EXHIBIT 10.10

SEMPRA ENERGY
SEVERANCE PAY AGREEMENT

THIS AGREEMENT

(this "Agreement"), dated as of August 18, 2004 (the "Effective Date") is made
by and between SEMPRA ENERGY, a California corporation, and NEAL SCHMALE (the
"Executive").

WHEREAS

, the Executive is currently employed by Sempra Energy or a subsidiary of Sempra
Energy (Sempra Energy and its subsidiaries are hereinafter collectively referred
to as the "Company") as Executive Vice President and Chief Financial Officer;
and

WHEREAS

, the Board of Directors of Sempra Energy (the "Board") has determined that it
is in the best interests of the Company to institute formalized severance
arrangements for certain of the executives of the Company, including the
Executive.

NOW, THEREFORE

, in consideration of the premises and mutual covenants herein contained, the
Company and the Executive hereby agree as follows:

Definitions

. For purposes of this Agreement, the following capitalized terms have the
meanings set forth below:

"Accounting Firm" has the meaning assigned thereto in Section 9(b) hereof.

"Act" has the meaning assigned thereto in Section 2(b) hereof.

"Affiliate" has the meaning set forth in Rule 12b-2 promulgated under the
Exchange Act.

"Annual Base Salary" has the meaning assigned thereto in Section 2(a) hereof.

"Beneficial Owner" has the meaning set forth in Rule 13d-3 promulgated under the
Exchange Act.

"Buyer" has the meaning assigned thereto in Section 17(i) hereof.

"Cause" means (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 3 hereof),
(ii) the Executive's commission of one or more acts of moral turpitude that
constitute a violation of applicable law (including but not limited to a felony)
which have or result in an adverse effect on the Company, monetarily or
otherwise, or one or more significant acts of dishonesty or (iii) the
Executive's refusal to abstain from voting as a member of the Board, if
applicable, on any of the following matters: (A) executive compensation, (B)
assignments to committees of the Board or (C) nomination, appointment or
election of directors. For purposes of clause (i) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless done,
or omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive's act, or failure to act, was in the best interests of
the Company. Notwithstanding the foregoing, the Executive shall not be deemed
terminated for Cause pursuant to clause (i) of this definition unless and until
the Executive shall have been provided with reasonable notice of and, if
possible, a reasonable opportunity to cure the facts and circumstances claimed
to provide a basis for termination of the Executive's employment for Cause.

"Change in Control" shall be deemed to have occurred when:

 a. Any Person is or becomes the Beneficial Owner, directly or indirectly, of
    securities of the Company (not including in the securities beneficially
    owned by such Person any securities acquired directly from the Company or
    its Affiliates other than in connection with the acquisition by the Company
    or its Affiliates of a business) representing twenty percent (20%) or more
    of the combined voting power of the Company's then outstanding securities;
    or
 b. The following individuals cease for any reason to constitute a majority of
    the number of directors then serving: individuals who, on the Effective
    Date, constitute the Board and any new director (other than a director whose
    initial assumption of office is in connection with an actual or threatened
    election contest, including, but not limited to, a consent solicitation
    relating to the election of directors of the Company) whose appointment or
    election by the Board or nomination for election by the Company's
    shareholders was approved or recommended by a vote of at least two-thirds
    (2/3) of the directors then still in office who either were directors on the
    date hereof or whose appointment, election or nomination for election was
    previously so approved or recommended; or
 c. There is consummated a merger or consolidation of the Company or any direct
    or indirect subsidiary of the Company with any other corporation, other than
    (A) a merger or consolidation which would result in the voting securities of
    the Company outstanding immediately prior to such merger or consolidation
    continuing to represent (either by remaining outstanding or by being
    converted into voting securities of the surviving entity or any parent
    thereof), in combination with the ownership of any trustee or other
    fiduciary holding securities under an employee benefit plan of the Company,
    at least sixty percent (60%) of the combined voting power of the securities
    of the Company or such surviving entity or any parent thereof outstanding
    immediately after such merger or consolidation, or (B) a merger or
    consolidation effected to implement a recapitalization of the Company (or
    similar transaction) in which no Person is or becomes the Beneficial Owner,
    directly or indirectly, of securities of the Company (not including in the
    securities beneficially owned by such Person any securities acquired
    directly from the Company or its Affiliates other than in connection with
    the acquisition by the Company or its Affiliates of a business) representing
    twenty percent (20%) or more of the combined voting power of the Company's
    then outstanding securities; or
 d. The shareholders of the Company approve a plan of complete liquidation or
    dissolution of the Company or there is consummated an agreement for the sale
    or disposition by the Company of all or substantially all of the Company's
    assets, other than a sale or disposition by the Company of all or
    substantially all of the Company's assets to an entity, at least sixty
    percent (60%) of the combined voting power of the voting securities of which
    are owned by shareholders of the Company in substantially the same
    proportions as their ownership of the Company immediately prior to such
    sale.

    "Change in Control Date" means the date on which a Change in Control occurs.

    "Code" means the Internal Revenue Code of 1986, as amended.

    "Compensation Committee" means the compensation committee of the Board.

    "Consulting Period" has the meaning assigned thereto in Section 13(e)
    hereof.

    "Date of Termination" has the meaning assigned thereto in Section 3(b)
    hereof.

    "Disability" has the meaning set forth in the Company's long-term disability
    plan or its successor; provided, however, that the Board may not terminate
    the Executive's employment hereunder by reason of Disability unless (i) at
    the time of such termination there is no reasonable expectation that the
    Executive will return to work within the next ninety (90) day period and
    (ii) such termination is permitted by all applicable disability laws.

    "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
    the applicable rulings and regulations thereunder.

    "Excise Tax" has the meaning assigned thereto in Section 9(a) hereof.

    "Good Reason" means:

 e. Prior to a Change in Control, the occurrence of any of the following without
    the prior written consent of the Executive, unless such act or failure to
    act is corrected prior to the Date of Termination specified in the Notice of
    Termination (as discussed in Section 3 hereof):
     i.    the failure of the Executive, except pursuant to his voluntary
           resignation, to be elected to the position of Chief Operating Officer
           or higher position upon the retirement or other termination of the
           Company's current Chairman and Chief Executive Officer;
     ii.   the assignment to the Executive of any duties materially inconsistent
           with the range of duties and responsibilities appropriate to a senior
           executive within the Company (such range determined by reference to
           past, current and reasonable practices within the Company);
     iii.  a material reduction in the Executive's overall standing and
           responsibilities within the Company, but not including (A) a mere
           change in title or (B) a transfer within the Company, which, in the
           case of both (A) and (B), does not adversely affect the Executive's
           overall status within the Company; or the assignment to the Executive
           of any position not reporting to the Company's Chief Executive
           Officer;
     iv.   a material reduction by the Company in the Executive's aggregate
           annualized compensation and benefits opportunities, except for
           across-the-board reductions (or modifications of benefit plans)
           similarly affecting all similarly situated executives (both of the
           Company and of any Person then in control of the Company) of
           comparable rank with the Executive;
     v.    the failure by the Company to pay to the Executive any portion of the
           Executive's current compensation and benefits or any portion of an
           installment of deferred compensation under any deferred compensation
           program of the Company within thirty (30) days of the date such
           compensation is due;
     vi.   any purported termination of the Executive's employment that is not
           effected pursuant to a Notice of Termination satisfying the
           requirements of Section 3 hereof; for purposes of this Agreement, no
           such purported termination shall be effective;
     vii.  the failure by the Company to obtain a satisfactory agreement from
           any successor of the Company requiring such successor to assume and
           agree to perform the Company's obligations under this Agreement, as
           contemplated in Section 15(c) hereof;
     viii. the failure by the Company to provide the indemnification and D&O
           insurance protection Section 10 of this Agreement requires it to
           provide; or
     ix.   the failure by the Company to comply with any material provision of
           this Agreement.

 f. From and after a Change in Control, the occurrence of any of the following
    without the prior written consent of the Executive, unless such act or
    failure to act is corrected prior to the Date of Termination specified in
    the Notice of Termination (as discussed in Section 3 hereof):
     i.    the failure of the Executive, except pursuant to his voluntary
           resignation, to be elected to the position of Chief Operating Officer
           or higher position upon the retirement or other termination of the
           Company's current Chairman and Chief Executive Officer;
     ii.   an adverse change in the Executive's title, authority, duties,
           responsibilities or reporting lines as in effect immediately prior to
           the Change in Control;
     iii.  a reduction by the Company in the Executive's aggregate annualized
           compensation opportunities, except for across-the-board reductions in
           base salaries, annual bonus opportunities or long-term incentive
           compensation opportunities of less than ten percent (10%) similarly
           affecting all similarly situated executives (both of the Company and
           of any Person then in control of the Company) of comparable rank with
           the Executive; or the failure by the Company to continue in effect
           any material benefit plan in which the Executive participates
           immediately prior to the Change in Control, unless an equitable
           arrangement (embodied in an ongoing substitute or alternative plan)
           has been made with respect to such plan, or the failure by the
           Company to continue the Executive's participation therein (or in such
           substitute or alternative plan) on a basis not materially less
           favorable, both in terms of the amount of benefits provided and the
           level of the Executive's participation relative to other
           participants, as existed at the time of the Change in Control;
     iv.   the relocation of the Executive's principal place of employment
           immediately prior to the Change in Control Date (the "Principal
           Location") to a location which is both further away from the
           Executive's residence and more than thirty (30) miles from such
           Principal Location, or the Company's requiring the Executive to be
           based anywhere other than such Principal Location (or permitted
           relocation thereof), 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
           of limited duration and (B) is understood not to be part of the
           Executive's regular duties with the Company;
     v.    the failure by the Company to pay to the Executive any portion of the
           Executive's current compensation and benefits or any portion of an
           installment of deferred compensation under any deferred compensation
           program of the Company within thirty (30) days of the date such
           compensation is due;
     vi.   any purported termination of the Executive's employment that is not
           effected pursuant to a Notice of Termination satisfying the
           requirements of Section 3 hereof; for purposes of this Agreement, no
           such purported termination shall be effective;
     vii.  the failure by the Company to obtain a satisfactory agreement from
           any successor of the Company requiring such successor to assume and
           agree to perform the Company's obligations under this Agreement, as
           contemplated in Section 15(c) hereof;
     viii. the failure by the Company to provide the indemnification and D&O
           insurance protection Section 10 of this Agreement requires it to
           provide; or
     ix.   the failure by the Company to comply with any material provision of
           this Agreement.

Following a Change in Control, the Executive's determination that an act or
failure to act constitutes Good Reason shall be presumed to be valid unless such
determination is deemed to be unreasonable by an arbitrator pursuant to the
procedure described in Section 12 hereof. The Executive's right to terminate the
Executive's employment for Good Reason shall not be affected by the Executive's
incapacity due to physical or mental illness. The Executive's continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder.

"Gross-Up Payment" has the meaning assigned thereto in Section 9(a) hereof.

"Incentive Compensation Awards" means awards granted under Incentive
Compensation Plans providing the Executive with the opportunity to earn, on a
year-by-year basis, annual and long-term incentive compensation.

"Incentive Compensation Plans" means annual incentive compensation plans and
long-term incentive compensation plans of the Company, which long-term incentive
compensation plans may include plans offering stock options, restricted stock
and other long-term incentive compensation.

"Involuntary Termination" means (a) a termination of employment by the Company
other than for Cause, death, or Disability, or (b) the Executive's resignation
of employment with the Company for Good Reason; provided, however, that except
as provided in the last paragraph of Section 6 hereof, a termination of the
Executive's employment by reason of his retirement prior to a Change in Control
shall not constitute an Involuntary Termination hereunder.

"JAMS Rules" has the meaning assigned thereto in Section 12 hereof.

"Notice of Termination" has the meaning assigned thereto in Section 3(a) hereof.

"Payment" has the meaning assigned thereto in Section 9(a) hereof.

"Person" has the meaning set forth in section 3(a)(9) of the Exchange Act, as
modified and used in sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its Affiliates, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, (iv) a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company, or (v) a person or group
as used in Rule 13d-1(b) promulgated under the Exchange Act.

"Post-Change in Control Accrued Obligations" has the meaning assigned thereto in
Section 6(a) hereof.

"Post-Change in Control Severance Payment" has the meaning assigned thereto in
Section 6 hereof.

"Pre-Change in Control Accrued Obligations" has the meaning assigned thereto in
Section 5(a) hereof.

"Pre-Change in Control Severance Payment" has the meaning assigned thereto in
Section 5 hereof.

"Principal Location" has the meaning assigned thereto in clause (b)(iv) of the
definition of Good Reason, above.

"Proprietary Information" has the meaning assigned thereto in Section 13(a)
hereof.

"Release" has the meaning assigned thereto in Section 13(d) hereof.

"SERP" has the meaning assigned thereto in Section 6(b) hereof.

"Underpayment" has the meaning assigned thereto in Section 9(b) hereof.

Compensation
.
Base Salary
. The Executive's annual base salary (the "
Annual Base Salary
") shall be payable in accordance with the Company's general payroll practices
and, upon the Executive's commencement of service as Chief Operating Officer,
shall in no event be less than $750,000. Subject to clauses (a)(iv) and (b)(iii)
of the definition of "Good Reason" in Section 1 hereof, the Board in its
discretion may from time to time direct such upward adjustments in the
Executive's Annual Base Salary as the Board deems to be necessary or desirable,
including, without limitation, adjustments in order to reflect increases in the
cost of living and the Executive's performance. Any increase in the Annual Base
Salary shall not serve to limit or reduce any other obligation of the Company
under this Agreement. For purposes of Sections 3(b), 5, 6, and 13(d) hereof,
reference to the Annual Base Salary shall mean the highest Annual Base Salary
payable to the Executive at any time during the term of this Agreement.
Sarbanes-Oxley Act of 2002
. Notwithstanding anything herein to the contrary, if the Company determines, in
its good faith judgment, that any provision of this Agreement is likely to be
interpreted as a personal loan prohibited by the Sarbanes-Oxley Act of 2002 and
the rules and regulations promulgated thereunder (the "
Act
"), then such provision shall be modified as necessary or appropriate so as to
not violate the Act; and if this cannot be accomplished, then the Company shall
use its reasonable efforts to provide the Executive with similar, but lawful,
substitute benefit(s) at a cost to the Company not to significantly exceed the
amount the Company would have otherwise paid to provide such benefit(s) to the
Executive. In addition, if the Executive is required to forfeit or to make any
repayment of any compensation or benefit(s) to the Company under the Act or any
other law, such forfeiture or repayment shall not constitute Good Reason.

Notice and Date of Termination

.

 a. Any purported termination of the Executive's employment (other than by
    reason of death) shall be communicated by written Notice of Termination from
    one party hereto to the other party hereto in accordance with Section 17(b)
    hereof. For purposes of this Agreement, a "Notice of Termination" shall mean
    a notice that shall indicate the specific termination provision in this
    Agreement relied upon, if any, and shall set forth in reasonable detail the
    facts and circumstances claimed to provide a basis for termination of the
    Executive's employment under the provision so indicated. Further, a Notice
    of Termination for Cause is required to include a copy of a resolution duly
    adopted by the affirmative vote of not less than a majority of the
    independent directors of the Board at a meeting of the Board that was called
    and held no more than ninety (90) days after the date the Board had
    knowledge of the most recent act or omission giving rise to such breach for
    the purpose of considering such termination (after reasonable notice to the
    Executive and an opportunity for the Executive, together with the
    Executive's counsel, to be heard before the Board and, if possible with
    respect to clause (i) of the definition of Cause in Section 1 hereof, to
    cure the breach that was the basis for the Notice of Termination for Cause
    within a reasonable period) finding that, in the good faith opinion of the
    Board, the Executive was guilty of conduct set forth in clause (i) or (ii)
    of the definition of Cause in Section 1 hereof, and specifying the
    particulars thereof in detail. Unless the Board determines otherwise, a
    Notice of Termination by the Executive alleging a termination for Good
    Reason must be made within 180 days of the act or failure to act that the
    Executive alleges to constitute Good Reason.
 b. The date of the Executive's termination of employment with the Company (the
    "Date of Termination") shall be determined as follows: (i) if the
    Executive's employment is terminated by the Company, either with or without
    Cause, the Date of Termination shall be the date specified in the Notice of
    Termination (which, in the case of a termination by the Company other than
    for Cause, shall not be less than two (2) weeks from the date such Notice of
    Termination is given unless the Company elects to pay the Executive, in
    addition to any other amounts payable hereunder, an amount equal to two (2)
    weeks of the Executive's Annual Base Salary in effect on the Date of
    Termination), and (ii) if the basis for the Executive's Involuntary
    Termination is his resignation for Good Reason, the Date of Termination
    shall be determined by the Company, but shall not in any event be less than
    fifteen (15) days nor more than sixty (60) days from the date such Notice of
    Termination is given.

Termination from the Board
. Upon the termination of the Executive's employment for any reason, the
Executive's membership on the Board, the board of directors of any of the
Company's Affiliates, any committees of the Board and any committees of the
board of directors of any of the Company's Affiliates, if applicable, shall be
automatically terminated.
Severance Benefits upon Involuntary Termination Prior to Change in Control

. Notwithstanding any other provision of this Agreement, the Company may
terminate the Executive's employment other than by a termination for Cause, but
only upon the affirmative vote of a majority of the independent directors of the
Board. Except as provided in Section 6 and Section 17(i) hereof, in the event of
the Involuntary Termination of the Executive prior to a Change in Control, the
Company shall pay the Executive, in one lump sum cash payment within thirty (30)
days after the Date of Termination, (A) the full amount of any earned but unpaid
Annual Base Salary through the Date of Termination at the rate in effect on such
date, plus (B) an amount (the "Pre-Change in Control Severance Payment") equal
to the sum of (X) the Executive's Annual Base Salary as in effect on the Date of
Termination and (Y) the greater of his average annual bonus payment for the two
(2) years immediately preceding the Date of Termination or the average of his
target bonuses for the two (2) years immediately preceding the Date of
Termination. In addition to the Pre-Change in Control Severance Payment, the
Executive shall be entitled to the following additional benefits:

Accrued Obligations
. The Company shall pay the Executive a lump sum amount in cash equal to the sum
of (A) the Executive's Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (B) an amount equal to any annual Incentive
Compensation Awards earned with respect to fiscal years ended prior to the year
that includes the Date of Termination to the extent not theretofore paid, (C)
any accrued and unpaid vacation, if any, and (D) reimbursement for unreimbursed
business expenses, if any, properly incurred by the Executive in the performance
of his duties in accordance with policies established from time to time by the
Board. (The amounts specified in clauses (A), (B), (C) and (D) shall be
hereinafter referred to as the "
Pre-Change in Control Accrued Obligations
").
Equity Based Compensation
. The Executive shall retain all rights to any equity-based compensation awards
to the extent set forth in the applicable plan and/or award agreement.
Welfare Benefits
. Subject to Section 11 below, for a period of one (1) year following the Date
of Termination (and an additional one (1) year if the Executive provides
consulting services under Section 13(e) hereof), the Executive and his
dependents shall be provided with health insurance benefits substantially
similar to those provided to the Executive and his dependents immediately prior
to the Date of Termination;
provided
,
however
, that such benefits shall be provided on substantially the same terms and
conditions and at the same cost to the Executive as in effect immediately prior
to the Date of Termination.
Outplacement Services
. The Executive shall receive outplacement services suitable to his position for
a period of twenty-four (24) months following the Date of Termination, in the
aggregate amount not to exceed $50,000. Notwithstanding the foregoing, the
Executive shall cease to receive outplacement services on the date the Executive
accepts employment with a subsequent employer.
Financial Planning Services
. The Executive shall receive financial planning services for a period of
twenty-four (24) 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.
Deferral of Payments
. The Executive shall have the right to elect to defer any lump sum payments
received by the Executive pursuant to this Section 5 under the terms and
conditions of the Company's nonqualified deferred compensation plan.

Severance Benefits upon Involuntary Termination in Connection with and after
Change in Control

. Notwithstanding any other provision of this Agreement, the Company may
terminate the Executive's employment other than by a termination for Cause, but
only upon the affirmative vote of a majority of the independent directors of the
Board. Notwithstanding the provisions of Section 5 above, in the event of the
Involuntary Termination of the Executive within two (2) years following a Change
in Control, in lieu of the payments described in Section 5 above, the Company
shall pay the Executive, in one lump sum cash payment within thirty (30) days
after the Date of Termination, (A) the full amount of any earned but unpaid
Annual Base Salary through the Date of Termination at the rate in effect on such
date, plus (B) an amount (the "Post-Change in Control Severance Payment") equal
to two (2) times the sum of (X) the Executive's Annual Base Salary as in effect
immediately prior to the Change in Control or the Date of Termination, whichever
is greater, and (Y) the greater of his average annual bonus payment for the two
(2) years immediately preceding the Date of Termination or the average of his
target bonuses for the two (2) years immediately preceding the Date of
Termination. In addition to the Post-Change in Control Severance Payment, the
Executive shall be entitled to the following additional benefits:

Accrued Obligations
. The Company shall pay the Executive a lump sum amount in cash equal to the sum
of (A) the Executive's Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (B) an amount equal to any annual Incentive
Compensation Awards earned with respect to fiscal years ended prior to the year
that includes the Date of Termination to the extent not theretofore paid, (C)
any accrued and unpaid vacation, if any, (D) reimbursement for unreimbursed
business expenses, if any, properly incurred by the Executive in the performance
of his duties in accordance with policies established from time to time by the
Board, and (E) an amount equal to the target amount payable under any annual
Incentive Compensation Awards for the fiscal year that includes the Date of
Termination or, if greater, the average of the three (3) years' highest gross
annual bonus awards, not necessarily consecutive, paid by the Company (or its
predecessor) to the Executive under the Company's Executive Incentive Plan (or
any predecessor or successor plan) in the five (5) years preceding the year of
Termination multiplied by a fraction the numerator of which shall be the number
of days from the beginning of such fiscal year to and including the Date of
Termination and the denominator of which shall be 365, in each case to the
extent not theretofore paid. (The amounts specified in clauses (A), (B), (C),
(D) and (E) shall be hereinafter referred to as the "
Post-Change in Control Accrued Obligations
").
Pension Supplement
. The Company shall pay the Executive's benefits under Section 3.1 of the Sempra
Energy Supplemental Executive Retirement Plan (the "
SERP
") in the form of a lump sum;
provided, however,
that (A) the Company shall provide the Executive with such additional years of
age and service credit for purposes of the calculation of retirement benefits
under the SERP as if he had remained employed for no less than three (3) years,
and (B) the applicable early retirement factor determined in accordance with
Appendix A of the SERP shall be applied to the Executive's age and years of
service only after he is credited with the additional age and service described
above.
Equity-Based Compensation
. Notwithstanding the provisions of any applicable equity-compensation plan or
award agreement to the contrary, all equity-based Incentive Compensation Awards
(including, without limitation, stock options, stock appreciation rights,
restricted stock awards, restricted stock units, performance share awards,
awards covered under Section 162(m) of the Code, and dividend equivalents) held
by the Executive shall immediately vest and become exercisable or payable, as
the case may be, as of the Date of Termination, to be exercised or paid, as the
case may be, in accordance with the terms of the applicable Incentive
Compensation Plan and Incentive Compensation Award agreement, and any
restrictions on any such Incentive Compensation Awards shall automatically
lapse;
provided,
however
, that any such awards granted on or after June 26, 1998 shall remain
outstanding and exercisable until the earlier of (A) the later of eighteen (18)
months following the Date of Termination or the period specified in the
applicable Incentive Compensation Award agreements or (B) the expiration of the
original term of such Incentive Compensation Award (it being understood that all
Incentive Compensation Awards granted prior to or after June 26, 1998 shall
remain outstanding and exercisable for a period that is no less than that
provided for in the applicable agreement in effect as of the date of grant).
Welfare Benefits
. Subject to Section 11 below, for a period of two (2) years following the Date
of Termination (and an additional one (1) year if the Executive provides
consulting services under Section 13(e) hereof), the Executive and his
dependents shall be provided with life, disability, accident and health
insurance benefits substantially similar to those provided to the Executive and
his dependents immediately prior to the Date of Termination or the Change in
Control Date, whichever is more favorable to the Executive;
provided
,
however
, that such benefits shall be provided on substantially the same terms and
conditions and at the same cost to the Executive as in effect immediately prior
to the Date of Termination or the Change in Control Date, whichever is more
favorable to the Executive.
Outplacement Services
. The Executive shall receive outplacement services suitable to his position for
a period of thirty-six (36) months following the Date of Termination, in the
aggregate amount not to exceed $50,000. Notwithstanding the foregoing, the
Executive shall cease to receive outplacement services on the date the Executive
accepts employment with a subsequent employer.
Financial Planning Services
. The Executive shall receive financial planning services for a period of
thirty-six (36) 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.
Deferral of Payments
. The Executive shall have the right to elect to defer any lump sum payments
received by the Executive pursuant to this Section 6 under the terms and
conditions of the Company's nonqualified deferred compensation plan.

Notwithstanding anything contained herein, if a Change in Control occurs and the
Executive's employment with the Company is terminated by reason of an
Involuntary Termination prior to the Change in Control Date, and if such
termination of employment (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 the
Executive shall, in lieu of the payments described in Section 5 hereof, be
entitled to the Post-Change in Control Severance Payment and the additional
benefits described in this Section 6 as if such Involuntary Termination had
occurred within two (2) years following the Change in Control.

Severance Benefits upon Termination by the Company for Cause or by the Executive
Other than for Good Reason
. If the Executive's employment shall be terminated for Cause, or if the
Executive terminates employment other than for Good Reason, the Company shall
have no further obligations to the Executive under this Agreement other than the
Pre-Change in Control Accrued Obligations and any amounts or benefits described
in Section 10 hereof.
Severance Benefits upon Termination due to Death or Disability
. If the Executive's employment shall terminate by reason of death or
Disability, the Company shall pay the Executive or his estate, as the case may
be, the Post-Change in Control Accrued Obligations and, solely in the case of
termination by reason of Disability, the Pension Supplement described in Section
6(b) hereof, and any amounts or benefits described in Section 10 hereof. Such
payments shall be in addition to those rights and benefits to which the
Executive or his estate may be entitled under the relevant Company plans or
programs.
Certain Additional Payments by the Company
.
 a. Anything in this Agreement to the contrary notwithstanding and except as set
    forth below, in the event it shall be determined that any payment or
    distribution in the nature of compensation (within the meaning of Section
    280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid
    or payable pursuant to this Agreement or otherwise (the "Payment") would be
    subject (in whole or in part) to the excise tax imposed by Section 4999 of
    the Code, together with any interest or penalties imposed with respect to
    such excise tax (collectively, the "Excise Tax"), then the Executive shall
    be entitled to receive an additional payment (the "Gross-Up Payment") in an
    amount such that, after payment by the Executive of all taxes (and any
    interest or penalties imposed with respect to such taxes), including,
    without limitation, any income taxes (and any interest and penalties imposed
    with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
    Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
    imposed upon the Payment. The Company's obligation to make Gross-Up Payments
    under this Section 9 shall not be conditioned upon the Executive's
    termination of employment. For purposes of determining the amount of any
    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 9, net of the maximum reduction in
    federal income taxes which could be obtained from deduction of such state
    and local taxes, and taking into consideration the phase-out of the
    Executive's itemized deductions under federal income tax law.
 b. Subject to the provisions of Section 9(c) below, all determinations required
    to be made under this Section 9, including whether and when a Gross-Up
    Payment is required, the amount of such Gross-Up Payment and the assumptions
    to be utilized in arriving at such determination, shall be made by a
    nationally recognized accounting firm as may be agreed by the Company and
    the Executive (the "Accounting Firm"); provided, that the Accounting Firm's
    determination shall be made based upon "substantial authority" within the
    meaning of Section 6662 of the Code. The Accounting Firm shall provide
    detailed supporting calculations to both the Company and the Executive
    within fifteen (15) business days of the receipt of notice from the
    Executive that there has been a Payment or such earlier time as is requested
    by the Company. All fees and expenses of the Accounting Firm shall be borne
    solely by the Company. Any Gross-Up Payment, as determined pursuant to this
    Section 9, shall be paid by the Company to the Executive within five (5)
    days of the receipt of the Accounting Firm's determination. Any
    determination by the Accounting Firm shall be binding upon the Company and
    the Executive. As a result of the uncertainty in the application of Section
    4999 of the Code at the time of the initial determination by the Accounting
    Firm hereunder, it is possible that Gross-Up Payments that will not have
    been made by the Company should have been made (the "Underpayment"),
    consistent with the calculations required to be made hereunder. In the event
    the Company exhausts its remedies pursuant to Section 9(c) below and the
    Executive thereafter is required to make a payment of any Excise Tax, the
    Accounting Firm shall determine the amount of the Underpayment that has
    occurred, and any such Underpayment shall be promptly paid by the Company to
    or for the benefit of the Executive.
 c. The Executive shall notify the Company in writing of any claim by the
    Internal Revenue Service that, if successful, would require the payment by
    the Company of the Gross-Up Payment. Such notification shall be given as
    soon as practicable, but no later than ten (10) business days after the
    Executive is informed in writing of such claim. The Executive shall apprise
    the Company of the nature of such claim and the date on which such claim is
    requested to be paid. The Executive shall not pay such claim prior to the
    expiration of the thirty (30) day period following the date on which the
    Executive gives such notice to the Company (or such shorter period ending on
    the date that any payment of taxes with respect to such claim is due). If
    the Company notifies the Executive in writing prior to the expiration of
    such period that the Company desires to contest such claim, the Executive
    shall:
     i.   give the Company any information reasonably requested by the Company
          relating to such claim,
     ii.  take such action in connection with contesting such claim as the
          Company shall reasonably request in writing from time to time,
          including, without limitation, accepting legal representation with
          respect to such claim by an attorney reasonably selected by the
          Company,
     iii. cooperate with the Company in good faith in order effectively to
          contest such claim, and
     iv.  permit the Company to participate in any proceedings relating to such
          claim;

    provided, however

    , that the Company shall bear and pay directly all costs and expenses
    (including additional interest and penalties) incurred in connection with
    such contest, and shall indemnify and hold the Executive harmless, on an
    after-tax basis, for any Excise Tax, income tax or any other taxes
    (including interest and penalties) imposed as a result of such
    representation and payment of costs and expenses. Without limitation on the
    foregoing provisions of this Section 9(c), the Company shall control all
    proceedings taken in connection with such contest, and, at its sole
    discretion, may pursue or forgo any and all administrative appeals,
    proceedings, hearings and conferences with the applicable taxing authority
    in respect of such claim and may, at its sole discretion, either direct the
    Executive to pay the tax claimed and sue for a refund or contest the claim
    in any permissible manner, and the Executive agrees to prosecute such
    contest to a determination before any administrative tribunal, in a court of
    initial jurisdiction and in one or more appellate courts, as the Company
    shall determine;
    provided, however
    , that if the Company directs the Executive to pay such claim and sue for a
    refund, the Company shall advance the amount of such payment to the
    Executive, on an interest-free basis, and shall indemnify and hold the
    Executive harmless, on an after-tax basis, from any Excise Tax, income tax
    or any other taxes (including interest or penalties) imposed with respect to
    such advance or with respect to any imputed income in connection with such
    advance; and
    provided, further
    , that any extension of the statute of limitations relating to payment of
    taxes for the taxable year of the Executive with respect to which such
    contested amount is claimed to be due is limited solely to such contested
    amount. Furthermore, the Company's control of the contest shall be limited
    to issues with respect to which the Gross-Up Payment would be payable
    hereunder, and the Executive shall be entitled to settle or contest, as the
    case may be, any other issue raised by the Internal Revenue Service or any
    other taxing authority.

    

 d. If, after the receipt by the Executive of a Gross-Up Payment or an amount
    advanced by the Company pursuant to Section 9(c) above, the Executive
    becomes entitled to receive any refund with respect to the Excise Tax to
    which such Gross-Up Payment relates or with respect to such claim, the
    Executive shall (subject to the Company's complying with the requirements of
    Section 9(c) above, if applicable) promptly pay to the Company the amount of
    such refund (together with any interest paid or credited thereon after taxes
    applicable thereto). If, after the receipt by the Executive of an amount
    advanced by the Company pursuant to Section 9(c) above, a determination is
    made that the Executive shall not be entitled to any refund with respect to
    such claim and the Company does not notify the Executive in writing of its
    intent to contest such denial of refund prior to the expiration of thirty
    (30) days after such determination, then such advance shall be forgiven and
    shall not be required to be repaid, and the amount of such advance shall
    offset, to the extent thereof, the amount of Gross-Up Payment required to be
    paid.
 e. Notwithstanding any other provision of this Section 9, the Company may, in
    its sole discretion, withhold and pay over to the Internal Revenue Service
    or any other applicable taxing authority, for the benefit of the Executive,
    all or any portion of any Gross-Up Payment, and the Executive hereby
    consents to such withholding. If such payment is made by the Company to the
    Internal Revenue Service or other applicable taxing authority, then the
    Executive shall not be entitled to payment pursuant to Section 9(b) above.
 f. Any other liability for unpaid or unwithheld Excise Taxes shall be borne
    exclusively by the Company, in accordance with Section 3403 of the Code. The
    foregoing sentence shall not in any manner relieve the Company of any of its
    obligations under this Agreement.

Nonexclusivity of Rights
. Nothing in this Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, plan, program, policy or practice provided
by the Company and for which the Executive may qualify (except with respect to
any benefit to which the Executive has waived his rights in writing), including,
without limitation, any and all indemnification arrangements in favor of the
Executive (whether under agreements or under the Company's charter documents or
otherwise), and insurance policies covering the Executive, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
other contract or agreement entered into after the Effective Date with the
Company. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any benefit, plan, policy, practice or program of, or
any contract or agreement entered into with, the Company shall be payable in
accordance with such benefit, plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement. At all times during
the Executive's employment with the Company and thereafter, the Company shall
provide the Executive with indemnification and D&O insurance insuring the
Executive against insurable events which occur or have occurred while the
Executive was a director or executive officer of the Company, on terms and
conditions that are at least as generous as that then provided to any other
current or former director or executive officer of the Company or any Affiliate.
Full Settlement; Mitigation
. The Company's obligation to make the payments provided for in this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others, provided that nothing
herein shall preclude the Company from separately pursuing recovery from the
Executive based on any such claim. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts (including amounts for damages for breach) payable to the Executive
under any of the provisions of this Agreement, and such amounts shall not be
reduced whether or not the Executive obtains other employment.
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 in San Diego, California in accordance with the
then existing JAMS arbitration rules applicable to employment disputes (the
"JAMS Rules"); provided that, notwithstanding any provision in such rules to the
contrary, in all cases the parties shall be entitled to reasonable discovery. In
the event of such an arbitration proceeding, the Executive and the Company shall
select a mutually acceptable neutral arbitrator from among the JAMS panel of
arbitrators. In the event the Executive and the Company cannot agree on an
arbitrator, the arbitrator shall be selected in accordance with the then
existing JAMS Rules. 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 to the extent necessary
to enforce any arbitration award in a court of competent jurisdiction. Except as
provided herein, the Federal Arbitration Act shall govern the interpretation of,
enforcement of and all proceedings under this agreement to arbitrate. 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. The Executive shall not be required to pay any arbitration fee or cost
that is unique to arbitration or greater than any amount he would be required to
pay to pursue his claims in a court of competent jurisdiction.

Executive's Covenants
.
Confidentiality
. The Executive acknowledges that in the course of his employment with the
Company, he has acquired non-public privileged or confidential information and
trade secrets concerning the operations, future plans and methods of doing
business ("
Proprietary Information
") of the Company and its Affiliates; and the Executive agrees that it would be
extremely damaging to the Company and its Affiliates if such Proprietary
Information were disclosed to a competitor of the Company and its Affiliates or
to any other person or corporation. The Executive understands and agrees that
all Proprietary Information has been divulged to the Executive in confidence and
further understands and agrees to keep all Proprietary Information secret and
confidential (except for such information which is or becomes publicly available
other than as a result of a breach by the Executive of this provision or
information the Executive is required by any governmental, administrative or
court order to disclose) without limitation in time. In view of the nature of
the Executive's employment and the Proprietary Information the Executive has
acquired during the course of such employment, the Executive likewise agrees
that the Company and its Affiliates would be irreparably harmed by any
disclosure of Proprietary Information in violation of the terms of this
paragraph and that the Company and its Affiliates shall therefore be entitled to
preliminary and/or permanent injunctive relief prohibiting the Executive from
engaging in any activity or threatened activity in violation of the terms of
this paragraph and to any other relief available to them. Inquiries regarding
whether specific information constitutes Proprietary Information shall be
directed to the Company's Senior Vice President, Public Policy (or, if such
position is vacant, the Company's then Chief Executive Officer);
provided
, that the Company shall not unreasonably classify information as Proprietary
Information.
Non-Solicitation of Employees
. The Executive recognizes that he possesses and will possess confidential
information about other employees of the Company and its Affiliates relating to
their education, experience, skills, abilities, compensation and benefits, and
inter-personal relationships with customers of the Company and its Affiliates.
The Executive recognizes that the information he possesses and will possess
about these other employees is not generally known, is of substantial value to
the Company and its Affiliates in developing their business and in securing and
retaining customers, and has been and will be acquired by him because of his
business position with the Company and its Affiliates. The Executive agrees that
at all times during the Executive's employment with the Company and for a period
of one (1) year thereafter, he will not, directly or indirectly, solicit or
recruit any employee of the Company or its Affiliates for the purpose of being
employed by him or by any competitor of the Company or its Affiliates on whose
behalf he is acting as an agent, representative or employee and that he will not
convey any such confidential information or trade secrets about other employees
of the Company and its Affiliates to any other person;
provided, however
, that it shall not constitute a solicitation or recruitment of employment in
violation of this paragraph to discuss employment opportunities with any
employee of the Company or its Affiliates who has either first contacted the
Executive or regarding whose employment the Executive has discussed with and
received the written approval of the Company's Vice President, Human Resources
(or, if such position is vacant, the Company's then Chief Executive Officer),
prior to making such solicitation or recruitment. In view of the nature of the
Executive's employment with the Company, the Executive likewise agrees that the
Company and its Affiliates would be irreparably harmed by any solicitation or
recruitment in violation of the terms of this paragraph and that the Company and
its Affiliates shall therefore be entitled to preliminary and/or permanent
injunctive relief prohibiting the Executive from engaging in any activity or
threatened activity in violation of the terms of this paragraph and to any other
relief available to them.
Survival of Provisions
. The obligations contained in Section 13(a) and Section 13(b) above shall
survive the termination of the Executive's employment within the Company and
shall be fully enforceable thereafter. If it is determined by a court of
competent jurisdiction in any state that any restriction in Section 13(a) or
Section 13(b) above is excessive in duration or scope or is unreasonable or
unenforceable under the laws of that state, it is the intention of the parties
that such restriction may be modified or amended by the court to render it
enforceable to the maximum extent permitted by the law of that state.
Release; Lump Sum Payment
. In the event the Executive's employment is terminated by the Company other
than for Cause, death or Disability or the Executive shall terminate his
employment for Good Reason, if the Executive agrees (i) to the covenants
described in Section 13(a) and Section 13(b) above, (ii) to execute a release
(the "
Release
") of all claims substantially in the form attached hereto as Exhibit A within
forty-five (45) days after the applicable Date of Termination and does not
revoke such release in accordance with the terms thereof, and (iii) to provide
the consulting services described in Section 13(e) below, then in consideration
for such covenants, the Company shall pay the Executive a lump sum amount in
cash equal to the sum of (A) the Executive's Annual Base Salary and (B) the
greater of the Executive's target bonus for the year of termination under the
Company's Executive Incentive Plan (or any successor plan) or the average of the
three (3) years' highest gross annual bonus awards, not necessarily consecutive,
paid by the Company (or its predecessor) to the Executive under the Company's
Executive Incentive Plan (or any predecessor or successor plan) in the five (5)
years preceding the year of termination. The amount specified in this Section
13(d) shall be paid as soon as practicable following the Executive's execution
of the Release, and the Executive shall have the right to elect to defer such
payment under the terms and conditions of the Company's nonqualified deferred
compensation plan.
Consulting
. If the Executive agrees to the covenants described in Section 13(d) above,
then the Executive shall have the obligation to provide consulting services to
the Company as an independent contractor, commencing on the Date of Termination
and ending on the second anniversary of the Date of Termination (the "
Consulting Period
"). The Executive shall hold himself available at reasonable times and on
reasonable notice to render such consulting services as may be so assigned to
him by the Board or the Company's then Chief Executive Officer;
provided, however
, that unless the parties otherwise agree, the consulting services rendered by
the Executive during the Consulting Period shall not exceed twenty (20) hours
each month. The Company agrees to use its best efforts during the Consulting
Period to secure the benefit of the Executive's consulting services so as to
minimize the interference with the Executive's other activities, including
requiring the performance of consulting services at the Company's offices only
when such services may not be reasonably performed off-site by the Executive.

Legal Fees
. In the event of the termination of the Executive's employment within two (2)
years following a Change in Control, the Company shall pay to the Executive all
legal fees and expenses (including but not limited to fees and expenses in
connection with any arbitration) incurred by the Executive in disputing in good
faith any issue arising under this Agreement relating to the termination of the
Executive's employment or in seeking in good faith to obtain or enforce any
benefit or right provided by this Agreement, but in each case only to the extent
the arbitrator or court determines that the Executive had a reasonable basis for
such claim. Notwithstanding the foregoing, in the event of the termination of
the Executive's employment prior to a Change in Control, the Executive, if he is
the prevailing party, shall be entitled to recover all legal fees and expenses
incurred in disputing in good faith any issue arising under this Agreement.
Successors
.
Assignment by Executive
. This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal representatives.
Successors and Assigns of Company
. This Agreement shall inure to the benefit of and be binding upon the Company,
its successors and assigns. The Company may not assign this Agreement to any
person or entity (except for a successor described in Section 15(c) below)
without the Executive's written consent.
Assumption
. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its businesses and/or assets as aforesaid that assumes and agrees
to perform this Agreement by operation of law or otherwise.

Administration Prior to Change in Control
. Prior to a Change in Control, the Compensation Committee shall have full and
complete authority to construe and interpret the provisions of this Agreement,
to determine an individual's entitlement to benefits under this Agreement, to
make in its sole and absolute discretion all determinations contemplated under
this Agreement, to investigate and make factual determinations necessary or
advisable to administer or implement this Agreement, and to adopt such rules and
procedures as it deems necessary or advisable for the administration or
implementation of this Agreement. All determinations made under this Agreement
by the Compensation Committee shall be final and binding on all interested
persons. Prior to a Change in Control, the Compensation Committee may delegate
responsibilities for the operation and administration of this Agreement to one
or more officers or employees of the Company. The provisions of this Section 16
shall terminate and be of no further force and effect upon the occurrence of a
Change in Control.
Miscellaneous
.
    Governing Law
    . This Agreement shall be governed by and construed in accordance with the
    laws of the State of California, without reference to its principles of
    conflict of laws. The captions of this Agreement are not part of the
    provisions hereof and shall have no force or effect. This Agreement may not
    be amended, modified, repealed, waived, extended or discharged except by an
    agreement in writing signed by the party against whom enforcement of such
    amendment, modification, repeal, waiver, extension or discharge is sought.
    No person, other than pursuant to a resolution of the Board or a committee
    thereof, shall have authority on behalf of the Company to agree to amend,
    modify, repeal, waive, extend or discharge any provision of this Agreement
    or anything in reference thereto.
    Notices
    . All notices and other communications hereunder shall be in writing and
    shall be given by hand delivery to the other party or by registered or
    certified mail, return receipt requested, postage prepaid, addressed, in
    either case, to the Company's headquarters or to such other address as
    either party shall have furnished to the other in writing in accordance
    herewith. Notices and communications shall be effective when actually
    received by the addressee.
    Severability
    . The invalidity or unenforceability of any provision of this Agreement
    shall not affect the validity or enforceability of any other provision of
    this Agreement.
    Taxes
    . The Company may withhold from any amounts payable under this Agreement
    such federal, state or local taxes as shall be required to be withheld
    pursuant to any applicable law or regulation.
    No Waiver
    . The Executive's or the Company's failure to insist upon strict compliance
    with any provision hereof or any other provision of this Agreement or the
    failure to assert any right the Executive or the Company may have hereunder,
    including, without limitation, the right of the Executive to terminate
    employment for Good Reason pursuant to Section 1 hereof, or the right of the
    Company to terminate the Executive's employment for Cause pursuant to
    Section 1 hereof shall not be deemed to be a waiver of such provision or
    right or any other provision or right of this Agreement.
    Entire Agreement
    ;
    Exclusive Benefit
    . This instrument contains the entire agreement of the Executive, the
    Company or any predecessor or subsidiary thereof with respect to any
    severance or termination pay. The Pre-Change in Control Severance Payment,
    the Post-Change in Control Severance Payment and all other benefits provided
    hereunder shall be in lieu of any other severance payments to which the
    Executive is entitled under any other severance plan or program or
    arrangement sponsored by the Company, as well as pursuant to any individual
    employment or severance agreement that was entered into by the Executive and
    the Company, and, upon the Effective Date of this Agreement, all such plans,
    programs, arrangements and agreements are hereby automatically superseded
    and terminated.
    No Right of Employment
    . Nothing in this Agreement shall be construed as giving the Executive any
    right to be retained in the employ of the Company or shall interfere in any
    way with the right of the Company to terminate the Executive's employment at
    any time, with or without Cause.
    Unfunded Obligation
    . The obligations under this Agreement shall be unfunded. Benefits payable
    under this Agreement shall be paid from the general assets of the Company.
    The Company shall have no obligation to establish any fund or to set aside
    any assets to provide benefits under this Agreement.
    Termination
    . Notwithstanding anything contained herein, this Agreement shall
    automatically terminate and be of no further force and effect and no
    benefits shall be payable hereunder in the event that the Company sells or
    otherwise disposes of any part of the business or assets of the Company
    (other than such a sale or disposition which is part of a transaction or
    series of transactions which would result in a Change in Control) and as a
    result of such transaction, (i) the Executive becomes an employee of the
    buyer of such business or assets (the "
    Buyer
    ") or (ii) the Executive is offered employment by the Buyer in an executive
    position with reasonably comparable status, compensation, benefits and
    severance agreement and which is consistent with the Executive's experience
    and education, but the Executive declines to accept such offer.
    Term
    . The term of this Agreement shall commence on the Effective Date and shall
    continue until the third (3rd) anniversary of the Effective Date;
    provided, however
    , that commencing on the second (2nd) anniversary of the Effective Date (and
    each anniversary of the Effective Date thereafter), the term of this
    Agreement shall automatically be extended for one (1) additional year,
    unless at least ninety (90) days prior to such date, the Company or the
    Executive shall give written notice to the other party that it or he, as the
    case may be, does not wish to so extend this Agreement. Notwithstanding the
    foregoing, if the Company gives such written notice to the Executive less
    than two (2) years after a Change in Control, the term of this Agreement
    shall be automatically extended until the later of (A) the date that is one
    (1) year after the anniversary of the Effective Date that follows such
    written notice or (B) the second (2nd) anniversary of the Change in Control
    Date.
    Counterparts
    . This Agreement may be executed in several counterparts, each of which
    shall be deemed to be an original but all of which together shall constitute
    one and the same instrument.
    Legal Fees
    . The Company agrees to reimburse the Executive for the reasonable
    attorneys' fees and costs incurred by the Executive in negotiating and
    documenting this Agreement.
 a. IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from
    its Board of Directors, the Company have caused this Agreement to be
    executed as of the day and year first above written.

SEMPRA ENERGY

/S/ G. JOYCE ROWLAND

G. Joyce Rowland

Senior Vice President, Human Resources

 

August 18, 2004

_____________________________________

Date

 

 

 

EXECUTIVE

 

/S/ NEAL SCHMALE

Neal Schmale

 

August 18, 2004

_____________________________________

Date

EXHIBIT A

GENERAL RELEASE

This GENERAL RELEASE (the "Agreement"), dated ___________, is made by and
between ______________________________, a California corporation (the "Company")
and ___________________________ ("you" or "your").

WHEREAS, you and the Company have previously entered into that certain Severance
Pay Agreement dated ____________, 2006 (the "Severance Pay Agreement"); and

WHEREAS, Section 13(d) of the Severance Pay Agreement provides for the payment
of a benefit to you by the Company in consideration for certain covenants,
including your execution and non-revocation of a general release of claims by
you against the Company and its subsidiaries and affiliates.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, you and the Company hereby agree as follows:

ONE: Your signing of this Agreement confirms that your employment with the
Company shall terminate at the close of business on ____________, or earlier
upon our mutual agreement.

TWO: As a material inducement for the payment of the benefit under Section 13 of
that certain Severance Pay Agreement between you and the Company, and except as
otherwise provided in this Agreement, you and the Company hereby irrevocably and
unconditionally release, acquit and forever discharge the other from any and all
Claims either may have against the other. For purposes of this Agreement and the
preceding sentence, the words "Releasee" or "Releasees" and "Claim" or "Claims"
shall have the meanings set forth below:

(a) The words "Releasee" or "Releasees" shall refer to you and to the Company
and each of the Company's owners, stockholders, predecessors, successors,
assigns, agents, directors, officers, employees, representatives, attorneys,
advisors, parent companies, divisions, subsidiaries, affiliates (and agents,
directors, officers, employees, representatives, attorneys and advisors of such
parent companies, divisions, subsidiaries and affiliates) and all persons acting
by, through, under or in concert with any of them.

(b) The words "Claim" or "Claims" shall refer to any charges, complaints,
claims, liabilities, obligations, promises, agreements, controversies, damages,
actions, causes of action, suits, rights, demands, costs, losses, debts and
expenses (including attorneys' fees and costs actually incurred) of any nature
whatsoever, known or unknown, suspected or unsuspected, which you or the Company
now, in the past or, except as limited by law or regulation such as the Age
Discrimination in Employment Act (ADEA), in the future may have, own or hold
against any of the Releasees; provided, however, that the word "Claim" or
"Claims" shall not refer to any charges, complaints, claims, liabilities,
obligations, promises, agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses (including
attorneys' fees and costs actually incurred) arising under [identify severance,
employee benefits, stock option, indemnification and D&O and other agreements
containing duties, rights obligations etc. of either party that are to remain
operative]. Claims released pursuant to this Agreement by you and the Company
include, but are not limited to, rights arising out of alleged violations of any
contracts, express or implied, any tort, any claim that you failed to perform or
negligently performed or breached your duties during employment at the Company,
any legal restrictions on the Company's right to terminate employees or any
federal, state or other governmental statute, regulation, or ordinance,
including, without limitation: (1) Title VII of the Civil Rights Act of 1964
(race, color, religion, sex and national origin discrimination); (2) 42 U.S.C.
Sec. 1981 (discrimination); (3) 29 U.S.C. Sec. 621 634 (age discrimination); (4)
29 U.S.C. Sec. 206(d)(l) (equal pay); (5) 42 U.S.C. Sec. 12101, et seq.
(disability); (6) the California Constitution, Article I, Section 8
(discrimination); (7) the California Fair Employment and Housing Act
(discrimination, including race, color, national origin, ancestry, physical
handicap, medical condition, marital status, religion, sex or age); (8)
California Labor Code Section 1102.1 (sexual orientation discrimination); (9)
Executive Order 11246 (race, color, religion, sex and national origin
discrimination); (10) Executive Order 11141 (age discrimination); (11) Sec. 503
and 504 of the Rehabilitation Act of 1973 (handicap discrimination); (12) The
Worker Adjustment and Retraining Act (WARN Act); (13) the California Labor Code
(wages, hours, working conditions, benefits and other matters); (14) the Fair
Labor Standards Act (wages, hours, working conditions and other matters); the
Federal Employee Polygraph Protection Act (prohibits employer from requiring
employee to take polygraph test as condition of employment); and (15) any
federal, state or other governmental statute, regulation or ordinance which is
similar to any of the statutes described in clauses (1) through (14).

THREE: You and the Company expressly waive and relinquish all rights and
benefits afforded by any statute (including but not limited to Section 1542 of
the Civil Code of the State of California) which limits the effect of a release
with respect to unknown claims. You and the Company do so understanding and
acknowledging the significance of the release of unknown claims and the waiver
of statutory protection against a release of unknown claims (including but not
limited to Section 1542). Section 1542 of the Civil Code of the State of
California states as follows:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

Thus, notwithstanding the provisions of Section 1542 or of any similar statute,
and for the purpose of implementing a full and complete release and discharge of
the Releasees, you and the Company expressly acknowledge that this Agreement is
intended to include in its effect, without limitation, all Claims which are
known and all Claims which you or the Company do not know or suspect to exist in
your or the Company's favor at the time of execution of this Agreement and that
this Agreement contemplates the extinguishment of all such Claims.

FOUR: The parties acknowledge that they might hereafter discover facts different
from, or in addition to, those they now know or believe to be true with respect
to a Claim or Claims released herein, and they expressly agree to assume the
risk of possible discovery of additional or different facts, and agree that this
Agreement shall be and remain effective, in all respects, regardless of such
additional or different discovered facts.

FIVE: You hereby represent and acknowledge that you have not filed any Claim of
any kind against the Company or others released in this Agreement. You further
hereby expressly agree never to initiate against the Company or others released
in this Agreement any administrative proceeding, lawsuit or any other legal or
equitable proceeding of any kind asserting any Claims that are released in this
Agreement.

The Company hereby represents and acknowledges that it has not filed any Claim
of any kind against you or others released in this Agreement. The Company
further hereby expressly agrees never to initiate against you or others released
in this Agreement any administrative proceeding, lawsuit or any other legal or
equitable proceeding of any kind asserting any Claims that are released in this
Agreement.

SIX: You hereby represent and agree that you have not assigned or transferred,
or attempted to have assigned or transfer, to any person or entity, any of the
Claims that you are releasing in this Agreement.

The Company hereby represents and agrees that it has not assigned or
transferred, or attempted to have assigned or transfer, to any person or entity,
any of the Claims that it is releasing in this Agreement.

SEVEN: As a further material inducement to the Company to enter into this
Agreement, you hereby agree to indemnify and hold each of the Releasees harmless
from all loss, costs, damages, or expenses, including without limitation,
attorneys' fees incurred by the Releasees, arising out of any breach of this
Agreement by you or the fact that any representation made in this Agreement by
you was false when made.

As a further material inducement to you to enter into this Agreement, the
Company hereby agrees to indemnify and hold each of the Releasees harmless from
all loss, costs, damages, or expenses, including without limitation, attorneys'
fees incurred by the Releasees, arising out of any breach of this Agreement by
it or the fact that any representation made in this Agreement by it was
knowingly false when made.

EIGHT: You and the Company represent and acknowledge that in executing this
Agreement, neither is relying upon any representation or statement not set forth
in this Agreement or the Severance Agreement.

NINE:

(a) This Agreement shall not in any way be construed as an admission by the
Company that it has acted wrongfully with respect to you or any other person, or
that you have any rights whatsoever against the Company, and the Company
specifically disclaims any liability to or wrongful acts against you or any
other person, on the part of itself, its employees or its agents. This Agreement
shall not in any way be construed as an admission by you that you have acted
wrongfully with respect to the Company, or that you failed to perform your
duties or negligently performed or breached your duties, or that the Company had
good cause to terminate your employment.

(b) If you are a party or are threatened to be made a party to any proceeding by
reason of the fact that you were an officer or director of the Company, the
Company shall indemnify you against any expenses (including reasonable
attorneys' fees; provided, that counsel has been approved by the Company prior
to retention, which approval shall not be unreasonably withheld), judgments,
fines, settlements and other amounts actually or reasonably incurred by you in
connection with that proceeding; provided, that you acted in good faith and in a
manner you reasonably believed to be in the best interest of the Company. The
limitations of California Corporations Code Section 317 shall apply to this
assurance of indemnification.

(c) You agree to cooperate with the Company and its designated attorneys,
representatives and agents in connection with any actual or threatened judicial,
administrative or other legal or equitable proceeding in which the Company is or
may become involved. Upon reasonable notice, you agree to meet with and provide
to the Company or its designated attorneys, representatives or agents all
information and knowledge you have relating to the subject matter of any such
proceeding. The Company agrees to reimburse you for any reasonable costs you
incur in providing such cooperation.

TEN: This Agreement is made and entered into in California. This Agreement shall
in all respects be interpreted, enforced and governed by and under the laws of
the State of California and applicable Federal law. Any dispute about the
validity, interpretation, effect or alleged violation of this Agreement (an
"arbitrable dispute") must be submitted to arbitration in San Diego, California.
Arbitration shall take place before an experienced employment arbitrator
licensed to practice law in such state and selected in accordance with the then
existing JAMS arbitration rules applicable to employment disputes; provided,
however, that in any event, the arbitrator shall allow reasonable discovery.
Arbitration shall be the exclusive remedy for any arbitrable dispute. The
arbitrator in any arbitrable dispute shall not have authority to modify or
change the Agreement in any respect. You and the Company shall each be
responsible for payment of one-half (1/2) the amount of the arbitrator's fee(s);
provided, however, that in no event shall you be required to pay any fee or cost
of arbitration that is unique to arbitration or exceeds the costs you would have
incurred had any arbitrable dispute been pursued in a court of competent
jurisdiction. The Company shall make up any shortfall. Should any party to this
Agreement institute any legal action or administrative proceeding against the
other with respect to any Claim waived by this Agreement or pursue any
arbitrable dispute by any method other than arbitration, the prevailing party
shall be entitled to recover from the non-prevailing party all damages, costs,
expenses and attorneys' fees incurred as a result of that action. The
arbitrator's decision and/or award shall be rendered in writing and will be
fully enforceable and subject to an entry of judgment by the Superior Court of
the State of California for the County of San Diego, or any other court of
competent jurisdiction.

ELEVEN: Both you and the Company understand that this Agreement is final and
binding eight (8) days after its execution and return. Should you nevertheless
attempt to challenge the enforceability of this Agreement as provided in
Paragraph TEN or, in violation of that Paragraph, through litigation, as a
further limitation on any right to make such a challenge, you shall initially
tender to the Company, by certified check delivered to the Company, all monies
received pursuant to Section 13(d) of the Severance Pay Agreement, plus
interest, and invite the Company to retain such monies and agree with you to
cancel this Agreement and void the Company's obligations under Section 13(d) of
the Severance Pay Agreement. In the event the Company accepts this offer, the
Company shall retain such monies and this Agreement shall be canceled and the
Company shall have no obligation under Section 13(d) of the Severance Pay
Agreement. In the event the Company does not accept such offer, the Company
shall so notify you and shall place such monies in an interest-bearing escrow
account pending resolution of the dispute between you and the Company as to
whether or not this Agreement and the Company's obligations under Section 13(d)
of the Severance Pay Agreement shall be set aside and/or otherwise rendered
voidable or unenforceable. Additionally, any consulting agreement then in effect
between you and the Company shall be immediately rescinded with no requirement
of notice.

TWELVE: Any notices required to be given under this Agreement shall be delivered
either personally or by first class United States mail, postage prepaid,
addressed to the respective parties as follows:

To Company: [TO COME]

Attn: [TO COME]

To You: _________________
_________________
_________________

THIRTEEN: You understand and acknowledge that you have been given a period of
forty-five (45) days to review and consider this Agreement (as well as
statistical data on the persons eligible for similar benefits) before signing it
and may use as much of this forty-five (45) day period as you wish prior to
signing. You are encouraged, at your personal expense, to consult with an
attorney before signing this Agreement. You understand and acknowledge that
whether or not you do so is your decision. You may revoke this Agreement within
seven (7) days of signing it. If you wish to revoke, the Company's Vice
President, Human Resources must receive written notice from you no later than
the close of business on the seventh (7th) day after you have signed the
Agreement. If revoked, this Agreement shall not be effective and enforceable,
and you will not receive payments or benefits under Section 13(d) of the
Severance Pay Agreement.

FOURTEEN: This Agreement constitutes the entire agreement of the parties hereto
and supersedes any and all other agreements (except the Severance Pay Agreement)
with respect to the subject matter of this Agreement, whether written or oral,
between you and the Company. All modifications and amendments to this Agreement
must be in writing and signed by the parties.

FIFTEEN: Each party agrees, without further consideration, to sign or cause to
be signed, and to deliver to the other party, any other documents and to take
any other action as may be necessary to fulfill the obligations under this
Agreement.

SIXTEEN: If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
application; and to this end the provisions of this Agreement are declared to be
severable.

SEVENTEEN: This Agreement may be executed in counterparts.

I have read the foregoing General Release, and I accept and agree to the
provisions it contains and hereby execute it voluntarily and with full
understanding of its consequences. I am aware it includes a release of all known
or unknown claims.

DATED: __________

__________________________________________

DATED: __________

__________________________________________

You acknowledge that you first received this Agreement on [date].

_________________________