SEPARATION AGREEMENT
Exhibit 10
This
Separation Agreement (this �Agreement�) is made and entered into by and between
Xxxxxxx X. Xxxxxx (the �Executive�) and Pacific Gas and Electric Company (the
�Company�) (collectively the �Parties�) and sets forth the terms and conditions
of the Executive�s separation from employment with the Company. The
�Effective Date� of this Agreement is defined in
paragraph 18(a).
1. Resignation. Effective
August 31, 2008 (the �Resignation Date�), the Executive hereby resigns from his
positions as Chief Executive Officer and President and a member of the Board of
Directors of the Company, and resigns from employment with the Company and from
each other position he holds with any of its affiliates, including as a director
of any such entity. Promptly after his Resignation Date, he will be
paid all salary or wages and vacation accrued, unpaid and owed to him as of the
Resignation Date, he will remain entitled to any other benefits to which he is
otherwise entitled as of the Resignation Date 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. The Executive shall make a diligent search for, and deliver to
the Company, by the Resignation Date (i) any document, materials, files or
computer files, or copies, reproductions, duplicates, transcriptions or replicas
thereof relating to the Company�s business or affairs or belonging to the
Company or any of its affiliates, which are in his possession or control and
(ii) all other Company property (including, without limitation, laptop computer,
blackberry, identification cards, security access cards, etc.), which are in his
possession or control.
The
continuation of wages and other compensation set forth in paragraph 2 below is
conditioned upon the Executive�s acceptance of this Agreement.
2. Continued pay and service
credit. To induce the Executive to resign as of the
Resignation Date and for other consideration set forth herein, the Company will
provide to the Executive, or his estate, the following compensation benefits
conditioned upon the occurrence of the Effective Date of this Agreement as set
forth in paragraph 18(a) below:
a. Salary continuation and bonus
payment. Subject to his compliance with the terms and
conditions of this Agreement, from the Resignation Date and continuing until
January 31, 2009, the Company shall continue to pay the Executive monthly
payments equal to the same monthly base salary that it would have paid him had
he continued to be employed through January 31, 2009, at the same time and on
the same conditions as though he had continued to be employed by the
Company. In addition, the Company will pay the Executive his target
participation in PG&E Corporation�s Short-Term Incentive Plan (�STIP�) of
$584,375 for 2008, multiplied by the final 2008 STIP rate as determined by the
PG&E Corporation�s Compensation Committee of the Board of Directors, less
applicable withholdings and deductions, payable in or about March 2009 in
accordance with the Company�s current pay practices.
b. Continued Service Credit for Equity
Awards. Subject to his
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compliance with the terms and conditions of this Agreement, the Company shall provide the Executive service credit from the Resignation Date to January 31, 2009 for purposes of vesting in restricted stock grants and performance share grants provided to the Executive under PG&E Corporation�s 2006 Long-Term Incentive Plan (�LTIP�) (including, without limitation, the restricted stock grants vesting on January 2, 2009 and January 29, 2009) in accordance with the terms of the restricted stock agreements and performance share agreements relating to such grants, provided, however, that all restricted stock grants and performance share grants that would not have vested as of January 31, 2009 based upon the vesting schedules set forth in such restricted stock agreements and performance share agreements shall be forfeited effective as of the Effective Date. The Executive shall not be eligible to receive (i) any incentive compensation for any period after December 31, 2008 or (ii) any additional equity awards from and after the Resignation Date.
c. Other benefits. Any
benefits accrued under the PG&E Corporation Supplemental Executive
Retirement Plan (�SERP�) as of the Resignation Date shall be paid in accordance
with the terms of such plan, and no additional benefits shall accrue under SERP
after the Resignation Date. In accordance with the terms of the
PG&E Corporation�s Executive Stock Ownership Program, the Executive will not
be entitled to any Special Incentive Stock Ownership Premiums (�SISOPs�) and
therefore will not be awarded any SISOPs. The Executive will be
eligible for COBRA continuation coverage from the Resignation Date to the extent
available to him at law. The Company will pay all COBRA premiums on
behalf of the Executive and his family through January 31, 2009, provided that
the Executive makes a COBRA election to continue said benefits on a timely
basis. The Company further agrees to promptly reimburse the Executive
for all out-of-pocket expenses incurred in the performance of his
responsibilities as an officer or director of the Company pursuant to the
Company�s reimbursement policies in effect as of the time of
submission. The Executive shall not be eligible for any benefits
under the PG&E Corporation Officer Severance Policy not otherwise
specifically provided for herein.
d. Other employment or
consulting. Provided that the Executive does not take a
position with or perform services for a direct competitor of the Company prior
to January 31, 2009, the Executive shall not lose any of the benefits set forth
in this Agreement based on the fact that he provides consulting services or
accepts a job with a different employer after the Resignation Date, but before
January 31, 2009. This paragraph 2(d) shall not affect the
Executive�s obligations under paragraph 7.
3. Defense and indemnification in
third-party claims. The Company and/or its parent, affiliate,
or subsidiary will provide the Executive 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 the
Company dated July 19, 1995, as well as otherwise required by law.
4. Cooperation.
a. The
Executive will, upon reasonable notice, furnish information and proper
assistance to the Company and/or its parent, affiliate or subsidiary (including
truthful
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testimony
and document production) as may reasonably be required by them or any of them in
connection with any legal, administrative or regulatory proceeding or
investigation (internal or external) 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 out-of-pocket expenses incurred by the Executive in
complying with this paragraph.
b. Until
the Resignation Date, the Executive will, as requested by the Company or
Chairman, Chief Executive Officer and President of PG&E Corporation, (i)
continue to devote his best skill and perform his duties as Chief Executive
Officer and President and a member of the board of directors of the Company
(including, without limitation, in connection with fulfilling the Company�s
reporting obligations to the Securities and Exchange Commission), (ii) cooperate
and participate in employee meetings, and (iii) cooperate in communications with
media, investment community, regulators, elected officials, other policymakers,
government officials and other stakeholders.
5. Release
of claims and covenant not to xxx.
a. In
consideration of the payments and other benefits the Company is providing under
this Agreement, the Executive, on behalf of himself and his representatives,
agents, heirs and assigns, waives, releases, discharges and promises never to
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 the
Executive�s 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. The
Executive 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 the Executive 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
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HER
SETTLEMENT WITH THE DEBTOR.
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c. With
respect to the claims released in the preceding paragraphs, the Executive 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 expressly permitted by law) assist or
participate in any such proceedings, including any proceedings brought by any
third parties.
d.
The
Executive agrees to reconfirm the release and covenants set forth herein by
executing and returning the attached Exhibit A within 30 days after the
Resignation Date. The Company shall be under no obligation to pay any
obligation to the Executive accruing after the Resignation Date absent the
Executive�s signature and return of the Exhibit A to the Company, unless
otherwise required by law. In the event the Executive should die or
become legally incapacitated prior to executing and returning the attached
Exhibit A, a release similar to that set forth in Exhibit A executed by the
Executive�s estate or legal representative will be sufficient to obligate the
Company to pay all remaining obligations or benefits.
6. Non-disclosure. The
Executive will not use, disclose, publicize, or circulate any confidential,
non-public 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 expressly
permitted by law. Before making any legally-required disclosure, the
Executive will give the Company notice at least ten (10) business days in
advance.
7. No
unfair competition.
a. The
Executive 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, the Executive 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 the Executive acquired information as a result of
any solicitation efforts by the Company or its parent, affiliates or
subsidiaries, or by the prospective customer, during the Executive�s
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 the Executive acquired information as a result of
any solicitation efforts by the Company or its parent, affiliates or
subsidiaries, or by the prospective vendor, during the Executive�s
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, or interfere
with, 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 or
subsidiaries.
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8. Material breach by
Employee. In the event that the Executive breaches any
material provision of this Agreement, including but not necessarily limited to
paragraphs 4, 5, 6, and/or 7, the Company may cease paying or
providing any unpaid amounts or benefits (including, without limitation,
continued salary payments and vesting of restricted stock grants and performance
share grants) specified in this Agreement, except as otherwise required by law
or subsequently determined to be due and owing pursuant to arbitration and a
determination of an appropriate offset, if any, based on established liability
and damages. Subject to the Company�s establishment of breach and
proof of damages, the Company shall also be entitled to the return of any and
all amounts or benefits (including, without limitation, continued salary
payments and vesting of restricted stock grants and performance share grants)
previously paid or provided to him under this Agreement not otherwise required
by law. Despite any breach by the Executive, 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 the Executive of any of the provisions in paragraphs 4, 5,
6, and/or 7, 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 the Executive of his obligations under
paragraphs 4, 5, 6, and/or 7, without any requirement to post any bond, which is
hereby expressly waived by the Executive.
9. Material breach by the
Company. The Executive will be entitled to recover 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, the
Executive will be entitled to seek, in addition to any other remedies provided
in this Agreement, 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
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obligations
under this Agreement will remain in full force and effect.
10.
No admission of
liability. This Agreement is not, and will not be considered,
an admission of liability or a violation of any applicable contract, law, rule,
regulation, or order of any kind.
11. Non-Disparagement. The
Executive agrees to refrain from performing any act, engaging in any conduct or
course of action or making or publishing any statements, claims, allegations or
assertions, which have or may reasonably have the effect of demeaning the name
or business reputation of PG&E Corporation or any of its
subsidiaries or affiliates, or any of their respective employees, officers,
directors, agents or advisors in their capacities as such or which adversely
affects (or may reasonably be expected adversely to affect) the best interests
(economic or otherwise) of any of them. The Company agrees to refrain
from performing any act, engaging in any conduct or course of action or making
or publishing any statements, claims, allegations or assertions in any print,
electronic or television media or in investor conference calls or webcasts,
which have or may reasonably have the effect of demeaning the name or business
reputation of the Executive. The Company further agrees to instruct
the members of the Company�s Board of Directors, Xxxxx Xxxxxx, and all of the
Company�s Chief Executive Officers, Chief Operating Officers, Presidents, Senior
Vice Presidents and Vice Presidents (in each case, while such person remains a
Board member or employee of the Company) to comply with the Company�s
obligations under this paragraph. In the event that Xxxxx
Xxxxxx, or the Company�s Chief Legal Officer or Head of Human Resources acquires
actual knowledge that a violation of the Company�s obligations under this
paragraph 11 has occurred, the Company shall take reasonable action to reprimand
and further discourage such behavior in violation of this paragraph
11. Each Party agrees that nothing in this paragraph 11 shall
preclude the other Party from fulfilling any duty or obligation that he or it
may have at law, from responding to any subpoena or official inquiry from any
court or government agency, including providing truthful testimony, documents
subpoenaed or requested or otherwise cooperating in good faith with any
proceeding or investigation, or from taking any reasonable actions to enforce
such party�s rights under this Agreement in accordance with the dispute
resolution provisions specified in paragraph 14 hereof. Each Party shall
continue to comply with its or his obligations under this Paragraph 11
regardless of any alleged breach by the other Party of its or his
agreements contained in this paragraph 11 unless and until there has been a
final determination by a court or an arbitration panel that the other Party has
breached its or his obligations under this paragraph 11.
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 the
Executive with any different benefits or payments). 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,
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void, or unenforceable, the remaining provisions will remain in full force and effect except that, should paragraphs 4, 5, 6, and/or 7 be held invalid, void or unenforceable, either jointly or separately, the Company will be entitled to rescind the Agreement and/or recover from the Executive any payments made and benefits provided to him under this Agreement.
14. Dispute
Resolution. 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, the Executive�s employment
with the Company, the separation of the Executive 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 one-member arbitration panel selected by mutual
agreement, or if the Parties fail to agree on an arbitrator, then in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
currently in effect, provided, however, that the arbitrator will be limited to
awarding the award requested by the Executive or the Company and shall not
determine an alternative or compromise remedy. 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, subject to a claim for subsequent
reimbursement under paragraph 17. The Parties will equally share the
costs of the arbitration, including the arbitrator�s fees, administrative costs
and filing fees, unless otherwise prohibited by law. To the extent
properly split, said arbitration costs will be subject to a claim for subsequent
reimbursement under paragraph 17. The Parties agree that the
arbitrator will have the power to decide any motions brought by any party to the
arbitration, including discovery motions, motions for summary judgment and/or
adjudication and motions to dismiss and demurrers, prior to any arbitration
hearing. The arbitrator will issue a written decision on the
merits. 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 arbitrator�s award in any court of competent
jurisdiction. Subject to the arbitration provisions of this
paragraph, the sole jurisdiction and venue for any action for injunctive or
declaratory relief related to the subject matter of this Agreement will be the
California state and federal courts in the City and County of San Francisco, and
both Parties hereby consent to the jurisdiction of such courts for any such
action.
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. Attorney�s Fees and
Costs. The prevailing party in any dispute or
controversy
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over the terms of this Agreement will be entitled to recover, in addition to any other available remedies specified in this Agreement, (i) such party�s reasonable attorneys� fees, except as otherwise set forth herein and (ii) such party�s all other litigation expenses and costs incurred in litigation or arbitration, including any arbitrator, administrative or filing fees except to the extent that the recovery of such costs is prohibited or limited by law.
18. Acceptance of
Agreement.
a. The
Executive 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, the Executive will have an
additional seven (7) days in which to revoke in writing acceptance of this
Agreement. To revoke, the Executive will submit a signed statement to
that effect to PG&E Corporation�s Chief Legal Officer before the close of
business on the seventh day. If the Executive does not submit a
timely revocation, the Effective Date of this Agreement will be the eighth day
after he has signed it.
b. The
Executive 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 Agreement, signing this Agreement knowingly and voluntarily,
and, after the Effective Date of this Agreement, being bound by all of its
provisions.
Dated: July 8,
2008 . PACIFIC
GAS AND ELECTRIC COMPANY
By: XXXX
X.
XXXXX
XXXX
X. XXXXX
Dated: July 8,
2008 Xxxxxxx
X. Xxxxxx
3:00pm
XXXXXXX
X.
XXXXXX
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EXHIBIT
A
EMPLOYMENT TERMINATION
CERTIFICATE
I entered
into a SEPARATION AGREEMENT
(�Separation
Agreement�) with Pacific Gas &
Electric Company (�Company�)
dated July __,
0000 (xXxxxxxxxx
Date�). I hereby acknowledge that:
(1)
A blank copy of this Employment Termination Certificate was attached as Exhibit A to the
Separation Agreement when the Company gave it to me for review. I have
been given sufficient and reasonable time to consider signing this
Certificate. I have discussed the Separation Agreement and this
Certificate with an attorney before executing either document.
(2)
The benefits payable under paragraph 2(a)-(c) of the Separation Agreement are
only payable to me if I sign this Certificate after the Resignation Date (as
defined in the Separation Agreement).
(3)
I executed the Separation Agreement prior to my last day of employment. In
exchange for the remaining benefits provided for in paragraph 2(a)-(c) of the
Separation Agreement, I hereby agree that this Certificate will be a part of my
Separation Agreement such that the release of claims and the covenants that I
provided under paragraph 5 of the Separation Agreement will, by my signature
below, extend to and cover any other claims that arose after the Effective Date,
up to and including the Resignation Date and the date this Certificate is
signed, provided, however, by signing the Employment Termination Certificate I
am not releasing any claim I have to receive any and all benefits otherwise due
to me under the terms of the Separation Agreement, or otherwise required by
law.
(4)
Nothing in this Certificate alters, diminishes, or mitigates the scope and
breadth of the releases and covenants that I previously provided to the Company
under the Separation Agreement, which shall remain in full force and effect
regardless of whether I sign this Certificate.
(5)
By signing below, I hereby extend the release of claims and the covenants that I
provided to the Company and other released parties under the Separation
Agreement to cover any other claims (as more fully described in paragraph 5 of
the Separation Agreement) that arose or may have arisen at any time after the
Effective Date, up to and including the Resignation Date and the date this
Certificate is signed. I knowingly and voluntarily waive any and all
rights or benefits which I may have had, may now have or in the future may have
under the terms of Section 1542 of the California Civil Code, which provides as
follows:
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 BY HIM OR HER MUST
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HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
I
understand that section 1542 gives me the right not to release existing claims
of which I am not now aware, but I expressly and voluntarily choose to waive my
rights under California Civil Code Section 1542, as well as under any other
federal or state statute or common law principles of similar
effect.
I UNDERSTAND THAT I HAVE A
RIGHT TO CONSULT WITH AN ATTORNEY OF MY OWN CHOOSING AND TO HAVE THE TERMS OF
THIS CERTIFICATE FULLY EXPLAINED TO ME PRIOR TO SIGNING, AND THAT I AM GIVING UP
ANY LEGAL CLAIMS I HAVE AGAINST THE PARTIES RELEASED IN THE SEPARATION AGREEMENT
BY SIGNING THIS CERTIFICATE. I AM SIGNING THIS CERTIFICATE KNOWINGLY, WILLINGLY
AND VOLUNTARILY IN EXCHANGE FOR THE BENEFITS DESCRIBED IN THE SEPARATION
AGREEMENT.
______________________________
Xxxxxxx
X. Xxxxxx
Date: _______________________
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