the Board and shall have the duties and
responsibilities that are typically performed by the chief executive officer of
a public company, as well as any other duties consistent with his position that
are assigned to Executive by the Board. Unless and until the Board elects a
President of the Company, Executive shall also have the powers, duties and
responsibilities that the Company's Bylaws confer on the President of the
Company. Executive agrees to comply with such lawful policies of the Company as
may be adopted from time to time. Although Executive may be required to travel
from time to time for business reasons, his principal place of employment shall
be the Company's corporate offices in San Jose, California.
a. Executive shall devote substantially all of his full business time
and his best efforts, skill, and attention to the Company's business and
affairs and to promoting the Company's best interests.
b. Executive shall serve as a member of the Board for as long as
Executive continues to be nominated and elected.
c. Notwithstanding the foregoing, nothing herein shall preclude
Executive from (i) serving on the boards of directors of other corporations
and/or charitable organizations (subject to the approval of the Board, such
approval not to be unreasonably withheld), (ii) engaging in charitable
activities and community affairs, and (iii) managing his personal
investments and affairs, provided that such activities do not materially
interfere with the proper performance of his duties and responsibilities
hereunder.
3. Compensation. For all of his services during the Term of Employment,
Executive shall receive the following compensation:
a. Base Salary. Executive's annual base salary shall be $1,500,000.
The Board will review the Base Salary at least annually and may increase it
at any time for any reason, in its sole discretion.
b. Bonus. In addition to his Base Salary, Executive shall be eligible
to receive an annual cash performance bonus (the "Bonus") for each fiscal
year ending during the Term of Employment if, and to the extent that, (x)
except with respect to any Bonus payable as severance under paragraph
4.b.i.1, Executive remains employed by the Company on the last day of such
fiscal year and (y) individual or corporate performance objectives
established by the Board are achieved, as determined by the Board or a
committee thereof in its sole discretion. Payment of the Bonus shall be
made at the same time that other senior-level executives receive their
bonuses, and no later than March 15th of the calendar year after the
calendar year in which the Bonus is earned. The target level for
Executive's Bonus shall be established by the Board in its sole discretion,
provided that the minimum target level for any year shall be 100% of the
Base Salary (the "Target Annual Bonus"). However, subject to the minimum
Bonuses for the Company's fiscal years ending December 31, 2006, and
December 31, 2007, set forth below, Executive's actual Bonus in any year
may range from 0% to 200% of the Target Annual Bonus:
i. For the Company's fiscal year ending December 31, 2006,
Executive shall be entitled to receive a minimum Bonus of $2,250,000,
to be paid no later than March 15, 2007 but no earlier than January 1,
2007.
ii. For the Company's fiscal year ending December 31, 2007,
Executive shall be entitled to receive a minimum Bonus of $1,500,000,
to be paid no later than March 15, 2008 but no earlier than January 1,
2008.
c. Benefits. Executive shall be eligible to participate in all Company
benefit plans and programs as are generally available for its senior
executives, and his benefits shall be based on the terms of the applicable
plan as established by the Company from time to time. Nothing in this
Agreement shall restrict the Company's ability to change or terminate any
or all of its employee benefit plans and programs from time to time; nor
shall anything in this Agreement prevent any such change from affecting
Executive.
d. Signing Bonus. In addition to the Base Salary and Bonus, Executive
shall be entitled to receive a one-time payment of $2,000,000, payable
within 15 days of the Start Date. If Executive resigns his employment
without Good Reason or Executive's employment is terminated by the Company
for Cause, Executive shall repay a pro rata portion (based on the number of
full calendar months remaining in the initial 24 month term divided by 24
months) of the signing bonus (net of any associated income and employment
taxes) within 10 days after such resignation or termination of employment.
Within 10 days after the filing of Executive's federal income tax return
for the year in which such repayment is made, Executive shall pay to the
Company the amount by which Executive's federal and state income tax
liability for such year was reduced as a result of such repayment. If
Executive resigns for Good Reason or Executive's employment is terminated
by the Company without Cause, Executive shall be entitled to retain the
full amount of the signing bonus. The Company acknowledges and agrees that
the payment of Executive's signing bonus is unrelated to any services that
he performed in the State of California.
e. Success Fee. In the event that the Company files for bankruptcy
protection under Chapter 11 of the United States Bankruptcy Code, if and
when a plan of reorganization that is confirmed by the bankruptcy court
becomes effective (the "Plan Effective Date") during Executive's tenure as
Chief Executive Officer of the Company, Executive shall be entitled to
receive a one-time payment of $12,000,000 (the "Success Fee"). If at any
time after the Start Date, Executive resigns his employment with Good
Reason or Executive's employment is terminated by the Company without Cause
before the Plan Effective Date, Executive shall be entitled to payment of
the Success Fee if the Plan Effective Date occurs within 12 months after
the date of termination of employment. In any case such Success Fee shall
be due and payable on the Plan Effective Date. Executive shall not be
entitled to all or any portion of the Success Fee if the Company terminates
his employment for Cause, Executive resigns his employment without Good
Reason or Executive's employment terminates due to death or Disability
before the Plan Effective Date.
f. Relocation. Executive shall be reimbursed for the following costs
associated with relocating to the San Jose, California, area:
i. All reasonable transaction costs (including any real estate
brokerage fees Executive incurs) and moving expenses incurred by
Executive, in each case while an employee of the Company, in
connection with moving his household goods from Executive's current
residence to the San Jose area, provided that Executive provides
appropriate documentation (the "Reimbursement"). Reimbursements under
this paragraph 3.f.i shall be paid on or before March 15th of the
calendar year after the calendar year in which the applicable expenses
were incurred. In connection with such payment, during the calendar
year after the calendar year in which the applicable expenses are
incurred, the Company shall pay Executive an additional payment in an
amount such that after the actual payment by Executive of all taxes,
if any, imposed in connection with the Reimbursement, Executive
retains an amount equal to the Reimbursement;
ii. Reimbursement of all reasonable temporary housing and living
expenses incurred by Executive, in each case while an employee of the
Company, for the shorter of (A) 9 months or (B) the period from the
Start Date until Executive moves to a residence of his choosing in the
San Jose area. Reimbursements under this paragraph 3.f.ii shall be
paid on or before March 15th of the calendar year after the calendar
year in which the applicable expenses were incurred.
g. Legal Fees. On or before March 15, 2006, the Company shall pay
Executive's reasonable legal fees actually incurred in an amount not to
exceed $25,000 and reasonable fees incurred in connection with the services
of an executive compensation consultant (but not to exceed $25,000), in
each case directly related to negotiation of Executive's compensation and
this Agreement.
4. a. Termination of Employment.
i. Termination by the Company for Cause. The Board may terminate
Executive's employment for Cause at any time after (x) providing
Executive with 10 days' advance written notice explaining the
circumstances that justify the termination (a "Termination Notice");
and (y) except in the case of termination for an event covered by (2)
below, providing Executive with the opportunity to appear before the
Board prior to any vote to terminate Executive's employment for Cause,
which opportunity may occur during the 10-day notice period. "Cause"
means any of the following: (1) Executive's material breach of any
material term of this Agreement that if capable of being corrected is
not corrected within 10 days after delivery of a Termination Notice to
Executive with respect to such breach; (2) Executive's commission of,
or formal charge or indictment alleging commission of, a felony, any
crime involving fraud, or any crime involving moral turpitude that in
the case of a crime involving moral turpitude may adversely affect the
business, standing or reputation of the Company or any other member of
the Group (other than motor vehicle related); (3) Executive's breach
of fiduciary duty to the Company or any other member of the Group; (4)
Executive's misappropriation of funds or material property of the
Company or any other member of the Group; (5) Executive's repeated
refusal to follow the lawful directives of the Board; (6) Executive's
fraud, dishonesty, disloyalty, gross negligence or willful misconduct,
where the dishonesty, disloyalty, gross negligence or willful
misconduct has resulted, or is likely to result, in substantial and
material damage to the Company or any other member of the Group, and
that if capable of being corrected is not corrected within 10 days
after delivery of a Termination Notice to Executive with respect to
such breach; (7) Executive's material violation of any of the
Company's Code of Conduct or employment policies that if capable of
being corrected is not corrected within 10 days after delivery of a
Termination Notice to Executive with respect to such breach; or (8)
Executive's knowing and material violation of any federal, state or
local laws that will result in a direct or indirect financial loss to
the Company or any other member of the Group or damage the reputation
of the Company or any other member of the Group.
ii. Termination by the Company without Cause. The Company may
terminate Executive's employment under this Agreement without Cause
upon at least 30 days' prior written notice to Executive.
iii. Death or Disability. Executive's employment by the Company
will immediately terminate upon Executive's death and at the option of
either Executive or the Company, exercisable upon written notice to
the other party, may terminate upon the Executive's Disability. For
purposes of this Agreement, "Disability" will occur if (A) Executive
becomes eligible for benefits under a long-term disability policy
provided by the Company, if any, or (B) Executive has become unable,
due to physical or mental illness or incapacity, to substantially
perform the essential duties of his employment with reasonable
accommodation for a period of 90 days or an aggregate of 180 days
during any consecutive 12-month period, as determined by an
independent physician approved by the Company and Executive.
iv. Termination by Executive for Good Reason. Executive may
terminate his employment for Good Reason at any time. "Good Reason"
shall mean the occurrence, during the Term of Employment, of any of
the following actions or failures to act, but in each case only if it
is not consented to by Executive in writing: (A) a material adverse
change in Executive's duties, reporting responsibilities, titles or
elected or appointed offices (including the failure to be elected to
the Company's Board) as in effect immediately prior to the effective
date of such change (including but not limited to the appointment of
any person to an executive position at the Company that is co-equal or
senior to that of Executive); (B) a material reduction by the Company
in Executive's Base Salary or Bonus or, solely to the extent provided
in paragraph 3.b, bonus opportunity, in each case in effect
immediately prior to the effective date of such reduction; (C)
Company's election not to renew the initial term or any subsequent
renewal term; (D) the failure of the Company to obtain the assumption
in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Company on
or prior to a merger, consolidation, sale or similar transaction; or
(E) if the Company files for bankruptcy protection under Chapter 11 of
the United States Bankruptcy Code, the failure of the bankruptcy court
to approve this Agreement within 90 days after the date of such
filing. (For purposes of this definition, none of the actions
described in clauses (A) and (B) 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 30 days after receipt of written notice thereof given
by Executive (or, if the matter is not capable of remedy within 30
days, then within a reasonable period of time following such 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 (A) and (B) above on the
60th day following the later of the occurrence of such action or
Executive's knowledge thereof, unless Executive has given the Company
written notice thereof prior to such date.
v. Termination by Executive without Good Reason. Executive may
terminate his employment under this Agreement without Good Reason upon
at least 30 days' prior written notice to the Company.
b. Consequences of Termination of Employment.
i. Termination by the Company without Cause or by Executive for
Good Reason. Executive shall receive the severance benefit described
in this paragraph 4.b if the Company terminates Executive's employment
without Cause (under paragraph 4.a.ii) at any time during the Term of
Employment or if Executive terminates his employment at any time
during the Term of Employment for Good Reason (under paragraph
4.a.iv).
1. Amount and Payment Schedule. Executive's severance
benefit shall be an annual amount equal to the sum of his (x)
annual Base Salary and (y) Target Annual Bonus as of the date his
employment terminates, paid for one year, provided that if
Executive is terminated in calendar year 2006 or 2007, in lieu of
the Target Annual Bonus referenced in (y) above, Executive shall
receive his minimum Bonus for the applicable year as set forth in
paragraph 3.b.i or 3.b.ii, above. Subject to the timing rule
described in paragraph 4.b.i.2, below, the severance benefit
shall be paid ratably on the same payment schedule that applied
to Executive's salary at the time of his termination.
2. Timing. To the extent necessary to comply with the
restriction in Section 409A(a)(2)(B) of the Internal Revenue Code
of 1986, as amended (the "Code") concerning payments to specified
employees, the first severance payment to Executive shall be made
on the first installment date (determined under paragraph
4.b.i.1, above) that is at least six months after Executive's
termination date. The first payment shall include any
installments that would have been paid previously under paragraph
4.b.i.1 were it not for this special timing rule, plus interest
on the delayed installments at an annual rate (compounded
monthly) equal to the federal short-term rate (as in effect under
Section 1274(d) of the Code on Executive's termination date).
3. Benefits. For a period of one year following the date of
termination of Executive's employment from the Company, the
Company shall at its sole cost and expense (but disregarding any
individual tax liability of Executive) provide Executive (and his
spouse and eligible dependents) with group health benefits
substantially similar to those benefits that Executive (and his
spouse and eligible dependents) were receiving immediately before
his termination (which may at the Company's election be pursuant
to reimbursement of the applicable COBRA premium).
4. Excise Tax. If, in the written opinion of the Company's
independent accountants, (x) any amount payable to Executive
under this Agreement is an "excess parachute payment" as defined
in Section 280G(b) of the Code, and (y) such excess parachute
payment is subject to the excise tax imposed by Section 4999 of
the Code (or any similar tax under state or local law), the
Company shall pay to Executive an amount necessary to place
Executive in the same after-tax position in which Executive would
have been if such excise tax had not been imposed (the
"Gross-Up). The Gross-Up shall be in an amount determined by the
Company's independent accountants and shall be paid during the
Payment Year (as hereinafter defined), on or before December 31st
of such Payment Year (subject to the special timing rule set
forth in paragraph 4.b.i.2, above). For purposes of this
paragraph 4.b.i.4, the "Payment Year" shall be the calendar year
following (A) with respect to amounts payable upon a change in
ownership or control (within the meaning of Section 280G(b) of
the Code), the calendar year in which such change in ownership or
control occurs or (B) with respect to amounts payable upon a
termination of employment, the calendar year in which such
termination of employment occurs.
ii. Death or Disability. In the event of termination of
Executive's employment due to death or Disability (under paragraph
4.a.ii), Executive shall be entitled to receive a pro rata portion of
his Target Annual Bonus for the portion of the calendar year before
the date of termination of employment, payable on or before March 15th
of the calendar year after the calendar year in which such termination
of employment occurs; but Executive shall not be eligible to receive
any other severance benefit under this paragraph 4. Executive's
eligibility (if any) to receive a severance or retirement benefit
under any other severance or retirement plan or program maintained by
the Company shall be determined by the terms of that plan or program
as in effect on his termination date.
iii. Termination for Cause or Voluntary Termination. If the
Company terminates Executive's employment for Cause (under paragraph
4.a.i), or if Executive terminates his employment without Good Reason
(under paragraph 4.a.v), Executive shall not be eligible to receive
any severance benefit under this paragraph 4. Executive's eligibility
(if any) to receive a severance or retirement benefit under any other
severance or retirement plan or program maintained by the Company
shall be determined by the terms of that plan or program as in effect
on his termination date. The foregoing shall not limit the remedies
available to the Group, at law or in equity, for any loss or other
injury caused directly or indirectly by Executive.
iv. Earned but Unpaid Bonus. In addition to any other amounts
owed to Executive under this paragraph 4.b, if the Company terminates
the Executive's employment for any reason after December 31 of any
year, Executive shall be entitled to receive any Bonus earned by
Executive for the preceding year as calculated in accordance with
paragraph 3.b but not yet paid as of the termination date.
v. Release. The Company will not be required to make the payments
stated in this paragraph 4 unless the Executive executes and delivers
to the Company an agreement releasing from all liability (other than
the payments contemplated by paragraph 4 of this Agreement and any
indemnification arrangement of the Company with respect to Executive)
the Group and any of their respective past or present directors,
officers, employees, shareholders, controlling persons or agents of
the Group. This agreement will be in the form normally used by the
Company for senior executives at the time.
5. Restrictive Covenants.
a. Non-Competition. During the Term of Employment, Executive shall not
directly or indirectly manage, operate, participate in, be employed by,
perform consulting services for, or otherwise be connected with, any
company or other enterprise that would compete with or otherwise adversely
effect the Company's business or otherwise interfere with Executive's
ability to devote his full time and attention to the Company. Executive may
invest in an entity that competes with the Company's business, provided
that Executive and his immediate family members do not own more than one
percent of the voting securities of any such entity at any time.
b. Use and Disclosure of Proprietary Information.
i. Definition of Proprietary Information. "Proprietary
Information" means confidential or proprietary information, knowledge
or data concerning (1) the Group's businesses, strategies, operations,
financial affairs, organizational matters, personnel matters, budgets,
business plans, marketing plans, studies, policies, procedures,
products, ideas, processes, software systems, trade secrets and
technical know-how, (2) any other matter relating to the Group, (3)
any matter relating to clients of the Group or other third parties
having relationships with the Group and (4) any confidential
information from which the Group derives business advantage or
economic value. Proprietary Information includes (A) information
regarding any aspect of Executive's tenure as an employee of the Group
or the termination of Executive's employment, (B) the names,
addresses, phone numbers and buying habits and preferences and other
information concerning clients and prospective clients of the Group,
and (C) information and materials concerning the personal affairs of
employees of the Group. In addition, Proprietary Information may
include information furnished to Executive orally or in writing
(whatever the form or storage medium) or gathered by inspection, in
each case before or after the date of this Agreement. Proprietary
Information does not include information (X) that was or becomes
generally available to Executive on a non-confidential basis, if the
source of this information was not reasonably known to Executive to be
bound by a duty of confidentiality, (Y) that was or becomes generally
available to the public, other than as a result of a disclosure by
Executive, directly or indirectly, or (Z) that Executive can establish
was independently developed by Executive without reference to any
Proprietary Information.
ii. Acknowledgements. Executive acknowledges that he will obtain
or create Proprietary Information in the course of Executive's
involvement in the Group's activities and may already have Proprietary
Information. Executive agrees that the Proprietary Information is the
exclusive property of the Group. In addition, nothing in this
Agreement will operate to weaken or waive any rights the Group may
have under statutory or common law, or any other agreement, to the
prohibition of unfair competition or the protection of trade secrets,
confidential business information and other confidential information.
iii. During Employment. Executive will use and disclose
Proprietary Information only for the Group's benefit and in accordance
with any restrictions placed on its use or disclosure by the Group.
iv. Post-Employment. After the termination of Executive's
employment, Executive will not use or disclose any Proprietary
Information for any purpose. For the avoidance of doubt, but without
limitation of the foregoing, for the 18-month period after termination
of Executive's employment, Executive will not directly or indirectly
use Proprietary Information from which the Group derives business
advantage or economic benefit to solicit, impair or interfere with, or
attempt to solicit, impair or interfere with, any person or entity,
who, at the time of the termination of Executive's employment, is then
a customer, vendor or business relationship of the Group (or who
Executive knew was a potential customer, vendor or business
relationship of the Company within the six months prior to the
termination of his Employment).
c. Non-Solicitation of Employees. During the Term of Employment and
for an 18-month period after termination of Executive's employment,
Executive will not directly or indirectly solicit or attempt to solicit
anyone who, at the time of the termination of Executive's employment, is
then an employee of the Group (or who was an employee of the Group within
the six months prior to the termination of his Employment) to resign from
the Group or to apply for or accept employment with any company or other
enterprise.
d. Non-Disparagement. During and after Executive's employment with the
Company, Executive covenants and agrees that Executive will not directly or
indirectly disparage the Company, or make or solicit any comments,
statements, or the like to any clients, competitors, suppliers, employees
or former employees of the Company, the press, other media, or others that
may be considered derogatory or detrimental to the good name or business
reputation of the Company.
6. Employment Taxes. All payments and other compensation under this
Agreement shall be subject to withholding of the applicable income and
employment taxes. At the same time, however, Executive is solely responsible for
paying all required taxes on any payments or other compensation provided under
this Agreement (including imputed compensation), regardless of whether taxes are
withheld.
7. Nonduplication of Benefits. No term or other provision of this Agreement
may be interpreted to require the Company to duplicate any payment or other
compensation that Executive is already entitled to receive under a compensation
or benefit plan, program, or other arrangement maintained by the Company.
8. Indemnification. To the fullest extent permitted by applicable law, the
Company shall provide indemnification for Executive under its Articles of
Incorporation and Bylaws. Executive shall be covered by the Company's standard
indemnification agreement and by any director's and officer's liability
insurance policy maintained by the Company.
9. Successors. Any successor to the Company or to all or substantially all
of the Company's business and/or assets (whether a direct or indirect successor,
and whether by purchase, lease, merger, consolidation, liquidation, or
otherwise) shall assume the obligations under this Agreement. In case of any
succession, the term "Company" shall refer to the successor. The terms of this
Agreement and all of Executive's rights hereunder shall inure to the benefit of,
and be enforceable by, Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.
10. No Third-Party Beneficiaries. Except as provided in paragraph 9, above,
nothing in this Agreement may confer upon any person or entity not a party to
this Agreement any rights or remedies of any nature or kind whatsoever under or
by reason of this Agreement.
11. No Duty to Mitigate. Executive shall not be required to seek new
employment or otherwise to mitigate the payments contemplated by this Agreement.
The payments contemplated by this Agreement shall not be reduced by earnings
that Executive may receive from any other source.
12. Notice. Notices and other communications between the parties to this
Agreement shall be delivered in writing and shall be deemed to have been given
when personally delivered or on the third business day after mailing by U.S.
registered or certified mail, return receipt requested and postage prepaid.
a. Notices and other communications to Executive shall be addressed to
Executive, at the most recent home address that he provided in writing to
the Company.
b. Notices and other communications to the Company shall be addressed
to the Company's corporate headquarters, to the attention of the Company's
Secretary.
13. Waiver and Amendments. No provision of this Agreement may be modified,
waived, or discharged, unless the modification, waiver, or discharge is agreed
to in writing signed by Executive and by an authorized representative of the
Company (other than Executive). Unless specifically characterized as a
continuing waiver, no waiver of a condition or provision at any one time may be
considered a waiver of the same provision or condition (or any different
provision or condition) at any other time.
14. Ability to Enter this Agreement. Executive represents and warrants that
neither the execution and delivery of this Agreement nor the performance of
Executive's services hereunder will conflict with, or result in a breach of, any
employment or other agreement to which Executive is a party or by which
Executive might be bound or affected. Executive further represents and warrants
that Executive has full right, power, and authority to enter into and carry out
the provisions of this Agreement.
15. Remedy at Law Inadequate. Executive acknowledges that a remedy at law
for any breach or attempted breach of the covenants described in paragraph 5 of
this Agreement will be inadequate and agrees that the Group shall be entitled to
specific performance and injunctive and other equitable relief in the case of
any such breach or attempted breach.
16. American Jobs Creation Act of 2004. This Agreement shall be construed,
administered and interpreted in accordance with a good-faith interpretation of
Section 409A of the Code and Section 885 of the American Jobs Creation Act of
2004. If the Company or Executive determines that any provision of this
Agreement is or might be inconsistent with such provisions (including any
administrative guidance issued thereunder), the parties shall make their best
efforts in good faith to agree to such amendments to this Agreement as may be
necessary or appropriate to comply with such provisions.
17. Choice of Law. This Agreement (including its validity, interpretation,
construction, and performance) shall be governed by the laws of the State of
California, without regard to any rule or principle concerning conflicts or
choice of law that might otherwise refer construction or interpretation to the
substantive law of another jurisdiction.
18. Section Headings. All headings in this Agreement are inserted for
convenience only. Headings do not constitute a part of the Agreement and may not
affect the meaning or interpretation of any term or other provision of this
Agreement.
19. Severability and Reformation. Each substantive provision of this
Agreement is a separate agreement, independently supported by good and adequate
consideration, and is severable from the other provisions of the Agreement. If a
court of competent jurisdiction determines that any term or provision of this
Agreement is unenforceable, then the other terms and provisions of this
Agreement shall remain in full force and effect, and the unenforceable terms or
provisions shall be equitably modified to the extent necessary to achieve the
underlying purpose in an enforceable way.
20. Whole Agreement. This Agreement reflects the entire understanding and
agreement between the Company and Executive regarding Executive's employment.
This Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings, and agreements, whether oral or written,
relating to Executive's employment with the Company. The respective rights and
obligations of the parties to this Agreement shall survive the termination of
Executive's employment to the extent necessary to give such rights and
obligations their intended effect.
21. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute a
single instrument.
* * *
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement on December 20, 2005.
CALPINE CORPORATION:
By: /s/ Kenneth T. Derr /s/ Robert P. May
------------------------------ ------------------------------
Kenneth T. Derr Robert P. May, in his
Chairman of the Board of Directors individual capacity