Exhibit 10.04
AMENDMENT TO
EMPLOYMENT AGREEMENT
By this Agreement, Sempra Energy (the "Company"), a California corporation
formerly known as Mineral Energy Company, and WARREN MITCHELL (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 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, ..."
2. 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."
3. 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."
4. 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).
5. 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: ________________________
Richard D. Farman
Chairman & Chief Executive Officer
________________________
WARREN MITCHELL