Unassociated Document


    

      Exhibit
        10.3

      


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

      


      SEPARATION
        AGREEMENT

      


       

      This
        Separation Agreement (this “Agreement”) is made and entered into by and between
        Bruce R. Worthington and PG&E Corporation (the “Company”) (collectively the
“Parties”) and sets forth the terms and conditions of Mr. Worthington’s
        separation from employment with the Company.  The “Effective Date” of
        this Agreement is defined in paragraph 17(a).

       

      1.  Resignation.  Effective
        the close of business on November 10, 2006, Mr. Worthington will resign from
        his
        position as Senior Vice President and General Counsel of the
        Company.  Effective the close of business on April 6, 2007 (for
        purposes of this Agreement, the “Date of Resignation”), Mr. Worthington will
        resign from employment with the Company.  Regardless of whether Mr.
        Worthington accepts this Agreement, on his Date of Resignation, he will be
        paid
        all salary or wages and vacation accrued, unpaid and owed to him as of that
        date, he will remain entitled to any other benefits to which he is otherwise
        entitled under the provisions of the Company’s plans and programs, and he will
        receive notice of the right to continue his existing health-insurance coverage
        pursuant to COBRA.

       

      Upon
        the
        Date of Resignation, all unvested stock option grants, restricted stock grants,
        and performance share grants provided to Mr. Worthington under PG&E
        Corporation’s Long-Term Incentive Program and 2006 Long-Term Incentive Plan
        shall vest under the provisions governing termination by reason of retirement
        contained in each respective plan or program in effect at the time this
        agreement is signed by Mr. Worthington.  The payment, exercise, and
        withdrawal of Mr. Worthington’s vested stock option grants, restricted stock
        grants and performance share grants shall be as provided under the terms
        of
        their respective plans or program in effect at the time this agreement is
        signed
        by Mr. Worthington.

       

      In
        the
        event that officers in Mr. Worthington’s officer band are eligible for a payment
        under the Company’s Short-Term Incentive Plan (“STIP”) for the year in which the
        Date of Resignation occurs, the Company will make the STIP payment that he
        would
        have received assuming he would have been rated “proficient” in all competencies
        and that he had “met” the 2007 goals, pro-rated to reflect the number of months
        from the beginning of the year to the Date of Resignation under the provisions
        governing termination by reason of retirement.  The STIP payment, if
        any, will be made at such time as STIP payments are made to officers in his
        band.  Subject to the foregoing, the STIP Plan Administrator will have
        the sole discretion to determine the amount of STIP payment, consistent with
        the
        program guidelines for the year in which the Date of Resignation
        occurs.

       

      The
        benefits set forth in paragraph 2 below are conditioned upon Mr. Worthington’s
        acceptance of this Agreement.

       

      2.  Separation
        benefits.  In consideration of his acceptance of this
        Agreement, the Company will provide to Mr. Worthington the following separation
        benefits:

       

      a.  Severance
        payment.  Under the terms of the PG&E Corporation
        Officer

       


      
        
           

        

        
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      Severance
        Policy, Mr. Worthington’s severance payment amount is One Million Five Hundred
        Sixteen Thousand Six Hundred Seventy-Five Dollars
        ($1,516,675).  Within five business days after the Date of
        Resignation, but conditioned on the occurrence of the Effective Date of this
        Agreement as set forth in paragraph 17(a) below, the Company will make a
        lump-sum payment to Mr. Worthington in the gross amount of One Million
        Fifty-Three Thousand Dollars ($1,516,675), less applicable withholdings and
        deductions.

       

      b.  Career
        transition services.  For a maximum period of one year
        following the Date of Resignation, the Company will provide Mr. Worthington
        with
        executive career transition services from the firm of Torchiana, Mastrov
&
Sapiro, Inc., in accordance with the contract between the Company and Torchiana,
        Mastrov & Sapiro, Inc.  Mr. Worthington’s entitlement to services
        under this Agreement will terminate when he becomes employed on a full-time
        basis, either by another employer or through self-employment.  If Mr.
        Worthington becomes employed, as defined, he will promptly notify PG&E
        Corporation’s Human Resources Officer to enable the Company to end the provision
        of services to him by Torchiana, Mastrov & Sapiro, Inc.

       

      c.  Payment
        of COBRA premiums.  If Mr. Worthington elects and is
        otherwise eligible to continue his existing health-insurance coverage pursuant
        to COBRA, the Company will pay his monthly COBRA premiums for the eighteen-month
        period commencing the first full month after the Date of Resignation and
        until
        and unless Mr. Worthington becomes covered under the health-insurance plan
        of
        another employer or through self-employment.  Mr. Worthington will
        promptly notify the PG&E Corporation’s Human Resources Officer if he becomes
        employed within that period.

       

      3.  Defense
        and indemnification in third-party claims.  The Company
        and/or its parent, affiliate, or subsidiary will provide Mr. Worthington
        with
        legal representation and indemnification protection in any legal proceeding
        in
        which he is a party or is threatened to be made a party by reason of the
        fact
        that he is or was an employee or officer of the Company and/or its parent,
        affiliate or subsidiary, in accordance with the terms of the resolution of
        the
        Board of Directors of PG&E Corporation dated December 18, 1996.

       

      4.  Cooperation
        with legal proceedings.  Mr. Worthington will, upon
        reasonable notice, furnish information and proper assistance to the Company
        and/or its parent, affiliate or subsidiary (including truthful testimony
        and
        document production) as may reasonably be required by them or any of them
        in
        connection with any legal, administrative or regulatory proceeding in which
        they
        or any of them is, or may become, a party, or in connection with any filing
        or
        similar obligation imposed by any taxing, administrative or regulatory authority
        having jurisdiction, provided, however, that the Company and/or its parent,
        affiliate or subsidiary will pay all reasonable expenses incurred and income
        foregone by Mr. Worthington in complying with this paragraph.

       

      5.  Release
        of claims and covenant not to sue.

       

      a.  In
        consideration of the separation benefits and other benefits the Company is
        providing under this Agreement, Mr. Worthington, on behalf of himself and
        his
        representatives, agents, heirs and assigns, waives, releases, discharges
        and
        promises never to

       


      
        
           

        

        
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      assert
        any and all claims, liabilities or obligations of every kind and nature,
        whether
        known or unknown, suspected or unsuspected that he ever had, now has or might
        have as of the Effective Date against the Company or its predecessors, parent,
        affiliates, subsidiaries, shareholders, owners, directors, officers, employees,
        agents, attorneys, successors, or assigns.  These released claims
        include, without limitation, any claims arising from or related to Mr.
        Worthington’s employment with the Company, its parent or any of its affiliates
        and subsidiaries, and the termination of that employment.  These
        released claims also specifically include, but are not limited, any claims
        arising under any federal, state and local statutory or common law, such
        as (as
        amended and as applicable) Title VII of the Civil Rights Act, the Age
        Discrimination in Employment Act, the Americans With Disabilities Act, the
        Employee Retirement Income Security Act, the California Fair Employment and
        Housing Act, the California Labor Code, any other federal, state or local
        law
        governing the terms and conditions of employment or the termination of
        employment, and the law of contract and tort; and any claim for attorneys’
fees.

       

      b.  Mr.
        Worthington acknowledges that there may exist facts or claims in addition
        to or
        different from those which are now known or believed by him to
        exist.  Nonetheless, this Agreement extends to all claims of every
        nature and kind whatsoever, whether known or unknown, suspected or unsuspected,
        past or present, and Mr. Worthington specifically waives all rights under
        Section 1542 of the California Civil Code which provides that:

       

      
        	
                 

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

              


      

       

      c.  With
        respect to the claims released in the preceding paragraphs, Mr. Worthington
        will
        not initiate or maintain any legal or administrative action or proceeding
        of any
        kind against the Company or its predecessors, parent, affiliates, subsidiaries,
        shareholders, owners, directors, officers, employees, agents, attorneys,
        successors, or assigns, for the purpose of obtaining any personal relief,
        nor
        (except as otherwise required or permitted by law) assist or participate
        in any
        such proceedings, including any proceedings brought by any third
        parties.

       

      6.  Re-employment.  Mr.
        Worthington will not seek any future re-employment with the Company, its
        parent
        or any of its subsidiaries or affiliates.  This paragraph will not,
        however, preclude Mr. Worthington from accepting an offer of future employment
        from the Company, its parent or any of its subsidiaries or
        affiliates.

       

      7.  Non-disclosure.

       

      a.  Mr.
        Worthington will not disclose, publicize, or circulate to anyone in whole
        or in
        part, any information concerning the existence, terms, and/or conditions
        of this
        Agreement without the express written consent of the PG&E Corporation’s
        Chief Legal Officer unless otherwise required or permitted by
        law.  Notwithstanding the preceding sentence, Mr. Worthington may
        disclose the terms and conditions of this Agreement to his family members,
        and
        any attorneys or tax advisors, if any, to whom there is a bona fide
        need for disclosure in order for them to render professional services to
        him,
        provided that the person first agrees to keep theinformation confidential
        and
        not to make any disclosure of the terms and conditions of this Agreement
        unless
        otherwise required or permitted by law.

       

      
        
           

        

        
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      b.  Mr.
        Worthington will not use, disclose, publicize, or circulate any confidential
        or
        proprietary information concerning the Company or its subsidiaries or
        affiliates, which has come to his attention during his employment with the
        Company, unless doing so is expressly authorized in writing by the PG&E
        Corporation’s Chief Legal Officer, or is otherwise required or permitted by
        law.  Before making any legally-required or permitted disclosure, Mr.
        Worthington will use his best efforts to give the Company notice at least
        ten
        (10) business days in advance.

       

      8.  No
        unfair competition.

       

      a.  Mr.
        Worthington will not engage in any unfair competition against the Company,
        its
        parent or any of its subsidiaries or affiliates.

       

      b.  For
        a
        period of one year after the Effective Date, Mr. Worthington will not, directly
        or indirectly, solicit or contact for the purpose of diverting or taking
        away or
        attempt to solicit or contact for the purpose of diverting or taking
        away:

       

      
        	
                (1)  

              	
                any
                  existing customer of the Company or its parent, affiliates or
                  subsidiaries;

              


      

       

      
        	
                (2)  

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

              


      

       

      
        	
                (3)  

              	
                any
                  existing vendor of the Company or its parent, affiliates or
                  subsidiaries;

              


      

       

      
        	
                (4)  

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

              


      

       

      
        	
                (5)  

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

              


      

       

      
        	
                (6)  

              	
                any
                  existing employee, agent or consultant of the Company or its parent,
                  affiliates or subsidiaries, to work in any capacity for or on behalf
                  of
                  any person, company or other business enterprise that is in competition
                  with the Company or its parent, affiliates
                  orsubsidiaries.

              


      

       

      
        
           

        

        
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      9.  Material
        breach by Employee.  In the event that Mr. Worthington
        breaches any material provision of this Agreement, including but not necessarily
        limited to paragraphs 4, 5, 6, 7, and/or 8, the Company will have no further
        obligation to pay or provide to him any unpaid amounts or benefits specified
        in
        this Agreement and will be entitled to immediate return of any and all amounts
        or benefits previously paid or provided to him under this Agreement and to
        recalculate any future pension benefit entitlement without the additional
        credited age he received or would have received under this
        Agreement.  Despite any breach by Mr. Worthington, his other duties
        and obligations under this Agreement, including his waivers and releases,
        will
        remain in full force and effect.  In the event of a breach or
        threatened breach by Mr. Worthington of any of the provisions in paragraphs
        4,
        5, 6, 7, and/or 8, the Company will, in addition to any other remedies provided
        in this Agreement, be entitled to equitable and/or injunctive relief and,
        because the damages for such a breach or threatened breach will be difficult
        to
        determine and will not provide a full and adequate remedy, the Company will
        also
        be entitled to specific performance by Mr. Worthington of his obligations
        under
        paragraphs 4, 5, 6, 7, and/or 8.

       

      10.  Material
        breach by the Company.  Mr. Worthington will be entitled to
        recover any loss, injury, or actual damages in the event of any material
        breach
        of this Agreement by the Company, including any unexcused late or non-payment
        of
        any amounts owed under this Agreement, or any unexcused failure to provide
        any
        other benefits specified in this Agreement.  In the event of a breach
        or threatened breach by the Company of any of its material obligations to
        him
        under this Agreement, Mr. Worthington will be entitled, in addition to any
        other
        remedies provided in this Agreement, to specific performance of the Company’s
        obligations and any other applicable equitable or injunctive
        relief.  Despite any breach by the Company, its other duties and
        obligations under this Agreement will remain in full force and
        effect.

       

      11.   No
        admission of liability.  This Agreement is not, and will not
        be considered, an admission of liability or of a violation of any applicable
        contract, law, rule, regulation, or order of any kind.

       

      12.  Complete
        agreement.  This Agreement sets forth the entire agreement
        between the Parties pertaining to the subject matter of this Agreement and
        fully
        supersedes any prior or contemporaneous negotiations, representations,
        agreements, or understandings between the Parties with respect to any such
        matters, whether written or oral (including any that would have provided
        Mr.
        Worthington with any different severance arrangements).  The Parties
        acknowledge that they have not relied on any promise, representation or
        warranty, express or implied, not contained in this Agreement.  Parol
        evidence will be inadmissible to show agreement by and among the Parties
        to any
        term or condition contrary to or in addition to the terms and conditions
        contained in this Agreement.

       

      13.  Severability.  If
        any provision of this Agreement is determined to be invalid, void, or
        unenforceable, the remaining provisions will remain in full force and
        effect.

       

      14.  Arbitration.  With
        the exception of any request for specific performance, injunctive or other
        equitable relief, any dispute or controversy of any kind arising out of or
        related to this Agreement, Mr. Worthington’s employment with the Company (or
        with theemploying subsidiary), the separation of Mr. Worthington from that
        employment and from his positions as an officer and/or director of the Company
        or any subsidiary or affiliate, or any claims for benefits, will be resolved
        exclusively by final and binding arbitration using a three-member arbitration
        panel in accordance with the Commercial Arbitration Rules of the American
        Arbitration Association currently in effect, provided, however, that in
        rendering their award, the arbitrators will be limited to accepting the position
        of Mr. Worthington or the Company.  The only claims not covered by
        this paragraph are any non-waivable claims for benefits under workers’
compensation or unemployment insurance laws, which will be resolved under
        those
        laws.  Any arbitration pursuant to this paragraph will take place in
        San Francisco, California.  The Parties may be represented by legal
        counsel at the arbitration but must bear their own fees for such representation
        in the first instance.  The prevailing party in any dispute or
        controversy covered by this paragraph, or with respect to any request for
        specific performance, injunctive or other equitable relief, will be entitled
        to
        recover, in addition to any other available remedies specified in this
        Agreement, all litigation expenses and costs, including any arbitrator,
        administrative or filing fees and reasonable attorneys’ fees, except as
        prohibited or limited by law.  The Parties specifically waive any
        right to a jury trial on any dispute or controversy covered by this
        paragraph.  Judgment may be entered on the arbitrators’ award in any
        court of competent jurisdiction.  Subject to the arbitration
        provisions of this paragraph, the sole jurisdiction and venue for any action
        related to the subject matter of this Agreement will be the California state
        and
        federal courts having within their jurisdiction the location of the Company’s
        principal place of business in California at the time of such action, and
        both
        Parties hereby consent to the jurisdiction of such courts for any such
        action.

      
        
           

        

        
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      15.  Governing
        law.  This Agreement will be governed by and construed under
        the laws of the United States and, to the extent not preempted by such laws,
        by
        the laws of the State of California, without regard to their conflicts of
        laws
        provisions.

       

      16.  No
        waiver.  The failure of either Party to exercise or enforce,
        at any time, or for any period of time, any of the provisions of this Agreement
        will not be construed as a waiver of that provision, or any portion of that
        provision, and will in no way affect that party’s right to exercise or enforce
        such provisions.  No waiver or default of any provision of this
        Agreement will be deemed to be a waiver of any succeeding breach of the same
        or
        any other provisions of this Agreement.

       

      17.  Acceptance
        of Agreement.

       

      a.  Mr.
        Worthington was provided up to 21 days to consider and accept the terms of
        this
        Agreement and was advised to consult with an attorney about the Agreement
        before
        signing it.  After signing the Agreement, Mr. Worthington will have an
        additional seven (7) days in which to revoke in writing acceptance of this
        Agreement.  To revoke, Mr. Worthington will submit a signed statement
        to that effect to PG&E Corporation’s Human Resources Officer before the
        close of business on the seventh day.  If Mr. Worthington does not
        submit a timely revocation, the Effective Date of this Agreement will be
        the
        eighth day after he has signed it.

       

      b.  Mr.
        Worthington acknowledges reading and understanding the contents of this
        Agreement, being afforded the opportunity to review carefully this Agreement
        with an attorney of his choice, not relying on any oral or written
        representation not contained in this

       

      
        
           

        

        
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       Agreement,
        signing this Agreement knowingly and voluntarily, and, after the Effective
        Date
        of this Agreement, being bound by all of its provisions.

       

      Dated:                                                          
                PG&E
        CORPORATION

       

       

                                      HYUN
        PARK                                     

      By:  Hyun
        Park

       

      Dated:  
        April 10,
        2007                                         BRUCE
        R.
        WORTHINGTON               

                      Bruce
        R. Worthington


      
        
           

        

        
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