Exhibit 10.02
AMENDMENT TO EMPLOYMENT AGREEMENT
By this Agreement, Sempra Energy (the "Company"), a California
corporation formerly known as Mineral Energy Company, and RICHARD FARMAN
(the "Executive") amend the Employment Agreement (the "Agreement") between
Mineral Energy Company and Executive dated October 12, 1996, to be
effective December 1, 1998, as follows:
1.Paragraph 4 (e) (iii) of the Agreement is stricken and replaced with the
following language:
"(iii) the relocation of the Executive's principal place of employment
to a location away from the Company's headquarters or a relocation of the
Company's headquarters to a location further away which is both further
away from Executive's residence and more than thirty (30) miles from such
headquarters 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;"
2. Paragraph 5 (a) (vi) of the Agreement is modified in its opening
phrase to read:
"(vi) Continuation of Welfare Benefits. For a period of three (3)
years or until the Executive is eligible for retiree medical benefits,
whichever is longer, ..."
3. Paragraphs 5 (d), (e) and (f) of the Agreement are stricken and
replaced by the following:
"(d) Code Section 280G
(i) 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 (as
defined in Section 4(e))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 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.
(ii) Accounting Firm. All determinations to be made with respect to
this Section 5 (d) 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."
4. Sections 5 (e) and (f) of the Agreement are added to read:
"(e) 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.
(f) 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."
5. Section 5(h) of the Agreement is added to read:
(h) Notwithstanding anything contained herein, if a Change in Control
occurs and if, prior to the date of the Change in Control, the Executive's
employment is terminated by the Company (other than for Cause, death or
Disability), or by the Executive for Good Reason, and if such Termination
(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 such
Termination shall be treated as a Termination following a Change in
Control for purposes of this Agreement (including, without limitation, for
purposes of determining the amounts of the Severance Payments under this
Section 5).
6. Paragraph 8 ("Arbitration") of the Agreement is stricken and replaced
with the following language:
"8. 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."
IN WITNESS WHEREOF, the Executive and, pursuant to authorization from
its Board of Directors, the Company have caused this Amendment to
Employment Agreement to be executed as of the effective date, above.
SEMPRA ENERGY
By: ________________________ By: ________________________
Stephen L. Baum G. Joyce Rowland
Vice Chairman, President & COO Senior Vice President,
Human Resources
________________________
RICHARD FARMAN
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