Exhibit 10.4                             

 
THE TERMS AND CONDITIONS OF THIS AGREEMENT ARE PURSUANT TO THE PG&E CORPORATION
OFFICER SEVERANCE PLAN, ADOPTED BY THE NOMINATING, COMPENSATION, AND GOVERNANCE
COMMITTEE OF PG&E CORPORATION, AND ARE NOT SUBJECT TO NEGOTIATION

SEPARATION AGREEMENT

 
This Separation Agreement (this “Agreement”) is made and entered into by and
between G. Robert Powell and PG&E Corporation (the “Corporation”) (collectively
the “Parties”) and sets forth the terms and conditions of Mr. Powell’s
separation from employment with the Corporation.  The “Effective Date” of this
Agreement is defined in paragraph 17(a).
 
1.           Resignation.  Effective the close of business on March 5, 2008 (for
purposes of this Agreement, the “Date of Resignation”), Mr. Powell will resign
from his positions as Vice President, Chief Financial Officer and Controller of
Pacific Gas and Electric Company and Vice President and Controller of PG&E
Corporation, and resign from employment with the Corporation.  Mr. Powell shall
have until March 26, 2008, to accept this Agreement by submitting a signed copy
to the Corporation.  Regardless of whether Mr. Powell accepts this Agreement, on
his Date of Resignation, he will be paid all salary or wages and vacation
accrued, unpaid and owed to him as of that date, he will remain entitled to any
other benefits to which he is otherwise entitled under the provisions of the
Corporation’s plans and programs, and he will receive notice of the right to
continue his existing health-insurance coverage pursuant to COBRA.
 
The benefits set forth in paragraph 2 below are conditioned upon Mr. Powell’s
acceptance of this Agreement.
 
2.           Separation benefits.  Even though Mr. Powell is not otherwise
entitled to them, in consideration of his acceptance of this Agreement, the
Company will provide to Mr. Powell the following separation benefits:
 
a.           Severance payment.  Under the terms of the PG&E Corporation Officer
Severance Policy, Mr. Powell’s severance payment amount is Six Hundred
Sixty-Seven Thousand Seven Hundred Twenty-Five Dollars ($667,725) of which
Sixty-Two Thousand Six Hundred Twenty-Eight Dollars ($62,628) will be converted
into additional age to age 55 under the PG&E Corporation Supplemental Executive
Retirement Plan.  As a result, Mr. Powell will be entitled to receive an annual
defined supplemental pension benefit as a single life annuity of Six Hundred
Twenty-Six Dollars and Eighty-Six Cents ($626.86) beginning on the first of
October 2008.  On the Effective Date of this Agreement as set forth in paragraph
17(a) below, the Corporation will make a lump-sum payment to Mr. Powell in the
gross amount of Six Hundred Five Thousand Ninety-Seven Dollars ($605,097), less
applicable withholdings and deductions.
 
b.           Stock.  Upon the Date of Resignation, but conditioned on the
occurrence of the Effective Date of this Agreement as set forth in paragraph
17(a) below, all unvested  restricted stock grants, and performance share grants
provided to Mr. Powell under PG&E Corporation’s 2006 Long-Term Incentive Plan
shall continue to vest, terminate, or be canceled as provided under the terms of
their respective plans or program, as modified by the PG&E Corporation Officer
Severance Policy in effect at the time this Agreement is signed by Mr.
 
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Powell.  The payment and withdrawal of Mr. Powell’s restricted stock grants, and
performance share grants shall be as provided under the terms of their
respective plans or program, as modified by the PG&E Corporation Officer
Severance Policy in effect at the time this Agreement is signed by Mr. Powell.
 
d.           Career transition services.  For a maximum period of one year
following the Date of Resignation, the Corporation will provide Mr. Powell with
executive career transition services from the firm of Torchiana, Mastrov &
Sapiro, Inc., in accordance with the contract between the Corporation and
Torchiana, Mastrov & Sapiro, Inc.  Mr. Powell’s entitlement to services under
this Agreement will terminate when he becomes employed, either by another
employer or through self-employment other than consulting with the
Corporation.  If Mr. Powell becomes employed, he will promptly notify PG&E
Corporation’s Human Resources Officer to enable the Corporation to end the
provision of services to him by Torchiana, Mastrov & Sapiro, Inc.
 
e.           Payment of COBRA premiums.  If Mr. Powell elects and is otherwise
eligible to continue his existing health-insurance coverage pursuant to COBRA,
the Corporation will pay his monthly COBRA premiums for the eighteen-month
period commencing the first full month after the Date of Resignation and until
and unless Mr. Powell becomes covered under the health-insurance plan of another
employer or through self-employment.  Mr. Powell will promptly notify the PG&E
Corporation’s Human Resources Officer if he becomes employed within that period.
 
3.           Defense and indemnification in third-party claims.  The Corporation
and/or its parent, affiliate, or subsidiary will provide Mr. Powell 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 Corporation and/or its parent, affiliate
or subsidiary, in accordance with the terms of the resolution of the Board of
Directors of PG&E Corporation dated December 18, 1996.
 
4.           Cooperation with legal proceedings.  Mr. Powell will, upon
reasonable notice, furnish information and proper assistance to the Corporation
and/or its parent, affiliate or subsidiary (including truthful testimony and
document production) as may reasonably be required by them or any of them in
connection with any legal, administrative or regulatory proceeding 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 Corporation and/or its parent,
affiliate or subsidiary will pay all reasonable expenses incurred by Mr. Powell
in complying with this paragraph.
 
5.           Release of claims and covenant not to sue.
 
a.           In consideration of the separation benefits and other benefits the
Corporation is providing under this Agreement, Mr. Powell, 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
Corporation or its predecessors, parent, affiliates, subsidiaries, shareholders,
 
 
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owners, directors, officers, employees, agents, attorneys, successors, or
assigns.  These released claims include, without limitation, any claims arising
from or related to Mr. Powell’s employment with the Corporation, 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.           Mr. Powell 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 Mr. Powell specifically waives all rights under Section 1542 of the
California Civil Code which provides that:
 
 
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 HER SETTLEMENT WITH
THE DEBTOR.

 
c.           With respect to the claims released in the preceding paragraphs,
Mr. Powell will not initiate or maintain any legal or administrative action or
proceeding of any kind against the Corporation 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 permitted by law) assist
or participate in any such proceedings, including any proceedings brought by any
third parties.
 
6.           Re-employment.  Mr. Powell will not seek any future re-employment
with the Corporation, its parent or any of its subsidiaries or affiliates.  This
paragraph will not, however, preclude Mr. Powell from accepting an offer of
future employment from the Corporation, its parent or any of its subsidiaries or
affiliates.
 
7.           Non-disclosure.
 
a.           Mr. Powell will not disclose, publicize, or circulate to anyone in
whole or in part, any information concerning the existence, terms, and/or
conditions of this Agreement without the express written consent of the PG&E
Corporation’s Chief Legal Officer unless otherwise required or permitted by
law.  Notwithstanding the preceding sentence, Mr. Powell may disclose the terms
and conditions of this Agreement to his family members, and any attorneys or tax
advisors, if any, to whom there is a bona fide need for disclosure in order for
them to render professional services to him, provided that the person first
agrees to keep the information confidential and not to make any disclosure of
the terms and conditions of this Agreement unless otherwise required or
permitted by law.
 
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b.           Mr. Powell will not use, disclose, publicize, or circulate any
confidential or proprietary information concerning the Corporation or its
subsidiaries or affiliates, which has come to his attention during his
employment with the Corporation, unless doing so is expressly authorized in
writing by the PG&E Corporation’s Chief Legal Officer, or is otherwise required
or permitted by law.  Before making any legally-required or permitted
disclosure, Mr. Powell will give the Corporation notice at least ten (10)
business days in advance.
 
8.           No unfair competition.
 
a.           Mr. Powell will not engage in any unfair competition against the
Corporation, its parent or any of its subsidiaries or affiliates.
 
b.           For a period of one year after the Effective Date, Mr. Powell 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:
 
 
(1)
any existing customer of the Corporation or its parent, affiliates or
subsidiaries;

 
 
(2)
any prospective customer of the Corporation or its parent, affiliates or
subsidiaries about whom Mr. Powell acquired information as a result of any
solicitation efforts by the Corporation or its parent, affiliates or
subsidiaries, or by the prospective customer, during Mr. Powell’s employment
with the Corporation;

 
 
(3)
any existing vendor of the Corporation or its parent, affiliates or
subsidiaries;

 
 
(4)
any prospective vendor of the Corporation or its parent, affiliates or
subsidiaries, about whom Mr. Powell acquired information as a result of any
solicitation efforts by the Corporation or its parent, affiliates or
subsidiaries, or by the prospective vendor, during Mr. Powell’s employment with
the Corporation;

 
 
(5)
any existing employee, agent or consultant of the Corporation or its parent,
affiliates or subsidiaries, to terminate or otherwise alter the person’s or
entity’s employment, agency or consultant relationship with the Corporation or
its parent, affiliates or subsidiaries; or

 
 
(6)
any existing employee, agent or consultant of the Corporation 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
Corporation or its parent, affiliates or subsidiaries.

 

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9.           Material breach by Employee.  In the event that Mr. Powell breaches
any material provision of this Agreement, including but not necessarily limited
to paragraphs 4, 5, 6, 7, and/or 8, the Corporation will have no further
obligation to pay or provide to him any unpaid amounts or benefits specified in
this Agreement and will be entitled to immediate return of any and all amounts
or benefits previously paid or provided to him under this Agreement and to
recalculate any future pension benefit entitlement without the additional
credited age he received or would have received under this Agreement.  Despite
any breach by Mr. Powell, 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 Mr. Powell of any of the
provisions in paragraphs 4, 5, 6, 7, and/or 8, the Corporation 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 Corporation will also be entitled to specific performance
by Mr. Powell of his obligations under paragraphs 4, 5, 6, 7, and/or
8.  Pursuant to paragraph 14, and except as otherwise prohibited or limited by
law, Mr. Powell will also be liable for any litigation costs and expenses that
the Corporation incurs in successfully seeking enforcement of its rights under
this Agreement, including reasonable attorney’s fees.
 
10.           Material breach by the Corporation.  Mr. Powell will be entitled
to recover actual damages in the event of any material breach of this Agreement
by the Corporation, 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 Corporation of any of its material obligations to him under this
Agreement, Mr. Powell will be entitled to seek, in addition to any other
remedies provided in this Agreement, specific performance of the Corporation’s
obligations and any other applicable equitable or injunctive relief.  Pursuant
to paragraph 14, and except as prohibited or limited by law, the Corporation
will also be liable for any litigation costs and expenses that Mr. Powell incurs
in successfully seeking enforcement of his rights under this Agreement,
including reasonable attorney’s fees.  Despite any breach by the Corporation,
its other duties and obligations under this Agreement will remain in full force
and effect.
 
11.            No admission of liability.  This Agreement is not, and will not
be considered, an admission of liability or of a violation of any applicable
contract, law, rule, regulation, or order of any kind.
 
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 Mr.
Powell with any different severance arrangements).  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.
 

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13.           Severability.  If any provision of this Agreement is determined to
be invalid, void, or unenforceable, the remaining provisions will remain in full
force and effect except that, should paragraphs 4, 5, 6, 7, and/or 8 be held
invalid, void or unenforceable, either jointly or separately, the Corporation
will be entitled to rescind the Agreement and/or recover from Mr. Powell any
payments made and benefits provided to him under this Agreement.
 
14.           Arbitration.  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, Mr. Powell’s employment
with the Corporation (or with the employing subsidiary), the separation of Mr.
Powell from that employment and from his positions as an officer and/or director
of the Corporation or any subsidiary or affiliate, or any claims for benefits,
will be resolved exclusively by final and binding arbitration using a
three-member arbitration panel in accordance with the Commercial Arbitration
Rules of the American Arbitration Association currently in effect, provided,
however, that in rendering their award, the arbitrators will be limited to
accepting the position of Mr. Powell or the Corporation.  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.  The prevailing party in any dispute or controversy covered by
this paragraph, or with respect to any request for specific performance,
injunctive or other equitable relief, will be entitled to recover, in addition
to any other available remedies specified in this Agreement, all litigation
expenses and costs, including any arbitrator, administrative or filing fees and
reasonable attorneys’ fees, except as prohibited or limited by law.  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 arbitrators’ award in
any court of competent jurisdiction.  Subject to the arbitration provisions of
this paragraph, the sole jurisdiction and venue for any action related to the
subject matter of this Agreement will be the California state and federal courts
having within their jurisdiction the location of the Corporation’s principal
place of business in California at the time of such action, 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.
 
 
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17.           Acceptance of Agreement.
 
a.           Mr. Powell 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.  The provisions of the Agreement are, however, not
subject to negotiation.  After signing the Agreement, Mr. Powell will have an
additional seven (7) days in which to revoke in writing acceptance of this
Agreement.  To revoke, Mr. Powell 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 Mr. Powell does not submit a timely revocation, the Effective
Date of this Agreement will be the eighth day after he has signed it.
 
b.           Mr. Powell 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:
  3/6/08                          .                
 
PG&E CORPORATION
             
By:      JOHN R. SIMON                  
Dated:
March 6, 2008             .                 
 
 
G. ROBERT POWELL
 
     
G. ROBERT POWELL                       

 
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