(Effective Until Closing of
Transaction with Pacific Enterprises, Inc.)
SAN DIEGO GAS & ELECTRIC COMPANY
SEVERANCE PLAN
I. PURPOSE AND OBJECTIVE
To provide a separation pay allowance to help meet Eligible
Employees' immediate financial burden associated with being
involuntarily and permanently terminated under conditions
described in the Plan. This Plan supersedes the previous
Severance Plan dated August 22, 1994, as of the Effective
Date.
II. RESPONSIBILITY
The Company, through its Division and Department heads, is
responsible for administering the Plan.
The Company, through its Human Resources Division, is
responsible for providing further interpretation and
guidance.
The business decisions, the manner in which they are carried
out that may result in the termination of an employee, and
the reason for termination (including resignation in lieu of
discharge) are decisions to be made by the Company in its
sole discretion. In making these decisions, the Company is
not required to treat similarly situated employees in the
same manner.
III. ELIGIBILITY
A. "Eligible Employee" includes an employee whose job is
terminated by the Company, who is not covered by any
other severance plan adopted by the Company, and who:
1. is a regular non-bargaining unit employee working
as a full-time, part-time, or call-in employee of
the Company, or a regular non-bargaining unit
full-time, part-time or call-in employee on
medical leave, military leave or long-term
disability;
2. has received written notice that employment will
be terminated;
3. continues as a satisfactory employee until
released by the Company in accordance with its
business needs;
4. abides by such other written terms and conditions
as the Company has established as a condition for
participation in, or payment of, benefits from the
Plan; and
5. is not excluded as provided below.
B. Eligible Employees exclude employees:
1. whose employment terminates due to death;
2. whose employment terminates because of
unsatisfactory performance, the employee is
discharged for cause, and/or resigns in lieu of
discharge for cause, all as determined by the
Company;
3. who accept employment with an organization that is
affiliated (directly or indirectly) with the
Company;
4. who voluntarily terminate employment with the
Company for any reason except as provided in IV.C
below; or
5. who are temporary workers (agency or independent),
interns, independent contractors, employment
contract employees, student employees, or
employees covered by a collective bargaining
agreement that does not provide for Plan
participation.
C. Participation in the Plan commences when an
EligibleEmployee receives the notice of employment
termination referred to above. An Eligible Employee who
commences participation in the Plan is called a
"Participant" in the Plan.
IV. BENEFITS
A. Introduction. For purposes of determining Plan
Benefits, the following shall apply:
1. "Annual Pay" means Base Salary multiplied by 52.
2. "Base Salary" means average regular straight time
weekly base pay in effect during the month
preceding termination of employment with the
Company, excluding overtime, shift differentials,
Bonus Awards and other special payments determined
by the Company in its sole discretion.
3. "Years of Continuous Service" means the number of
years since Hire Date a person has been
continuously employed as an active regular full-
time, part-time or call-in employee of the Company
or its predecessors, as determined by the Company.
An Eligible Employee who is a call-in or regular
part-time employee entitled to these benefits will
receive pro-rated severance benefits as follows:
a. Add the total number of hours worked during the
preceding ten (10) years.
b. Divide by 2,087 hours for non-exempt employees
and 2,080 hours for exempt employees.
c. The resulting number, excluding fraction, will
constitute Years of Continuous Service
completed under the Plan.
4. "Hire Date" shall be, except as provided in a
collective bargaining agreement, the date a person
was hired by SDG&E as a non-bargaining unit regular
full-time employee, a non-bargaining unit regular
part-time employee, or a non-bargaining unit call-
in Employee, whichever occurred first.
5. "Final Salary" means the Participant's Base Salary
plus his or her Bonus Awards.
6. "Bonus Awards" means the gross cash amounts awarded
under the San Diego Gas & Electric Company Senior
Management Incentive Compensation Plan or
Compensation Incentive Plan during the 12-month
period ending on the date of the Participant's
termination of employment divided by 52.
7. If, in the sole judgment of the Company, an
Eligible Employee is terminated, and the Eligible
Employee's services can be used for a period equal
to the weeks of Plan Benefits or if there is a
reasonable possibility that a job for which the
Eligible Employee is qualified may become open
within such period, the Company may, in its sole
discretion, permit an Eligible Employee to elect
between remaining on the payroll for the period of
time equal to the Plan Benefits or receiving the
actual Plan Benefits.
B. Benefits Without Change in Control or Other
Corporate Events.
1. Basic Benefit. In the absence of termination
in connection with certain corporate events
described in Section IV.C., Plan Benefits will
be paid in one lump sum at termination
accordance with one of the following schedules,
as determined in Paragraph 2.
Schedule A Schedule B
Without Release With Release
Years of Continuous Weeks of Weeks of
Service Completed Base Salary Paid Final Salary Paid
Less than 2 1 2
At least 2, but less than 4 1 3
At least 4, but less than 6 2 4
At least 6, but less than 8 2 5
At least 8, but less than 10 2 6
At least 10, but less than 12 3 7
At least 12, but less than 14 4 8
At least 14, but less than 15 5 9
At least 15, but less than 16 5 10
At least 16, but less than 17 5 11
At least 17, but less than 18 6 12
At least 18, but less than 19 6 13
At least 19, but less than 20 6 14
At least 20, but less than 21 7 15
At least 21, but less than 22 7 16
At least 22, but less than 23 7 17
At least 23, but less than 24 8 18
At least 24, but less than 25 8 19
At least 25, but less than 26 8 20
At least 26, but less than 27 9 21
At least 27, but less than 28 9 22
At least 28, but less than 29 10 23
At least 29, but less than 30 10 24
30 or more 10 26
2. Release from Claims. Participants who sign a
release of all known and unknown claims in such
form as the Company determines shall receive
Plan Benefits under Schedule B of Paragraph 1.
Other Participants shall receive Plan Benefits
under Schedule A of Paragraph 1.
a. As an additional benefit, Participants
under age 40 who sign such a release will
receive continuation of all group medical
insurance, and 50% of the AD&D and 50% of
the life insurance in force as of the
of termination for the Participant and
existing covered dependents for the number
of weeks of Final Salary (minimum of four)
represented by Schedule B of Paragraph 1.
The Company will continue to pay its share
of the premiums, and the Company will
deduct the Participant's share of such
premiums from the Participant's lump sum
check.
b. As an additional benefit, Participants over
age 40 who sign such a release which waives
claims under the Age Discrimination in
Employment Act will receive continuation of
all group medical insurance, and 50% of the
AD&D and 50% of the life insurance in force
as of the date of termination for the
employee and existing covered dependents
for the number of weeks of Final Salary
(minimum of four) represented by Schedule B
of Paragraph 1. The Company will continue
to pay its share of the premiums, and the
Company will also pay the Participant's
share of such premiums. Company will not
pay for dependent coverage for life and
AD&D.
c. For purposes of computing Plan Benefits
under this Section IV.B., Participants who
are participants in the Senior Management
Incentive Plan and who sign such release
shall receive, at a minimum, the same Plan
Benefits as Participants who have completed
exactly 18 Years of Continuous Service.
C. Benefits Upon Change in Control and Other Corporate
Events.
1. In General.
a. Involuntary Termination upon Change in
Control. An otherwise Eligible Employee
who is involuntarily terminated for other
than cause, death, or disability within
two years after a Change in Control will
receive a Plan Benefit based upon Final
Salary, pursuant to Paragraph 2 below. A
Change in Control shall mean:
i. a reorganization, merger or
consolidation of the Company with one
or more corporations;
ii. the acquisition of beneficial
ownership, directly or indirectly, of
more than 30 percent of the voting
power of the outstanding stock of the
Company by one person, group,
association, corporation or
entity coupled with the election to
the Board of Directors of new members
who were not originally nominated by
the Board at the last annual meeting
and who constitute a new majority of
the Board; or
iii. the sale of all or substantially all
the property of the Company.
iv. Notwithstanding i., ii., or iii.
above, no Change in Control shall be
deemed to occur with respect to any
reorganization, merger, consolidation
or sale entered into voluntarily by
the Company:
(a) in which the Company survives
a direct or indirect subsidiary
of a public company, or
(b) in which members of the company's
Board of Directors constitute a
majority of the members of
Board of Directors of the
surviving company, and the
shareholders of the Company
constitute a majority of the
shareholders of the surviving
company.
b. Voluntary Termination for Good Reason. An
otherwise Eligible Employee who
voluntarily terminates employment for Good
Reason within two years following a Change
in Control (as defined in Paragraph 2
above), will receive a Plan Benefit based
upon Final Salary, pursuant to Paragraph 2
below. Good Reason shall mean:
i. a significant reduction in Base
Salary for reasons not related to
performance,
ii. elimination or significant reduction
of the aggregate value of health,
dental, disability and life coverage,
or
iii. involuntary transfer to a new business
location outside the San Diego Gas &
Electric Company service territory.
c. Sale of Work Unit. A Participant will
receive a Plan Benefit based upon Final
Salary, pursuant to Paragraph 2, below, if
he or she is terminated under the
following circumstances: unless the
purchaser of a work unit assumes the
obligations of this Plan, such benefits
will be paid to a Participant employed by
such work unit who is either: (i)
terminated following the sale of the work
unit and not rehired by the purchaser
within two months from the date of the
sale and retained for a period of at least
unacceptable performance is not an issue.
2. Corporate Event Benefit.
In the event of termination in connection with
certain corporate events described in this
Section IV.C., Plan Benefits shall be paid in
one lump sum at termination in an amount equal
to Final Salary multiplied by the number of
credits determined below and under Paragraph 3:
Weeks of Final Salary
Years of Continuous Schedule A Schedule B
Service Completed Without Release With Release
Less than 2 2 4
At least 2, but less than 4 2 6
At least 4, but less than 6 3 8
At least 6, but less than 8 3 10
At least 8, but less than 10 3 12
At least 10, but less than 12 4 17
At least 12, but less than 14 5 21
At least 14, but less than 15 6 24
At least 15, but less than 16 7 27
At least 16, but less than 17 8 30
At least 17, but less than 18 9 33
At least 18, but less than 19 10 36
At least 19, but less than 20 11 39
At least 20, but less than 21 12 44
At least 21, but less than 22 13 47
At least 22, but less than 23 14 50
At least 23, but less than 24 15 53
At least 24, but less than 25 16 56
At least 25, but less than 26 17 61
At least 26, but less than 27 18 64
At least 27, but less than 28 19 67
At least 28, but less than 29 20 70
At least 29, but less than 30 21 73
30 or more 22 78
3. Release from Claims. If Participantvoluntarily
signs a release of all known and unknown claims
in such form as the Company prepares, then the
Participant shall be entitled to the severance
payment under Schedule B of Paragraph 2, or, if
greater, the amount in Schedule B of IV.B.1.
Other Participants will receive benefits under
Schedule A of Paragraph 2.
a. As an additional benefit, a Participant
under age 40 who signs such a release will
receive continuation of all group medical
insurance, and 50% of the AD&D and 50% of
the life insurance in force as of the date
of termination for the Participant and
existing covered dependents for the number
of weeks of Final Salary (minimum of four)
represented in Schedule B of Paragraph 2.
The Company will continue to pay its share
of the premiums, and the Company will
deduct the employee's share of such
premiums from the Participant's lump
check.
b. As an additional benefit, a Participant
over age 40 who signs such a release which
waives claims under the Age Discrimination
in Employment Act will receive continuation
of all group medical insurance, and 50% of
the AD&D and 50% of the life insurance in
force as of the date of termination for the
Participant and existing covered dependents
for the number of weeks of Final Salary
(minimum of four) represented in Schedule B
of Paragraph 2. The Company will continue
to pay its share of the premiums, and the
Company will also pay the Participant's
share of such premiums. The Company will
not pay for dependent coverage for life and
AD&D.
c. For purposes of computing severance
allowances pursuant to this IV.C.,
Participants who are participants in the
Senior Management Incentive Plan and who
sign such release will receive, at a
minimum, the same Plan Benefits
Paragraph 2 as Participants who have
completed exactly 19 years of Continuous
Service.
V. GENERAL
A. The Board of Directors reserves the right to change, amend or
terminate the Plan at any time for any reason, however no
such amendment or termination shall affect the right to any
unpaid Plan Benefit of any Participant whose employment was
terminated prior to the adoption of the amendment or
resolution to terminate the Plan.
B. The Company is the Plan Administrator and the Plan Sponsor
for purposes of the Employee Retirement Income Security Act
of 1974 ("ERISA"). The Company has the complete discretion
and responsibility to interpret the Plan. All actions by the
Company are final, binding, and conclusive.
C. As to participants in the Savings Plan and/or the Pension
Plan, participation will stop on the termination date. The
employee will receive information about rights under those
plans.
D. If an employee who is eligible for a Plan Benefit dies after
termination and prior to the payment of the Plan Benefit, the
Plan Benefit will be paid in a single lump sum to the spouse,
if any. If no spouse survives, the payment will be made to
the employee's estate.
E. To the full extent permitted by law, except as provided in
the Plan, no Plan Benefit hereunder shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or change, and any attempt to do so shall be
void.
F. The Effective Date of this Plan is October 12, 1996. This
Plan is drawn under and shall be construed in accordance with
ERISA and, to the extent not preempted by ERISA, with the
laws of the State of California.
G. The Company shall be responsible for paying all benefits
under the Plan. The Plan shall be unfunded and benefits
hereunder shall be paid only from the general assets of the
Company. All or part of any benefits paid under the Plan may
be credited to any statutory amounts to which employees are
entitled upon termination to the extent allowed by applicable
law.
H. Claims for benefits should be made in writing to the Company
Attention: Human Resources Department, pursuant to the claims
procedure set forth in the Employee Handbook. For a
discussion of other plan information and your ERISA rights,
please see the Employee Handbook.
Adopted the _______ of October, 1996
Margot Kyd, Vice President
Human Resources