TABLE OF CONTENTS

 

          Page ARTICLE 1 DEFINITIONS    1 ARTICLE 2 SEVERANCE BENEFITS    5
          2.1    Right to Severance Benefits    5 2.2    Right to Change in
Control Severance Benefits    6 2.3    Severance Benefit - Termination by
Employer Without Cause (Other than a Qualifying Termination Event or Termination
due to the Eligible Employee’s Disability)    6   

2.3.1    Cash Benefit

   6   

2.3.2    Health Care Coverage Benefit

   7   

2.3.3    Executive Health Enhancement Extension

   7   

2.3.4    Survivor Benefit Plan Extension

   8   

2.3.5    Outplacement Benefit

   8   

2.3.6    Educational Assistance Benefit

   8   

2.3.7    Estate and Financial Planning Extension

   8 2.4    Change in Control Severance Benefits    8   

2.4.1    Senior Officer Enhanced Benefit

   9   

2.4.2    Certain Additional Enhanced Benefits

   9 2.5    Termination for Other Reasons    9 2.6    Notice of Termination   
10 ARTICLE 3 TAXES    10 ARTICLE 4 EXCISE TAX GROSS-UP    11 4.1    Gross-Up
Payment    11 4.2    Determination of Gross-Up    11 4.3    Notification    12
4.4    Underpayment and Overpayment    14 ARTICLE 5 BENEFICIARY DESIGNATION   
14 ARTICLE 6 CONDITIONS RELATED TO BENEFITS    15 6.1    Nonassignability    15
6.2    No Right to Assets    15 6.3    Payment of Obligations Absolute    15 6.4
   Other Benefit Plans    16

 

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TABLE OF CONTENTS

(continued)

 

          Page

6.5  

   Incapacity    16

6.6  

   Six Month Delay    16

ARTICLE 7 CLAIMS AND REVIEW PROCEDURES

   16

7.1  

   Claims Procedures    16

7.2  

   Dispute Arbitration    17

ARTICLE 8 SUCCESSORS AND ASSIGNMENT

   19

8.1  

   Successors to an Employer    19

8.2  

   Sale, Spin-Off, or Liquidation of an Employer    19

ARTICLE 9 ADMINISTRATION OF THE PLAN

   19

9.1  

   Administrator Action    19

9.2  

   Powers and Duties of the Administrator    20

9.3  

   Plan Interpretation    20

9.4  

   Information    21

9.5  

   Compensation, Expenses and Indemnity    21

ARTICLE 10 MISCELLANEOUS

   21

10.1  

   Release and Agreement    21

10.2  

   Term of the Plan    21

10.3  

   Employment Status    22

10.4  

   Gender, Singular and Plural    23

10.5  

   Validity    23

10.6  

   Modification    23

10.7  

   Notice    23

10.8  

   Applicable Law    23

10.9  

   WARN Act    24

10.10

   Statutes and Regulations    24

 

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Exhibit 10.6

EDISON INTERNATIONAL

2008 EXECUTIVE SEVERANCE PLAN

PREAMBLE

Edison International hereby amends and restates the Edison International
Executive Severance Plan effective January 1, 2008. This Plan is intended to be
an “employee benefit plan” within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.

The purpose of this Plan is to provide for continuity in the management and
operations of the Employers by offering Eligible Employees of the Affiliates
employment protection and financial security.

ARTICLE 1

DEFINITIONS

Capitalized terms in the text of the Plan are defined as follows:

Administrator means the Compensation and Executive Personnel Committee of the
Board of Directors of EIX.

Affiliate means EIX or any corporation or entity which (i) along with EIX, is a
component member of a “controlled group of corporations’ within the meaning of
Section 414(b) of the Code, and (ii) has approved the participation of its
Executives in the Plan.

Beneficiary means the person or persons or entity designated as such in
accordance with Article 5 of the Plan.

Board means the Board of Directors of EIX.

Cause means the occurrence of either or both of the following:

 

(1) The Eligible Employee’s conviction for, or pleading guilty or nolo
contendere to, committing an act of fraud, embezzlement, theft, or other act
constituting a felony; or

 

(2) The willful engaging by the Eligible Employee in misconduct that is:

 

  (i) if the event giving rise to the termination of the Eligible Employee’s
employment does not occur during a Protected Period, in violation of EIX’s
and/or the Eligible Employee’s Employer’s policies and practices applicable to
the Eligible Employee from time to time; or

 

  (ii)

if the event giving rise to the termination of the Eligible Employee’s
employment occurs during a Protected Period, that would have resulted in the
termination of the Eligible Employee’s employment by EIX’s or the Eligible

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Employee’s Employer under EIX’s and/or the Eligible Employee’s Employer’s
policies and practices applicable to the Eligible Employee in effect immediately
prior to the start of the Protected Period. However, no act or failure to act,
on the Eligible Employee’s part, shall be considered “willful” unless done, or
omitted to be done, by the Eligible Employee not in good faith and without
reasonable belief that his or her action or omission was in the best interest of
EIX and his or her Employer.

CEO means the Chief Executive Officer of EIX.

Change in Control means a change in control shall be deemed to have occurred as
of the first day that any one or more of the following conditions shall have
been satisfied:

(1) Any Person (other than a trustee or other fiduciary holding securities under
an employee benefit plan of EIX) becomes the Beneficial Owner, directly or
indirectly, of securities of EIX representing thirty percent (30%) or more of
the combined voting power of EIX’s then outstanding securities. For purposes of
this clause, “Person” shall mean any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), except that such term shall not include one or
more underwriters acquiring newly-issued voting securities (or securities
convertible into voting securities) directly from EIX with a view towards
distribution; and the term “Beneficial Owner” shall mean as defined under
Rule 13d-3 promulgated under the Exchange Act.

(2) On any day after the Effective Date (the “Reference Date”) Continuing
Directors cease for any reason to constitute a majority of the Board. A director
is a “Continuing Director” if he or she either:

(i) was a member of the Board on the applicable Initial Date (an “Initial
Director”); or

(ii) was elected to the Board, or was nominated for election by EIX’s
shareholders, by a vote of at least two-thirds (2/3) of the Initial Directors
then in office.

A member of the Board who was not a director on the applicable Initial Date
shall be deemed to be an Initial Director for purposes of clause (ii) above if
his or her election, or nomination for election by EIX’s shareholders, was
approved by a vote of at least two-thirds (2/3) of the Initial Directors
(including directors elected after the applicable Initial Date who are deemed to
be Initial Directors by application of this provision) then in office. For these
purposes, “Initial Date” means the later of (i) the Effective Date or (ii) the
date that is two years before the Reference Date.

(3) EIX is liquidated; all or substantially all of EIX’s assets are sold in one
or a series of related transactions; or EIX is merged, consolidated, or
reorganized with or involving any other corporation, other than a merger,
consolidation, or reorganization that results in the voting securities of EIX
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities

 

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of the surviving entity) more than fifty percent (50%) of the combined voting
power of the voting securities of EIX (or such surviving entity) outstanding
immediately after such merger, consolidation, or reorganization. Notwithstanding
the foregoing, a bankruptcy of EIX or a sale or spin-off of an affiliate of EIX
(short of a dissolution of EIX or a liquidation of substantially all of EIX’s
assets, determined on an aggregate basis) will not constitute a Change in
Control of EIX.

(4) The consummation of such other transaction that the Board may, in its
discretion in the circumstances, declare to be a Change in Control of EIX for
purposes of this Plan.

COBRA means the health care continuation coverage requirements set forth in
Section 4980B of the Code.

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

Disability means the Eligible Employee (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than twelve months or (ii) is, by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve months, receiving income replacement benefits for a
period of not less than three months under a plan covering employees of the
Employer.

Effective Date means January 1, 2008.

EIX means Edison International, or any successor thereto as provided in
Section 8.1.

Eligible Employee means an Executive of an Affiliate or an employee of an
Affiliate who was an Executive of an Affiliate after a Potential Change in
Control (unless and until the Board declares in good faith that the
circumstances giving rise to the Potential Change in Control will not result in
an actual Change in Control or an actual Change in Control occurs) or during a
Protected Period.

Employer means the Affiliate employing the Eligible Employee. As the context may
require, an Eligible Employee’s Employer means the Employer that employs or last
employed the Eligible Employee.

Exchange Act means the United States Securities Exchange Act of 1934, as
amended.

Executive means an Employee of an Affiliate who is designated an Executive by
the Chief Executive Officer of that Affiliate or who is elected as a Vice
President or officer of higher rank by the board of that Affiliate or the Board
of EIX.

Executive Retirement Plan means the EIX 2008 Executive Retirement Plan, as
amended from time to time, or any similar or successor plan sponsored by an
Employer.

 

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Good Reason means, without the Eligible Employee’s express written consent, the
occurrence of any one or more of the following during the Protected Period:

(1) A material diminution in the Eligible Employee’s authorities, duties, and/or
responsibilities.

(2) A material diminution by the Eligible Employee’s Employer of the Eligible
Employee’s Salary as in effect on the Effective Date, or as the same shall be
increased from time to time.

(3) The relocation of the Eligible Employee’s principal office more than 50
miles from the Eligible Employee’s principal office.

(4) Any other action or inaction that constitutes a material breach by the
Employer of the agreement under which the Eligible Employee provides services.

The foregoing events shall only constitute “Good Reason” if the Eligible
Employee provides notice to the Employer of the existence of the condition
within 90 days of its initial existence and the Employer does not remedy the
condition within 30 days.

Person shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a group as
contemplated by Sections 13(d)(3) and 14(d)(2) thereof.

Plan means the EIX 2008 Executive Severance Plan.

Potential Change in Control shall be deemed to have occurred as of the first day
that any one or more of the following conditions shall have been satisfied:

(1) Any Person (other than a trustee or other fiduciary holding securities under
an employee benefit plan of EIX or of an EIX affiliate):

(i) announces an intention to take action which, if consummated, would result in
a Change in Control; or

(ii) becomes the Beneficial Owner, directly or indirectly, of securities of EIX
representing fifteen percent (15%) or more of the combined voting power of EIX’s
then outstanding securities. For purposes of this clause, “Person” (and “group”
as used in the definition of Person) shall not include one or more underwriters
acquiring newly-issued voting securities (or securities convertible into voting
securities) directly from EIX with a view towards distribution.

(2) EIX enters into an agreement that, if consummated, would result in a Change
in Control.

(3) The Board declares that a Potential Change in Control has occurred for
purposes of this Plan.

 

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Protected Period means the period related to a Change in Control that is deemed
to commence on the date that is six months before the date of the actual Change
in Control and end on the date that is two years after the Change in Control.

Qualifying Termination Event means, as to an Eligible Employee, the occurrence
of one or both of the following events within the Protected Period corresponding
to a Change in Control:

(1) A termination of the Eligible Employee’s employment by his or her Employer,
without the Eligible Employee’s consent, for reasons other than Cause or
Disability; or

(2) A termination of employment by the Eligible Employee for Good Reason;
provided that the termination of employment is in no event later than two years
following the initial existence of the Good Reason condition.

Salary means the Eligible Employee’s basic pay from the Employer (excluding
bonuses, special awards, commissions, severance pay, and other non-regular forms
of compensation).

Separation from Service occurs when an Eligible Employee dies, retires, or
otherwise has a termination of employment from the Employer that constitutes a
“separation from service” within the meaning of Treasury Regulation
Section 1.409A-1(h)(1), without regard to the optional alternative definitions
available thereunder.

Target Bonus Percentage means the target, stated as a percentage of salary,
fixed by the CEO of the Employer or by the Administrator for the bonus to be
awarded to the Eligible Employee pursuant to the terms of the Executive
Incentive Compensation Plan, the 2007 Performance Incentive Plan or a successor
plan governing annual executive bonuses.

Termination Date means, in the case of an Eligible Employee who becomes entitled
to benefits under this Plan, the day on which the Eligible Employee incurs a
Separation from Service in connection with the event that entitles the Eligible
Employee to such benefits.

ARTICLE 2

SEVERANCE BENEFITS

2.1 Right to Severance Benefits

Subject to Sections 8.2 and 10.1, an Eligible Employee shall be entitled to
receive from his or her Employer the benefits described in Section 2.3 if the
Eligible Employee’s employment by his or her Employer is terminated by the
Employer without Cause (and other than due to the Eligible Employee’s
Disability). Notwithstanding anything else contained herein to the contrary, an
Eligible Employee shall not be entitled to receive the benefits described in
Section 2.3 if the Eligible Employee is entitled to benefits under or as
described in Section 2.2.

 

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2.2 Right to Change in Control Severance Benefits

Subject to Sections 8.2 and 10.1, an Eligible Employee shall be entitled to
receive the benefits described in Section 2.4 if the Eligible Employee incurs a
Qualifying Termination Event. If more than one Qualifying Termination Event
occurs with respect to an Eligible Employee, such events shall constitute a
single Qualifying Termination Event and the provisions of Section 2.4 shall
apply with respect to the Eligible Employee only once. An Eligible Employee’s
continued employment shall not constitute a consent to, or a waiver of rights
with respect to, any circumstances constituting Good Reason for purposes of
determining if a Qualifying Termination Event has occurred with respect to the
Eligible Employee.

2.3 Severance Benefit—Termination by Employer Without Cause (Other than a
Qualifying Termination Event or Termination due to the Eligible Employee’s
Disability)

In the event that an Eligible Employee becomes entitled to receive benefits in
accordance with Section 2.1, then the Eligible Employee shall be entitled to the
benefits described in Sections 2.3.1 through 2.3.7 below.

2.3.1 Cash Benefit

The Eligible Employee’s Employer shall pay to the Eligible Employee a
non-discounted cash amount equal to the sum of the following:

(a) an amount equal to the greater of:

(1) one times the highest annualized rate of the Eligible Employee’s Salary in
effect at any time during the 24-month period ending on the Eligible Employee’s
Termination Date, or

(2) one times the highest weekly rate of the Eligible Employee’s Salary in
effect at any time during the 24-month period ending on the Eligible Employee’s
Termination Date multiplied by the number of weeks that would have been used (if
the Eligible Employee had not been an Executive) to determine the Eligible
Employee’s cash severance benefit under the non-executive severance plan (if
any) maintained by the Eligible Employee’s Employer and as in effect on the
Eligible Employee’s Termination Date;

(b) a pro rata portion (based on the number of weekdays that elapsed in the
calendar year in which the Eligible Employee’s Termination Date occurs between
the start of that calendar year and the Eligible Employee’s Termination Date) of
the Eligible Employee’s highest Target Bonus Percentage in effect at any time
during the 24-month period ending on the Eligible Employee’s Termination Date
multiplied by the Eligible Employee’s highest annualized Salary in effect at any
time during such 24-month period; and

 

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(c) an amount equal to the highest annualized rate of the Eligible Employee’s
Salary in effect at any time during the 24-month period ending on the Eligible
Employee’s Termination Date times the Eligible Employee’s highest Target Bonus
Percentage in effect at any time during the 24-month period ending on the
Eligible Employee’s Termination Date.

The amount determined under this Section 2.3.1 shall be paid as a lump sum no
later than the date that is the 15th day of the third month following the end of
the Eligible Employee’s taxable year in which his or her Separation from Service
occurred but only if EIX has received from the Eligible Employee the agreement
referenced in Section 10.1.

2.3.2 Health Care Coverage Benefit

(a) The Eligible Employee will be eligible to participate in EIX’s retiree
health care program if, under the terms of the non-executive severance plan (if
any) maintained by the Eligible Employee’s Employer and as in effect on the
Eligible Employee’s Termination Date, the Eligible Employee would otherwise have
been eligible (if he or she had not been an Executive) for participation in
EIX’s retiree health care program by virtue of his or her age and service.

(b) If the Eligible Employee is not eligible for EIX’s retiree health care
program in accordance with Section 2.3.2(a) or is not otherwise eligible for
EIX’s retiree health care program, the Eligible Employee will receive an
extension of health care coverage for a period following the Eligible Employee’s
Termination Date that is the greater of 12 months or the extension period for
which the Eligible Employee would have been eligible (if he or she had not been
an Executive) under the non-executive severance program (if any) maintained by
the Eligible Employee’s Employer and as in effect on the Eligible Employee’s
Termination Date but in no event longer than the maximum period the Eligible
Employee would be entitled to continuation coverage under COBRA. Any continued
coverage in accordance with the preceding sentence shall be on terms similar to
those as in effect under the Eligible Employee’s Employer’s health care program
in effect with respect to the Eligible Employee immediately before the
termination of his or her employment and based on the Eligible Employee’s
coverage elections in effect at such time. Notwithstanding Section 6.3 to the
contrary, EIX and/or the Eligible Employee’s Employer, as applicable, shall not
be obligated to continue such coverage if the Eligible Employee obtains similar
coverage from any successor employer. EIX and/or the Eligible Employee’s
Employer, as applicable, shall give the Eligible Employee the required COBRA
benefit continuation notice prior to (and the Eligible Employee’s eligibility
for continuation benefits under COBRA shall commence as of) the end of the
applicable period determined as set forth above.

2.3.3 Executive Health Enhancement Extension

If the Eligible Employee was eligible to participate in the EIX-sponsored
Executive Health Enhancement Program at any point during the 12 months preceding
the Eligible Employee’s Termination Date, the Eligible Employee will remain
eligible to participate in the program during the one-year period commencing on
the Eligible Employee’s

 

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Termination Date. Any reimbursements made under the program shall be paid to the
Eligible Employee on or before the last day of the Eligible Employee’s taxable
year following the taxable year in which the expense was incurred and shall not
be subject to liquidation or exchange for other benefits.

2.3.4 Survivor Benefit Plan Extension

If the Eligible Employee was eligible to participate in the EIX 2008 Survivor
Benefit Plan (or predecessor plan) at any point during the 12 months preceding
the Eligible Employee’s Termination Date, the Eligible Employee will be entitled
to continued coverage under such Survivor Benefit Plan for the one-year period
commencing on the Eligible Employee’s Termination Date.

2.3.5 Outplacement Benefit

The Eligible Employee shall be entitled to reimbursement of up to $20,000 for
outplacement costs incurred in the two-year period commencing on his or her
Termination Date. Any such reimbursements shall be paid to the Eligible Employee
by the end of the third taxable year of the Eligible Employee following the
taxable year in which the Eligible Employee’s Separation from Service occurred.

2.3.6 Educational Assistance Benefit

The Eligible Employee shall be entitled to the educational assistance benefit to
which he or she would have been entitled (if he or she had not been an
executive) under the non-executive severance plan, if any, maintained by his or
her Employer and as in effect on the Eligible Employee’s Termination Date.

2.3.7 Estate and Financial Planning Extension

If the Eligible Employee was eligible to participate in the Estate and Financial
Planning Program of an Employer at any point during the 12 months preceding the
Eligible Employee’s Termination Date, the Eligible Employee will be eligible to
participate in the program during the one-year period commencing on the Eligible
Employee’s Termination Date. Notwithstanding the above, if the Eligible Employee
is at least age 54 with at least four years of service (as years of service are
determined for vesting purposes under the Executive Retirement Plan) as of the
Eligible Employee’s Termination Date, then the normal terms of the Estate and
Financial Planning Program for retirement will apply with respect to the
Eligible Employee. Notwithstanding the foregoing, any reimbursement of estate
and financial planning costs will be subject to the following conditions:
(1) the amount of expense eligible for reimbursement during the Eligible
Employee’s taxable year does not affect the expenses eligible for reimbursement
in any other taxable year, (2) the reimbursement of an eligible expense is made
on or before the last day of the Eligible Employee’s taxable year following the
taxable year in which the expense was incurred, and (3) the right to
reimbursement is not subject to liquidation or exchange for another benefit.

2.4 Change in Control Severance Benefits

 

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If an Eligible Employee incurs a Qualifying Termination Event, the Eligible
Employee shall be entitled to the benefits described in Sections 2.3.1 through
2.3.7 above, subject to the following subsections of this Section 2.4.

2.4.1 Senior Officer Enhanced Benefit

If the Eligible Employee was a Senior Vice President or an officer of higher
rank within the 12-month period preceding his or her Termination Date but is not
covered by Section 2.4.2, then the Eligible Employee will be entitled to the
benefit modifications described in this Section 2.4.1. “Two times” will be
substituted for “one times” in Section 2.3.1, including for purposes of
determining the Eligible Employee’s benefit under Section 2.3.1(c). “Two-year
period” will be substituted for “one-year period” in Sections 2.3.3, 2.3.4, and
2.3.7. “$30,000” will be substituted for “$20,000” in Section 2.3.5. Benefits
under Section 2.3.2 will be extended to the maximum period permitted under
COBRA.

2.4.2 Certain Additional Enhanced Benefits

If the Eligible Employee was the Chief Executive Officer of EIX, Southern
California Edison, Edison Mission Group, or the General Counsel or Chief
Financial Officer of EIX within the 12-month period preceding his or her
Termination Date, then the Eligible Employee will be entitled to the benefit
modifications described in this Section 2.4.2. “Three times” will be substituted
for “one times” in Section 2.3.1, including for purposes of determining the
Eligible Employee’s benefit under Section 2.3.1(c). “Three-year period” will be
substituted for “one-year period” in Sections 2.3.3, 2.3.4, and 2.3.7. “$50,000”
will be substituted for “$20,000” in Section 2.3.5. Benefits under Section 2.3.2
will be extended to the maximum period permitted under COBRA.

2.5 Termination for Other Reasons

Except as expressly provided below, EIX and an Eligible Employee’s Employer
shall have no obligations (or no further obligations, as the case may be) to the
Eligible Employee under this Plan if:

(a) the Eligible Employee’s employment is terminated by his or her Employer for
Cause;

(b) the Eligible Employee terminates his or her employment with his or her
Employer during a Protected Period other than for Good Reason;

(c) the Eligible Employee’s employment by his or her Employer terminates due to
the Eligible Employee’s Disability or death;

(d) the Eligible Employee terminates his or her employment with his or her
Employer for any reason if the termination occurs outside of a Protected Period;
or

(e) the Eligible Employee is employed by an Employer that is sold, spun off, or
liquidated and the Eligible Employee is no longer covered by this Plan as
provided in

 

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Section 8.2 or the Eligible Employee does not timely comply with Section 10.1.
Notwithstanding anything else contained herein to the contrary, a termination of
an Eligible Employee’s employment on account of the Eligible Employee reaching
mandatory retirement age, as such age may be defined from time to time in
policies adopted by EIX or his or her Employer prior to the commencement of the
Protected Period, to the extent such policies are applicable to the Eligible
Employee immediately prior to the commencement of the Protected Period and to
the extent such policies are consistent with applicable law, shall not entitle
the Eligible Employee to the benefits described in Section 2.3 and shall not be
a Qualifying Termination Event unless the Eligible Employee was otherwise able
to terminate employment for Good Reason immediately prior to his or her
retirement and his or her retirement occurred during a Protected Period.

2.6 Notice of Termination

Any termination of an Eligible Employee’s employment by his or her Employer for
Cause or by an Eligible Employee for Good Reason shall be communicated by Notice
of Termination. For purposes of this Plan, a “Notice of Termination” shall mean
a written notice which shall indicate the specific termination provision in this
Plan relied upon, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Eligible
Employee’s employment under the provision so indicated. The Notice of
Termination shall be effective on the date specified in Section 10.7 of this
Plan.

ARTICLE 3

TAXES

EIX and/or the Eligible Employee’s Employer, as applicable, has the right to
withhold from any amount otherwise payable to an Eligible Employee under or
pursuant to this Plan the amount of any taxes that EIX or such Employer may
legally be required to withhold with respect to such payment (including, without
limitation, any United States Federal taxes, and any other state, city, or local
taxes). In the event that tax withholding is required with respect to amounts or
benefits payable or deliverable by EIX or the Eligible Employee’s Employer to an
Eligible Employee and EIX or the Employer cannot satisfy its tax withholding
obligations in the manner described in the preceding sentence, EIX or the
Employer may require the Eligible Employee to pay or provide for the payment of
such required tax withholding as a condition to the payment or delivery of such
amounts or benefits. Each Eligible Employee, former Eligible Employee and
Beneficiary shall be solely responsible for all income and employment taxes
arising in connection with participation in this Plan or benefits hereunder.

 

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ARTICLE 4

EXCISE TAX GROSS-UP

4.1 Gross-Up Payment

In the event it is determined (pursuant to Section 4.2) or finally determined
(as defined in Section 4.3(c)) that any payment, distribution, transfer, or
benefit by an Eligible Employee’s Employer, or a direct or indirect subsidiary
or affiliate of that Employer, to or for the benefit of the Eligible Employee or
the Eligible Employee’s dependents, heirs or beneficiaries (whether such
payment, distribution, transfer, benefit or other event occurs pursuant to the
terms of this Plan or otherwise, but determined without regard to any additional
payments required under this Article 6) (each a “Payment” and collectively the
“Payments”) is subject to the excise tax imposed by Section 4999 of the Code,
and any successor provision or any comparable provision of state or local income
tax law (collectively, “Section 4999”), or any interest, penalty or addition to
tax is incurred by the Eligible Employee with respect to such excise tax (such
excise tax, together with any such interest, penalty, and addition to tax,
hereinafter collectively referred to as the “Excise Tax”), then the Eligible
Employee’s Employer shall pay to the Eligible Employee (or to the applicable
taxing authority on the Eligible Employee’s behalf) an additional cash payment
(hereinafter referred to as the “Gross-Up Payment”) equal to an amount such that
after payment by the Eligible Employee of all taxes, interest, penalties,
additions to tax and costs imposed or incurred with respect to the Gross-Up
Payment (including, without limitation, any income and excise taxes imposed upon
the Gross-Up Payment), the Eligible Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon such Payment or Payments. This
provision is intended to put the Eligible Employee in the same position as the
Eligible Employee would have been had no Excise Tax been imposed upon or
incurred as a result of any Payment. Any payment under this Section 4.1 shall be
paid to the Eligible Employee by the end of the Eligible Employee’s taxable year
following the taxable year in which the Eligible Employee pays the related
taxes.

4.2 Determination of Gross-Up

(a) Except as provided in Section 4.3, the determination that a Payment is
subject to an Excise Tax shall be made in writing by the principal certified
public accounting firm then retained by EIX to audit its annual financial
statements (the “Accounting Firm”). Such determination shall include the amount
of the Gross-Up Payment and detailed computations thereof, including any
assumptions used in such computations. Any determination by the Accounting Firm
will be binding on EIX, the Eligible Employee’s Employer and the Eligible
Employee.

(b) For purposes of determining the amount of the Gross-Up Payment, the Eligible
Employee shall be deemed to pay Federal income taxes at the highest marginal
rate of Federal income taxation in the calendar year in which the Gross-Up
Payment is to be made. Such highest marginal rate shall take into account the
loss of itemized deductions by the Eligible Employee and shall also include the
Eligible Employee’s share of the hospital insurance portion of FICA and state
and local income taxes at the

 

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highest marginal rate of taxation in the state and locality of the Eligible
Employee’s residence on the date of his or her Qualifying Termination Event, net
of the maximum reduction in Federal income taxes that could be obtained from the
deduction of such state and local taxes.

4.3 Notification

(a) The Eligible Employee shall notify EIX and his or her Employer (if other
than EIX) in writing of any claim by the Internal Revenue Service (or any
successor thereof) or any state or local taxing authority (individually or
collectively, the “Taxing Authority”) that, if successful, would require the
payment by the Eligible Employee’s Employer of a Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than 30 days
after the Eligible Employee receives written notice of such claim and shall
apprise EIX and his or her Employer of the nature of such claim and the date on
which such claim is requested to be paid; provided, however, that failure by the
Eligible Employee to give such notice within such 30-day period shall not result
in a waiver or forfeiture of any of the Eligible Employee’s rights under this
Article 4 except to the extent of actual damages suffered by EIX or the Eligible
Employee’s Employer as a result of such failure. The Eligible Employee shall not
pay such claim prior to the expiration of the 15-day period following the date
on which the Eligible Employee gives such notice to EIX and his or her Employer
(or such shorter period ending on the date that any payment of taxes, interest,
penalties or additions to tax with respect to such claim is due). If EIX or the
Eligible Employee’s Employer notifies the Eligible Employee in writing prior to
the expiration of such 15-day period (regardless of whether such claim was
earlier paid as contemplated by the preceding parenthetical) that it desires to
contest such claim, the Eligible Employee shall:

(1) give EIX and the Eligible Employee’s Employer any information reasonably
requested by EIX or the Eligible Employee’s Employer relating to such claim;

(2) take such action in connection with contesting such claim as EIX or the
Eligible Employee’s Employer shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with respect
to such claim by an attorney selected by EIX or the Eligible Employee’s
Employer;

(3) cooperate with EIX and the Eligible Employee’s Employer in good faith in
order effectively to contest such claim; and

(4) permit EIX and the Eligible Employee’s Employer to participate in any
proceedings relating to such claim; provided, however, that the Eligible
Employee’s Employer shall bear and pay directly all attorneys fees, costs and
expenses (including additional interest, penalties and additions to tax)
incurred in connection with such contest and shall indemnify and hold the
Eligible Employee harmless, on an after-tax basis, for all taxes (including,
without limitation, income and excise taxes), interest, penalties and additions
to tax imposed in relation to

 

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such claim and in relation to the payment of such costs and expenses or
indemnification.

(b) Without limitation on the foregoing provisions of this Section 4.3, and to
the extent its actions do not unreasonably interfere with or prejudice the
Eligible Employee’s disputes with the Taxing Authority as to other issues, EIX
and the Eligible Employee’s Employer shall control all proceedings taken in
connection with such contest and, in its or their reasonable discretion, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the Taxing Authority in respect of such claim and may, at its
or in their sole option, either direct the Eligible Employee to pay the tax,
interest or penalties claimed and sue for a refund or contest the claim in any
permissible manner, and the Eligible Employee 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 EIX or the Eligible
Employee’s Employer shall determine; provided, that any extension of the statute
of limitations relating to payment of taxes, interest, penalties or additions to
tax for the taxable year of the Eligible Employee with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount; and, provided, further, that any settlement of any claim shall be
reasonably acceptable to the Eligible Employee, and EIX’s and the Eligible
Employee’s Employer’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder, and the Eligible
Employee shall be entitled to settle or contest, as the case may be, any other
issue.

(c) If, after receipt by the Eligible Employee of a reimbursement amount paid by
the Eligible Employee’s Employer pursuant to this Article 4, the Eligible
Employee receives any refund with respect to such claim, the Eligible Employee
shall (subject to the Eligible Employee’s Employer’s complying with the
requirements of this Article 4) promptly pay to the Eligible Employee’s Employer
an amount equal to such refund (together with any interest paid or credited
thereof after taxes applicable thereto), net of any taxes (including, without
limitation, any income or excise taxes), interest, penalties or additions to tax
and any other costs incurred by the Eligible Employee in connection with such
advance, after giving effect to such repayment.

(d) For purposes of this Article 4, whether the Excise Tax is applicable to a
Payment shall be deemed to be “finally determined” upon the earliest of:

(1) the expiration of the 15-day period referred to in Section 4.3(a) if EIX or
the Eligible Employee’s Employer has not notified the Eligible Employee that it
intends to contest the underlying claim,

(2) the expiration of any period following which no right of appeal exists,

(3) the date upon which a closing agreement or similar agreement with respect to
the claim is executed by the Eligible Employee and the Taxing Authority (which
agreement may be executed only in compliance with this section), or

 

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(4) the receipt by the Eligible Employee of notice from EIX or the Eligible
Employee’s Employer that it no longer seeks to pursue a contest (which shall be
deemed received if EIX or the Eligible Employee’s Employer does not, within 15
days following receipt of a written inquiry from the Eligible Employee,
affirmatively indicate in writing to the Eligible Employee that EIX or the
Eligible Employee’s Employer intends to continue to pursue such contest).

4.4 Underpayment and Overpayment

It is possible that no Gross-Up Payment will initially be made but that a
Gross-Up Payment should have been made, or that a Gross-Up Payment will
initially be made in an amount that is less than what should have been made
(either of such events is referred to as an “Underpayment”). It is also possible
that a Gross-Up Payment will initially be made in an amount that is greater than
what should have been made (an “Overpayment”). The determination of any
Underpayment or Overpayment shall be made by the Accounting Firm in accordance
with Section 4.2. In the event of an Underpayment, the amount of any such
Underpayment shall be paid to the Eligible Employee as an additional Gross-Up
Payment. In the event of an Overpayment, the Eligible Employee shall repay the
amount of such Overpayment to the Employer with interest at the applicable
Federal rate provided for in Section 1274(d) of the Code from the date of the
Overpayment to the date of the repayment of such amount. In such case, the
amount of the repayment obligation shall be subject to reduction to the extent
necessary to put the Eligible Employee in the same after-tax position as if such
Overpayment were never made. The amount of any such reduction to the repayment
obligation shall be determined by the Accounting Firm in accordance with the
principles set forth in Section 4.2. The Eligible Employee shall repay the
amount of the Overpayment (after reduction, if any, and with interest as
provided above) to the Eligible Employee’s Employer as soon as administratively
practicable after EIX or the Eligible Employee’s Employer notifies the Eligible
Employee of (a) the Accounting Firm’s determination that an Overpayment was made
and (b) the amount to be repaid.

ARTICLE 5

BENEFICIARY DESIGNATION

The Eligible Employee will have the right, at any time, to designate any person
or persons as Beneficiary (both primary and contingent) to whom payment under
the Plan will be made in the event of the Eligible Employee’s death. The
Beneficiary designation will be effective when it is submitted in writing to the
Administrator during the Eligible Employee’s lifetime on a form prescribed by
the Administrator.

The submission of a new Beneficiary designation will cancel all prior
Beneficiary designations. Any finalized divorce or marriage of an Eligible
Employee subsequent to the date of a Beneficiary designation will revoke such
designation, unless in the case of divorce the previous spouse was not
designated as a Beneficiary, and unless in the case of marriage the Eligible
Employee’s new spouse has previously been designated as Beneficiary. The spouse
of a married Eligible Employee must consent in writing to any designation of a
Beneficiary other than the spouse.

 

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If an Eligible Employee fails to designate a Beneficiary as provided above, or
if the Beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if every person designated as
Beneficiary predeceases the Eligible Employee, then the Administrator will
direct the distribution of the benefits to the Eligible Employee’s estate. If a
primary Beneficiary dies after commencement of payments to the Beneficiary but
prior to completion of benefits under this Plan, and no contingent Beneficiary
has been designated by the Eligible Employee, any remaining payments will be
paid to the primary Beneficiary’s Beneficiary, if one has been designated, or to
the Beneficiary’s estate.

ARTICLE 6

CONDITIONS RELATED TO BENEFITS

6.1 Nonassignability

The benefits provided under the Plan may not be alienated, assigned,
transferred, pledged or hypothecated by or to any person or entity, at any time
or any manner whatsoever. These benefits will be exempt from the claims of
creditors of any Eligible Employee or other claimants and from all orders,
decrees, levies, garnishment or executions against any Eligible Employee to the
fullest extent allowed by law.

6.2 No Right to Assets

The benefits paid under the Plan will be paid from the general funds of the
Employer who last employs the Eligible Employee immediately prior to the time
that the Eligible Employee becomes entitled to benefits hereunder, and the
Eligible Employee and any Beneficiary will be no more than unsecured general
creditors of the Employer with no special or prior right to any assets of the
Employer for payment of any obligations hereunder. Neither the Eligible Employee
nor the Beneficiary will have a claim to benefits from any other Affiliate.

6.3 Payment of Obligations Absolute

Subject to the Eligible Employee’s compliance with Section 10.1 and the
agreement contemplated thereby, each Employer’s obligation to make the payments
and the arrangements provided for herein shall be absolute and unconditional,
and shall not be affected by any circumstances, including, without limitation,
any offset, counterclaim, recoupment, defense, or other right which the Employer
may have against the Eligible Employee or anyone else. All amounts payable by an
Employer hereunder shall be paid no later than the date that is the 15th day of
the third month following the end of the Eligible Employee’s taxable year in
which his or her Separation from Service occurred without notice or demand. Each
and every payment made hereunder by an Employer shall be final, and the Employer
shall not seek to recover all or any part of such payment from the Eligible
Employee or from whomsoever may be entitled thereto, for any reasons whatsoever,
except as otherwise provided in Article 4 or Article 8 and subject to the
Eligible Employee’s compliance with Section 10.1 and the agreement

 

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contemplated thereby. Eligible Employees shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Plan, and the obtaining of any such other employment shall in
no event effect any reduction of an Employer’s obligations to make the payments
and arrangements required to be made under this Plan except as provided in
Section 2.3.2(b).

6.4 Other Benefit Plans

All payments, benefits and amounts provided under this Plan shall be in addition
to and not in substitution for any pension rights under EIX’s or other
Employer’s tax-qualified pension plan in which the Eligible Employee
participates, and any disability, workers’ compensation or EIX or other Employer
benefit plan distribution that an Eligible Employee is entitled to, under the
terms of any such plan, at the time his or her employment by his or her Employer
terminates. Notwithstanding the foregoing, this Plan shall not create an
inference that any duplicate payments shall be required. Payments received by a
person under this Plan shall not be deemed a part of the person’s compensation
for purposes of determining the person’s benefits under any employee welfare,
pension or other benefit plan or arrangement, if any, provided by an Employer,
except where explicitly provided under the terms of such plan or arrangement.

6.5 Incapacity

If any person entitled to payments under this Plan is, in the opinion of the
Administrator or its designee, incapacitated and unable to use such payments in
his or her own best interest, the Administrator or its designee may direct that
payments (or any portion) be made to that person’s legal guardian or
conservator, or that person’s spouse, as an alternative to payment to the person
unable to use the payments. The Administrator or its designee will have no
obligation to supervise the use of such payments, and court-appointed
guardianship or conservatorship may be required.

6.6 Six Month Delay

Notwithstanding any other provisions of the plan, any payment or benefit
otherwise required to be made after an Eligible Employee’s Separation from
Service that the Employer reasonably determines is subject to
Section 409A(a)(2)(B)(i) of the Code shall not be paid until the earlier of
(1) six months after the date of the Eligible Employee’s Separation from Service
or (2) the Eligible Employee’s death.

ARTICLE 7

CLAIMS AND REVIEW PROCEDURES

7.1 Claims Procedures

(a) The Administrator will notify an Eligible Employee or his or her Beneficiary
(or person submitting a claim on behalf of an Eligible Employee or Beneficiary)
(a “claimant”) in writing, within 90 days after his or her written application
for benefits, of his

 

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or her eligibility or noneligibility for benefits under the Plan. If the
Administrator determines that a claimant is not eligible for benefits or full
benefits, the notice will set forth (1) the specific reasons for the denial,
(2) a specific reference to the provisions of the Plan on which the denial is
based, (3) a description of any additional information or material necessary for
the claimant to perfect his or her claim, and a description of why it is needed,
and (4) an explanation of the Plan’s claims review procedure and other
appropriate information as to the steps to be taken if the claimant wishes to
have the claim reviewed. If the Administrator determines that there are special
circumstances requiring additional time to make a decision, the Administrator
will notify the claimant of the special circumstances and the date by which a
decision is expected to be made, and may extend the time for up to an additional
90-day period.

(b) If a claimant is determined by the Administrator not to be eligible for
benefits, or if the claimant believes that he or she is entitled to greater or
different benefits, the claimant will have the opportunity to have the claim
reviewed by the Administrator by filing a petition for review with the
Administrator within 60 days after receipt of the notice issued by the
Administrator. Said petition will state the specific reasons which the claimant
believes entitle him or her to benefits or to greater or different benefits.
Within 60 days after receipt by the Administrator of the petition, the
Administrator will afford the claimant (and counsel, if any) an opportunity to
present his or her position to the Administrator in writing, and the claimant
(or counsel) will have the right to review the pertinent documents. The
Administrator will notify the claimant of its decision in writing within the
60-day period, stating specifically the basis of its decision, written in a
manner calculated to be understood by the claimant and the specific provisions
of the Plan on which the decision is based. If, because of the need for a
hearing, the 60-day period is not sufficient, the decision may be deferred for
up to another 60-day period at the election of the Administrator, but notice of
this deferral will be given to the claimant. In the event of the death of the
Eligible Employee, the same procedures will apply to the Eligible Employee’s
Beneficiaries.

7.2 Dispute Arbitration

(a) Notwithstanding the foregoing, and because it is agreed that time will be of
the essence in determining whether any payments are due to the claimant under
the Plan, a claimant may, if he or she desires, submit any claim for payment
under the Plan to arbitration. This right to select arbitration will be solely
that of the claimant and the claimant may decide whether or not to arbitrate in
his or her discretion. The “right to select arbitration” is not mandatory on the
claimant, and the claimant may choose in lieu thereof to bring an action in an
appropriate civil court. Once an arbitration is commenced, however, it may not
be discontinued without the mutual consent of both parties to the arbitration.
During the lifetime of the Eligible Employee only he or she can use the
arbitration procedure set forth in this section.

(b) Any claim for arbitration may be submitted as follows: if a claimant has
submitted a request to be paid under the Plan and the claim is finally denied by
the Administrator in whole or in part, the claim may be filed in writing with an
arbitrator of the claimant’s choice who is selected by the method described in
the next four sentences. The first

 

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step of the selection will consist of the claimant submitting a list of five
potential arbitrators to the Administrator. Each of the five arbitrators must be
either (1) a member of the National Academy of Arbitrators located in the State
of California or (2) a retired California Superior Court or Appellate Court
judge. Within one week after receipt of the list, the Administrator will select
one of the five arbitrators as the arbitrator for the dispute in question. If
the Administrator fails to select an arbitrator within one week after receipt of
the list, the claimant will then designate one of the five arbitrators for the
dispute in question.

(c) The arbitration hearing will be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No continuance of
said hearing will be allowed without the mutual consent of the claimant and the
Administrator. Absence from or nonparticipation at the hearing by either party
will not prevent the issuance of an award. Hearing procedures which will
expedite the hearing may be ordered at the arbitrator’s discretion, and the
arbitrator may close the hearing in his or her sole discretion when he or she
decides he or she has heard sufficient evidence to satisfy issuance of an award.

(d) The arbitrator’s award will be rendered as expeditiously as possible and in
no event later than one week after the close of the hearing.

(e) In the event the arbitrator finds that the Administrator or the Employer has
breached the terms of the Plan, he or she will order the Employer to pay to the
claimant within two business days after the decision is rendered the amount then
due the claimant, plus, notwithstanding anything to the contrary in the Plan, an
additional amount equal to 20% of the amount actually in dispute. This
additional amount will constitute an additional benefit under the Plan. The
award of the arbitrator will be final and binding upon the Parties.

(f) The award may be enforced in any appropriate court as soon as possible after
its rendition. The Administrator will be considered the prevailing party in a
dispute if the arbitrator determines (1) that neither the Administrator nor the
Employer has breached the terms of the Plan and (2) the claim by the claimant
was not made in good faith. Otherwise, the claimant will be considered the
prevailing party. In the event that the Administrator is the prevailing party,
the fee of the arbitrator and all necessary expenses of the hearing (excluding
any attorneys’ fees incurred by the Administrator) including the fees of a
stenographic reporter, if employed, will be paid by the losing party. In the
event that the claimant is the prevailing party, the fee of the arbitrator and
all necessary expenses of the hearing (including all attorneys’ fees incurred by
the claimant in pursuing his or her claim and the fees of a stenographic
reporter, if employed) will be paid by the Employer.

 

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ARTICLE 8

SUCCESSORS AND ASSIGNMENT

8.1 Successors to an Employer

Subject to Section 8.2, each Employer will require any successor (whether direct
or indirect, by purchase, merger, consolidation, or otherwise) of all or
substantially all of the business and/or assets of the Employer or of any
division or subsidiary thereof (the business and/or assets of which constitute
at least fifty percent (50%) of the total business and/or assets of the
Employer) to expressly assume and agree to perform the Employer’s obligations
under this Plan in the same manner and to the same extent that the Employer
would be required to perform them if such succession had not taken place.
Subject to Section 8.2, in any case where the successor is not an affiliate of
EIX (determined immediately after the transaction), failure of the Employer to
obtain such assumption and agreement in a written instrument prior to the
effective date of any such succession shall be a breach of this Plan and shall
entitle Eligible Employees employed by that Employer to benefits under this
Plan.

8.2 Sale, Spin-Off, or Liquidation of an Employer

Except as provided in the following two sentences, if EIX sells (regardless of
whether pursuant to a stock sale or sale of all or substantially all of the
business and/or assets of the Employer), spins-off or liquidates an Employer
(other than EIX), this Plan shall be deemed to have been terminated as to all
Eligible Employees employed by that Employer and such Eligible Employees shall
have no further rights under this Plan and shall have no right to any payment or
benefits under this Plan in respect of such termination. If such a sale,
spin-off or liquidation occurs after a Potential Change in Control has occurred
(and the Board has not declared in good faith that the circumstances giving rise
to the Potential Change in Control will not result in an actual Change in
Control) or during a Protected Period, the preceding sentence shall not apply
with respect to any Eligible Employee who was employed immediately prior to the
Potential Change in Control or start of the Protected Period, as applicable, by
EIX or an Employer other than the Employer that is sold, spun off, or
liquidated. The first sentence of this Section 8.2 will not apply to an Eligible
Employee if (i) the Employer has entered a written agreement with the Eligible
Employee, (ii) the agreement has been approved by an officer of EIX, (iii) the
agreement provides specific conditions under which the Eligible Employee will
eligible for the benefits described in Section 2.3 in connection with the sale
or spin-off of the Employer, and (iv) those conditions are met.

ARTICLE 9

ADMINISTRATION OF THE PLAN

9.1 Administrator Action

The Administrator shall act at meetings by affirmative vote of a majority of the
members of the Administrator. Any action permitted to be taken at a meeting may
be taken

 

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without a meeting if, prior to such action, a written consent to the action is
signed by all members of the Administrator and such written consent is filed
with the minutes of the proceedings of the Administrator. A member of the
Administrator shall not vote or act upon any matter which relates solely to
himself or herself as an Eligible Employee. The Chairman or any other member or
members of the Administrator designated by the Chairman may execute any
certificate or other written direction on behalf of the Administrator.

9.2 Powers and Duties of the Administrator

The Administrator shall enforce this Plan in accordance with its terms, shall be
charged with the general administration of this Plan, and shall have all powers
necessary to accomplish its purposes, including, but not by way of limitation,
the power and authority to do the following:

(a) To determine eligibility for and participation in this Plan;

(b) To construe and interpret the terms and provisions of this Plan;

(c) To compute and certify to the amount and kind of benefits payable to
Eligible Employees and their Beneficiaries, and to determine the amount of
withholding taxes to be deducted pursuant to Article 3;

(d) To maintain all records that may be necessary for the administration of this
Plan;

(e) To provide for the disclosure of all information and the filing or provision
of all reports and statements to Eligible Employees, Beneficiaries or
governmental agencies as shall be required by law;

(f) To make and publish such rules for the regulation of this Plan and
procedures for the administration of this Plan as are not inconsistent with the
terms hereof; and

(g) To appoint a plan administrator or any other agent (which may include,
without limitation, one or more employees of EIX), and to delegate to them such
powers and duties in connection with the administration of this Plan as the
Administrator may from time to time prescribe.

9.3 Plan Interpretation

The Administrator will administer the Plan and interpret, construe and apply its
provisions in accordance with its terms and will provide direction and oversight
as necessary to management, staff, or contractors to whom day-to-day Plan
operations may be delegated. The Administrator will establish, adopt or revise
such rules and regulations as it may deem necessary or advisable for the
administration of the Plan. All decisions of the Administrator will be final and
binding.

 

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9.4 Information

To enable the Administrator to perform its functions, each Employer shall supply
full and timely information to the Administrator on all matters relating to the
compensation of all Eligible Employees, their death or other cause of
termination, and such other pertinent facts as the Administrator may require.

9.5 Compensation, Expenses and Indemnity

The members of the Administrator shall serve without additional compensation for
their services hereunder beyond that which they are entitled as authorized by
the Board. The Administrator is authorized at the expense of EIX to employ such
legal counsel as it may deem advisable to assist in the performance of its
duties hereunder. EIX shall pay expenses and fees in connection with the
administration of this Plan. To the extent permitted by applicable law, EIX
shall indemnify and save harmless the Administrator and each member thereof, the
Board and each member thereof, and delegates of the Administrator who are
employees of EIX against any and all expenses, liabilities and claims, including
legal fees to defend against such liabilities and claims arising out of their
discharge in good faith of responsibilities under or incident to this Plan,
other than expenses and liabilities arising out of willful misconduct. This
indemnity shall not preclude such further indemnities as may be available under
insurance purchased by EIX or provided by EIX under any bylaw, agreement or
otherwise, as such indemnities are permitted under state law.

ARTICLE 10

MISCELLANEOUS

10.1 Release and Agreement

Notwithstanding anything else contained herein to the contrary, each Employer’s
obligation to pay benefits to an Eligible Employee is subject to the condition
precedent that the Eligible Employee execute a valid and effective Severance
Agreement in the form attached hereto as Exhibit A (or such other form, which is
substantially the same as the form attached hereto as Exhibit B, as the
Administrator may require) and such executed agreement is received by EIX and
the Eligible Employee’s Employer no later than 60 days after the Eligible
Employee’s Termination Date and is not revoked by the Eligible Employee or
otherwise rendered unenforceable by the Eligible Employee.

10.2 Term of the Plan

(a) This Plan will commence on the Effective Date and shall continue in effect
through December 31, 2008. However, at the end of such initial period and, if
extended, at the end of each additional year thereafter, the term of this Plan
shall be extended automatically for one additional year, unless the
Administrator (or the Board) delivers written notice at least six months prior
to the end of such term, or extended term, to each Eligible Employee that this
Plan will not be extended, and if such notice is timely given this Plan will
terminate at the end of the term then in progress; provided, however, that this
provision for automatic extension shall have no application following a

 

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Potential Change in Control (unless and until the Board declares in good faith
that the circumstances giving rise to the Potential Change in Control will not
result in an actual Change in Control) or a Change in Control, in which case the
provisions of Section 10.2(b) or Section 10.2(c), respectively, shall apply.

(b) If a Potential Change in Control occurs, the Administrator (or the Board)
may not give notice that the term of this Plan will not be extended, or will not
be further extended, as the case may be, unless and until the Board declares in
good faith that the circumstances giving rise to the Potential Change in Control
will not result in an actual Change in Control or an actual Change in Control
occurs.

(c) In the event a Change in Control occurs during the initial or any extended
term, this Plan will remain in effect for the longer of:

(1) twenty-four months beyond the month in which such Change in Control
occurred; or

(2) as to any Eligible Employee who incurs a Qualifying Termination Event, until
all obligations of each Employer hereunder to that Eligible Employee have been
fulfilled. Any subsequent Change in Control (“Subsequent Change in Control”)
that occurs during the initial or any extended term shall also continue the term
of this Plan until the later of:

(i) twenty-four months beyond the month in which such Subsequent Change in
Control occurred; or

(ii) as to any Eligible Employee who incurs a Qualifying Termination Event,
until all obligations of each Employer hereunder have been fulfilled to that
Eligible Employee; provided, however, that if a Subsequent Change in Control
occurs, it shall only be considered a Change in Control under this Plan if it
occurs no later than twenty-four months after the immediately preceding Change
in Control or Subsequent Change in Control.

(d) The foregoing provisions of this Section 10.2 are subject to the provisions
of Section 8.2 as to any Eligible Employee that is employed by an Employer that
is sold or spun-off by EIX.

10.3 Employment Status

Except as may be provided under any other written agreement between an Eligible
Employee and his or her Employer, the employment of the Eligible Employee by his
or her Employer is “at will,” and may be terminated by either the Eligible
Employee or the Employer at any time, subject to applicable law. Payments made
under this Plan shall not give any person the right to any benefits provided to
persons retained in an Employer’s employ (such as, without limitation, health
and dental benefits). Except as may otherwise be required by law or set forth
specifically in such plans or as otherwise expressly provided in this Plan, such
benefits shall terminate as of the date the Eligible Employee’s employment by an
Employer terminates.

 

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10.4 Gender, Singular and Plural

All pronouns and variations thereof will be deemed to refer to the masculine,
feminine, or neuter, as the identity of the person or persons may require. As
the context may require, the singular may be read as the plural and the plural
as the singular.

10.5 Validity

If any provision of the Plan is held invalid, void or unenforceable, the same
will not affect, in any respect whatsoever, the validity of any other provisions
of the Plan.

10.6 Modification

The Administrator or the Board may from time to time amend this Plan in any way
it determines to be advisable; provided, however, that no such amendment shall
be effective without the consent of each affected Eligible Employee (or the
Eligible Employee’s legal representative) if it is adopted (a) after a Potential
Change in Control (unless and until the Board determines in good faith that the
circumstances giving rise to the Potential Change in Control will not result in
an actual Change in Control or an actual Change in Control occurs), or
(b) during a Protected Period. No provision of this Plan may be waived unless as
to an Eligible Employee such waiver is agreed to in writing and signed by the
Eligible Employee (or the Eligible Employee’s legal representative) and by an
authorized member of the Administrator (or the Board) or its designee or legal
representative.

10.7 Notice

For purposes of this Plan, notices, including Notice of Termination, and all
other communications provided for in this Plan shall be in writing and shall be
deemed to have been duly given when delivered or on the date stamped as received
by the U.S. Postal Service for delivery by certified or registered mail, postage
prepaid and addressed:

(a) if to the Eligible Employee, to his or her latest address as reflected on
the records of EIX or his or her Employer, and

(b) if to an Employer, to the attention of EIX’s Corporate Secretary at the
address of EIX’s principal executive offices; or to such other address as either
party may furnish to the other in writing for the delivery of notices to that
party, with specific reference to this Plan and the importance of the notice,
except that a notice of change of address shall be effective only upon receipt
by the other party.

10.8 Applicable Law

The Plan will be governed and construed in accordance with the laws of
California except where the laws of California are preempted by ERISA.

 

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10.9 WARN Act

Benefits payable under this Plan are intended to satisfy, where applicable, any
EIX or other Employer’s obligations under the Federal Worker Adjustment and
Retraining Notification Act and any similar obligations that EIX or any other
Employer may have under any successor or other severance pay statute.

10.10 Statutes and Regulations

Any reference to a statute or regulation herein shall include any successor to
such statute or regulation.

IN WITNESS WHEREOF, EIX has caused its duly authorized officer to execute this
restatement of the Plan effective January 1, 2008.

 

EDISON INTERNATIONAL

/s/ Diane L. Featherstone

Diane L. Featherstone, Senior Vice President

Dated: 

   

 

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EXHIBIT A

SEVERANCE AGREEMENT

This Severance Agreement (this “Agreement”), made this          day of
                            ,              (the “Termination Date”), by and
between                                 , an individual (the “Individual”), and
Edison International, a California corporation (the “Company”), is a severance
agreement that includes a release, a confidentiality agreement, and an agreement
not to solicit employees or customers, and certain other terms and conditions.

RECITALS

A. The Individual and the Company desire to terminate the Individual’s
employment by the Company and/or one or more of its current or former
subsidiaries or affiliates (collectively, the Company and its current or former
subsidiaries and affiliates are referred to herein as the “Company Group”).

B. The Individual and the Company further desire to resolve all pending and
potential actions and issues between the Individual and each member of the
Company Group without the further expenditure of time and expense of litigation
and, for that reason, have entered into this Agreement.

C. The Company maintains the Edison International Executive Severance Plan (the
“Plan”). The Company’s (and/or another member of the Company Group’s) obligation
to pay severance benefits to the Individual under and in accordance with the
terms of the Plan, which benefits are summarized and attached to this Agreement
as Exhibit A (the “Severance Benefits”), is subject to the condition precedent
that the Company receive this Agreement from the Individual and that the
Individual does not revoke or otherwise render this Agreement unenforceable.

AGREEMENT

In consideration of the covenants undertaken and the releases contained in this
Agreement, and the Individual’s right to receive the Severance Benefits, the
Individual and the Company agree as follows:

1. Termination of Employment

The Individual and the Company agree that the Individual’s employment by the
Company and/or one or more of the other members of the Company Group shall be,
and it hereby is, terminated. Accordingly, the Individual hereby resigns any and
all of his or her positions, offices, and/or directorships with each entity in
the Company Group and any employment agreement(s) between the Individual and one
or more members of the Company Group be, and they hereby are, terminated.

 

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2. Severance Benefit

The Company and/or the appropriate member of the Company Group will pay to the
Individual the Severance Benefits in accordance with the terms of the Plan.

3. Release by the Individual

Except for those obligations created by or arising out of this Agreement, the
Individual on behalf of himself or herself, his or her descendants, dependents,
heirs, executors, administrators, assigns, and successors, and each of them,
hereby covenants not to sue and fully releases and discharges the Company, its
parent (if any), the Company’s subsidiaries and affiliates, past and present,
and each of them, as well as its and their trustees, directors, officers,
agents, attorneys, insurers, employees, stockholders, representatives, assigns,
and successors, past and present, and each of them, hereinafter together and
collectively referred to as “Releasees,” with respect to and from any and all
claims, wages, demands, rights, liens, agreements, contracts, covenants,
actions, suits, causes of action, obligations, debts, costs, expenses,
attorneys’ fees, damages, judgments, orders and liabilities of whatever kind or
nature in law, equity or otherwise, whether now known or unknown, suspected or
unsuspected, and whether or not concealed or hidden, which he or she now owns or
holds or he or she has at any time heretofore owned or held or may in the future
hold as against said Releasees, arising out of or in any way connected with the
Individual’s employment relationship with any member of the Company Group, or
the termination of his or her employment or any other transactions, occurrences,
acts or omissions or any loss, damage or injury whatever, known or unknown,
suspected or unsuspected, resulting from any act or omission by or on the part
of said Releasees, or any of them, committed or omitted prior to the date of
this Agreement including, without limiting the generality of the foregoing, any
claim under Section 1981 of the Civil Rights Act of 1866, Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Family and Medical Leave Act of 1993, the California Fair
Employment and Housing Act, the California Family Rights Act, any other claim
under any other federal, state or local law or regulation, and any other claim
for severance pay, bonus or incentive pay, sick leave, holiday pay, vacation
pay, life insurance, health or medical insurance or any other fringe benefit,
medical expenses, or disability (except vested benefits that the Individual may
be entitled to receive under and in accordance with the terms of the Plan, as
such benefits are outlined in Exhibit A hereto, or vested benefits that the
Individual may be entitled to receive under and in accordance with the terms of
the [Company to list any other plans in which the Individual has a vested right
to receive benefits following the Termination Date]). Exhibit A is incorporated
herein by this reference.

4. Known and Unknown Claims

It is the intention of the Individual and the Company in executing this
instrument that the same shall be effective as a bar to each and every claim,
demand and cause of action hereinabove specified. In furtherance of this
intention, the Individual hereby expressly waives any and all rights and
benefits conferred upon him or her by

 

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the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and expressly
consents that this Agreement shall be given full force and effect according to
each and all of its express terms and provisions, including those related to
unknown and unsuspected claims, demands and causes of action, if any, as well as
those relating to any other claims, demands and causes of action hereinabove
specified. SECTION 1542 provides: “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.” The Individual acknowledges that he or she may
hereafter discover claims or facts in addition to or different from those which
he or she now knows or believes to exist with respect to the subject matter of
this Agreement and which, if known or suspected at the time of executing this
Agreement, may have materially affected this settlement. Nevertheless, the
Individual hereby waives any right, claim or cause of action that might arise as
a result of such different or additional claims or facts. The Individual
acknowledges that he or she understands the significance and consequence of such
release and such specific waiver of SECTION 1542.

5. Other Waiver by the Individual

The Individual expressly acknowledges and agrees that, by entering into this
Agreement, he or she is waiving any and all rights or claims that he or she may
have arising under the Age Discrimination in Employment Act of 1967, as amended,
which have arisen on or before the date of execution of this Agreement.

6. Confidentiality

The Individual represents and covenants that he or she has not previously and
that he or she will not at any time, unless compelled by lawful process,
disclose or use for his or her own benefit or purposes or the benefit or
purposes of any other person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise other than the
Company, any trade secrets, or other confidential data or information relating
to customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, financing methods, or plans of
any member of the Company Group; provided that the foregoing shall not apply to
information which is generally known to the industry or the public other than as
a result of the Individual’s breach of this covenant. The Individual agrees that
he or she will return to the Company immediately all memoranda, books, papers,
plans, information, letters and other data, and all copies thereof or therefrom,
in any way relating to the business of any entity within the Company Group,
except that he or she may retain personal notes, notebooks and diaries that do
not contain confidential information of the type described in the preceding
sentence. The Individual further agrees that he or she will not retain or use
for his or her account at any time any trade names, trademark or other
proprietary business designation used or owned in connection with the business
of any entity within the Company Group.

 

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7. No Solicitation

The Individual represents and covenants that he or she has not previously and
that during the period commencing on the date hereof and ending on the second
anniversary of the date hereof (the “Limitation Period”) he or she will not
influence or attempt to influence customers of any entity within the Company
Group (as it may now or in the future be composed), either directly or
indirectly, to divert their business away from the Company Group to any
individual, partnership, firm, corporation or other entity then in competition
with the business of any entity within the Company Group. The Individual
represents and covenants that he or she has not previously and that he or she
will not at any time during the Limitation Period directly or indirectly solicit
any person who is then, or at any time within six months prior thereto was, an
employee of an entity within the Company Group who earned annually $25,000 or
more as an employee of such entity during the last six months of his or her own
employment to work for any business, individual, partnership, firm, corporation,
or other entity then in competition with the business of any entity within the
Company Group.

8. Representations by the Individual

The Individual further expressly acknowledges, represents, and agrees that:

a. He or she was not otherwise entitled to the Severance Benefits (in the event
that the Individual is entitled to severance benefits under any federal or state
law, the Individual acknowledges, represents and agrees that he or she was not
otherwise entitled the level of Severance Benefits being offered and that such
benefits exceed the minimum required statutory level of benefits that he or she
may have otherwise been entitled to);

b. His or her right to receive the Severance Benefits is consideration for his
or her agreements herein and the Severance Benefits (to the extent that they
exceed any minimum required statutory level of benefits) would not be paid if he
or she did not execute and deliver this Agreement;

c. The restrictions on him or her which are set forth in Sections 6 and 7 are
reasonable;

d. He or she was orally advised by the Company and is hereby advised in writing
by this Agreement to consult with an attorney before signing this Agreement;

e. He or she was given a copy of this Agreement on the Termination Date, and
informed that he or she had up to forty-five (45) days within which to consider
the Agreement;

f. He or she was informed that he or she has seven (7) days following the date
of execution of the Agreement in which to revoke the Agreement; and

g. He or she has had the opportunity to consult with his or her advisors and
attorneys regarding

 

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this Agreement (including, without limitation, its terms, conditions, and
effects) and represents that he or she has so consulted with such advisors and
attorneys.

9. Confidentiality of the Agreement

The parties agree that the terms and conditions of this Agreement shall remain
confidential as between the parties and they shall not, except as required by
law, disclose them to any other person other than family members, and legal and
financial advisors. Without limiting the generality of the foregoing, the
parties will not respond to or in any way participate in or contribute to any
public discussion, notice or other publicity concerning, or in any way relating
to, execution of this Agreement or the events (including any negotiations) which
led to the termination of the Individual’s employment. Without limiting the
generality of the foregoing, the Individual specifically agrees that he or she
shall not disclose information regarding this Agreement or the termination of
his or her employment to any current or former employee of any entity in the
Company Group (other than the Company’s executive officers), except to the
extent required by law or authorized in writing by the Company’s General
Counsel. The Individual hereby agrees that disclosure by him or her of any of
the terms and conditions of this Agreement in violation of the foregoing shall
constitute and be treated as a material breach of this Agreement.

10. No Prior Assignment or Transfer

The Individual warrants and represents to the Company that he or she has not
heretofore assigned or transferred to any person not a party to this Agreement
any released matter or any part or portion thereof and he or she shall defend,
indemnify and hold harmless the Releasees from and against any claim (including
the payment of attorneys’ fees and costs actually incurred whether or not
litigation is commenced) based on or in connection with or arising out of any
such assignment or transfer made, purported or claimed.

11. No Further Employment Rights

The Individual and the Company acknowledge that any employment relationship
between the Individual and the Company Group terminated on the Termination Date,
and that they have no further employment or contractual relationship except as
may arise out of this Agreement and that the Individual waives any right or
claim to reinstatement as an employee of any member of the Company Group. In the
event any member of the Company Group receives inquiries about the Individual
from prospective employers, such member shall provide to such persons or
entities only the following information: confirmation of the Individual’s
employment dates, position history, salary history, and that the Individual’s
employment with the Company Group was mutually terminated.

12. Taxes

The Individual agrees that he or she shall be exclusively liable for the payment
of all federal and state taxes which may be due as the result of the

 

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consideration that he or she receives pursuant to this Agreement and the
Individual hereby represents that he or she shall make payments on such taxes at
the time and in the amount required of him or her. In addition, the Individual
hereby agrees fully to defend, indemnify and hold harmless Releasees and each of
them from payment of taxes or penalties that are required of them by any
government agency at any time as the result of payment of the consideration set
forth herein. The individual further agrees to comply with the provisions of
Article 7 of the Plan including, without limitation, the notice and repayment
provisions thereof. The Individual further agrees to provide the Releasees and
each of them with any tax information that they or it may reasonably request.

13. Beneficiaries and Successors

Each Releasee shall be deemed to be a beneficiary of the Individual’s promises
and representations made herein. In the event of a merger, consolidation, or
transfer or sale of all or substantially all of the assets of the Company with
or to any other individual(s) or entity, this Agreement shall inure to the
benefit of such successor. In the event of a merger, transfer or sale of the
stock or assets of an entity in the Company Group that results in such entity
not continuing as a member of the Company Group, the Individual’s promises and
representations made herein shall continue to inure to the benefit of such
entity as well as the Company.

14. Entire Agreement

This instrument constitutes and contains the entire agreement and understanding
concerning the Individual’s relationship with the Company Group, the termination
of the Individual’s employment, and the other subject matters addressed herein
between the parties, and supersedes and replaces all prior negotiations and all
agreements proposed or otherwise, whether written or oral, concerning the
subject matters hereof. This is an integrated document.

15. Revocability

The Individual may revoke this Agreement in its entirety during the seven
(7) days following execution of this Agreement by the Individual. Any revocation
of this Agreement must be in writing, clearly state that it is a revocation of
this Agreement, and be hand delivered to, or delivered in such a manner to
ensure receipt by, the General Counsel of the Company during the revocation
period. This Agreement will become effective, enforceable, and irrevocable upon
seven (7) days following its execution by the Individual, unless it is revoked
during the seven-day period.

16. Severability

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

 

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17. Governing Law

This Agreement shall be deemed to have been executed and delivered within the
State of California, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, the laws of
the State of California without regard to principles of conflict of laws.

18. Mandatory Arbitration

Except for the injunctive relief provided for and contemplated by the following
paragraph, which is expressly hereby excluded from this paragraph, any dispute
or controversy between the Individual, on the one hand, and the Company (or any
other Releasee), on the other hand, in any way arising out of, related to, or
connected with this Agreement or the subject matter thereof, or arising out of
or related to any other dispute between the Individual and the Company or any
other member of the Company Group, now or in the future, shall be resolved
through final and binding arbitration in Los Angeles, California, in accordance
with the arbitration provisions contained in the Plan. It is further expressly
agreed that Company will or would suffer irreparable injury if the Individual
were to breach Section 6 or 7 of this Agreement and that, regardless of the
dispute resolution provisions set forth in the foregoing paragraph, the Company
would by reason of such breach or potential breach be entitled to injunctive
relief in a court of appropriate jurisdiction, and the Individual further
consents and stipulates to the entry of such injunctive relief in such a court
prohibiting the Individual from engaging in any act, conduct, or relationship in
violation of, or that would reasonably result in a violation of, this Agreement.

19. Counterparts, Headings

This Agreement may be executed in counterparts, and each counterpart, when
executed, shall have the efficacy of a signed original. Photographic copies of
such signed counterparts may be used in lieu of the originals for any purpose.
The headings in this Agreement are only for convenience and ease of reference
and are not to be considered in construction or interpretation.

20. Waiver, Amendment

Failure to insist upon strict compliance with any of the terms, covenants, or
conditions hereof shall not be deemed a waiver of such term, covenant, or
condition, nor shall any waiver or relinquishment of, or failure to insist upon
strict compliance with, any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times. No waiver shall be binding unless in writing and signed by the party
waiving the breach. No amendment of any term or provision of this Agreement
shall be binding unless in writing and signed by all parties to this Agreement.

21. No Presumption

 

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In entering this Agreement, the parties represent that they have had full
opportunity to consult with attorneys of their own choice, that the parties have
completely read and understood the terms of this Agreement and voluntarily
accepted such terms. If an ambiguity or question of intent or interpretation
arises, this Agreement will be construed as if drafted jointly by the parties,
and no presumption or burden of proof will arise favoring or disfavoring any
party because it or its representatives drafted any of the provisions of this
Agreement.

22. Additional Acts

All parties agree to cooperate fully and to execute any and all supplementary
documents and to take all additional actions that may be necessary or
appropriate to give full force to the basic terms and intent of this Agreement
and which are not inconsistent with its terms.

23. I have read the foregoing Agreement and I accept and agree to the provisions
it contains and hereby execute it voluntarily with full understanding of its
consequences. I declare under penalty of perjury under the laws of the United
States and the State of California that the foregoing is true and correct.

EXECUTED on the Termination Date at Los Angeles County, California.

The Individual Signature:                                
                                                              

Print Name:                                    
                                        
                                            

EXECUTED on the Termination Date at Los Angeles County, California.

The Company

By:                                      
                                        
                                                           

Print Name:                                    
                                        
                                            

Its:                                      
                                        
                                                           

ENDORSEMENT

I                                          (the Individual named in the
foregoing Agreement), hereby acknowledge that I was given 45 days to consider
the foregoing Agreement and voluntarily chose to sign the Agreement prior to the
expiration of the 45-day period. I declare under penalty of perjury under the
laws of the United States and the State of California that the foregoing is true
and correct.

EXECUTED this              day of                                 ,
            , at Los Angeles County, California.

Signature:                                     
                                        
                                               

Print Name:                                    
                                        
                                            

 

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