EXHIBIT 10.1
SEMPRA ENERGY
SEVERANCE PAY AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of December 1, 1998 (the
"Effective Date") is made by and between SEMPRA ENERGY, a California
corporation, and __________________ (the "Executive").
WHEREAS, the Executive is currently employed by Sempra Energy or a
subsidiary of Sempra Energy (Sempra Energy and its subsidiaries are
hereinafter collectively referred to as the "Company") as ______
(Title); and
WHEREAS, the Board of Directors of Sempra Energy (the "Board") has
determined that it is in the best interests of the Company to
institute formalized severance arrangements for certain of the
executives of the Company, including the Executive.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Company and the Executive hereby agree as
follows:
Section 1. Definitions. For purposes of this Agreement, the
following capitalized terms have the meanings set forth below:
"Affiliate" has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act.
"Beneficial Owner" has the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Cause" means (i) the willful and continued failure by the Executive
to substantially perform the Executive's duties with the Company
(other than any such failure resulting from the Executive's
incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for
Good Reason by the Executive pursuant to Section 2 hereof), or (ii)
the Executive's commission of one or more acts of moral turpitude
that constitute a violation of applicable law (including but not
limited to a felony) which have or result in an adverse effect on the
Company, monetarily or otherwise, or one or more significant acts of
dishonesty. For purposes of clause (i) of this definition, no act,
or failure to act, on the Executive's part shall be deemed "willful"
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the Executive's act, or
failure to act, was in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed
terminated for Cause pursuant to clause (i) of this definition unless
and until the Executive shall have been provided with reasonable
notice of and, if possible, a reasonable opportunity to cure the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment for Cause.
A "Change in Control" of Sempra Energy shall be deemed to have
occurred when:
(a) Any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of Sempra Energy representing twenty
percent (20%) or more of the combined voting power of Sempra Energy's
then outstanding securities; or
(b) The following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on
the Effective Date, constitute the Board and any new director (other
than a director whose initial assumption of office is in connection
with an actual or threatened election contest, including, but not
limited to, a consent solicitation, relating to the election of
directors of Sempra Energy) whose appointment or election by the
Board or nomination for election by Sempra Energy's shareholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was
previously so approved or recommended; or
(c) There is consummated a merger or consolidation of Sempra Energy
or any direct or indirect subsidiary of Sempra Energy with any other
corporation, other than (A) a merger or consolidation which would
result in the voting securities of Sempra Energy outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of Sempra Energy or
any subsidiary of Sempra Energy, at least sixty percent (60%) of the
combined voting power of the securities of Sempra Energy or such
surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of Sempra Energy (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of Sempra Energy (not including
in the securities beneficially owned by such Person any securities
acquired directly from Sempra Energy or its affiliates other than in
connection with the acquisition by Sempra Energy or its affiliates of
a business) representing twenty percent (20%) or more of the combined
voting power of Sempra Energy's then outstanding securities; or
(d) The shareholders of Sempra Energy approve a plan of complete
liquidation or dissolution of Sempra Energy or there is consummated
an agreement for the sale or disposition by Sempra Energy of all or
substantially all of Sempra Energy's assets, other than a sale or
disposition by Sempra Energy of all or substantially all of Sempra
Energy's assets to an entity, at least sixty percent (60%) of the
combined voting power of the voting securities of which are owned by
shareholders of Sempra Energy in substantially the same proportions
as their ownership of Sempra Energy immediately prior to such sale.
"Change in Control Date" means the date on which a Change in Control
occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Date of Termination" has the meaning assigned thereto in Section 2
hereof.
"Disability" has the meaning set forth in the SERP (as defined
below), as in effect from time to time; provided, however, that in no
event shall the Executive be deemed to have incurred a Disability
hereunder if there exists a reasonable expectation that the Executive
will return to work on a full-time basis within ninety (90) days of
the events giving rise to the Disability.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the applicable rulings and regulations thereunder.
"Good Reason" means:
(a) Prior to a Change in Control, the occurrence of any of the
following without the prior written consent of the Executive, unless
such act or failure to act is corrected prior to the Date of
Termination specified in the Notice of Termination (as discussed in
Section 2 below):
(I) the assignment to the Executive of any duties materially
inconsistent with the range of duties and responsibilities
appropriate to a senior executive within the Company (such range
determined by reference to past, current and reasonable practices
within the Company);
(ii) a material reduction in the Executive's overall standing and
responsibilities within the Company, but not including (A) a mere
change in title, or (B) a transfer within Company, which, in the case
of both (A) and (B), does not adversely affect the Executive's
overall status within the Company;
(iii) a material reduction by the Company in the Executive's
aggregate annualized compensation and benefits opportunities, except
for across-the-board reductions (or modifications of benefit plans)
similarly affecting all similarly situated executives (both of the
Company and of any Person then in control of the Company) of
comparable rank with the Executive;
(iv) the failure by the Company to pay to the Executive any portion
of the Executive's current compensation and benefits or any portion
of an installment of deferred compensation under any deferred
compensation program of the Company within thirty (30) days of the
date such compensation is due;
(v) any purported termination of the Executive's employment that is
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 2 hereof; for purposes of this Agreement, no
such purported termination shall be effective;
(vi) the failure by the Company to obtain a satisfactory agreement
from any successor of the Company requiring such successor to assume
and agree to perform the Company's obligations under this Agreement,
as contemplated in Section 8(a) hereof; or
(vii) the failure by the Company to comply with any material
provision of this Agreement.
(b) From and after a Change in Control, the occurrence of any of
the following without the prior written consent of the Executive,
unless such act or failure to act is corrected prior to the Date of
Termination specified in the Notice of Termination (as discussed in
Section 2 below):
(I) an adverse change in the Executive's title, authority, duties,
responsibilities or reporting lines as in effect immediately prior to
the Change in Control;
(ii) a reduction of ten percent (10%) or more by the Company in the
Executive's aggregate annualized compensation and benefits
opportunities, except for across-the-board reductions (or
modifications of benefit plans) of less than ten percent (10%)
similarly affecting all similarly situated executives (both of the
Company and of any Person then in control of the Company) of
comparable rank with the Executive;
(iii) the relocation of the Executive's principal place of employment
immediately prior to the Change in Control Date (the "Principal
Location") to a location which is both further away from Executive's
residence and more than thirty (30) miles from such Principal
Location, or the Company's requiring the Executive to be based
anywhere other than such Principal Location (or permitted relocation
thereof), or a substantial increase in the Executive's business
travel obligations outside of the Southern California area as of the
Effective Date other than any such increase that (A) arises in
connection with extraordinary business activities of the Company and
(B) is understood not to be part of the Executive's regular duties
with the Company;
(iv) the failure by the Company to pay to the Executive any portion
of the Executive's current compensation and benefits or any portion
of an installment of deferred compensation under any deferred
compensation program of the Company within thirty (30) days of the
date such compensation is due;
(v) any purported termination of the Executive's employment that is
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 2 hereof; for purposes of this Agreement, no
such purported termination shall be effective;
(vi) the failure by the Company to obtain a satisfactory agreement
from any successor of the Company requiring such successor to assume
and agree to perform the Company's obligations under this Agreement,
as contemplated in Section 8(a) hereof; or
(vii) the failure by the Company to comply with any material
provision of this Agreement.
From and after a Change in Control, the Executive's determination
that an act or failure to act constitutes Good Reason shall be
presumed to be valid unless such determination is deemed to be
unreasonable by an arbitrator. The Executive's right to terminate
the Executive's employment for Good Reason shall not be affected by
the Executive's incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute consent to, or
a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
"Involuntary Termination" means (a) a termination of employment by
the Company other than for Cause, death, or Disability, or (b) the
Executive's resignation of employment with the Company for Good
Reason; provided, however, that, except as provided in the last
paragraph of Section 4, a termination of the Executive's employment
by reason of his or her retirement prior to a Change in Control shall
not constitute an Involuntary Termination hereunder.
"Notice of Termination" has the meaning assigned thereto in Section 2
hereof.
"Person" means any person, entity or "group" within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, except that
such term shall not include (i) the Company or any of its Affiliates,
(ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii)
an underwriter temporarily holding securities pursuant to an offering
of such securities, (iv) a corporation owned, directly or indirectly,
by the shareholders of Sempra Energy in substantially the same
proportions as their ownership of stock of Sempra Energy, or (v) a
person or group as used in Rule 13d-1(b) under the Exchange Act.
Section 2. Date and Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive shall be
communicated by a written notice of termination to the other party
(the "Notice of Termination"). Where applicable, the Notice of
Termination shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated. The
date of the Executive's termination of employment with the Company
(the "Date of Termination") shall be determined as follows: (i) if
the Executive's employment is terminated by the Company, either with
or without Cause, the Date of Termination shall be the date specified
in the Notice of Termination (which, in the case of a termination by
the Company other than for Cause, shall not be less than two (2)
weeks from the date such Notice of Termination is given unless the
Company elects to pay the Executive, in addition to any other amounts
payable hereunder, an amount equal to two (2) weeks of the
Executive's base salary in effect on the Date of Termination), and
(ii) if the basis for the Executive's Involuntary Termination is his
or her resignation for Good Reason, the Date of Termination shall be
determined by the Company, but shall not in any event be less than
fifteen (15) days nor more than sixty (60) days from the date such
Notice of Termination is given. Unless the Board determines
otherwise, notice by Executive of his or her resignation for Good
Reason must be made within 180 days of the act or failure to act the
Executive alleges to constitute Good Reason.
Section 3. Severance Benefits Prior to Change in Control. Except as
provided in Section 4 and Section 12(g) hereof, in the event of the
Involuntary Termination of the Executive, the Company shall pay the
Executive, in one lump sum cash payment as soon as practicable
following such Involuntary Termination, (A) the full amount of any
earned but unpaid base salary through the Date of Termination at the
rate in effect on such date, plus (B) an amount (the "Severance
Payment") equal to the sum of (X) the Executive's annual base salary
as in effect on the Date of Termination and (Y) his or her average
annual bonus payment for the two years immediately preceding the Date
of Termination (or in the event that the Executive has not been
employed for two years, then his target bonus for the year in which
the termination occurs). In addition to the Severance Payment, the
Executive shall be entitled to the following additional benefits:
(I) Equity Based Compensation. The Executive shall retain all
rights to any equity-based compensation awards to the extent set
forth in the applicable plan and/or award agreement.
(ii) Welfare Benefits. Subject to Section 6 below, for a period of
______ following the Date of Termination, the Executive and his or
her dependents shall be provided with health insurance benefits
substantially similar to those provided to the Executive and his or
her dependents immediately prior to the Date of Termination;
provided, however, that such benefits shall be provided on
substantially the same terms and conditions and at the same cost to
the Executive as in effect immediately prior to the Date of
Termination.
(iii) Outplacement Services. The Executive shall receive
outplacement services suitable to his or her position for a period of
eighteen (18) months following the Date of Termination, or if
earlier, until the first acceptance of an offer of employment with a
subsequent employer, in an aggregate amount not to exceed $50,000.
(iv) Financial Planning Services. The Executive shall receive
financial planning services for a period of eighteen (18) months
following the Date of Termination at a level consistent with the
benefits provided under the Company's financial planning program for
the Executive, as in effect immediately prior to the Date of
Termination.
Section 4. Severance Benefits in Connection with and After Change in
Control. Notwithstanding the provisions of Section 3 above, in the
event of the Involuntary Termination of the Executive within two
years following a Change in Control, in lieu of the payments
described in Section 3 above, the Company shall pay the Executive, in
one lump sum cash payment as soon as practicable following such
Involuntary Termination, (A) the full amount of any earned but unpaid
base salary through the Date of Termination at the rate in effect on
such date, plus (B) an amount (the "Change in Control Severance
Payment") equal to ____ the sum of (X) the Executive's annual base
salary as in effect immediately prior to the Change in Control or the
Date of Termination, whichever is greater, and (Y) his or her average
annual bonus payment for the two years immediately preceding the
Change in Control Date or the Date of Termination, whichever is
greater (or in the event that the Executive has not been employed for
two years, then his target bonus for the year in which the Change in
Control or in which the termination occurs, whichever is greater).
In addition to the Change in Control Severance Payment, the Executive
shall be entitled to the following additional benefits:
(I) Equity-Based Compensation. Notwithstanding the provisions of
any applicable equity-compensation plan or award agreement to the
contrary, all equity-based incentive compensation awards (including,
without limitation, stock options, stock appreciation rights,
restricted stock awards, restricted stock units, performance share
awards, section 162(m) awards, and dividend equivalents) held by the
Executive under any annual incentive compensation plan or long-term
incentive compensation plan maintained by the Company shall
immediately vest and become exercisable or payable, as the case may
be, as of the Date of Termination, to be exercised or paid, as the
case may be, in accordance with the terms of the applicable plan and
award agreement, and any restrictions on any such awards shall
automatically lapse; provided, however, that any such awards granted
on or after the Effective Date shall remain outstanding and
exercisable until the earlier of (A) eighteen (18) months following
the Date of Termination or (B) the expiration of the original term of
such award (it being understood that all awards granted prior to the
Effective Date shall remain outstanding and exercisable for a period
that is no less than that provided for in the applicable agreement in
effect as of the date of grant).
(ii) SERP. The Executive shall receive a lump sum cash payment
representing the present value as of the Date of Termination of his
or her Supplemental Executive Retirement Plan ("SERP") benefits, to
be calculated as if the Executive had reached age 62 (or his or her
actual age if older) for service and vesting purposes, and applying
either the applicable early retirement factors under the Company's
tax-qualified retirement plan, if the Executive is less than age 62
but at least 55, or actuarially determined early retirement factors
if the Executive is less than age 55 and the applicable lump-sum
factors under the Company's tax-qualified retirement plan.
(iii) Welfare Benefits. Subject to Section 6 below, for a period of
_____ months following the Date of Termination, the Executive and his
or her dependents shall be provided with life, disability, accident
and health insurance benefits substantially similar to those provided
to the Executive and his or her dependents immediately prior to the
Date of Termination or the Change in Control Date, whichever is more
favorable to the Executive; provided, however, that such benefits
shall be provided on substantially the same terms and conditions and
at the same cost to the Executive as in effect immediately prior to
the Date of Termination or the Change in Control Date, whichever is
more favorable to the Executive.
(iv) Outplacement Services. The Executive shall receive
outplacement services suitable to his or her position for a period of
eighteen (18) months following the Date of Termination, or if
earlier, until the first acceptance of an offer of employment with a
subsequent employer, in an aggregate amount not to exceed $50,000.
(v) Financial Planning Services. The Executive shall receive
financial planning services for a period of eighteen (18) months
following the Date of Termination at a level consistent with the
benefits provided under the Company's financial planning program for
the Executive, as in effect immediately prior to the Date of
Termination or the Change in Control Date, whichever is more
favorable to the Executive.
(vi) Deferred Compensation. Notwithstanding any election heretofore
or hereafter made by the Executive under any deferred compensation
plan of the Company, the Executive shall receive a lump sum cash
payment in an amount equal to any compensation previously deferred by
the Executive (together with any accrued interest or earnings
thereon) under any deferred compensation plan of the Company.
Notwithstanding anything contained herein, if a Change in Control
occurs and the Executive's employment with the Company is terminated
by reason of an Involuntary Termination prior to the Change in
Control Date, and if such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to
effect the Change in Control or (ii) otherwise arose in connection
with or in anticipation of the Change in Control, then the Executive
shall, in lieu of the payments described in Section 3 above, be
entitled to the Change in Control Severance Payment and the
additional benefits described in this Section 4 as if such
Involuntary Termination had occurred within two years following the
Change in Control.
Section 5. Release. Notwithstanding anything herein to the
contrary, the Company's obligation to make the payments provided for
in this Agreement is expressly made subject to and conditioned upon
(i) the Executive's prior execution of a release substantially in the
form attached hereto as Exhibit A within forty-five (45) days after
the applicable Date of Termination and (ii) the Executive's non-
revocation of such release in accordance with the terms thereof.
Section 6. No Mitigation or Offset.
(a) No Mitigation by Executive. Except as otherwise expressly
provided herein, the Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided
for herein be reduced by any compensation earned by the Executive as
the result of employment by another employer; provided, however, that
if the Executive becomes employed with another employer and is
eligible to receive life, disability, accident and health insurance
benefits under another employer-provided plan, the Executive's
continued plan coverage as set forth in Section 3(ii) or 4(iii)
hereof, as the case may be, shall be secondary to the coverage
provided under such other plan(s) during such applicable period of
eligibility.
(b) No Offset by Company. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others, provided
that nothing herein shall preclude the Company from separately
pursuing recovery from the Executive based on any such claim.
Section 7. Section 280G
(a) Gross-Up. Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be
received by the Executive (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with (A) the
Company, (B) any Person whose actions result in a Change in Control
or (C) any Person affiliated with the Company or such Person) (all
such payments and benefits, including the Change in Control Severance
Payments, being hereinafter called the "Total Payments") would be
subject (in whole or part) to the tax (the "Excise Tax") imposed
under section 4999 of the Code, the Company shall pay to the
Executive such additional amounts (the "Gross-Up Payment") such that
the net amount retained by the Executive, after deduction of any
Excise Tax on the Total Payments and any federal, state and local
income and employment taxes and Excise Tax upon the Gross-Up Payment,
shall be equal to the Total Payments. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income tax at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence on
the date on which the Gross-Up Payment is calculated for purposes of
this section, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of
the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being
repaid by the Executive to the extent that such repayment results in
a reduction in Excise Tax and/or a federal, state or local income tax
deduction) plus interest on the amount of such repayment at the rate
provided in section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account
hereunder (including by reason of any payment the existence or amount
of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions payable by the
Executive with respect to such excess) at the time that the amount of
such excess is finally determined. The Executive and the Company
shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total
Payments.
(b) Accounting Firm. All determinations to be made with respect to
this Section 7 shall be made by the Company's independent accounting
firm (or, in the case of a payment following a Change in Control, the
accounting firm that was, immediately prior to the Change in Control,
the Company's independent auditor). The accounting firm shall be
paid by the Company for its services performed hereunder.
Section 8. Successors; Binding Agreement.
(a) Assumption by Successor. Sempra Energy will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business or assets of Sempra Energy expressly to assume and to agree
to perform its obligations under this Agreement in the same manner
and to the same extent that Sempra Energy would be required to
perform such obligations if no such succession had taken place;
provided, however, that no such assumption shall relieve Sempra
Energy of its obligations hereunder. As used herein, the "Company"
shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid that assumes and agrees to
perform its obligations by operation of law or otherwise.
(b) Enforceability; Beneficiaries. This Agreement shall be binding
upon and inure to the benefit of the Executive (and the Executive's
personal representatives and heirs) and the Company and any
organization which succeeds to substantially all of the business or
assets of Sempra Energy, whether by means of merger, consolidation,
acquisition of all or substantially all of the assets of Sempra
Energy or otherwise, including, without limitation, as a result of a
Change in Control or by operation of law. This Agreement shall inure
to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die
while any amount would still be payable to such Executive hereunder
if he or she had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to his or her devisee, legatee or other designee
or, if there is no such designee, to his or her estate.
Section 9. Confidentiality; Non Solicitation.
(a) Confidentiality. The Executive acknowledges that in the course
of his or her employment within the Company, he or she has acquired
non-public privileged or confidential information and trade secrets
concerning the operations, future plans and methods of doing business
("Proprietary Information") of the Company; and the Executive agrees
that it would be extremely damaging to the Company if such
Proprietary Information were disclosed to a competitor of the Company
or to any other person or corporation. The Executive understands and
agrees that all Proprietary Information the Executive has acquired
during the course of such employment has been divulged to the
Executive in confidence and further understands and agrees to keep
all Proprietary Information secret and confidential (except for such
information which is or becomes publicly available other than as a
result of a breach by the Executive of this provision) without
limitation in time. In view of the nature of the Executive's
employment and the Proprietary Information the Executive has acquired
during the course of such employment, the Executive likewise agrees
that the Company would be irreparably harmed by any disclosure of
Proprietary Information in violation of the terms of this paragraph
and that the Company shall therefore be entitled to preliminary
and/or permanent injunctive relief prohibiting the Executive from
engaging in any activity or threatened activity in violation of the
terms of this paragraph and to any other judicial relief available to
it. Inquiries regarding whether specific information constitutes
Proprietary Information shall be directed to the Company's General
Counsel (or, if such position is vacant, the Company's Chief
Executive Officer); provided, however, that the Company shall not
unreasonably classify information as Proprietary Information.
(b) Non-Solicitation of Employees. The Executive recognizes that
he or she possesses and will possess confidential information about
other employees of the Company, relating to their education,
experience, skills, abilities, compensation and benefits, and
interpersonal relationships with customers of the Company. The
Executive recognizes that the information he or she possesses and
will possess about these other employees is not generally known, is
of substantial value to the Company in developing their business and
in securing and retaining customers, and has been and will be
acquired by him or her because of his or her business position within
the Company. The Executive agrees that for a period of one (1) year
following the Date of Termination, he or she will not, directly or
indirectly, solicit or recruit any employee of the Company for the
purpose of being employed by him or her or by any other competitor of
the Company on whose behalf he or she is acting as an agent,
representative or employee and that he or she will not convey any
such confidential information or trade secrets about other employees
of the Company to any other person; provided, however, that it shall
not constitute a solicitation or recruitment of employment in
violation of this paragraph to discuss employment opportunities with
any employee of the Company who has either first contacted the
Executive or regarding whose employment the Executive has discussed
with and received written approval of the Company's Senior Vice
President, Human Resources (or, if such position is vacant, the
Company's Chief Executive Officer), prior to making such solicitation
or recruitment. In view of the nature of the Executive's employment
with the Company, the Executive likewise agrees that the Company
would be irreparably harmed by any solicitation or recruitment in
violation of the terms of this paragraph and that the Company shall
therefore be entitled to preliminary and/or permanent injunctive
relief prohibiting the Executive from engaging in any activity or
threatened activity in violation of the terms of this paragraph and
to any other judicial relief available to it.
(c) Survival of Provisions. The obligations contained in this
Section 9 shall survive the termination or expiration of the
Executive's employment within the Company and shall be fully
enforceable thereafter. If it is determined by a court of competent
jurisdiction in any state that any restriction in this Section 9 is
excessive in duration or scope or is unreasonable or unenforceable
under the laws of that state, it is the intention of the parties that
such restriction may be modified or amended by the court to render it
enforceable to the maximum extent permitted by the law of that state.
Section 10. Notices. For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested,
postage prepaid, addressed to Sempra Energy, 000 Xxx Xxxxxx, Xxx
Xxxxx, XX 00000, Attn: Human Resources Administrator, or to the
Executive at the address in the records of the Company, or to such
other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
Section 11. Administration Prior to Change in Control. Prior to a
Change in Control, the compensation committee of the Board (the
"Compensation Committee") shall have full and complete authority to
construe and interpret the provisions of this Agreement, to determine
an individual's entitlement to benefits under this Agreement, to make
in its sole and absolute discretion all determinations contemplated
under this Agreement, to investigate and make factual determinations
necessary or advisable to administer or implement this Agreement, and
to adopt such rules and procedures as it deems necessary or advisable
for the administration or implementation of this Agreement. All
determinations made under this Agreement by the Compensation
Committee shall be final and binding on all interested persons.
Prior to a Change in Control, the Compensation Committee may delegate
responsibilities for the operation and administration of this
Agreement to one or more officers or employees of the Company. The
provisions of this Section 11 shall terminate and be of no further
force and effect upon the occurrence of a Change in Control.
Section 12. Miscellaneous.
(a) No Right of Employment. Nothing in this Agreement shall be
construed as giving the Executive any right to be retained in the
employ of the Company or shall interfere in any way with the right of
the Company to terminate the Executive's employment at any time, with
or without Cause.
(b) Unfunded Obligation. The obligations under this Agreement
shall be unfunded. Benefits payable under this Agreement shall be
paid from the general assets of the Company. The Company shall have
no obligation to establish any fund or to set aside any assets to
provide benefits under this Agreement.
(c) Rules of Construction. As used herein, the masculine gender
shall be deemed to include the feminine and the singular form shall
be deemed to encompass the plural, unless the context requires
otherwise. Headings of sections (other than the definitions) are
included solely for convenience of reference and shall not govern or
control the meaning of the text of this Agreement. The invalidity or
unenforceability of any provision of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
(d) Tax Withholding. All amounts paid under this Agreement shall
be subject to all applicable federal, state and local wage and
employment tax withholding.
(e) Exclusive Benefit. The Severance Payment, the Change in
Control Severance Payment and all other benefits provided hereunder
shall be in lieu of any other severance payments to which the
Executive is entitled under any other severance plan or arrangement
sponsored by the Company, as well as pursuant to any individual
employment or severance agreement that was entered by the Executive
and the Company, and, upon the Effective Date of this Agreement, all
such plans, programs, agreements and arrangements are hereby
automatically superseded and terminated.
(f) Dispute Resolution. Any disagreement, dispute, controversy or
claim arising out of or relating to this Agreement or the
interpretation of this Agreement or any arrangements relating to this
Agreement or contemplated in this Agreement or the breach,
termination or invalidity thereof shall be settled by final and
binding arbitration administered by JAMS/Endispute in San Diego,
California in accordance with the then existing JAMS/Endispute
Arbitration Rules and Procedures for Employment Disputes. In the
event of such an arbitration proceeding, the Executive and the
Company shall select a mutually acceptable neutral arbitrator from
among the JAMS/Endispute panel of arbitrators. In the event the
Executive and the Company cannot agree on an arbitrator, the
Administrator of JAMS/Endispute will appoint an arbitrator. Neither
the Executive nor the Company nor the arbitrator shall disclose the
existence, content, or results of any arbitration hereunder without
the prior written consent of all parties. Except as provided herein,
the Federal Arbitration Act shall govern the interpretation,
enforcement and all proceedings. The arbitrator shall apply the
substantive law (and the law of remedies, if applicable) of the state
of California, or federal law, or both, as applicable and the
arbitrator is without jurisdiction to apply any different substantive
law. The arbitrator shall have the authority to entertain a motion
to dismiss and/or a motion for summary judgment by any party and
shall apply the standards governing such motions under the Federal
Rules of Civil Procedure. The arbitrator shall render an award and a
written, reasoned opinion in support thereof. Judgment upon the
award may be entered in any court having jurisdiction thereof. The
Executive and the Company shall generally each be responsible for
payment of one-half the amount of the arbitrator's fee; provided,
however, that the Company shall pay to the Executive all legal fees
and expenses (including but not limited to fees and expenses in
connection with any arbitration) incurred by the Executive in
disputing in good faith any issue arising under this Agreement
relating to the termination of the Executive's employment in
connection with a Change in Control or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement on
account of a Change in Control unless the arbitrator or court
determines that the Executive had no reasonable basis for such claim.
(g) Amendment and Termination. No provision of this Agreement may
be amended or terminated unless it is agreed to in writing and signed
by both parties hereto. Notwithstanding anything contained herein,
this Agreement shall automatically terminate and be of no further
force and effect and no benefits shall be payable hereunder in the
event that the Company sells or otherwise disposes of any part of the
business or assets of Sempra Energy or a subsidiary of Sempra Energy
(other than such a sale or disposition which is part of a transaction
or series of transactions which would result in a Change in Control)
and as a result of such transaction, the Executive is no longer
employed by the Company or any of its Affiliates.
(h) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
(I) Governing Law. This Agreement shall be governed by the laws of
the State of California, without giving effect to conflicts of laws
principles thereof.
(j) Nonexclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation
in any benefit, plan, program, policy or practice provided by the
Company and for which the Executive may qualify (except with respect
to any benefit to which the Executive has waived his rights in
writing), nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any other contract or
agreement entered into after the Effective Date with the Company.
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any benefit, plan, policy, practice or
program of, or any contract or agreement entered into with, the
Company shall be payable in accordance with such benefit, plan,
policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
SEMPRA ENERGY
By: ________________________
Xxxxxxx X. Xxxxxx
Chairman & Chief Executive Officer
EXECUTIVE
________________________
________________________
