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EXHIBIT 10.2.1
This
Second Amended and Restated Employment Agreement (the
“Agreement”) is entered into effective as of March
25, 2008, 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”) pursuant to an Employment Agreement dated as of
December 12, 2005 (the “2005
Agreement”). The Company and Executive
entered into an Amended and Restated Employment Agreement
dated as of October 10, 2007 (the “2007
Agreement”).
The
Company and Executive have agreed that Executive will continue
to 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 .
Executive’s
term of employment (“Term of Employment”) begins
as of the date hereof and ends on December 31, 2008, subject
to the termination provisions of paragraph 4
below.
2
Position and
Responsibilities .
During
the Term of Employment, Executive shall have the position and
responsibilities described below. Executive shall
be employed as the Company’s 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 reasonably required
to travel from time to time for business reasons, his
principal place of employment shall be the Company’s
corporate offices wherever located.
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(a)
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Executive
shall devote all of his full business time and his best efforts,
skill, and attention to the Company’s business and affairs
and to promoting the Company’s best interests.
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(b)
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Executive
shall serve as a non-chairman member of the Board for as long as
Executive continues to be nominated and elected; however, Executive
shall offer his resignation from the Board upon the termination of
Executive’s employment with the Company.
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(c)
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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 any such activities
listed in (i) and (ii) above do not interfere in more than a de
minimis manner with the proper performance of his duties and
responsibilities hereunder and comply with the limitations set
forth in paragraph 5.a.
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3
Compensation
.
For
all of his services during the Term of Employment, Executive
shall receive the following compensation:
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(a)
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Base Salary . Executive’s annual base
salary shall be $1,500,000 (as may be increased from time to time,
the “Base Salary”). The Board will review
the Base Salary at least annually and may increase it at any time
for any reason, in its sole discretion; however, it shall have no
obligation to do so.
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(b)
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Bonus . In addition to his Base Salary, Executive
shall be eligible to receive an annual cash performance bonus (the
“Bonus”) for each fiscal year, including 2008, ending
during the Term of Employment if, and to the extent that, corporate
performance objectives established by the Board (or a committee
thereof) 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 (or a committee thereof) in its
sole discretion, provided that the minimum target level for any
year shall be 100% of the Base Salary (the “Target Annual
Bonus”).
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(c)
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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.
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(d)
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Success Fee. Executive shall be entitled to
receive a one-time payment in an amount equal to the amount set
forth on Exhibit A attached hereto (the “Success Fee”),
which shall be due and payable on the date the plan of
reorganization confirmed by the Bankruptcy Court becomes effective
(the “Plan Effective Date”).
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(f)
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Relocation . Executive shall be responsible for
all temporary housing, living and commuting expenses incurred by
Executive, in each case while an employee of
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the
Company. Executive shall not be reimbursed by the
Company for any such expenses.
(g)
Equity
Grant .
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(i)
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Stock Options . Executive shall be granted
325,500 options (the “Options”) to purchase shares of
the Company’s common stock under the 2008 Equity Incentive
Plan (the “Equity Incentive Plan”) promptly following
execution of the Agreement. The Options shall be subject
to the terms of the Executive’s Stock Option Agreement,
attached as Exhibit B.
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(ii)
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Restricted Stock . Effective February 6, 2008,
Executive was granted 547,600 restricted shares (the
“Restricted Stock”) of the Company’s common stock
under the Equity Incentive Plan. Promptly following the
execution of the Agreement, the terms applicable to 73,000 shares
of such Restricted Stock shall be amended and shall be subject to
the terms of the Restricted Stock Plan and Executive’s
Restricted Stock Agreement, attached hereto as Exhibit
C. The remaining 474,600 shares of Restricted Stock
shall be immediately canceled and rendered null and void and
Executive shall not be entitled to any compensation on account
thereof.
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(iii)
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Emergence Stock Options . Effective January 31,
2008, Executive was granted 348,700 options (the “Emergence
Options”) to purchase shares of the Company’s common
stock under the Equity Incentive Plan. Upon the
execution of the Agreement, the Emergence Options shall be
immediately canceled and rendered null and void and Executive shall
not be entitled to any compensation on account
thereof.
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4
Termination
.
(a)
Termination
of Employment .
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(i)
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Termination by the Company for Cause . The Board
may terminate Executive’s employment for Cause at any time
after (x) providing Executive with 5 business 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 5-business-day notice
period. “Cause” means any of the
following: (1) Executive’s breach of any material
term of this Agreement that is not corrected within 10 days after
delivery of a Termination Notice to Executive with respect to such
breach; (2) Executive’s commission of, or formal
prosecutorial charge or indictment alleging commission of, a felony
or any crime of similar status, any crime involving fraud, or any
crime involving moral turpitude (other than motor vehicle related)
(it being agreed that in the case of a crime involving moral
turpitude, only to the extent such crime materially
and
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adversely
affects the business, standing or reputation of the Company or
any other member of the Group); (3) Executive’s breach
of fiduciary duty to the Company or any other member of the
Group that has any material and adverse impact on the Company
that is not corrected within 10 days after delivery of a
Termination Notice to Executive with respect to such breach;
(4) Executive’s misappropriation of funds or material
property of the Company or any other member of the Group; (5)
Executive’s refusal to follow the lawful
directives of the Board without a materially valid business
justification that is not corrected within 10 days after
delivery of a Termination Notice to Executive with respect to
such refusal; (6) Executive’s fraud related to the
Company that is not corrected within 10 days after delivery of
a Termination Notice to Executive with respect to such fraud;
(7) Executive’s material dishonesty, disloyalty, gross
negligence or willful misconduct, where such dishonesty,
disloyalty, gross negligence or willful misconduct is
reasonably likely to result, in substantial and material
damage to the Company or any other member of the Group and
that is not corrected within 10 days after delivery of a
Termination Notice to Executive with respect to such event;
(8) Executive’s willful and material violation of any of
the Company’s Code of Conduct or employment policies
that is not corrected within 10 days after delivery of a
Termination Notice to Executive with respect to such
violation; or (9) Executive’s material violation of any
federal, state or local laws that could result in a direct or
indirect financial loss to the Company or any other member of
the Group or damage the reputation of the Company or any other
member of the Group.
For
this definition, no act or omission by the Executive will be
“willful” unless it is made by him in bad faith or
without a reasonable belief that his act or omission was in
the best interests of the Company or the Group. Any
act, or failure to act, based upon the advice of counsel to
the Company or any member of the Group shall be presumed to be
done, or omitted to be done, by the Executive in good faith
and in the best interests of the Company and the
Group.
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(ii)
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Termination by the Company without Cause . The
Company may terminate Executive’s employment under this
Agreement without Cause immediately upon written notice to
Executive. For purposes hereof, a Termination by the
Company without Cause shall also include a termination of
Executive’s employment after the parties’ failure to
enter into a new employment agreement prior to December 31, 2008
that results in Executive’s termination of employment with
the Company on December 31, 2008.
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(iii)
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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
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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.
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(iv)
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Termination by Executive for Good Reason
. Executive may terminate his employment for Good Reason
within 90 days of the occurrence of an event constituting Good
Reason. “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) any reduction or failure to pay when due
the Executive’s Base Salary or the Success Fee; (C) any
reduction by the Company in Executive’s Target Annual Bonus
opportunity; (D) the Company’s breach of any material term of
this Agreement that is not corrected within 10 days after delivery
of a notice to the Company with respect to such breach or (E) the
failure of the Company to obtain the assumption in writing of this
Agreement by any successor to or an acquirer of all or
substantially all of the assets of the Company on or prior to a
merger, consolidation, sale or similar transaction; provided,
however, that Executive first notifies the Company in writing of an
occurrence constituting Good Reason and the Company fails to cure
such occurrence within 30 days of such notice. For
purposes of this definition, none of the actions described in
clauses (A) through (E) above shall constitute “Good
Reason” with respect to Executive if it was an isolated and
inadvertent action not taken in bad faith by the Company and if it
is remedied by the Company within 10 days after receipt of written
notice thereof given by Executive.
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(v)
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Termination by Executive without Good Reason
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