SAN DIEGO GAS & ELECTRIC COMPANY
1986 LONG-TERM INCENTIVE PLAN
1995 RESTRICTED STOCK AWARD AGREEMENT
_______________________________________________
THIS RESTRICTED STOCK AWARD AGREEMENT (the "Agreement")
is entered into this _____ day of _________________, 1995,
by and between SAN DIEGO GAS & ELECTRIC COMPANY, a
California corporation ("SDG&E") and _______________________
("Participant").
WHEREAS, the Board of Directors of SDG&E ("the Board")
has adopted the 1986 Long-Term Incentive Plan (the "Plan"),
which provides for the granting to selected employees of
SDG&E and its subsidiaries of awards of Common Stock of
SDG&E ("Restricted Stock Awards");
WHEREAS, the grant of Restricted Stock Awards is
intended as an incentive which will attract and retain
highly competent persons as officers and key employees of
SDG&E and its subsidiaries;
WHEREAS, Participant is a selected employee of SDG&E;
and
WHEREAS, the Executive Compensation Committee of the
Board (the "Committee") has authorized, and the Board has
approved, the grant of a Restricted Stock Award to
Participant pursuant to the terms of the Plan.
NOW, THEREFORE, in consideration of the foregoing and
of the mutual covenants hereinafter set forth and other good
and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Grant of Restricted Stock Award
SDG&E hereby grants to Participant, on the terms,
conditions and restrictions hereinafter set forth, and in
accordance with the Plan which is incorporated herein, as a
matter of separate inducement to achieve a certain goal set
by the Board and not in lieu of any salary or other
compensation for Participant's services, a Restricted Stock
Award consisting of_____________________________
_____________________________________________
(_____________) shares of the authorized but unissued shares
of SDG&E Common Stock, (the "Shares").
2. Purchase and Sale of Shares
Participant hereby purchases and acquires the Shares,
and SDG&E hereby sells and transfers the Shares to
Participant. Concurrently with the execution hereof, SDG&E
has delivered to Participant, and Participant acknowledges
receipt into escrow of, a certificate or certificates
evidencing the Shares, duly issued to Participant by SDG&E.
Concurrently with the execution hereof, Participant
acknowledges that the Secretary or Assistant Secretary of
SDG&E, holds on behalf of Participant all
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certificates evidencing the Shares. Participant also
acknowledges prior receipt of a prospectus for the Plan, a
copy of the Plan, and the most recent Annual Report of
SDG&E. Participant shall execute all such stock powers and
other instruments of transfer in favor of SDG&E as are
necessary at any time in the future to perform this
contract.
3. Purchase Price; Payment
The purchase price for the Shares shall be Two Dollars
and Fifty Cents ($2.50) per share. In payment thereof,
Participant has delivered to SDG&E, on the date first
written above, and SDG&E acknowledges receipt of, a check
payable to SDG&E in the amount of _________________________
_______________________Dollars ($_____________). SDG&E
agrees that Participant shall be deemed a shareholder of
record with respect to the Shares on the date first written
above.
4. Restricted Term
The Restricted Term with respect to the Shares shall
commence on the date first above written. The restrictions
will be removed from and the restricted term will expire on
one quarter of the restricted shares after the end of each
of the years 1996, 1997, 1998 and 1999:
(1) If, at the end of each of such year the
Corporation's earnings per share meet or exceed the target
earnings per share as set by the Executive Compensation
Committee.
(2) If, beginning in 1997, at the end of any quarter,
the published quarterly earnings meet or exceed the previous
year's target earnings plus 25% of the annual target
increase per quarter.
(3) At the end of 1999, the remaining restricted
shares not released previously may be released in the
discretion of the Board dependent upon the impact on 1996
through 1999 earnings of industry and corporate
restructuring during such period.
(4) The Board, in response to industry or corporate
restructuring, may elect to change the Plan design and
performance goals to align the Plan with a new long term
direction.
5. Voting and Other Rights
During the Restricted Term, Participant shall, except
as otherwise provided herein, have all of the rights of a
stockholder with respect to all of the Shares subject to the
Restricted Term, including without limitation the right to
vote such Shares and the right to receive all dividends or
other distributions with respect to such Shares. In
connection with the payment of such dividends or other
distributions, there shall be deducted any taxes or other
amounts required by any governmental authority to be
withheld and paid over to such authority for the account of
Participant.
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6. Restrictions On Inter Vivos Transfer
During the Restricted Term, the Shares subject to the
Restricted Term shall not be sold, assigned, transferred,
hypothecated or otherwise alienated, disposed of or
encumbered except as provided in the Plan. The certificate
for such Shares shall bear the following legend, or any
other similar legend as may be required by SDG&E:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ENCUMBERED OR DISPOSED OF EXCEPT
AS PERMITTED BY SAN DIEGO GAS & ELECTRIC COMPANY'S 1986
LONG-TERM INCENTIVE PLAN OR THE COMMITTEE WHICH ADMINISTERS
THAT PLAN."
7. Termination of Participant's Employment
In the event Participant ceases to be employed by SDG&E
at any time before the end of the Restricted Term for any
reason, Participant shall sell, and SDG&E shall purchase all
Shares subject to the Restricted Term for a price of Two
Dollars and Fifty Cents ($2.50) per share. Upon the
delivery by SDG&E to its Secretary or Assistant Secretary of
(i) notice that Participant has ceased to be so employed,
and (ii) its check, payable to the order of Participant, in
the amount of such purchase price, said Secretary or
Assistant Secretary shall deliver to SDG&E all certificates
evidencing the Shares subject to the Restricted Term,
accompanied by stock powers and other instruments of
transfer duly executed by Participant, and shall deliver to
Participant the check in the amount of the purchase price
for such Shares.
8. Election to Recognize Income
Check one:
a. ___ Participant elects, pursuant to the Internal
Revenue Code as amended, and the comparable provisions of
state tax law, to include in gross income in connection with
the grant of this Restricted Stock Award, all amounts now
recognizable.
b. ___ Participant shall not elect, pursuant to the
Internal Revenue Code as amended, or comparable provisions
of any state tax law, to include any amount in gross income
in connection with the grant of this Restricted Stock Award.
9. Withholding and Registration
a. Upon recognition of income as elected in paragraph
8 above, Participant shall, with respect to such Shares,
make payment, in the form of cash or a cashier's check or in
the manner stated in paragraph 9(b) below, to SDG&E in an
amount sufficient to satisfy any taxes or other amounts
SDG&E determines is required by any governmental authority
to be withheld and paid over by SDG&E or any of its
subsidiaries to such authority for the account of
Participant (collectively, "Withholding Taxes"), or shall
otherwise make arrangements satisfactory to SDG&E for the
payment
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of such amounts through withholding or otherwise. For
purposes of paragraph 8(a), such payment or arrangements
shall be made by December 8, 1995. For purposes of
paragraph 8(b), the date shall be 30 days after the
restrictions are removed. Participant shall, if requested
by SDG&E, make appropriate representations in a form
satisfactory to SDG&E that such Shares will not be sold
other than pursuant to an effective registration statement
under the Securities Act of 1933, as amended, or an
applicable exemption from the registration requirements of
such Act.
b. Subject to the restrictions set forth in paragraph
9(c) and such rules as the Committee may from time to time
adopt and upon approval by the Committee in its sole
discretion, Participant may elect to satisfy all or any
portion of such Participant's tax withholding obligations
set forth in paragraph 9(a) by electing (i) to have SDG&E
withhold from delivery of any Shares otherwise deliverable
to Participant in the manner set forth in paragraph 10
hereof, a portion of such Shares to satisfy Withholding
Taxes or (ii) to deliver to SDG&E shares of Common Stock, no
par value, of SDG&E, other than those delivered to
Participant in the manner set forth in paragraph 10 hereof,
to satisfy all or any portion of such Participant's
Withholding Taxes. The number of Shares withheld from
delivery or such other shares delivered shall equal the
number of shares the Committee, in its sole discretion,
determines to have a fair market value equal to the amount
of such Participant's Withholding Taxes required to be
withheld or paid over by SDG&E or any of its subsidiaries
and which Participant elected to be satisfied by withholding
or delivery of shares.
c. Participant's election to satisfy all or any
portion of Participants Withholding Taxes under paragraph
9(b) is subject to the following restrictions:
(i) such election must be made in writing on or
before the date when the amount of Withholding Taxes is
required to be determined (the "Tax Date");
(ii) such election shall be irrevocable;
(iii) such election shall be subject to the
approval or disapproval of the Committee, in its sole
discretion;
(iv) the fair market value of the Shares to be
withheld or other shares of Common Stock to be delivered to
SDG&E for the purposes of satisfying all or any portion of
such Participant's Withholding Taxes shall be deemed to be
the average of the highest and lowest selling prices of such
stock as reported on the New York Stock Exchange Composite
Transactions Tape on the Tax Date, or if such stock is not
traded that day, then on the next preceding day on which
such stock was traded; and
(v) if Participant is or becomes subject to
Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), such election must be made either
six months or more prior to the Tax Date or within a ten-day
period beginning on the third and ending on the twelfth
business day following release for publication of SDG&E's
quarterly or annual summary statement of earnings in
accordance with Rule 16b-3(e)(3)(iii) under the 1934 Act;
provided that no such
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election may be made within six months of the grant of such
Restricted Stock award, except in the case of death or
disability of Participant."
10. Delivery of Shares
Upon expiration of the Restricted Term applicable to
any shares as provided in the manner stated in paragraph 4
above and payment by the Participant as required in
paragraph 9 above, the Secretary or Assistant Secretary of
SDG&E shall deliver to Participant all certificates
evidencing the Shares free of legend and no longer subject
to the Restricted Term and all restrictions set forth herein
with respect to such Shares shall terminate.
If at the end of 1999 the restrictions have not been
removed from and the Restricted Term has not expired on any
of the shares purchased by Participant under this Agreement,
Participant shall sell and SDG&E shall purchase all such
shares for a price of Two Dollars and Fifty Cents ($2.50)
per share no later than February 1, 2000. The Secretary or
Assistant Secretary shall deliver to SDG&E all certificates
evidencing such shares accompanied by stock powers and other
instruments of transfer duly executed by Participant and
shall deliver to Participant a check in the amount of the
purchase price for such shares.
11. Effects On Participant's Continued Employment
Participant's right, if any, to continue to serve SDG&E
and its subsidiaries as an officer or employee shall not be
enlarged or otherwise affected by the grant to him or her of
this Restricted Stock Award, nor shall such grant in any way
restrict the right of SDG&E or any of its subsidiaries to
terminate Participant's employment at any time.
12. Further Action
Each party hereto agrees to perform any further acts
and to execute and deliver any documents which may be
reasonably necessary to carry out the provisions hereof.
13. Parties in Interest and Governing Law
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective assigns
and successors-in-interest, and shall be governed by and
interpreted in accordance with the laws of the State of
California.
14. Entire Agreement
This Agreement contains the entire agreement and
understanding between the parties as to the subject matter
hereof.
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15. Invalid Provisions
The invalidity or unenforceability of any particular
provision hereto shall not affect the other provisions
hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were
omitted.
16. Amendment
No amendment or modification hereof shall be valid
unless it shall be in writing and signed by both parties
hereto.
17. Counterparts
This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, and taken together
shall constitute one and the same document.
18. Notices
All notices or other communications required or
permitted hereunder shall be in writing, and shall be
sufficient in all respects only if delivered in person or
sent via certified mail, postage prepaid, addressed as
follows:
If to SDG&E: San Diego Gas & Electric Company
P.O. Box 1831
San Diego, CA 92112
Attention: Corporate Secretary
If to Participant:_____________________________________
_____________________________________
_____________________________________
or such other address as shall be furnished in writing by
any such party. Any such notice or communication shall be
deemed to have been delivered when delivered in person or 48
hours after the date it has been mailed in the manner
described above.
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IN WITNESS WHEREOF, the parties hereto have executed
this Restricted Stock Award Agreement on the day and year
first above written.
PARTICIPANT
__________________________________
Signature of Participant
SAN DIEGO GAS & ELECTRIC COMPANY
By:________________________________
Title:_____________________________
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