SEPARATION AGREEMENT
Exhibit
10.3
THE
TERMS AND CONDITIONS OF THIS AGREEMENT ARE PURSUANT TO THE PG&E CORPORATION
OFFICER SEVERANCE PLAN, ADOPTED BY THE NOMINATING, COMPENSATION, AND GOVERNANCE
COMMITTEE OF PG&E CORPORATION, AND ARE NOT SUBJECT TO
NEGOTIATION
This
Separation Agreement (this “Agreement”) is made and entered into by and between
Xxxxx X. Xxxxxxxxxxx and PG&E Corporation (the “Company”) (collectively the
“Parties”) and sets forth the terms and conditions of Xx. Xxxxxxxxxxx’x
separation from employment with the Company. The “Effective Date” of
this Agreement is defined in paragraph 17(a).
1. Resignation. Effective
the close of business on November 10, 2006, Xx. Xxxxxxxxxxx will resign from
his
position as Senior Vice President and General Counsel of the
Company. Effective the close of business on April 6, 2007 (for
purposes of this Agreement, the “Date of Resignation”), Xx. Xxxxxxxxxxx will
resign from employment with the Company. Regardless of whether Xx.
Xxxxxxxxxxx accepts this Agreement, on his Date of Resignation, he will be
paid
all salary or wages and vacation accrued, unpaid and owed to him as of that
date, he will remain entitled to any other benefits to which he is otherwise
entitled under the provisions of the Company’s plans and programs, and he will
receive notice of the right to continue his existing health-insurance coverage
pursuant to COBRA.
Upon
the
Date of Resignation, all unvested stock option grants, restricted stock grants,
and performance share grants provided to Xx. Xxxxxxxxxxx under PG&E
Corporation’s Long-Term Incentive Program and 2006 Long-Term Incentive Plan
shall vest under the provisions governing termination by reason of retirement
contained in each respective plan or program in effect at the time this
agreement is signed by Xx. Xxxxxxxxxxx. The payment, exercise, and
withdrawal of Xx. Xxxxxxxxxxx’x vested stock option grants, restricted stock
grants and performance share grants shall be as provided under the terms
of
their respective plans or program in effect at the time this agreement is
signed
by Xx. Xxxxxxxxxxx.
In
the
event that officers in Xx. Xxxxxxxxxxx’x officer band are eligible for a payment
under the Company’s Short-Term Incentive Plan (“STIP”) for the year in which the
Date of Resignation occurs, the Company will make the STIP payment that he
would
have received assuming he would have been rated “proficient” in all competencies
and that he had “met” the 2007 goals, pro-rated to reflect the number of months
from the beginning of the year to the Date of Resignation under the provisions
governing termination by reason of retirement. The STIP payment, if
any, will be made at such time as STIP payments are made to officers in his
band. Subject to the foregoing, the STIP Plan Administrator will have
the sole discretion to determine the amount of STIP payment, consistent with
the
program guidelines for the year in which the Date of Resignation
occurs.
The
benefits set forth in paragraph 2 below are conditioned upon Xx. Xxxxxxxxxxx’x
acceptance of this Agreement.
2. Separation
benefits. In consideration of his acceptance of this
Agreement, the Company will provide to Xx. Xxxxxxxxxxx the following separation
benefits:
x. Xxxxxxxxx
payment. Under the terms of the PG&E Corporation
Officer
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Severance
Policy, Xx. Xxxxxxxxxxx’x xxxxxxxxx payment amount is One Million Five Hundred
Sixteen Thousand Six Hundred Seventy-Five Dollars
($1,516,675). Within five business days after the Date of
Resignation, but conditioned on the occurrence of the Effective Date of this
Agreement as set forth in paragraph 17(a) below, the Company will make a
lump-sum payment to Xx. Xxxxxxxxxxx in the gross amount of One Million
Fifty-Three Thousand Dollars ($1,516,675), less applicable withholdings and
deductions.
b. Career
transition services. For a maximum period of one year
following the Date of Resignation, the Company will provide Xx. Xxxxxxxxxxx
with
executive career transition services from the firm of Torchiana, Mastrov
&
Xxxxxx, Inc., in accordance with the contract between the Company and Torchiana,
Mastrov & Xxxxxx, Inc. Xx. Xxxxxxxxxxx’x entitlement to services
under this Agreement will terminate when he becomes employed on a full-time
basis, either by another employer or through self-employment. If Xx.
Xxxxxxxxxxx becomes employed, as defined, he will promptly notify PG&E
Corporation’s Human Resources Officer to enable the Company to end the provision
of services to him by Torchiana, Mastrov & Xxxxxx, Inc.
c. Payment
of COBRA premiums. If Xx. Xxxxxxxxxxx elects and is
otherwise eligible to continue his existing health-insurance coverage pursuant
to COBRA, the Company will pay his monthly COBRA premiums for the eighteen-month
period commencing the first full month after the Date of Resignation and
until
and unless Xx. Xxxxxxxxxxx becomes covered under the health-insurance plan
of
another employer or through self-employment. Xx. Xxxxxxxxxxx will
promptly notify the PG&E Corporation’s Human Resources Officer if he becomes
employed within that period.
3. Defense
and indemnification in third-party claims. The Company
and/or its parent, affiliate, or subsidiary will provide Xx. Xxxxxxxxxxx
with
legal representation and indemnification protection in any legal proceeding
in
which he is a party or is threatened to be made a party by reason of the
fact
that he is or was an employee or officer of the Company and/or its parent,
affiliate or subsidiary, in accordance with the terms of the resolution of
the
Board of Directors of PG&E Corporation dated December 18, 1996.
4. Cooperation
with legal proceedings. Xx. Xxxxxxxxxxx will, upon
reasonable notice, furnish information and proper assistance to the Company
and/or its parent, affiliate or subsidiary (including truthful testimony
and
document production) as may reasonably be required by them or any of them
in
connection with any legal, administrative or regulatory proceeding in which
they
or any of them is, or may become, a party, or in connection with any filing
or
similar obligation imposed by any taxing, administrative or regulatory authority
having jurisdiction, provided, however, that the Company and/or its parent,
affiliate or subsidiary will pay all reasonable expenses incurred and income
foregone by Xx. Xxxxxxxxxxx in complying with this paragraph.
5. Release
of claims and covenant not to xxx.
a. In
consideration of the separation benefits and other benefits the Company is
providing under this Agreement, Xx. Xxxxxxxxxxx, on behalf of himself and
his
representatives, agents, heirs and assigns, waives, releases, discharges
and
promises never to
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assert
any and all claims, liabilities or obligations of every kind and nature,
whether
known or unknown, suspected or unsuspected that he ever had, now has or might
have as of the Effective Date against the Company or its predecessors, parent,
affiliates, subsidiaries, shareholders, owners, directors, officers, employees,
agents, attorneys, successors, or assigns. These released claims
include, without limitation, any claims arising from or related to Xx.
Xxxxxxxxxxx’x employment with the Company, its parent or any of its affiliates
and subsidiaries, and the termination of that employment. These
released claims also specifically include, but are not limited, any claims
arising under any federal, state and local statutory or common law, such
as (as
amended and as applicable) Title VII of the Civil Rights Act, the Age
Discrimination in Employment Act, the Americans With Disabilities Act, the
Employee Retirement Income Security Act, the California Fair Employment and
Housing Act, the California Labor Code, any other federal, state or local
law
governing the terms and conditions of employment or the termination of
employment, and the law of contract and tort; and any claim for attorneys’
fees.
b. Xx.
Xxxxxxxxxxx acknowledges that there may exist facts or claims in addition
to or
different from those which are now known or believed by him to
exist. Nonetheless, this Agreement extends to all claims of every
nature and kind whatsoever, whether known or unknown, suspected or unsuspected,
past or present, and Xx. Xxxxxxxxxxx specifically waives all rights under
Section 1542 of the California Civil Code which provides that:
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A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW
OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING
THE
RELEASE, WHICH IF KNOWN TO HIM OR HER MUST HAVE MATERIALLY AFFECTED
HIS OR
HER SETTLEMENT WITH THE DEBTOR.
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c. With
respect to the claims released in the preceding paragraphs, Xx. Xxxxxxxxxxx
will
not initiate or maintain any legal or administrative action or proceeding
of any
kind against the Company or its predecessors, parent, affiliates, subsidiaries,
shareholders, owners, directors, officers, employees, agents, attorneys,
successors, or assigns, for the purpose of obtaining any personal relief,
nor
(except as otherwise required or permitted by law) assist or participate
in any
such proceedings, including any proceedings brought by any third
parties.
6. Re-employment. Xx.
Xxxxxxxxxxx will not seek any future re-employment with the Company, its
parent
or any of its subsidiaries or affiliates. This paragraph will not,
however, preclude Xx. Xxxxxxxxxxx from accepting an offer of future employment
from the Company, its parent or any of its subsidiaries or
affiliates.
7. Non-disclosure.
a. Xx.
Xxxxxxxxxxx will not disclose, publicize, or circulate to anyone in whole
or in
part, any information concerning the existence, terms, and/or conditions
of this
Agreement without the express written consent of the PG&E Corporation’s
Chief Legal Officer unless otherwise required or permitted by
law. Notwithstanding the preceding sentence, Xx. Xxxxxxxxxxx may
disclose the terms and conditions of this Agreement to his family members,
and
any attorneys or tax advisors, if any, to whom there is a bona fide
need for disclosure in order for them to render professional services to
him,
provided that the person first agrees to keep theinformation confidential
and
not to make any disclosure of the terms and conditions of this Agreement
unless
otherwise required or permitted by law.
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b. Xx.
Xxxxxxxxxxx will not use, disclose, publicize, or circulate any confidential
or
proprietary information concerning the Company or its subsidiaries or
affiliates, which has come to his attention during his employment with the
Company, unless doing so is expressly authorized in writing by the PG&E
Corporation’s Chief Legal Officer, or is otherwise required or permitted by
law. Before making any legally-required or permitted disclosure, Xx.
Xxxxxxxxxxx will use his best efforts to give the Company notice at least
ten
(10) business days in advance.
8. No
unfair competition.
a. Xx.
Xxxxxxxxxxx will not engage in any unfair competition against the Company,
its
parent or any of its subsidiaries or affiliates.
b. For
a
period of one year after the Effective Date, Xx. Xxxxxxxxxxx will not, directly
or indirectly, solicit or contact for the purpose of diverting or taking
away or
attempt to solicit or contact for the purpose of diverting or taking
away:
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(1)
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any
existing customer of the Company or its parent, affiliates or
subsidiaries;
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(2)
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any
prospective customer of the Company or its parent, affiliates or
subsidiaries about whom Xx. Xxxxxxxxxxx acquired information as
a result
of any solicitation efforts by the Company or its parent, affiliates
or
subsidiaries, or by the prospective customer, during Xx. Xxxxxxxxxxx’x
employment with the Company;
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(3)
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any
existing vendor of the Company or its parent, affiliates or
subsidiaries;
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(4)
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any
prospective vendor of the Company or its parent, affiliates or
subsidiaries, about whom Xx. Xxxxxxxxxxx acquired information as
a result
of any solicitation efforts by the Company or its parent, affiliates
or
subsidiaries, or by the prospective vendor, during Xx. Xxxxxxxxxxx’x
employment with the Company;
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(5)
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any
existing employee, agent or consultant of the Company or its parent,
affiliates or subsidiaries, to terminate or otherwise alter the
person’s
or entity’s employment, agency or consultant relationship with the Company
or its parent, affiliates or subsidiaries;
or
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(6)
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any
existing employee, agent or consultant of the Company or its parent,
affiliates or subsidiaries, to work in any capacity for or on behalf
of
any person, company or other business enterprise that is in competition
with the Company or its parent, affiliates
orsubsidiaries.
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9. Material
breach by Employee. In the event that Xx. Xxxxxxxxxxx
breaches any material provision of this Agreement, including but not necessarily
limited to paragraphs 4, 5, 6, 7, and/or 8, the Company will have no further
obligation to pay or provide to him any unpaid amounts or benefits specified
in
this Agreement and will be entitled to immediate return of any and all amounts
or benefits previously paid or provided to him under this Agreement and to
recalculate any future pension benefit entitlement without the additional
credited age he received or would have received under this
Agreement. Despite any breach by Xx. Xxxxxxxxxxx, his other duties
and obligations under this Agreement, including his waivers and releases,
will
remain in full force and effect. In the event of a breach or
threatened breach by Xx. Xxxxxxxxxxx of any of the provisions in paragraphs
4,
5, 6, 7, and/or 8, the Company will, in addition to any other remedies provided
in this Agreement, be entitled to equitable and/or injunctive relief and,
because the damages for such a breach or threatened breach will be difficult
to
determine and will not provide a full and adequate remedy, the Company will
also
be entitled to specific performance by Xx. Xxxxxxxxxxx of his obligations
under
paragraphs 4, 5, 6, 7, and/or 8.
10. Material
breach by the Company. Xx. Xxxxxxxxxxx will be entitled to
recover any loss, injury, or actual damages in the event of any material
breach
of this Agreement by the Company, including any unexcused late or non-payment
of
any amounts owed under this Agreement, or any unexcused failure to provide
any
other benefits specified in this Agreement. In the event of a breach
or threatened breach by the Company of any of its material obligations to
him
under this Agreement, Xx. Xxxxxxxxxxx will be entitled, in addition to any
other
remedies provided in this Agreement, to specific performance of the Company’s
obligations and any other applicable equitable or injunctive
relief. Despite any breach by the Company, its other duties and
obligations under this Agreement will remain in full force and
effect.
11. No
admission of liability. This Agreement is not, and will not
be considered, an admission of liability or of a violation of any applicable
contract, law, rule, regulation, or order of any kind.
12. Complete
agreement. This Agreement sets forth the entire agreement
between the Parties pertaining to the subject matter of this Agreement and
fully
supersedes any prior or contemporaneous negotiations, representations,
agreements, or understandings between the Parties with respect to any such
matters, whether written or oral (including any that would have provided
Xx.
Xxxxxxxxxxx with any different severance arrangements). The Parties
acknowledge that they have not relied on any promise, representation or
warranty, express or implied, not contained in this Agreement. Parol
evidence will be inadmissible to show agreement by and among the Parties
to any
term or condition contrary to or in addition to the terms and conditions
contained in this Agreement.
13. Severability. If
any provision of this Agreement is determined to be invalid, void, or
unenforceable, the remaining provisions will remain in full force and
effect.
14. Arbitration. With
the exception of any request for specific performance, injunctive or other
equitable relief, any dispute or controversy of any kind arising out of or
related to this Agreement, Xx. Xxxxxxxxxxx’x employment with the Company (or
with theemploying subsidiary), the separation of Xx. Xxxxxxxxxxx from that
employment and from his positions as an officer and/or director of the Company
or any subsidiary or affiliate, or any claims for benefits, will be resolved
exclusively by final and binding arbitration using a three-member arbitration
panel in accordance with the Commercial Arbitration Rules of the American
Arbitration Association currently in effect, provided, however, that in
rendering their award, the arbitrators will be limited to accepting the position
of Xx. Xxxxxxxxxxx or the Company. The only claims not covered by
this paragraph are any non-waivable claims for benefits under workers’
compensation or unemployment insurance laws, which will be resolved under
those
laws. Any arbitration pursuant to this paragraph will take place in
San Francisco, California. The Parties may be represented by legal
counsel at the arbitration but must bear their own fees for such representation
in the first instance. The prevailing party in any dispute or
controversy covered by this paragraph, or with respect to any request for
specific performance, injunctive or other equitable relief, will be entitled
to
recover, in addition to any other available remedies specified in this
Agreement, all litigation expenses and costs, including any arbitrator,
administrative or filing fees and reasonable attorneys’ fees, except as
prohibited or limited by law. The Parties specifically waive any
right to a jury trial on any dispute or controversy covered by this
paragraph. Judgment may be entered on the arbitrators’ award in any
court of competent jurisdiction. Subject to the arbitration
provisions of this paragraph, the sole jurisdiction and venue for any action
related to the subject matter of this Agreement will be the California state
and
federal courts having within their jurisdiction the location of the Company’s
principal place of business in California at the time of such action, and
both
Parties hereby consent to the jurisdiction of such courts for any such
action.
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15. Governing
law. This Agreement will be governed by and construed under
the laws of the United States and, to the extent not preempted by such laws,
by
the laws of the State of California, without regard to their conflicts of
laws
provisions.
16. No
waiver. The failure of either Party to exercise or enforce,
at any time, or for any period of time, any of the provisions of this Agreement
will not be construed as a waiver of that provision, or any portion of that
provision, and will in no way affect that party’s right to exercise or enforce
such provisions. No waiver or default of any provision of this
Agreement will be deemed to be a waiver of any succeeding breach of the same
or
any other provisions of this Agreement.
17. Acceptance
of Agreement.
a. Xx.
Xxxxxxxxxxx was provided up to 21 days to consider and accept the terms of
this
Agreement and was advised to consult with an attorney about the Agreement
before
signing it. After signing the Agreement, Xx. Xxxxxxxxxxx will have an
additional seven (7) days in which to revoke in writing acceptance of this
Agreement. To revoke, Xx. Xxxxxxxxxxx will submit a signed statement
to that effect to PG&E Corporation’s Human Resources Officer before the
close of business on the seventh day. If Xx. Xxxxxxxxxxx does not
submit a timely revocation, the Effective Date of this Agreement will be
the
eighth day after he has signed it.
b. Xx.
Xxxxxxxxxxx acknowledges reading and understanding the contents of this
Agreement, being afforded the opportunity to review carefully this Agreement
with an attorney of his choice, not relying on any oral or written
representation not contained in this
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Agreement,
signing this Agreement knowingly and voluntarily, and, after the Effective
Date
of this Agreement, being bound by all of its provisions.
Dated:
PG&E
CORPORATION
HYUN
PARK
By: Hyun
Park
Dated:
April 10,
2007 XXXXX
X.
XXXXXXXXXXX
Xxxxx
X. Xxxxxxxxxxx
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