Document:

Exhibit

Exhibit 10.28

THE SEMPRA ENERGY
DEFERRED COMPENSATION AND EXCESS SAVINGS PLAN
(As Amended and Restated Effective as of November 10, 2016)

TABLE OF CONTENTS

	
				
	ARTICLE I. DEFINITIONS
	 

	 
	 

	ARTICLE II. PARTICIPATION
	 

	 

	ARTICLE III. CONTRIBUTIONS
	 

	3.1
	 
	Elections to Defer Compensation and 401(k) Excess
	 

	3.2
	 
	Transfers from Prior Plans
	 

	3.3
	 
	Company Matching Contributions
	 

	3.4
	 
	FICA and Other Taxes
	 

	 

	ARTICLE IV. INVESTMENTS
	 

	4.1
	 
	Measurement Funds
	 

	4.2
	 
	Investment Elections
	 

	4.3
	 
	Investment of Transferred Accounts
	 

	4.4
	 
	Compliance with Section 16 of the Exchange Act
	 

	 

	ARTICLE V. ACCOUNTS

	5.1
	 
	Accounts
	 

	 

	ARTICLE VI. VESTING
	 

	 

	ARTICLE VII. DISTRIBUTIONS
	 

	7.1
	 
	Distribution of Accounts
	 

	7.2
	 
	Early Distributions
	 

	7.3
	 
	Hardship Distribution
	 

	7.4
	 
	Effect of a Change in Control
	 

	7.5
	 
	Inability to Locate Participant
	 

	7.6
	 
	Distributions Pursuant to QDROs
	 

	 

	ARTICLE VIII. ADMINISTRATION
	 

	8.1
	 
	Committee
	 

	8.2
	 
	Administrator
	 

	8.3
	 
	Committee Action
	 

	8.4
	 
	Powers and Duties of the Committee
	 

	8.5
	 
	Construction and Interpretation
	 

	8.6
	 
	Information
	 

	8.7
	 
	Compensation, Expenses and Indemnity
	 

	8.8
	 
	Quarterly Statements
	 

	8.9
	 
	Disputes
	 

	 

	ARTICLE IX. MISCELLANEOUS
	 

	9.1
	 
	Unsecured General Creditor
	 

	9.2
	 
	Restriction Against Assignment
	 

	
				
	9.3
	 
	Withholding
	 

	9.4
	 
	Amendment, Modification, Suspension or Termination
	 

	9.5
	 
	Designation of Beneficiary
	 

	9.6
	 
	Insurance
	 

	9.7
	 
	Governing Law
	 

	9.8
	 
	Receipt of Release
	 

	9.9
	 
	Compliance with Code Section 162(m)
	 

	9.10
	 
	Payments on Behalf of Persons Under Incapacity
	 

	9.11
	 
	Limitation of Rights
	 

	9.12
	 
	Exempt ERISA Plan
	 

	9.13
	 
	Notice
	 

	9.14
	 
	Errors and Misstatements
	 

	9.15
	 
	Pronouns and Plurality
	 

	9.16
	 
	Severability
	 

	9.17
	 
	Status
	 

	9.18
	 
	Headings
	 

	
	
	Sempra Energy

Deferred Compensation and Excess Savings Plan

Sempra Energy, a California corporation (“Sempra Energy”), and its direct and indirect subsidiaries previously maintained the Sempra Energy Deferred Compensation Plan for Directors, the Sempra Energy Executive Deferred Compensation Plan, the Sempra Energy Deferred Compensation Plan, the Sempra Energy Excess Savings Plan, the Pacific Enterprises Executive Deferred Compensation Plan, the Pacific Enterprises Deferred Compensation Plan for Directors, the Pacific Enterprises Deferred Compensation Plan, the San Diego Gas & Electric Co. deferred compensation agreements and the Enova deferred compensation agreements to provide supplemental retirement income benefits for certain directors and for a select group of management and highly compensated employees. Effective as of January 1, 2000, these plans and agreements were merged into the form of the Sempra Energy Deferred Compensation and Excess Savings Plan (the “Plan”) which was designed to provide supplemental retirement income benefits for certain directors and for a select group of management and highly compensated employees through deferrals of salary and incentive compensation and Company matching contributions.  The Plan was also designed to provide for benefits that could not be provided under the Sempra Energy Savings Plan due to the limitations of Code Sections 401(a)(17), 402(g) and 415.  
Effective as of January 1, 2005, Sempra Energy established the Sempra Energy 2005 Deferred Compensation Plan (now known as The Sempra Energy Employee and Director Savings Plan.  Effective as of December 31, 2004, the Plan was frozen as to participation and contributions and all amounts deferred under the Plan as of December 31, 2004 are intended to be “grandfathered” under Section 409A of the Code (as defined herein).  No person became a participant under the Plan and no amounts of compensation were deferred under the Plan after December 31, 2004, no deferral elections were made, or given effect for any period after, December 31, 2004, and any references to deferrals of compensation or other amounts shall be inoperative after December 31, 2004; provided, however, that further deferrals made in accordance with the terms and conditions of the Plan with respect to amounts deferred on or prior to December 31, 2004 are not affected by the cessation of deferrals of compensation after December 31, 2004.
The Plan is hereby amended and restated in the form set forth herein, effective as of November 10, 2016, to make clarifying and conforming changes.  None of the changes  included in this amendment and restatement are intended to cause any amounts deferred hereunder to cease to qualify as “grandfathered” amounts subject to Section 409A of the Code and the Plan  shall continue to be interpreted and administered in all respects as a “grandfathered” plan for purposes of Section 409A of the Code.  
ARTICLE I.

DEFINITIONS

Whenever the following words and phrases are used in this Plan, with the first letter capitalized, they shall have the meanings specified below.
(a)“Account” or “Accounts” shall mean a Participant’s Deferral Account, 401(k) Excess Account, Company Matching Account and/or Transferred Account.

(b)“Administrator” shall mean the individual(s) designated by the Committee (who need not be a member of the Committee) to handle the day-to-day Plan administration.  If the Committee does not make such a designation, the Administrator shall be the most senior officer of the Sempra Energy Human Resources Department.

(c)“Affiliate” has the meaning ascribed to such term in Rule 12b-2 promulgated under the Exchange Act.

(d)“Base Salary” shall mean a Participant’s annual base salary, excluding bonus, incentive and all other remuneration for services rendered to the Company, prior to reduction for any salary contributions to a plan established pursuant to Section 125 of the Code or qualified pursuant to Section 401(k) of the Code.

(e)“Beneficial Owner” has the meaning set forth in Rule 13d-3 under the Exchange Act.

(f)“Beneficiary” or “Beneficiaries” shall mean the person or persons, including a trustee, personal representative or other fiduciary, last designated in writing by a Participant to receive the benefits specified hereunder in the event of the Participant’s death in accordance with Section 9.5.  

(g)“Board of Directors” or “Board” shall mean the Board of Directors of Sempra Energy. 

(h)“Bonus” shall mean the annual incentive award earned by a Participant under the Company’s short-term incentive plan and other special payments or awards that may be granted by the Company from time to time.

(i)“Change in Control” shall be deemed to have occurred when:
(1)    Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Sempra Energy representing twenty percent (20%) or more of the combined voting power of Sempra Energy’s then outstanding securities; or 
(2)    The following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to, a consent solicitation, relating to the election of directors of Sempra Energy) whose appointment or election by the Board or nomination for election by Sempra Energy’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or 
(3)    There is consummated a merger or consolidation of Sempra Energy or any direct or indirect subsidiary of Sempra Energy with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of Sempra Energy outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of Sempra Energy or any subsidiary of Sempra Energy, at least sixty percent (60%) of the combined voting power of the securities of Sempra Energy or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of Sempra Energy (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly 

or indirectly, of securities of Sempra Energy (not including in the securities beneficially owned by such Person any securities acquired directly from Sempra Energy or its affiliates other than in connection with the acquisition by Sempra Energy or its affiliates of a business) representing twenty percent (20%) or more of the combined voting power of Sempra Energy’s then outstanding securities; or
 (4)    The shareholders of Sempra Energy approve a plan of complete liquidation or dissolution of Sempra Energy or there is consummated an agreement for the sale or disposition by Sempra Energy of all or substantially all of Sempra Energy’s assets, other than a sale or disposition by Sempra Energy of all or substantially all of Sempra Energy’s assets to an entity, at least sixty percent (60%) of the combined voting power of the voting securities of which are owned by shareholders of Sempra Energy in substantially the same proportions as their ownership of Sempra Energy immediately prior to such sale.
(j)“Code” shall mean the Internal Revenue Code of 1986, as amended.

(k)“Committee” shall mean the compensation committee of the Board of Directors.

(l)“Company” shall mean Sempra Energy and any successor corporations.  Company shall also include each corporation which is a member of a controlled group of corporations (within the meaning of Section 414(b) of the Code) of which Sempra Energy is a component member, if the Board provides that such corporation shall participate in the Plan and such corporation’s governing board of directors adopts this Plan.

(m)“Company Matching Account” shall mean the bookkeeping account maintained by the Company for each Participant that is credited with an amount equal to the Company Matching Contribution, if any, debited by amounts equal to all distributions to and withdrawals made by the Participant and/or his Beneficiary and adjusted for investment earnings and losses pursuant to Article V.  The Company Matching Account may be further subdivided into sub-accounts, one representing the Company Matching Contribution, if any, related to any deferral of Compensation, and a second representing the Company Matching Contribution, if any, related to any 401(k) Excess contributed to the Plan.

(n)“Company Matching Contributions” shall mean the employer matching contribution made to the Plan on behalf of Participants who make deferrals under Article III.

(o)“Compensation” shall mean Base Salary, Bonus and Dividend Equivalents that the Participant who is an employee is entitled to receive for services rendered to the Company.  In addition, for any Participant who is an Executive Officer, Compensation includes (i) SERP Lump Sum and (ii) Severance Payments.  Compensation shall mean retainer payments and/or meeting and other fees, received from the Company for services performed by any Participant as a Director.  Compensation earned for periods after December 31, 2004 shall not be taken into account under the Plan.

(p)“Deferral Account” shall mean the bookkeeping account maintained by the Company for each Participant that is credited with amounts equal to the portion of the Participant’s Compensation that he elects to defer pursuant to Section 3.1, debited by amounts equal to all distributions to and withdrawals made by the Participant and/or his Beneficiary and adjusted for investment earnings and losses pursuant to Article V.  The Deferral Account may be further subdivided into subaccounts as determined by the Committee or the Administrator.

(q)“Deferral Election Form” shall mean the form designated by the Committee or the Administrator for purposes of making deferrals under Section 3.1.

(r)“Director” shall mean an individual who is a non-employee member of the Board.

(s)“Disability” shall mean a “disability” as defined in the Company’s long-term disability plan, as then in effect.  

(t)“Distributable Amount” shall mean the sum of the vested balance of a Participant’s Deferral Account, 401(k) Excess Account, Company Matching Account and Transferred Account.

(u)“Dividend Equivalent” shall mean the phantom dividends relating to post-July 1, 1998 stock option grants under the 1998 Sempra Energy Long-Term Incentive Plan which are eligible for deferral.

(v)“Early Distribution” shall mean an election by a Participant in accordance with Section 7.2 to receive a withdrawal of amounts from his or her Deferral Account, Transferred Account, Company Matching Account and 401(k) Excess Account prior to the time in which such Participant would otherwise be entitled to such amounts.

(w)“Effective Date” shall mean January 1, 2000.

(x)“Election Period” shall mean the period designated by the Committee or the Administrator; provided, however, that such period shall be no less than ten (10) business days.

(y)“Eligible Individual” shall mean those individuals selected by the Committee from (i) those employees of the Company who either (A) are Executive Officers or (B) have Base Salary for a calendar year that is at least $120,000, as adjusted by the Committee from time to time and (ii) those Directors who are not employees of the Company.  The Committee may, in its sole discretion, select such other individuals to participate in the Plan who do not otherwise meet the foregoing criteria.  No person shall be an Eligible Individual for periods after December 31, 2004.

(z)“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

(aa)    “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder.

(bb)    “Executive Officer” shall mean an employee of the Company who was a Participant in the Plan as an Executive Officer as of December 31, 2004. 

(cc)    “401(k) Excess Account” shall mean the bookkeeping account maintained by the Company for each Participant that is credited with amounts equal to the Participant’s 401(k) Excess that he elects to defer pursuant to Section 3.1, debited by amounts equal to all distributions to and withdrawals made by the Participant and/or his Beneficiary and adjusted for investment earnings and losses pursuant to Article V.

(dd)    “401(k) Excess” shall mean the amount, if any, which a Participant may not contribute to the applicable 401(k) Plan by reason of Code Section 401(a)(17) or 415 and the regulations issued 

thereunder, or which may not be contributed to the applicable 401(k) Plan by reason of the limitations set forth in Code Section 402(g).

(ee)    “401(k) Plan” shall mean the Sempra Energy Savings Plan maintained by the Company under Code Section 401(k), as in effect from time to time or as applicable for any Participant, a plan maintained by a direct or indirect subsidiary of the Company under Code Section 401(k).

(ff)    “Manager” shall mean an employee of the Company who was a Participant in the Plan as a Manager as of December 31, 2004.

(gg)    “Measurement Fund” shall mean one or more of the investment funds selected by the Committee pursuant to Section 4.1.

(hh)    Moody’s  Plus Rate” shall mean the Moody’s Rate (as defined below) plus the greater of  (i) 10% of the Moody’s Corporate Bond Yield Average - Monthly Average Corporates as published by Moody’s Investors Service, Inc. (or any successor) or (ii) one percentage point per annum. The Moody’s Rate for the month of June means the average of the daily Moody’s Corporate Bond Yield Average - Monthly Average Corporates for the month of June.

(ii)    “Participant” shall mean any Eligible Individual who became a Participant in accordance with Article II and who has not received a complete distribution of the amounts credited to his Account.

(jj)    “Payroll Date” shall mean, with respect to any Participant, the date on which he would otherwise be paid Compensation.

(kk)    “Payment Date” shall mean (1) the first business day of the month which is at least thirty (30) days after the date of the Participant's Termination or Retirement, or (2) if elected, at least one (1) year prior to the Participant's Termination or Retirement, the first business day of January of a designated year which is no later than the first business day of January of the fifth year following the year in which the Participant has a Termination or Retirement.  The Scheduled Withdrawal Date elected in accordance with the provisions of Section 7.1(b) shall also be a “Payment Date”.  

(ll)    “Person” means any person, entity or “group” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, except that such term shall not include (i) Sempra Energy or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of Sempra Energy or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of Sempra Energy in substantially the same proportions as their ownership of stock of Sempra Energy, or (v) a person or group as used in Rule 13d-1(b) under the Exchange Act.

(mm)    “Plan” shall mean The Sempra Energy Deferred Compensation and Excess Savings Plan set forth herein, as amended from time to time.

(nn)    “Plan Year” shall mean the twelve (12) consecutive month period beginning on each January 1 and ending on each December 31.

(oo)    “Prior Plans” shall mean the Sempra Energy Deferred Compensation Plan for Directors, the Sempra Energy Executive Deferred Compensation Plan, the Sempra Energy Deferred Compensation Plan, the Sempra Energy Excess Savings Plan, the Pacific Enterprises Executive Deferred Compensation 

Plan, the Pacific Enterprises Deferred Compensation Plan for Directors, the Pacific Enterprises Deferred Compensation Plan, the San Diego Gas & Electric Co. deferred compensation agreements and the Enova deferred compensation agreements designed to provide supplemental retirement income benefits for any director or select group of management and highly compensated employees of the Company or its direct and indirect subsidiaries.

(pp)    “Prior Rate” shall mean the rate of investment return established under the applicable Prior Plan, subject to the terms of such Prior Plan.

(qq)    “QDRO” shall mean a domestic relations order that constitutes a “qualified domestic relations order” within the meaning of the Code or ERISA.

(rr)    “Retirement” shall mean, for a Participant who is an employee of the Company, a Participant’s voluntary retirement from employment with the Company on or after age 55 and five (5) years of employment with the Company in accordance with the Company’s retirement policies as then in effect.  Retirement shall mean, for a Participant who is a Director, ceasing to be a Director for any reason other than for death or Disability.  If a Participant is both an employee of the Company and a Director, Retirement shall occur only after he resigns from both positions.

(ss)    “Rule 16b-3” shall mean that certain Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to time.

(tt)    “Scheduled Withdrawal Date” shall be the day in January in the year elected by the Participant for an in-service withdrawal of all amounts of Compensation or 401(k) Excess deferred in a given Plan Year, but excluding earnings and losses attributable thereto, as set forth on the election forms for such Plan Year.  If the day elected by the Participant is not a business day, the Scheduled Withdrawal Date shall be deemed to be the next following business day.

(uu)    “Sempra Energy Stock Fund” shall mean the Measurement Fund in which investment earnings and losses parallel the investment return on the common stock of the Company.

(vv)    “SERP Lump Sum” shall mean the lump sum retirement benefit that would be payable to an Executive Officer who is a Plan Participant under either the Sempra Energy Supplemental Executive Retirement Plan or the Sempra Energy Excess Cash Balance Plan.

(ww)    “Severance Payment” shall mean any severance payments payable to a Participant under an executive employment agreement or severance agreement with the Company.

(xx)    “Termination” shall mean for any Participant who is an employee, ceasing to be an employee of the Company for reasons other than death, Disability or Retirement.  For any Participant who is a Director, "Termination" shall mean ceasing to be a Director for any reason, including death, Disability or Retirement.  If a Participant is both an employee of the Company and a Director, he shall not have a Termination until he resigns from both positions.

(yy)    “Transferred Account” shall mean the bookkeeping account maintained by the Company for each Participant that is credited with amounts which were transferred from a Prior Plan, debited by amounts equal to all distributions and withdrawals made to the Participant or his Beneficiary and adjusted for investment earnings and losses pursuant to Article V.

(zz)     “Valuation Date”, with respect to the Measurement Funds that are available under the 401(k) Plan, shall have the same meaning as under the 401(k) Plan.  For purposes of the Moody’s Plus Rate, “Valuation Date” shall mean the last day of the calendar month.  For purposes of the Prior Rate, “Valuation Date” shall have the same meaning it has under the applicable Prior Plan.

ARTICLE II.

PARTICIPATION

An Eligible Individual shall become a Participant in the Plan by (1) electing to make deferrals in accordance with Section 3.1 and (2) filing such other forms as the Committee or the Administrator may reasonably require for participation hereunder.  Additionally, in order to defer 401(k) Excess, the Eligible Individual must be making 401(k) contributions to the 401(k) Plan at the rate of no less than 6% of compensation (as defined in the 401(k) Plan) for the year.  An Eligible Individual who completes the requirements of the preceding sentences shall commence participation in this Plan as of the first Payroll Date with respect to which Compensation is deferred.   No person shall become a Participant in the Plan after December 31, 2004.
ARTICLE III.

CONTRIBUTIONS

3.1    Elections to Defer Compensation and 401(k) Excess  

(a)    General Rule.  Each Participant may defer Compensation and/or 401(k) Excess by filing with the Administrator a Deferral Election Form that conforms to the requirements of this Section 3.1, no later than the last day of the applicable Election Period.  The Committee or the Administrator may permit an Eligible Individual who first becomes eligible to participate in the Plan during a Plan Year to have his first Election Period during such Plan Year.  An election to defer Compensation must be filed during the Election Period prior to the effective date of such election and shall be effective for Compensation and/or 401(k) Excess earned during periods beginning after the effective date of such election, unless modified or suspended pursuant to Section 3.1(e).  Notwithstanding any other provision of this Article III, no election to defer Compensation shall be given effect with respect to periods after December 31, 2004 and any election to defer Compensation under the Plan in effect on December 31, 2004 shall be of no further force and effect after December 31, 2004; provided, however, that this provision does not affect further deferrals made in accordance with the terms and conditions of the Plan with respect to amounts deferred on or prior to December 31, 2004.

(b)    Special Rules.  Notwithstanding the above, the following restrictions apply to deferrals of certain elements of Compensation for periods prior to December 31, 2004.

(1)    Severance.  In order to defer Severance Payments, an eligible Participant must file the appropriate Deferral Election Form on or before the effective date of his executive employment agreement or severance agreement, as applicable, that provides for the Severance Payments to the Participant; provided, however, that if such agreement is already in effect as of September 10, 2002, then the Participant must file the Deferral Election Form within the next Election Period following September 10, 2002 in order to defer any Severance Payments that may become payable following such deferral election.

(2)    SERP Lump Sum.  In order to defer a SERP Lump Sum, an eligible Participant must file the appropriate Deferral Election Form at least twelve months prior to the date the SERP Lump Sum would otherwise be payable to the Participant; provided, however, that a Participant who participates in the SERP on September 10, 2002 must file the Deferral Election Form within the next Election Period following September 10, 2002 in order to defer the SERP Lump Sum that shall or may  become payable within twelve months following such deferral election.   
(c)    Deferral Amounts.  The amount of Compensation and/or 401(k) Excess which a Participant may elect to defer is such Compensation and/or 401(k) Excess earned on or after the time at which the Participant elects to defer each Plan Year in accordance with Section 3.1(a) and (b).  The applicable limitations for any Participant shall be determined based on his classification by the Committee. 
 
(1)    Each Participant who is a Manager shall be permitted to defer (A) from 5% to 50% of Base Salary and (B) from 5% to 100% of his Bonus and Dividend Equivalents. 
(2)    Each Participant who is an Executive Officer shall be permitted to defer (A) from 10% to 100% of Base Salary and (B) from 10% to 100% of his Bonus, Dividend Equivalents, Severance Payments and SERP Lump Sum. 
(3)    Each Participant who is a Director shall be permitted to defer from 10% to 100% of his Compensation.
(4)    Each Participant who participates in the 401(k) Plan and makes 401(k) contributions at a rate of 6% of compensation (as defined in the 401(k) Plan) per year shall be deemed to make the same election under this Plan that he has made under the applicable 401(k) Plan unless a contrary election is made under the Plan.
Notwithstanding the limitations established above, the total amount deferred by a Participant may be limited in any calendar year, if necessary, to satisfy the Participant’s income and employment tax withholding obligations  (including Social Security, unemployment and Medicare), and the Participant’s employee benefit plan contribution requirements, as determined in the sole and absolute discretion of the Committee or the Administrator.  If permitted by the Committee, the Participant may make deferrals with respect to any designated portion of his Compensation (such as meeting fees, for example).
(d)    Ordering Rule.      If a Participant elects to defer both Compensation and 401(k) Excess, the Compensation deferrals shall be deducted from the Participant's compensation and contributed to the Plan before any 401(k) Excess deferrals. 

(e)    Duration of Deferral Election. 

(1)    Except as provided in this Section 3.1(e)(1), if permitted by the Administrator, a Participant may modify or suspend his election to defer Compensation and/or 401(k) Excess during a Plan Year only in the event that (A) the Participant has a change in marital status, (B) the Participant has a change in the number of his dependents (as defined under Code Section 152(a)) or (C) the Participant or his spouse has a change in employment status (as determined by the Administrator).  Such modification or suspension shall be made by filing such an election during the Election Period immediately prior to the date such modification or suspension is to be effective.  Notwithstanding the above, all deferral elections with respect to a SERP Lump Sum and Severance Payments may be modified or suspended at the discretion of the Participant; provided, however, that if any such deferral election is filed by a Participant within the one (1) year period ending on the date of the Participant's Termination or Retirement, other than 

a Participant's initial election filed with the Administrator in accordance with Section 3.1(b)(1) or 3.1(b)(4), as applicable, such deferral election shall be of no force and effect; provided, further, that if a Participant has timely filed more than one election at least twelve months prior to the date of the Participant's Termination or Retirement, the most recent such election shall govern with respect to a SERP Lump Sum and Severance Payments, as applicable, and all prior elections shall be superseded and shall be of no force or effect. 
(2)    A Participant’s election to defer all or any portion of his SERP Lump Sum shall automatically become void in the event the Participant dies or becomes disabled while employed by the Company.
(3)    A Participant's election to defer 401(k) Excess shall automatically be suspended for the remainder of the Plan Year if the Participant's election under the 401(k) Plan falls below 6% of his compensation (as defined under the 401(k) Plan) per year.
(4)    Except as provided in Section 3.1(b), a Participant must file a new election for each subsequent Plan Year during the Election Period immediately prior to the next Plan Year, which election shall be effective on the first day of the next following Plan Year.  In the event a Participant fails to timely file an election for the next Plan Year, he should be deemed to have elected not to have deferred any Compensation and/or 401(k) Excess for any relevant period.
(f)    Elections.  Subject to the limitations of subsection (b), any Eligible Individual who does not elect to defer Compensation and/or 401(k) Excess during his Election Period may subsequently become a Participant.  Subject to the limitations of subsection (b), any Eligible Individual who has terminated a prior deferral election may elect to again defer Compensation and/or 401(k) Excess by filing a Deferral Election Form during a subsequent Election Period. 

(g)    Termination of Participation and/or Deferrals.  If the Committee or the Administrator determines in good faith that a Participant no longer qualifies as a Director or a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee or the Administrator shall have the right, in its sole discretion and only for purposes of preserving the Plan’s exemption from Title I of ERISA, to (i) terminate any deferral election the Participant has made for the remainder of the Plan Year in which the Participant’s membership status changes, (ii) prevent the Participant from making future deferral elections and/or (iii) immediately distribute the balance of the Participant’s Accounts and terminate the Participant’s participation in the Plan.

3.2    Transfers from Prior Plans.

All amounts credited to this Plan as a result of the merger of the Prior Plans shall be credited to Participants’ Transferred Accounts under this Plan.  Each  Participant is always 100% vested in his Transferred Account at all times.  No additional amounts may be contributed to a Participant’s Transferred Account other than investment earnings.  Any amounts so transferred to a Participant’s Transferred Account shall be subject to the terms of this Plan for all purposes, except as provided in Section 4.3 and Section 7.1(a)(7).
3.3    Company Matching Contributions

(a)    The Company shall make a Company Matching Contribution on behalf of select Participants who make deferrals under Article III in an amount equal to 

(1)    the product of (A) the rate of the matching contribution under the 401(k) Plan in which the Participant participates and (B) the sum of the Participant’s Base Salary and Bonus, 
less 
(2)    the amount credited to the Participant’s matching contribution account under the 401(k) Plan for that Plan Year.  
Notwithstanding the above, the Company reserves the right to change the Company Matching Contribution in its sole discretion.
(b)    Pursuant to the Committee’s or the Administrator’s procedures, for each Plan Year each Participant’s Company Matching Account shall be credited with an amount described in subsection (a) above, if any.

(c)    No Company Matching Contributions shall be made under the Plan for any period after December 31, 2004.

3.4    FICA and Other Taxes.

(a)    Annual Deferral Amounts.  For each Plan Year in which a Participant who is an employee makes a deferral under Section 3.1, the Company shall withhold from that portion of the Participant’s Compensation that is not being deferred, in a manner determined by the Company, the Participant’s share of FICA and other employment taxes on such amount.  If necessary, the Committee or the Administrator may reduce the Participant's deferrals under Section 3.1 or make deductions from his Deferral Account in order to comply with this Section.

(b)    Company Matching Amounts.  For each Plan Year in which a Participant is credited with a contribution to his or her Company Matching Account under Section 3.3, the Company shall withhold from the Participant’s Compensation that is not deferred, in a manner determined by the Company, the Participant’s share of FICA and other employment taxes.  If necessary, the Committee or the Administrator may reduce the Participant’s Company Matching Account in order to comply with this Section. 

ARTICLE IV.

INVESTMENTS
4.1    Measurement Funds.

(a)    In the manner designated by the Committee or the Administrator, Participants may elect one or more Measurement Funds to be used to determine the additional amounts to be credited to their Accounts.  Although the Participant may designate the available Measurement Funds that will be used to determine additional amounts to be credited to their Accounts, neither the Committee nor the Administrator shall be bound to make actual investments in such Measurement Funds based on the Participant’s election.  If the Committee designates a substitute Measurement Fund for a Participant (without regard to the Participant’s election), the substitute Measurement Fund must provide the Participant with an investment opportunity reasonably comparable to the original Measurement Funds elected by the Participant, as determined by the Committee in its sole discretion.  The Committee shall select from time to time, in its sole discretion, the Measurement Funds to be available under the Plan.

(b)    No Actual Investment.  Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant’s election of any such Measurement Fund, the allocation to his Accounts thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Accounts shall not be considered or construed in any manner as an actual investment of his Accounts in any such Measurement Fund.  In the event that the Committee, the Administrator, or the trustee, as applicable, in its own discretion, decides to invest funds in any or all of the Measurement Funds, no Participant shall have any rights in or to such investments themselves.  Without limiting the foregoing, a Participant’s Accounts shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company.  The Participant shall at all times remain an unsecured creditor of the Company.

4.2    Investment Elections.

(a)    Executive Officers and Director Participants.  

(1)    Deferral, 401(k) Excess and Transferred Accounts.  Except as provided in Sections 4.2(a)(2) and  4.3, Participants who are either Executive Officers or Directors may designate how their Deferral, 401(k) Excess and Transferred Accounts shall be deemed to be invested under the Plan.
(A)    Such Participants may make separate investment elections for (I) their future deferrals of Compensation and  401(k) Excess as well as transfers under Section 3.2 and (II) the existing balances of their Deferral, 401(k) Excess and Transferred Accounts.  
(B)    Such Participants may make and change their investment elections by choosing from the Measurement Funds designated by the Committee in accordance with the procedures established by the Committee or the Administrator.  
(C)    Except as otherwise designated by the Committee, the available Measurement Funds under this Section 4.2(a)(1) shall be the investment funds under the 401(k) Plan (excluding the Stable Value Fund and any brokerage account option) and the Sempra Energy Stock Fund.  Additionally, for the Deferral Account (and the Company Matching Contributions attributable thereto) only, there shall also be a Measurement Fund based on the Moody’s Plus Rate.  For the avoidance of doubt, the 401(k) Excess Account (and related Company Matching Contributions) may not be invested in the Measurement Fund based on the Moody’s Plus Rate.
(D)    If a Participant fails to elect a Measurement Fund under this Section, he shall be deemed to have elected the default Measurement Fund (as designated by the Committee) for all of his Accounts.
(2)    Company Matching Account and Certain Deferral Subaccounts.  Participants may not direct the investment of their Company Matching Account, which amounts shall be deemed to be invested in the Sempra Energy Stock Fund, except as provided by the Committee or the Administrator.
(b)    Manager Participants.  

(1)    401(k) Excess Accounts.  Except as provided in Section 4.3, Participants who are Managers may designate how their 401(k) Excess Accounts shall be deemed to be invested under the Plan.

(A)    Manager Participants may make separate investment elections for (I) their future deferrals of 401(k) Excess and (II) the existing balances of their 401(k) Excess Accounts.  
(B)    Participants may make and change their investment elections by choosing from the Measurement Funds designated by the Committee in accordance with the procedures established by the Committee or the Administrator.  
(C)    Except as otherwise designated by the Committee, the available Measurement Funds under this Section 4.2(b)(1) for the 401(k) Excess Accounts  shall be the investment funds under the 401(k) Plan (excluding the Stable Value Fund and any brokerage account option) and the Sempra Energy Stock Fund.  
(D)    If a Participant fails to elect a Measurement Fund under this Section, he shall be deemed to have elected the default Measurement Fund (as designated by the Committee) for his 401(k) Excess Account.
(2)    Deferral Account.  Any Participant who is a Manager shall have his Deferral Account invested in the Measurement Fund based on the Moody’s Plus Rate, except as otherwise permitted by the Committee or the Administrator.
(3)    Company Matching Account.  Participants may not direct the investment of their Company Matching Account which shall be invested in the Sempra Energy Stock Fund, except as provided by the Committee or the Administrator.
(c)    Participants who have had a Termination but not yet commenced distributions under Article VII or Participants or Beneficiaries who are receiving installment payments may continue to make investment elections pursuant to subsection (a) and (b) above, as applicable, except as otherwise determined by the Committee or the Administrator.  

4.3    Investment of Transferred Accounts.

(a)    Each Participant’s Transferred Account balance shall be treated as invested in a Measurement Fund with a rate of investment return based solely on the Prior Rate, except as provided in subsection (b).

(b)    In accordance with the procedures established by the Committee or the Administrator, once each calendar quarter (or as otherwise permitted by the Committee or the Administrator) a Participant may elect to transfer a designated percentage of the balance of his Transferred Account to new Measurement Funds, as provided in Section 4.2.  As of the effective date of such an election, such designated percentage of the balance of his Transferred Account may be allocated to the Participant's other Accounts in accordance with the type of contributions with which it is credited (i.e., pre-tax deferrals shall be credited to the Participant's Deferral Account).  Such portion of the Transferred Account shall cease to be credited with investment returns at the Prior Rate and may not be subsequently invested at the Prior Rate.
  
4.4    Compliance with Section 16 of the Exchange Act.

(a)    Any Participant or Beneficiary who is subject to Section 16 of the Exchange Act shall have his Measurement Fund elections under the Plan subject to the requirements of the Exchange Act, as interpreted by the Committee.  Any such Participant or Beneficiary who either (i) transferred amounts from another available Measurement Fund under the Plan into the Sempra Energy Stock Fund or (ii) 

transferred any amounts from the Sempra Energy Stock Fund to another available Measurement Fund under the Plan may not make an election with the opposite effect under this Plan or any other Company-sponsored plan until six months and one (1) day following the original election.

(b)    Notwithstanding any other provision of the Plan or any rule, instruction, election form or other form, the Plan and any such rule, instruction or form shall be subject to any additional conditions or limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b‐3) that are requirements for the application of such exemptive rule.  To the extent permitted by applicable law, such Plan provision, rule, instruction or form shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

ARTICLE V.

ACCOUNTS

5.1    Accounts.

(a)    The Committee or the Administrator shall establish and maintain a Deferral Account, 401(k) Excess Account, Transferred Account and Company Matching Account for each Participant under the Plan.  Each Participant’s Accounts shall be further divided into separate subaccounts (“investment fund subaccounts”), each of which corresponds to a Measurement Fund elected by the Participant pursuant to Section 4.2.

(b)    The performance of each elected Measurement Fund (either positive or negative) shall be determined by the Committee or the Administrator, in its reasonable discretion, based on the performance of the Measurement Funds themselves.  A Participant’s Accounts shall be credited or debited on each Valuation Date based on the performance of each Measurement Fund selected by the Participant, as determined by the Committee or the Administrator in its sole discretion, as though (i) a Participant’s Accounts were invested in the Measurement Fund(s) selected by the Participant, in the percentages applicable to such period, as of the close of business on the first business day of such period, at the closing price on such date; (ii) the portion of the Participant's Compensation that was actually deferred pursuant to Section 3.1 during any period were invested in the Measurement Fund(s) selected by the Participant, in the percentages applicable to such period, no later than the close of business on the first business day after the day on which such amounts are actually deferred from the Participant’s Compensation, at the closing price on such date; and (iii) any withdrawal or distribution made to a Participant that decreases such Participant’s Accounts ceased being invested in the Measurement Fund(s), in the percentages applicable to such period, no earlier than one (1) business day prior to the distribution, at the closing price on such date.  The Participant’s Company Matching Contribution shall be credited to his Company Matching Account for purposes of this Section in the manner determined by the Committee or the Administrator.

ATICLE VI.

VESTING

Each Participant shall be 100% vested in his Deferral Account, 401(k) Excess Account, Matching Account and Transferred Account at all times. 

ARTICLE VII.

DISTRIBUTIONS

7.1    Distribution of Accounts. 

(a)    Distribution at Termination, Disability or Retirement.

(1)    Normal Form.  Except as provided in subsection 7.1(a)(2), subsection 7.1(a)(7) or Section 7.4, upon the Termination, Disability or Retirement of the Participant, the Distributable Amount shall be paid to the Participant in substantially equal annual installments over ten (10) years beginning as of the Participant’s Payment Date.
(2)    Optional Forms.  Instead of receiving his Distributable Amount as described at Section 7.1(a)(1), the Participant may elect one of the following optional forms of payment (on the form provided by Company) at the time of his deferral election: 
(i)annual installments (calculated as set forth at subsection 7.1(a)(6)) over five (5) years beginning as of the Participant’s Payment Date, 

(ii)annual installments (calculated as set forth at subsection 7.1(a)(6)) over fifteen (15) years beginning as of the Participant’s Payment Date, or

(iii)a lump sum.

A Participant may change his election with respect to the frequency of payment, provided such change in the frequency of payment occurs at least one (1) year prior to the Participant’s Termination or Retirement. 
(3)    Small Accounts.  Notwithstanding any provision to the contrary, in the event the Distributable Amount is equal to or less than $25,000, such Distributable Amount shall be distributed to the Participant (or his Beneficiary, as applicable) in a lump sum.  
(4)    Investment Adjustments.  The Participant’s Accounts shall continue to be adjusted for investment earnings and losses pursuant to Section 4.2 and Section 4.3 of the Plan until all amounts credited to his Accounts under the Plan have been distributed.
(5)    Calculating Payments.  All payments made under the Plan shall be determined in accordance with the following:
(i)    All installment payments made under the Plan shall be determined in accordance with the annual fractional payment method, calculated as follows:  the balance of the Participant’s Accounts shall be calculated as of the close of business on the Payment Date.  The annual installment shall be calculated by multiplying this balance by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual payments due the Participant.  By way of example, if the Participant elects ten (10) year installments the first payment shall be 1/10 of the balance of his Accounts calculated as described in this definition.  The following year, the payment shall be 1/9 of the balance of the Participant’s Accounts, calculated as described in this definition.  Each annual installment shall be paid on or as soon as practicable after the Payment Date.

(ii)    All lump sum payments made under the Plan shall be calculated as of the close of business on the Payment Date.  The lump sum shall paid on or as soon as practicable after the Payment Date. 

(7)    Distribution of Transferred Accounts.  Until a Participant so elects, his Transferred Account shall be subject to his most recent form of distribution election in effect under the applicable Prior Plan.  However, if the Participant elects to apply his distribution election in effect under this Plan to the balance of his Transferred Account, then any prior distribution election under the Prior Plan shall automatically be permanently revoked.
(b)    Distribution on a Scheduled Withdrawal Date.  

(1)    In the case of a Participant who has elected a Scheduled Withdrawal Date for a distribution to be made while still in the employ of the Company or while still a Director, such Participant shall receive his or her deferrals of Compensation and 401(k) Excess (but excluding any investment earnings on such amounts) (the “Withdrawal Amount”) as shall have been elected by the Participant to be subject to the Scheduled Withdrawal Date.  A Participant’s Scheduled Withdrawal Date with respect to amounts of Compensation and/or 401(k) Excess deferred in a given Plan Year must be at least three (3) years from the last day of the Plan Year for which such deferrals are made.  
(2)    The Withdrawal Amount shall be paid in a lump sum in cash. 
(3)    A Participant may extend the Scheduled Withdrawal Date for the Withdrawal Amount for any Plan Year, provided such extension occurs at least one (1) year before the Scheduled Withdrawal Date and is for a period of not less than five (5) years from the Scheduled Withdrawal Date.  The Participant shall have the right to modify any Scheduled Withdrawal Date only once, without the consent of the Committee or the Administrator, by submitting a written notice of such modification to the Committee or the Administrator at least one (1) year in advance of the originally elected Scheduled Withdrawal Date.  A Participant who has modified a Scheduled Withdrawal Date, may again once further modify the Scheduled Withdrawal Date, but only with the consent of the Committee or the Administrator.
(4)    In the event of Participant’s Termination, Disability or Retirement prior to a Scheduled Withdrawal Date, the Participant’s entire Withdrawal Amount shall be paid in accordance with the Participant’s election under Section 7.1(a).  In the event of a Participant’s death prior to a Scheduled Withdrawal Date, the Participant’s entire Withdrawal Amount shall be paid as soon as practicable after the Termination in a lump sum.  
(c)    Distribution upon Death.  In the event a Participant dies before he has begun receiving distributions under Section 7.1(a), his Accounts shall be paid to his Beneficiary in the same manner elected by the Participant.  In the event a Participant dies after he has begun receiving distributions under Section 7.1(a) with a remaining balance in his Accounts, the balance shall continue to be paid to his Beneficiary in the same manner.  Notwithstanding the above, the Committee or the Administrator may, in its sole discretion, permit the Beneficiary to receive an immediate lump sum payment of the Participant’s Accounts reduced by a penalty of 10% of the balance of the Accounts.  The penalty amount shall be permanently forfeited and the Company shall have no obligation to the Beneficiary with respect to such forfeited amount.

(d)    Other Distribution.  Independent of any termination of this Plan, if the Internal Revenue Service makes a final determination that amounts under this Plan are immediately taxable to any 

Participant or Beneficiary, the Committee or the Administrator has the discretion to accelerate distributions under the Plan to such Participants or Beneficiaries.

7.2    Early Distributions.

A Participant shall be permitted to elect an Early Distribution from his or her Deferral Account, 401(k) Excess Account and Transferred Account prior to the Payment Date, whether or not he has had a Termination, Disability or Retirement, subject to the following restrictions:
(a)    The election to take an Early Distribution shall be made by filing a form provided by and filed with the Committee or the Administrator prior to the end of any calendar month.

(b)    The amount of the Early Distribution shall in all cases be an amount not less than $10,000.

(c)    The amount described in subsection (b) above shall be paid in a single lump sum in cash as soon as practicable after the end of the calendar month in which the Early Distribution election is made.

(d)    If a Participant requests an Early Distribution, 10% of the gross amount to be distributed shall be permanently forfeited and the Company shall have no obligation to the Participant or his Beneficiary with respect to such forfeited amount.

(e)    If a Participant receives an Early Distribution the Participant shall be ineligible to contribute deferrals to the Plan for the remainder of the Plan Year and for the next following Plan Year.

7.3    Hardship Distribution.

A Participant shall be permitted to elect a Hardship Distribution of all or a portion of his Accounts under the Plan prior to the Payment Date, subject to the following restrictions:
(a)    The election to take a Hardship Distribution shall be made by filing the form provided by the Committee or the Administrator before the date established by the Committee or the Administrator.

(b)    The Committee or the Administrator shall have made a determination in its sole discretion that the requested distribution constitutes a Hardship Distribution in accordance with subsection (d).

(c)    The amount determined by the Committee or the Administrator as a Hardship Distribution shall be paid in a single lump sum in cash as soon as practicable after the end of the calendar month in which the Hardship Distribution election is made and approved by the Committee or the Administrator.

(d)    If a Participant receives a Hardship Distribution, the Participant shall be ineligible to contribute deferrals to the Plan for the balance of the Plan Year and the following Plan Year.  “Hardship Distribution” shall mean a severe financial hardship to the Participant resulting from (i) a sudden and unexpected illness or accident of the Participant or of his or her dependent (as defined in Section 152(a) of the Code), (ii) loss of a Participant’s property due to casualty, or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  The circumstances that would constitute an unforeseeable emergency shall depend upon the facts of each case, but, in any case, a Hardship Distribution may not be made to the extent that such hardship is or may be relieved (A) through reimbursement or compensation by insurance or otherwise, (B) by liquidation of the 

Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship or (C) by cessation of deferrals under this Plan.

7.4    Effect of a Change in Control.

(a)    In the event there is a Change in Control, the person who is the chief executive officer (or, if not so identified, the Company’s highest ranking officer) shall name a third-party fiduciary as the sole member of the Committee immediately prior to such Change in Control. The appointed fiduciary, in its sole discretion, may permit immediate distributions.   If permitted by the appointed fiduciary, a Participant who has a Termination within 24 months of the effective date of the Change in Control may elect one of the optional forms of distribution as provided in Section 7.1(a)(2).  

(b)    Upon and after the occurrence of a Change in Control, the Company must (i) pay all reasonable administrative fees and expenses of the appointed fiduciary, (ii) indemnify the appointed fiduciary against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the appointed fiduciary's duties hereunder, other than with respect to matters resulting from the gross negligence of the appointed fiduciary or its agents or employees and (iii) timely provide the appointed fiduciary with all necessary information related to the Plan, the Participants and Beneficiaries.  

(c)    Notwithstanding Section 9.4, in the event there is a Change in Control no amendment may be made to this Plan except as approved by the third-party fiduciary.  Upon a Change in Control, assets shall be placed in a rabbi trust in an amount which shall equal the full accrued liability under this Plan as determined by an actuarial firm appointed by the Board immediately prior to such Change in Control or in the absence of such appointment, Willis Towers Watson or a successor actuarial firm.

7.5    Inability to Locate Participant.

In the event that the Committee or the Administrator is unable to locate a Participant or Beneficiary within two (2) years following the required Payment Date, the amount allocated to the Participant’s Accounts shall be forfeited.  If, after such forfeiture, the Participant or Beneficiary later claims such benefit, such benefit shall be reinstated without interest or earnings from the date of forfeiture, subject to applicable escheat laws.
7.6    Distributions Pursuant To QDROs.

Except as otherwise provided by the Committee or the Administrator, distributions to alternate payees pursuant to a QDRO will be made or commence within ninety (90) days of the date on which the domestic relations order is determined to be a QDRO in one of the following forms elected by the alternate payee (including by the terms of the QDRO) in accordance with the terms of the Plan.  If no election is made by the alternate payee within sixty (60) days following the date on which the domestic relations order is determined to be a QDRO, the alternate payee’s benefit will be paid in a lump sum in accordance with the provisions of this Section 7.6.

ARTICLE VIII.

ADMINISTRATION

8.1    Committee.

The Committee shall administer the Plan in accordance with this Article.  
8.2    Administrator.

The Administrator, unless restricted by the Committee, shall exercise the powers under Sections 8.4 and 8.5 except when the exercise of such authority would materially affect the cost of the Plan to the Company or materially increase benefits to Participants. 
8.3    Committee Action.

The Committee shall act at meetings by affirmative vote of a majority of the members of the Committee present at a meeting at which a quorum is present.  Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such action, a written consent to the action is signed by all members of the Committee and such written consent is filed with the minutes of the proceedings of the Committee.  A member of the Committee shall not vote or act upon any matter which relates solely to himself or herself as a Participant.  The chairman or any other member or members of the Committee designated by the chairman may execute any certificate or other written direction on behalf of the Committee.
8.4    Powers and Duties of the Committee.

(a)    The Committee, on behalf of the Participants and their Beneficiaries, shall enforce the Plan in accordance with its terms and shall have all powers necessary to accomplish its purposes as set forth herein, including, but not by way of limitation, the following:

(1)    To select the Measurement Funds in accordance with Section 4.1 hereof;
(2)    To conclusively construe and interpret the terms and provisions of the Plan and to remedy any inconsistencies or ambiguities hereunder;
(3)    To compute and certify to the amount and kind of benefits payable to Participants and their Beneficiaries;
(4)    To maintain all records that may be necessary for the administration of the Plan;
(5)    To provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as shall be required by law;
(6)    To make and publish such rules for the regulation and operation of the Plan and procedures for the administration of the Plan as are not inconsistent with the terms hereof;
(7)    To appoint a plan administrator or any other agent, and to delegate to them such powers and duties in connection with the administration of the Plan as the Committee may from time to time prescribe; and

(8)    To take all actions necessary for the administration of the Plan.  
8.5    Construction and Interpretation.

The Committee or the Administrator shall have full discretion to conclusively construe and interpret the terms and provisions of this Plan, which interpretations or construction shall be final and binding on all parties, including but not limited to the Company and any Participant or Beneficiary.  The Committee or the Administrator shall administer such terms and provisions in accordance with any and all laws applicable to the Plan.  The Committee or the Administrator may provide for different rules, rights and procedures for different Participants or Eligible Individuals and there is no requirement under the Plan that all Participants or Eligible Individuals receive the same benefits, payment rights, election rights or any other benefits or rights, subject to the requirements of applicable law.
8.6    Information.

The Company shall furnish the Committee or the Administrator with such data and information as may be required for it to discharge its duties.  Participants and other persons entitled to benefits under the Plan must furnish the Committee or the Administrator such evidence, data or information as the Committee or the Administrator considers necessary or desirable to carry out the terms of the Plan.
8.7    Compensation, Expenses and Indemnity.

(a)    The members of the Committee and the Administrator shall serve without compensation for their services hereunder.

(b)    The Committee or the Administrator is authorized at the expense of the Company to employ such legal counsel and other advisors as it may deem advisable to assist in the performance of its duties hereunder.  Expenses and fees in connection with the administration of the Plan shall be paid by the Company.

(c)    To the extent permitted by applicable state law, the Company  shall indemnify and save harmless the Committee and each member thereof, the Board of Directors and any delegate of the Committee who is an employee of the Company or any Affiliate and the Administrator 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 the 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 the Company or provided by any bylaw, agreement or otherwise of the Company, as such indemnities are permitted under state law.

8.8    Quarterly Statements.

Under procedures established by the Committee or the Administrator, a Participant shall receive a statement with respect to such Participant’s Accounts on a quarterly basis as of each March 31, June 30, September 30 and December 31.
8.9    Disputes.

(a)    Claim.

A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as “Claimant”) may file a written request for such benefit with the Administrator, setting forth his claim.  The request must be addressed to the Administrator at Sempra Energy at its then principal place of business.
(b)    Claim Decision.

Upon receipt of a claim, the Administrator shall advise the Claimant that a reply shall be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period.  The Administrator may, however, extend the reply period for an additional ninety (90) days for special circumstances.
If the claim is denied in whole or in part, the Administrator shall inform the Claimant in writing, using language calculated to be understood by the Claimant, setting forth: (i) the specified reason or reasons for such denial; (ii) the specific reference to pertinent provisions of this Plan on which such denial is based; (iii) a description of any additional material or information necessary for the Claimant to perfect his claim and an explanation of why such material or such information is necessary; (iv) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and (v) the time limits for requesting a review under subsection 8.9(c).
(c)    Request For Review.

With sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing a review the determination of the Administrator.  Such review shall be completed by the most senior officer of Human Resources of Sempra Energy for Participants who are Managers and by the Committee for Participants who are Executive Officers or Directors.  Such request must be addressed to the Secretary of Sempra Energy, at its then principal place of business.  The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the most senior officer of Human Resources of Sempra Energy or the Committee, as applicable.  If the Claimant does not request a review within such sixty (60) day period, he shall be barred and estopped from challenging the Administrator’s determination.
(d)    Review of Decision.

Within sixty (60) days after the receipt of a request for review by the most senior officer of Human Resources of Sempra Energy or the Committee, as applicable, after considering all materials presented by the Claimant, the most senior officer of Human Resources of Sempra Energy or the Committee, as applicable, shall inform the Participant in writing, in a manner calculated to be understood by the Claimant, the decision setting forth the specific reasons for the decision contained specific references to the pertinent provisions of this Plan on which the decision is based.  If special circumstances require that the sixty (60) day period be extended, the most senior officer of Human Resources of Sempra Energy or the Committee, as applicable, shall so notify the Claimant and shall render the decision as soon as possible, but no later than one hundred and twenty (120) days after receipt of the request for review.

ARTICLE IX.

MISCELLANEOUS

9.1    Unsecured General Creditor.

Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interest in any specific property or assets of the Company.  No assets of the Company shall be held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan.  Any and all of the Company’s assets shall be, and remain, the general unpledged, unrestricted assets of the Company.  The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general creditors.  It is the intention of the Company that this Plan be unfunded for purposes of the Code and Title I of ERISA.
9.2    Restriction Against Assignment.

(a)    The Company shall pay all amounts payable hereunder only to the person or persons designated by the Plan and not to any other person or entity.  No right, title or interest in the Plan or in any account may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution.  No right, title or interest in the Plan or in any Account shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.

(b)    Notwithstanding the provisions of subsection (a), a Participant’s interest in his Account may be transferred by the Participant pursuant to a domestic relations order that constitutes a “qualified domestic relations order” as defined by the Code or Title I of ERISA.

9.3    Withholding.

There shall be deducted from each payment made under the Plan or any other Compensation payable to the Participant (or Beneficiary) all taxes which are required to be withheld by the Company in respect to such payment or this Plan.  The Company shall have the right to reduce any payment (or compensation) by the amount of such of cash sufficient to provide the amount of said taxes.
9.4    Amendment, Modification, Suspension or Termination.

Subject to Section 7.4, the Committee may amend, modify, suspend or terminate the Plan in whole or in part, except that no amendment, modification, suspension or termination shall have any retroactive effect to reduce any vested amounts allocated to a Participant’s Accounts. In the event of Plan termination, distributions may be accelerated. 

9.5    Designation of Beneficiary.

(a)    Each Participant shall have the right to designate, revoke and redesignate Beneficiaries hereunder and to direct payment of his Distributable Amount to such Beneficiaries upon his death. 

(b)    Designation, revocation and redesignation of Beneficiaries must be made in writing in accordance with the procedures established by the Committee or the Administrator and shall be effective upon delivery to the Committee or the Administrator.

(c)    If there is no Beneficiary designation in effect, or the designated beneficiary does not survive the Participant, then the Participant’s spouse shall be the Beneficiary.  If there is no surviving spouse, the duly appointed and currently acting personal representative of the Participant’s estate (which shall include either the Participant’s probate estate or living trust) shall be the Beneficiary.

(d)    After the Participant’s death, any Beneficiary (other than the Participant’s estate) who is to receive installment payments may designate a secondary beneficiary to receive amounts due under this Plan to the Beneficiary in the event of the Beneficiary’s death prior to receiving full payment from the Plan.  If no secondary beneficiary is designated, it shall be the Beneficiary’s estate.

9.6    Insurance.    

(a)    As a condition of participation in this Plan, each Participant shall, if requested by the Committee, the Administrator, or the Company, undergo such examination and provide such information as may be required by the Company with respect to any insurance contracts on the Participant’s life and shall authorize the Company to purchase life insurance on his life, payable to the Company.

(b)    If the Company maintains an insurance policy on a Participant’s life to fund benefits under the Plan and such insurance policy is invalidated because (i) the Participant commits suicide during the two (2)-year period beginning on the first day of the first Plan Year of such Participant’s participation in the Plan or because (ii) the Participant makes any material misstatement of information or nondisclosure of medical history, then the only benefits that shall be payable hereunder to such Participant, his Beneficiary or his surviving spouse, are the payment of the amount of deferrals of Compensation and/or 401(k) Excess then credited to the Participant’s Accounts but without any interest including interest theretofore credited under this Plan.   

9.7    Governing Law.

Subject to ERISA, this Plan shall be construed, governed and administered in accordance with the laws of the State of California.
9.8    Receipt of Release.

Any payment to a Participant or the Participant’s Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Committee, the Administrator, and the Company.  The Committee or the Administrator may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.

9.9    Compliance with Code Section 162(m)

It is the intent of the Company that any Compensation which is deferred under the Plan by a person who is, with respect to the year of distribution, deemed by the Committee to be a “covered employee” within the meaning of Code Section 162(m) and regulations thereunder, which Compensation constitutes either “qualified performance-based compensation” within the meaning of Code Section 162(m) and regulations thereunder or compensation not otherwise subject to the limitation on deductibility under Section 162(m) and regulations thereunder, shall not, as a result of deferral hereunder, become compensation with respect to which the Company in fact would not be entitled to a tax deduction under Code Section 162(m).    If the Company determines in good faith prior to a Change in Control that there is a reasonable likelihood that any compensation paid to a Participant for a taxable year of the Company would not be deductible by the Company solely by reason of the limitation under Code Section 162(m), then to the extent deemed necessary by the Company to ensure that the entire amount of any distribution to the Participant pursuant to this Plan prior to the Change in Control is deductible, the Company may defer all or any portion of a distribution under this Plan.  Any amounts deferred pursuant to this limitation shall continue to be credited/debited with additional amounts in accordance with Article IV, even if such amount is being paid out in installments.  The amounts so deferred and amounts credited thereon shall be distributed to the Participant or his Beneficiary (in the event of the Participant’s death) at the earliest possible date, as determined by the Company in good faith, on which the deductibility of compensation paid or payable to the Participant for the taxable year of the Company during which the distribution is made shall not be limited by Section 162(m), or if earlier, the effective date of a Change in Control.  Notwithstanding anything to the contrary in this Plan, this Section shall not apply to any distributions made after a Change in Control.
9.10    Payments on Behalf of Persons Under Incapacity.

In the event that any amount becomes payable under the Plan to a person who, in the sole judgment of the Committee or the Administrator, is considered by reason of physical or mental condition to be unable to give a valid receipt therefore, the Committee or the Administrator may direct that such payment be made to any person found by the Committee or the Administrator, in its sole judgment, to have assumed the care of such person.  Any payment made pursuant to such termination shall constitute a full release and discharge of the Committee, the Administrator, and the Company.
9.11    Limitation of Rights

Neither the establishment of the Plan nor any modification thereof, nor the creating of any fund or account, nor the payment of any benefits shall be construed as giving to any Participant or other person any legal or equitable right against the Company except as provided in the Plan.  In no event shall the terms of employment of, or membership on the Board by, any Participant be modified or in any be effected by the provisions of the Plan.
9.12    Exempt ERISA Plan

The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for directors and a select group of management or highly compensated employees within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.

9.13    Notice

Any notice or filing required or permitted to be given to the Committee or the Administrator under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of Sempra Energy, directed, in the case of the Committee, to the attention of the General Counsel and Secretary of Sempra Energy and in the case of the Administrator, to the the Administrator.  Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
9.14    Errors and Misstatements

In the event of any misstatement or omission of fact by a Participant to the Committee or the Administrator or any clerical error resulting in payment of benefits in an incorrect amount, the Committee or the Administrator, as applicable, shall promptly cause the amount of future payments to be corrected upon discovery of the facts and shall pay or, if applicable, cause the Plan to pay, the Participant or any other person entitled to payment under the Plan any underpayment in a lump sum or to recoup any overpayment from future payments to the Participant or any other person entitled to payment under the Plan in such amounts as the Committee or the Administrator shall direct or to proceed against the Participant or any other person entitled to payment under the Plan for recovery of any such overpayment.
9.15    Pronouns and Plurality

The masculine pronoun shall include the feminine pronoun, and the singular the plural where the context so indicates.
9.16    Severability

In the event that any provision of the Plan shall be declared unenforceable or invalid for any reason, such unenforceability or invalidity shall not affect the remaining provisions of the Plan but shall be fully severable, and the Plan shall be construed and enforced as if such unenforceable or invalid provision had never been included herein.
9.17    Status

The establishment and maintenance of, or allocations and credits to, the Accounts of any Participant shall not vest in any Participant any right, title or interest in and to any Plan assets or benefits except at the time or times and upon the terms and conditions and to the extent expressly set forth in the Plan.
9.18    Headings.

Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

	
						
	Executed at San Diego, California this ___ day of __________, 2016.

	 
	 
	 
	 
	 
	 

	 
	 
	 
	SEMPRA ENERGY

	 
	 
	 
	 
	 
	 

	 
	 
	 
	By:
	_____________________________
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	Title:
	Senior Vice President and
	 

	 
	 
	 
	 
	Chief Human Resources and
	 

	 
	 
	 
	 
	Administrative Officer
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	Date:
	___________________, 2016Exhibit

Exhibit 10.39

SEMPRA ENERGY
SEVERANCE PAY AGREEMENT
THIS AGREEMENT (this “Agreement”), dated as of January 1, 2017 (the “Effective Date”), is made by and between SEMPRA ENERGY, a California corporation (“Sempra Energy”), and Steven D. Davis (the “Executive”).
WHEREAS, the Executive is currently employed by Sempra Energy or another corporation or trade or business which is a member of a controlled group of corporations (within the meaning of Section 414(b) or (c) of the Code) of which Sempra Energy is a component member, determined by applying an ownership threshold of 50% rather than 80% (Sempra Energy and such other controlled group members, collectively, “Company”); 
WHEREAS, Sempra Energy and the Executive desire to enter into this Agreement; and
WHEREAS, the Board of Directors of Sempra Energy (the “Board”) or an authorized committee thereof has authorized this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, Sempra Energy and the Executive hereby agree as follows:
Section 1.Definitions.  For purposes of this Agreement, the following capitalized terms have the meanings set forth below:
“Accounting Firm” has the meaning assigned thereto in Section 8(d) hereof.
“Accrued Obligations” means the sum of (A) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) an amount equal to any annual Incentive Compensation Awards earned with respect to fiscal years ended prior to the year that includes the Date of Termination to the extent not theretofore paid, (C) any accrued and unpaid vacation, and (D) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of his duties in accordance with Company policies applicable to the Executive from time to time, in each case to the extent not theretofore paid.  
“Affiliate” has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act.
“Annual Base Salary” means the Executive’s annual base salary from the Company.
“Asset Purchaser” has the meaning assigned thereto in Section 16(e).
“Asset Sale” has the meaning assigned thereto in Section 16(e).
“Average Annual Bonus” means the average of the annual bonuses from the Company earned by the Executive with respect to the three (3) fiscal years of Sempra Energy ending immediately preceding the Date of Termination (the “Bonus Fiscal Years”); provided, however, that, if the Executive was employed by the Company for less than three (3) Bonus Fiscal Years, “Average Annual Bonus” means the average of the annual bonuses (if any) from the Company earned by the Executive with respect 

to the Bonus Fiscal Years during which the Executive was employed by the Company; and, provided, further, that, if the Executive was not employed by the Company during any of the Bonus Fiscal Years, “Average Annual Bonus” means zero.
“Cause” means:  
(a)Prior to a Change in Control, (i) the willful failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness), (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) the Executive’s gross insubordination; and/or (iv) the Executive’s commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony involving one or more acts of moral turpitude) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty.  For purposes of clause (i) of this subsection (a), no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interests of the Company. 
(b)From and after a Change in Control (or in connection with a termination occurring pursuant to subsection 5(h)), (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or other than any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 2 hereof and after the Company’s cure period relating to the event on which Good Reason is based, if any and if applicable, has expired) and/or (ii) the Executive’s commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony involving one or more acts of moral turpitude) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty.  For purposes of clause (i) of this subsection (b), no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interests of the Company.  Notwithstanding the foregoing, the Executive shall not be deemed terminated for Cause pursuant to clause (i) of this subsection (b) unless and until the Executive shall have been provided with reasonable notice of and, if possible, a reasonable opportunity to cure the facts and circumstances claimed to provide a basis for termination of the Executive’s employment for Cause.
“Change in Control” shall be deemed to have occurred on the date that a change in the ownership of Sempra Energy, a change in the effective control of Sempra Energy, or a change in the ownership of a substantial portion of assets of Sempra Energy occurs (each, as defined in subsection (a) below), except as otherwise provided in subsections (b), (c) and (d) below:
(a)    (i)    a “change in the ownership of Sempra Energy” occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of Sempra Energy that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of Sempra Energy,
(ii)    a “change in the effective control of Sempra Energy” occurs only on either of the following dates:

(A)    the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of Sempra Energy possessing thirty percent (30%) or more of the total voting power of the stock of Sempra Energy, or
(B)    the date a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of appointment or election, and
(iii)    a “change in the ownership of a substantial portion of assets of Sempra Energy” occurs on the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from Sempra Energy that have a total gross fair market value equal to or more than eighty-five percent (85%) of the total gross fair market value of all of the assets of Sempra Energy immediately before such acquisition or acquisitions.
(b)    A “change in the ownership of Sempra Energy” or “a change in the effective control of Sempra Energy” shall not occur under clause (a)(i) or (a)(ii) by reason of any of the following:
(i)an acquisition of ownership of stock of Sempra Energy directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business, 
(ii)a merger or consolidation which would result in the voting securities of Sempra Energy outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least sixty percent (60%) of the combined voting power of the securities of Sempra Energy or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or
(iii)a merger or consolidation effected to implement a recapitalization of Sempra Energy (or similar transaction) in which no Person is or becomes the Beneficial Owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Sempra Energy (not including the securities beneficially owned by such Person any securities acquired directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business) representing twenty percent (20%) or more of the combined voting power of Sempra Energy’s then outstanding securities.
(c)A “change in the ownership of a substantial portion of assets of Sempra Energy” shall not occur under clause (a)(iii) by reason of a sale or disposition by Sempra Energy of the assets of Sempra Energy to an entity, at least sixty percent (60%) of the combined voting power of the voting securities of which are owned by shareholders of Sempra Energy in substantially the same proportions as their ownership of Sempra Energy immediately prior to such sale.
(d)This definition of “Change in Control” shall be limited to the definition of a “change in control event” with respect to the Executive and relating to Sempra Energy under Treasury Regulation Section 1.409A-3(i)(5).  
“Change in Control Date” means the date on which a Change in Control occurs.

“Code” means the Internal Revenue Code of 1986, as amended.
“Compensation Committee” means the compensation committee of the Board.
“Consulting Payment” has the meaning assigned thereto in Section 14(e) hereof.
“Consulting Period” has the meaning assigned thereto in Section 14(f) hereof.
“Date of Termination” has the meaning assigned thereto in Section 2(b) hereof.
“Disability” has the meaning set forth in the long-term disability plan or its successor maintained by the Company entity that is the employer of the Executive; provided, however, that the Executive’s employment hereunder may not be terminated by reason of Disability unless (i) at the time of such termination there is no reasonable expectation that the Executive will return to work within the next ninety (90) day period and (ii) such termination is permitted by all applicable disability laws.  
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the applicable rulings and regulations thereunder.
“Excise Tax” has the meaning assigned thereto in Section 8(a) hereof.
“Good Reason” means:
(a)     Prior to a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 2 hereof): 
(i)the assignment to the Executive of any duties materially inconsistent with the range of duties and responsibilities appropriate to a senior executive within the Company (such range determined by reference to past, current and reasonable practices within the Company);
(ii)a material reduction in the Executive’s overall standing and responsibilities within the Company, but not including (A) a mere change in title or (B) a transfer within the Company, which, in the case of both (A) and (B), does not adversely affect the Executive’s overall status within the Company; 
(iii)a material reduction by the Company in the Executive’s aggregate annualized compensation and benefits opportunities, except for across-the-board reductions (or modifications of benefit plans) similarly affecting all similarly situated executives of the Company of comparable rank with the Executive;
(iv)the failure by the Company to pay to the Executive any portion of the Executive’s current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)any purported termination of the Executive’s employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 2 hereof; 
(vi)the failure by Sempra Energy to perform its obligations under Section 16(c) or (d) hereof; 

(vii)the failure by the Company to provide the indemnification and D&O insurance protection Section 10 of this Agreement requires it to provide; or
(viii)the failure by Sempra Energy (or any of the entities comprising the Company, as applicable) to comply with any material provision of this Agreement.
(b)    From and after a Change in Control (or in connection with a termination occurring pursuant to subsection 5(h)), the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 2 hereof):
(i)an adverse change in the Executive’s title, authority, duties, responsibilities or reporting lines as in effect immediately prior to the Change in Control;
(ii)a reduction by the Company in the Executive’s aggregate annualized compensation opportunities, except for across-the-board reductions in base salaries, annual bonus opportunities or long-term incentive compensation opportunities of less than ten percent (10%) similarly affecting all similarly situated executives (including, if applicable, of the Person then in control of Sempra Energy) of comparable rank with the Executive; or the failure by the Company to continue in effect any material benefit plan in which the Executive participates immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executive's participation relative to other participants, as existed at the time of the Change in Control;
(iii)the relocation of the Executive’s principal place of employment immediately prior to the Change in Control Date (the “Principal Location”) to a location which is both further away from the Executive’s residence and more than thirty (30) miles from such Principal Location, or the Company’s requiring the Executive to be based anywhere other than such Principal Location (or permitted relocation thereof), or a substantial increase in the Executive’s business travel obligations outside of the Southern California area as of immediately prior to the Change in Control (without regard to any changes therein in anticipation of the Change in Control) other than any such increase that (A) arises in connection with extraordinary business activities of the Company of limited duration and (B) is understood not to be part of the Executive’s regular duties with the Company;
(iv)the failure by the Company to pay to the Executive any portion of the Executive’s current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)any purported termination of the Executive’s employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 2 hereof; for purposes of this Agreement; 
(vi)the failure by Sempra Energy to perform its obligations under Section 16(c) or (d) hereof; 
(vii)the failure by the Company to provide the indemnification and D&O insurance protection Section 10 of this Agreement requires it to provide; or

(viii)the failure by Sempra Energy (or any of the entities comprising the Company, as applicable) to comply with any material provision of this Agreement.
Following a Change in Control, the Executive’s determination that an act or failure to act constitutes Good Reason shall be presumed to be valid unless such determination is deemed to be unreasonable by an arbitrator pursuant to the procedure described in Section 13 hereof.  The  Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness.  The  Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
“Incentive Compensation Awards” means awards granted under Incentive Compensation Plans providing the Executive with the opportunity to earn, on a year‐by‐year basis, annual and long‐term incentive compensation. 
“Incentive Compensation Plans” means annual incentive compensation plans and long‐term incentive compensation plans of the Company, which long‐term incentive compensation plans may include plans offering stock options, restricted stock and other long‐term incentive compensation. 
“Involuntary Termination” means (a) the Executive’s Separation from Service by reason other than for Cause, death, Disability, or Mandatory Retirement, or (b) the Executive’s Separation from Service by reason of resignation of employment for Good Reason.    
“JAMS Rules” has the meaning assigned thereto in Section 13 hereof.
“Mandatory Retirement” means termination of employment pursuant to the Company’s mandatory retirement policy.
“Medical Continuation Benefits” has the meaning assigned thereto in Section 4(c) hereof.
“Notice of Termination” has the meaning assigned thereto in Section 2(a) hereof.
“Payment” has the meaning assigned thereto in Section 8(a) hereof.
“Payment in Lieu of Notice” has the meaning assigned thereto in Section 2(b) hereof.
“Person” means any person, entity or “group” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, except that such term shall not include (1) Sempra Energy or any of its Affiliates, (2) a trustee or other fiduciary holding securities under an employee benefit plan of Sempra Energy or any of its Affiliates, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, (4) a corporation owned, directly or indirectly, by the shareholders of Sempra Energy in substantially the same proportions as their ownership of stock of Sempra Energy, or (5) a person or group as used in Rule 13d-1(b) under the Exchange Act.
“Post-Change in Control Severance Payment” has the meaning assigned thereto in Section 5 hereof.
“Pre-Change in Control Severance Payment” has the meaning assigned thereto in Section 4 hereof.

“Principal Location” has the meaning assigned thereto in clause (b)(iii) of the definition of Good Reason, above.
“Proprietary Information” has the meaning assigned thereto in Section 14(a) hereof.
“Pro Rata Bonus” has the meaning assigned thereto in Section 5(b) hereof.
“Release” has the meaning assigned thereto in Section 4 hereof.
“Section 409A Payments” means any payments under this Agreement which are subject to Section 409A of the Code.
“Sempra Energy Control Group” means Sempra Energy and all persons with whom Sempra Energy would be considered a single employer under Section 414(b) or 414(c) of the Code, as determined from time to time.
“Separation from Service” has the meaning set forth in Treasury Regulation Section 1.409A-1(h).
“SERP” has the meaning assigned thereto in Section 5(c) hereof.
“Specified Employee” shall be determined in accordance with Section 409A(a)(2)(B)(i) of the Code and Treasury Regulation Section 1.409A-1(i).
For purposes of this Agreement, references to any “Treasury Regulation” shall mean such Treasury Regulation as in effect on the date hereof.
Section 2.Notice and Date of Termination. 
(a) Any termination of the Executive’s employment by the Company or by the Executive shall be communicated by a written notice of termination to the other party (the “Notice of Termination”).  Where applicable, the Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.  Unless the Board or a committee thereof, in writing, provides a longer notice period, a Notice of Termination by the Executive alleging a termination for Good Reason must be made within 180 days of the act or failure to act that the Executive alleges to constitute Good Reason.  
(b)The date of the Executive’s termination of employment with the Company (the “Date of Termination”) shall be determined as follows:  (i) if the Executive’s Separation from Service is at the volition of the Company, then the Date of Termination shall be the date specified in the Notice of Termination (which, in the case of a termination by the Company other than for Cause, shall not be less than two (2) weeks from the date such Notice of Termination is given unless the Company elects to pay the Executive, in addition to any other amounts payable hereunder, an amount (the “Payment in Lieu of Notice”) equal to two (2) weeks of the Executive’s Annual Base Salary in effect on the Date of Termination), and (ii) if the Executive’s Separation from Service is by the Executive for Good Reason, the Date of Termination shall be determined by the Executive and specified in the Notice of Termination, but in no event be less than fifteen (15) days nor more than sixty (60) days after the date such Notice of Termination is given.   The Payment in Lieu of Notice shall be paid on such date as is required by law, but no later than thirty (30) days after the date of the Executive’s Separation from Service.

Section 3.Termination from the Board.  Upon the termination of the Executive’s employment for any reason, the Executive’s membership on the Board, the board of directors of any Affiliates of Sempra Energy, any committees of the Board and any committees of the board of directors of any of the Affiliates of Sempra Energy, if applicable, shall be automatically terminated and the Executive agrees to take any and all actions (including resigning) required by Sempra Energy or any of its Affiliates to evidence and effect such termination of membership.  
Section 4.Severance Benefits upon Involuntary Termination Prior to Change in Control.  Except as provided in Section 5(h) and Section 19(i) hereof, in the event of the Involuntary Termination of the Executive prior to a Change in Control, Sempra Energy shall, or shall cause one of its Affiliates that is the employer of the Executive to, pay the Executive, in one lump sum cash payment, an amount (the “Pre-Change in Control Severance Payment”) equal to the greater of:  (X) 180% of the Executive’s Annual Base Salary as in effect on the Date of Termination, and (Y) the sum of (I) the Executive’s Annual Base Salary as in effect on the Date of Termination, plus (II) the Executive’s Average Annual Bonus.  In addition to the Pre-Change in Control Severance Payment, the Executive shall be entitled to the following additional benefits specified in subsections (a) through (e).  The Company's obligation to pay the Pre-Change in Control Severance Payment or provide the benefits set forth in subsections (c), (d) and (e) are subject to and conditioned upon the Executive executing a release of all claims substantially in the form attached hereto as Exhibit A (the “Release”) within fifty (50) days after the date of Involuntary Termination and the Executive not revoking such Release in accordance with the terms thereof.  Except as provided in Section 4(f), the Pre-Change in Control Severance Payment shall be paid within sixty (60) days after the date of the Involuntary Termination on such date as is determined by Sempra Energy, but not before the Release becomes effective and irrevocable.  If the fifty (50) day period in which the Release could become effective spans more than one taxable year, then the Pre-Change in Control Severance Payment shall not be made until the later taxable year.
(a)Accrued Obligations.  The Company shall pay the Executive a lump sum amount in cash equal to Accrued Obligations within the time prescribed by law.
(b)Equity Based Compensation.  The  Executive shall retain all rights to any equity-based compensation awards to the extent set forth in the applicable plan and/or award agreement.
(c)Welfare Benefits.  Subject to the terms and conditions of this Agreement, for a period of twelve (12) months following the date of the Involuntary Termination (and an additional twelve (12) months if the Executive provides consulting services under Section 14(f) hereof), the Executive and his dependents shall be provided with group medical benefits which are substantially similar to those provided from time to time to similarly situated active employees of the Company (and their eligible dependents) (“Medical Continuation Benefits”).  Without limiting the generality of the foregoing, such Medical Continuation Benefits shall be provided on substantially the same terms and conditions and at the same cost to the Executive as apply to similarly situated active employees of the Company. Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5).  Notwithstanding the foregoing, if Sempra Energy determines in its sole discretion that the Medical Continuation Benefits cannot be provided without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act) or that the provision of Medical Continuation Benefits under this Agreement would subject Sempra Energy or any of its Affiliates to a material tax or penalty, (i) the Executive shall be provided, in lieu thereof, with a taxable monthly payment in an amount equal to the monthly premium that the Executive would be required to pay to continue the Executive’s and his covered dependents’ group medical benefit coverages under COBRA as then in effect (which amount shall be based on the premiums for the first month of COBRA coverage) or (ii) Sempra Energy shall have the authority to amend the Agreement to the limited extent reasonably necessary to avoid such violation of 

law or tax or penalty and shall use all reasonable efforts to provide the Executive with a comparable benefit that does not violate applicable law or subject Sempra Energy or any of its Affiliates to such tax or penalty.
(d)Outplacement Services.  The  Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executive’s Involuntary Termination, for a period of twenty-four (24) months following the date of the Involuntary Termination, in an aggregate amount of cost to the Company not to exceed $50,000.  Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer.  Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(e)Financial Planning Services.  The  Executive shall receive financial planning services, on an in-kind basis, for a period of twenty-four (24) months following the Date of Termination.  Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial planning services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000.  The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services.  The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive.  The  Executive’s right to financial planning services shall not be subject to liquidation or exchange for any other benefit.  Such financial planning services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv).  
Section 5.Severance Benefits upon Involuntary Termination in Connection with and after Change in Control.  Notwithstanding the provisions of Section 4 above, and except as provided in Section 19(i) hereof, in the event of the Involuntary Termination of the Executive on or within two (2) years following a Change in Control, in lieu of the payments described in Section 4 above, Sempra Energy shall, or shall cause one of its Affiliates that is the employer of the Executive to, pay the Executive, in one lump sum cash payment, an amount (the “Post-Change in Control Severance Payment”) equal to two times the greater of:  (X)  180 % of the Executive’s Annual Base Salary as in effect immediately prior to the Change in Control or the Date of Termination, whichever is greater, and (Y) the sum of (I) the Executive’s Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, plus (II) the Executive’s Average Annual Bonus.  In addition to the Post-Change in Control Severance Payment, the Executive shall be entitled to the following additional benefits specified in subsections (a) through (g).  The Company's obligation to pay the Post-Change in Control Severance Payment or provide the benefits set forth in subsections (b),(c), (d), (e), and (f) are subject to and conditioned upon the Executive executing the Release within fifty (50) days after the date of Involuntary Termination and the Executive not revoking such Release in accordance with the terms thereof.  Except as provided in Section 5(h), the Post-Change in Control Severance Payment, the Pro Rata Bonus, and the payments under Section 5(c) shall be paid within sixty (60) days after the date of Involuntary Termination on such date as is determined by Sempra Energy (or its successor) but not before the Release becomes effective and irrevocable.  If the fifty (50) day period in which the Release could become effective spans more than one taxable year, then the Post-Change in Control Severance Payment, the Pro Rata Bonus and the payments under Section 5(c) shall not be made until the later taxable year.  

(a)Accrued Obligations.  The Company shall pay the Executive a lump sum amount in cash equal to the Accrued Obligations within the time required by law and, to the extent applicable, in accordance with the applicable plan, policy or arrangement  pursuant to which such payments are to be made.
(b)Pro Rata Bonus.  The Company shall pay the Executive a lump sum amount in cash equal to:  (i) the greater of:  (X) 80% of the Executive’s Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, or (Y) the Executive’s Average Annual Bonus, multiplied by (ii) a fraction, the numerator of which shall be the number of days from the beginning of such fiscal year to and including the Date of Termination and the denominator of which shall be 365 equal to (the “Pro Rata Bonus”).
(c)Pension Supplement.  The  Executive shall be entitled to receive a Supplemental Retirement Benefit under the Sempra Energy Supplemental Executive Retirement Plan, as in effect from time to time (“SERP”), determined in accordance with this Section 5(c), in the event that the Executive is a “Participant” (as defined in the SERP) as of the Date of Termination.  Such Supplemental Retirement Benefit shall be determined by crediting the Executive with additional months of Service (if any) equal to the number of full calendar months from the Date of Termination to the date on which the Executive would have attained age 62.  The Executive shall be entitled to receive such Supplemental Retirement Benefit without regard to whether the Executive has attained age 55 or completed five years of “Service” (as defined in the SERP) as of the Date of Termination.  The Executive shall be treated as qualified for “Retirement” (as defined in the SERP) as of the Date of Termination, and the Executive’s Vesting Factor with respect to the Supplemental Retirement Benefit shall be 100%.  The Executive’s Supplemental Retirement Benefit shall be calculated based on the Executive’s actual age as of the date of commencement of payment of such Supplemental Retirement Benefit (the “SERP Distribution Date”), and by applying the applicable early retirement factors under the SERP, if the Executive has not attained age 62 but has attained age 55 as of the SERP Distribution Date.  If the Executive has not attained age 55 as of the SERP Distribution Date, the Executive’s Supplemental Retirement Benefit shall be calculated by applying the applicable early retirement factor under the SERP for age 55, and the Supplemental Retirement Benefit otherwise payable at age 55 shall be actuarially adjusted to the Executive’s actual age as of the SERP Distribution Date using the following actuarial assumptions:  (i) the applicable mortality table promulgated by the Internal Revenue Service under Section 417(e)(3) of the Code, as in effect on the first day of the calendar year in which the SERP Distribution Date occurs, and (ii) the applicable interest rate promulgated by the Internal Revenue Service under Section 417(a)(3) of the Code for the November next preceding the first day of the calendar year in which the SERP Distribution Date occurs.  The Executive’s Supplemental Retirement Benefit shall be determined in accordance with this Section 5(c), notwithstanding any contrary provisions of the SERP and, to the extent subject to Section 409A of the Code, shall be paid in accordance with Treasury Regulation Section 1.409A-3(c)(1).  The Supplemental Retirement Benefit paid to or on behalf of the Executive in accordance with this Section 5(c) shall be in full satisfaction of any and all of the benefits payable to or on behalf of the Executive under the SERP.  
(d)Equity-Based Compensation.  Notwithstanding the provisions of any applicable equity-compensation plan or award agreement to the contrary, all equity-based Incentive Compensation Awards (including, without limitation, stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share awards, awards covered under Section 162(m) of the Code, and dividend equivalents) held by the Executive shall immediately vest and become exercisable or payable, as the case may be, as of the Date of Termination, to be exercised or paid, as the case may be, in accordance with the terms of the applicable Incentive Compensation Plan and Incentive Compensation Award agreement, and any restrictions on any such Incentive Compensation Awards shall automatically lapse; 

provided, however, that, in the case of any stock option or stock appreciation rights awards granted on or after June 26, 1998 that remain outstanding on the Date of Termination, such stock options or stock appreciation rights shall remain exercisable until the earlier of (A) the later of eighteen (18) months following the Date of Termination or the period specified in the applicable Incentive Compensation Award agreements or (B) the expiration of the original term of such Incentive Compensation Award (or, if earlier, the tenth anniversary of the original date of grant) (it being understood that all Incentive Compensation Awards granted prior to, on or after June 26, 1998 shall remain outstanding and exercisable for a period that is no less than that provided for in the applicable agreement in effect as of the date of grant).
(e)Welfare Benefits.  Subject to the terms and conditions of this Agreement, for a period of twenty four (24) months following the date of Involuntary Termination (and an additional twelve (12) months if the Executive provides consulting services under Section 14(f) hereof), the Executive and his dependents shall be provided with life, disability, accident and group medical benefits which are substantially similar to those provided to the Executive and his dependents immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive.  Without limiting the generality of the foregoing, the continuing benefits described in the preceding sentence shall be provided on substantially the same terms and conditions and at the same cost to the Executive as in effect immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive.  Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5).  Notwithstanding the foregoing, if Sempra Energy determines in its sole discretion that the portion of the foregoing continuing benefits that constitute group medical benefits cannot be provided without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act) or that the provision of such group medical benefits under this Agreement would subject Sempra Energy or any of its Affiliates to a material tax or penalty, (i) the Executive shall be provided, in lieu thereof, with a taxable monthly payment in an amount equal to the monthly premium that the Executive would be required to pay to continue the Executive’s and his covered dependents’ group medical benefit coverages under COBRA as then in effect (which amount shall be based on the premiums for the first month of COBRA coverage) or (ii) Sempra Energy shall have the authority to amend the Agreement to the limited extent reasonably necessary to avoid such violation of law or tax or penalty and shall use all reasonable efforts to provide the Executive with a comparable benefit that does not violate applicable law or subject Sempra Energy or any of its Affiliates to such tax or penalty.
(f)Outplacement Services.  The  Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executive’s Involuntary Termination, for a period of thirty-six (36) months following the date of Involuntary Termination (but in no event beyond the last day of the Executive’s second taxable year following the Executive’s taxable year in which the Involuntary Termination occurs), in the aggregate amount of cost to the Company not to exceed $50,000.  Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer.  Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(g)Financial Planning Services.  The  Executive shall receive financial planning services, on an in-kind basis, for a period of thirty-six (36) months following the date of Involuntary Termination.  Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial 

services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000.  The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services.  The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive.  The  Executive’s right to financial planning services shall not be subject to liquidation or exchange for any other benefit.  Such financial planning services shall be provided in a manner that complies with Section 1.409A-3(i)(1)(iv).  
(h)Involuntary Termination in Connection with a Change in Control.  Notwithstanding anything contained herein, in the event of an Involuntary Termination prior to a Change in Control, if the Involuntary Termination (1) was at the request of a third party who has taken steps reasonably calculated to effect such Change in Control or (2) otherwise arose in connection with or in anticipation of such Change in Control, then the Executive shall, in lieu of the payments described in Section 4 hereof, be entitled to the Post-Change in Control Severance Payment and the additional benefits described in this Section 5 as if such Involuntary Termination had occurred within two (2) years following the Change in Control.  The amounts specified in Section 5 that are to be paid under this Section 5(h) shall be reduced by any amount previously paid under Section 4.  The amounts to be paid under this Section 5(h) shall be paid within sixty (60) days after the Change in Control Date of such Change in Control.
Section 6.Severance Benefits upon Termination by the Company for Cause or by the Executive Other than for Good Reason.  If the Executive’s employment shall be terminated for Cause, or if the Executive terminates employment other than for Good Reason, the Company shall have no further obligations to the Executive under this Agreement other than the Pre-Change in Control Accrued Obligations and any amounts or benefits described in Section 10 hereof.
Section 7.Severance Benefits upon Termination due to Death or Disability.  If the Executive has a Separation from Service by reason of death or Disability, the Company shall pay the Executive or his estate, as the case may be, the Accrued Obligations and the Pro Rata Bonus (without regard to whether a Change in Control has occurred) and any amounts or benefits described in Section 10 hereof.  Such payments shall be in addition to those rights and benefits to which the Executive or his estate may be entitled under the relevant Company plans or programs.  The Company's obligation to pay the Pro Rata Bonus is conditioned upon the Executive, the Executive's representative or the Executive's estate, as the case may be executing the Release within fifty (50) days after the date of the Executive's Separation from Service and not revoking such Release in accordance with the terms thereof. The Accrued Obligations shall be paid within the time required by law and the Pro Rata Bonus shall be paid within sixty (60) days after the date of the Separation from Service on such date determined by Sempra Energy but not before the Release becomes effective and irrevocable.  If the fifty (50) day period in which the Release could become effective spans more than one taxable year, then the Pro Rata Bonus shall not be made until the later taxable year.  
Section 8.Limitation on Payments by the Company.  
(a)Anything in this Agreement to the contrary notwithstanding and except as set forth in this Section 8 below, in the event it shall be determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise (the “Payment”) would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code, (the “Excise Tax”), then, subject to subsection (b), the Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall be reduced 

under this subsection (a) to the amount equal to the Reduced Payment.  For such Payment payable under this Agreement, the “Reduced Payment” shall be the amount equal to the greatest portion of the Payment (which may be zero)  that, if paid, would result in no portion of any Payment being subject to the Excise Tax.  
(b)The Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall not be reduced under subsection (a) if:  
(i)such reduction in such Payment is not sufficient to cause no portion of any Payment to be subject to the Excise Tax, or 
(ii)the Net After-Tax Unreduced Payments (as defined below) would equal or exceed one hundred and five percent (105%) of the Net After-Tax Reduced Payments (as defined below).  
For purposes of determining the amount of any Reduced Payment under subsection (a), and the Net-After Tax Reduced Payments and the Net After-Tax Unreduced Payments, the Executive shall be considered to pay federal, state and local income and employment taxes at the Executive’s applicable marginal rates taking into consideration any reduction in federal income taxes which could be obtained from the deduction of state and local income taxes, and any reduction or disallowance of itemized deductions and personal exemptions under applicable tax law).  The applicable federal, state and local income and employment taxes and the Excise Tax (to the extent applicable) are collectively referred to as the “Taxes”. 
(c)For purposes of determining the amount of any Reduced Payment under this Section 8, the amount of any Payment shall be reduced in the following order:
(i)first, by reducing the amounts of parachute payments that would not constitute deferred compensation subject to Section 409A of the Code;
(ii)next, if after the reduction described in subparagraph (i), additional reductions are required, then by reducing the cash portion of the Payment that constitutes deferred compensation (within the meaning of Section 409A) subject to Section 409A, with the reductions to be applied first to the portion of the Payment scheduled for the latest distribution date, and then applied to distributions scheduled for progressively earlier distribution dates, to the extent necessary to decrease the Payment as required under this Section 8; and
(iii)next, if after the reduction described in subparagraph (ii), additional reductions are required, then, by reducing the non-cash portion of the Payment that constitutes deferred compensation (within the meaning of subject to 409A), with the reductions to be applied first to the portion of the Payment scheduled for the latest distribution date, and then applied to distributions scheduled for progressively earlier distribution dates, to the extent necessary to decrease the Payment as required under this Section 8. 
(d)The following definitions shall apply for purposes of this Section 8:
(i)“Net After-Tax Reduced Payments” shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are reduced pursuant to subsection (a).

(ii)“Net After-Tax Unreduced Payments” shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are not reduced pursuant to subsection (a).
(iii)“Net After-Tax Basis” shall mean, with respect to the Payments, either with or without reduction under subsection (a) (as applicable), the amount that would be retained by the Executive from such Payments after the payment of all Taxes.
(e)All determinations required to be made under this Section 8 and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm as may be agreed by the Company and the Executive (the “Accounting Firm”); provided, that the Accounting Firm’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code.  The Accounting Firm shall provide detailed supporting calculations to both the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.  For purposes of determining whether and the extent to which the Payments will be subject to the Excise Tax, (i) no portion of the Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Payments shall be taken into account which, in the written opinion of the Accounting Firm, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Payments shall be taken into account which, in the opinion of the Accounting Firm, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the base amount (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Payments shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
Section 9.Delayed Distribution under Section 409A of the Code.  Notwithstanding any other provision of this Agreement to the contrary, if the Executive is a Specified Employee on the date of the Executive’s Involuntary Termination (or on the date of the Executive’s Separation from Service by reason of Disability), the Section 409A Payments which are payable upon Separation from Service shall be delayed to the extent necessary in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, and such delayed payments or benefits shall be paid or distributed to the Executive during the thirty (30) day period commencing on the earlier of (a) the expiration of the six (6) month period measured from the date of the Executive’s Separation from Service or (b) the date of the Executive’s death.  Upon the expiration of the applicable six (6) month period, all payments deferred pursuant to this Section 9 (excluding in-kind benefits) shall be paid in a lump sum payment to the Executive, plus interest thereon from the date of the Executive’s Involuntary Termination through the payment date at an annual rate equal to Moody’s Rate.  The “Moody’s Rate” shall mean the average of the daily Moody’s Corporate Bond Yield Average - Monthly Average Corporates as published by Moody’s Investors Service, Inc. (or any successor) for the month next preceding the Date of Termination.  Any remaining payments due under the Agreement shall be paid as otherwise provided herein.

Section 10.Nonexclusivity of Rights.  Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any benefit, plan, program, policy or practice provided by the Company and for which the Executive may qualify (except with respect to any benefit to which the Executive has waived his rights in writing), including, without limitation, any and all indemnification arrangements in favor of the Executive (whether under agreements or under the Company’s charter documents or otherwise), and insurance policies covering the Executive, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement entered into after the Effective Date with the Company.  Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any benefit, plan, policy, practice or program of, or any contract or agreement entered into with, the Company shall be payable in accordance with such benefit, plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.  At all times during the  Executive’s employment with the Company and thereafter, the Company shall provide (to the extent permissible under applicable law) the  Executive with indemnification and D&O insurance insuring the  Executive against insurable events which occur or have occurred while the  Executive was a director or executive officer of the Company, that with respect to such insurance is on terms and conditions that, to the extent reasonably practical, are at least as generous as that then currently provided to any other current or former director or executive officer of the Company or any Affiliate.  Such indemnification and D&O insurance shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(10).
Section 11.Clawbacks.  Notwithstanding anything herein to the contrary, if Sempra Energy determines, in its good faith judgment, that if the Executive is required to forfeit or to make any repayment of any compensation or benefit(s) to the Company under the Sarbanes-Oxley Act of 2002 or pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other law or pursuant to any formal policy of Sempra Energy, such forfeiture or repayment shall not constitute Good Reason.
Section 12.Full Settlement; Mitigation.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set‐off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others, provided that nothing herein shall preclude the Company from separately pursuing recovery from the Executive based on any such claim.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts (including amounts for damages for breach) payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment.  
Section 13.Dispute Resolution.
(a)If any dispute arises between the Executive and Sempra Energy or any of its Affiliates, including, but not limited to, disputes relating to or arising out of this Agreement, any action relating to or arising out of the Executive’s employment or its termination, and/or any disputes regarding the interpretation, enforceability, or validity of this Agreement (“Arbitrable Dispute”), the Executive and Sempra Energy waive the right to resolve the dispute through litigation in a judicial forum and agree to resolve the Arbitrable Dispute through final and binding arbitration, except as prohibited by law.  Arbitration shall be the exclusive remedy for any Arbitrable Dispute.  
(b)As to any Arbitrable Dispute, Sempra Energy and the Executive waive any right to a jury trial or a court bench trial.  The Company and the Executive also waive the right to bring, maintain, or participate in any class, collective, or representative proceeding, whether in arbitration or otherwise. 

 Further, Arbitrable Disputes must be brought in the individual capacity of the party asserting the claim, and cannot be maintained on a class, collective, or representative basis.  
(c)Arbitration shall take place at the office of the Judicial Arbitration and Mediation Service (“JAMS”) (or, if the Executive is employed outside of California, the American Arbitration Association (“AAA”))  nearest to the location where the Executive last worked for the Company.  Except to the extent it conflicts with the rules and procedures set forth in this Arbitration Agreement, arbitration shall be conducted in accordance with the JAMs Employment Arbitration Rules & Procedures (if the Executive is employed outside of California, the AAA Employment Arbitration Rules & Mediation Procedures), copies of which are attached for my reference and available at www.jamsadr.com; tel:  800.352.5267  and www.adr.org; tel:  800.778.7879, before a single experienced, neutral employment arbitrator selected in accordance with those rules.  
(d)Sempra Energy will be responsible for paying any filing fee and the fees and costs of the arbitrator.  Each party shall pay its own attorneys’ fees.  However, if any party prevails on a statutory claim that authorizes an award of attorneys’ fees to the prevailing party, or if there is a written agreement providing for attorneys’ fees, the arbitrator may award reasonable attorneys’ fees to the prevailing party, applying the same standards a court would apply under the law applicable to the claim.  
(e)The arbitrator shall apply the Federal Rules of Evidence, shall have the authority to entertain a motion to dismiss or a motion for summary judgment by any party, and shall apply the standards governing such motions under the Federal Rules of Civil Procedure.  The arbitrator does not have the authority to consider, certify, or hear an arbitration as a class action, collective action, or any other type of representative action.  Sempra Energy and the Executive recognize that this Agreement arises out of or concerns interstate commerce and that the Federal Arbitration Act shall govern the arbitration and shall govern the interpretation or enforcement of this Arbitration Agreement or any arbitration award.   
(f)EXECUTIVE ACKNOWLEDGES THAT BY ENTERING INTO THIS AGREEMENT, EXECUTIVE IS WAIVING ANY RIGHT HE OR SHE MAY HAVE TO A TRIAL BY JURY.
Section 14.Executive’s Covenants.    
(a)Confidentiality.  The  Executive acknowledges that in the course of his employment with the Company, he has acquired non‐public privileged or confidential information and trade secrets concerning the operations, future plans and methods of doing business (“Proprietary Information”) of Sempra Energy and its Affiliates; and the Executive agrees that it would be extremely damaging to Sempra Energy and its Affiliates if such Proprietary Information were disclosed to a competitor of Sempra Energy and its Affiliates or to any other person or corporation.  The  Executive understands and agrees that all Proprietary Information has been divulged to the Executive in confidence and further understands and agrees to keep all Proprietary Information secret and confidential (except for such information which is or becomes publicly available other than as a result of a breach by the Executive of this provision or information the Executive is required by any governmental, administrative or court order to disclose) without limitation in time.  In view of the nature of the Executive’s employment and the Proprietary Information the Executive has acquired during the course of such employment, the Executive likewise agrees that Sempra Energy and its Affiliates would be irreparably harmed by any disclosure of Proprietary Information in violation of the terms of this paragraph and that Sempra Energy and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other 

relief available to them.  Inquiries regarding whether specific information constitutes Proprietary Information shall be directed to the Company’s Senior Vice President, Public Policy (or, if such position is vacant, the Company’s then Chief Executive Officer); provided, that the Company shall not unreasonably classify information as Proprietary Information.  
(b)Governmental Reporting.  Nothing in this Agreement is intended to interfere with or discourage the Executive’s good faith disclosure related to a suspected violation of federal or state law or regulation to any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation.  The Executive cannot and will not be held criminally or civilly liable under any federal or state trade secret law for disclosing otherwise protected trade secrets and/or confidential or proprietary information so long as the disclosure is made in (1) confidence to a federal, state, or local government official, directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law; or (2) a complaint or other document filed in a lawsuit or other proceeding, so long as such filing is made under seal.  Company will not retaliate against the Executive in any way for a disclosure made pursuant to this Section.  Further, in the event the Executive makes such a disclosure, and files a lawsuit against the Company alleging that the Company retaliated against the Executive because of the disclosure, the Executive may disclose the relevant trade secret or confidential information to the Executive’s attorney, and may use the same in the court proceeding only if (1) the Executive ensures that any court filing that includes the trade secret or confidential information at issue is made under seal; and (2) the Executive does not otherwise disclose the trade secret or confidential information except as required by court order.
(c)Non‐Solicitation of Employees.  The  Executive recognizes that he possesses and will possess confidential information about other employees of Sempra Energy and its Affiliates relating to their education, experience, skills, abilities, compensation and benefits, and inter‐personal relationships with customers of Sempra Energy and its Affiliates.  The  Executive recognizes that the information he possesses and will possess about these other employees is not generally known, is of substantial value to Sempra Energy and its Affiliates in developing their business and in securing and retaining customers, and has been and will be acquired by him because of his business position with Sempra Energy and its Affiliates.  The  Executive agrees that at all times during the Executive’s employment with the Company and for a period of one (1) year thereafter, he will not, directly or indirectly, solicit or recruit any employee of the Company or its Affiliates for the purpose of being employed by him or by any competitor of the Company or its Affiliates on whose behalf he is acting as an agent, representative or employee and that he will not convey any such confidential information or trade secrets about other employees of Sempra Energy and its Affiliates to any other person; provided, however, that it shall not constitute a solicitation or recruitment of employment in violation of this paragraph to discuss employment opportunities with any employee of the Company or its Affiliates who has either first contacted the Executive or regarding whose employment the Executive has discussed with and received the written approval of the Company’s most senior Vice President, Human Resources (or, if such position is vacant, the Company’s then Chief Executive Officer), prior to making such solicitation or recruitment.  In view of the nature of the Executive’s employment with the Company, the Executive likewise agrees that Sempra Energy and its Affiliates would be irreparably harmed by any solicitation or recruitment in violation of the terms of this paragraph and that Sempra Energy and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them.
(d)Survival of Provisions.  The obligations contained in Sections 14(a), (b) and (c) above shall survive the termination of the Executive’s employment within the Company and shall be fully enforceable thereafter.  If it is determined by a court of competent jurisdiction in any state that any 

restriction in Section 14(a) or Section 14(c) above is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.
(e)Release; Consulting Payment.  In the event of the Executive’s Involuntary Termination,  if the Executive (i) reconfirms and agrees to abide by the covenants described in Section 14(a) and Section 14(c) above, (ii) executes the Release within fifty (50) days after the date of Involuntary Termination and does not revoke such Release in accordance with the terms thereof, and (iii) agrees to provide the consulting services described in Section 14(f) below, then in consideration for such covenants and consulting services, the Company shall pay the Executive, in one cash lump sum, an amount (the “Consulting Payment”) in cash equal to the greater of:  (X) 180% of the Executive’s Annual Base Salary as in effect on the Date of Termination, and (Y) the Executive’s Annual Base Salary as in effect on the Date of Termination, plus the Executive’s Average Annual Bonus.  Except as provided in this subsection, the Consulting Payment shall be paid on such date as is determined by the Company within the ten (10) day period commencing on the 60th day after the date of the Executive’s Involuntary Termination; provided, however, that if the Executive is a Specified Employee on the date of the Executive’s Involuntary Termination, the Consulting Payment shall be paid as provided in Section 9 hereof to the extent required.  
(f)Consulting.  If the Executive agrees to the provisions of Section 14(e) above,  then the Executive shall have the obligation to provide consulting services to the Company as an independent contractor, commencing on the Date of Termination and ending on the second anniversary of the Date of Termination (the “Consulting Period”).  The  Executive shall hold himself available at reasonable times and on reasonable notice to render such consulting services as may be so assigned to him by the Board or the Company’s then Chief Executive Officer; provided, however, that unless the parties otherwise agree, the consulting services rendered by the Executive during the Consulting Period shall not exceed twenty (20) hours each month; and, provided, further, that the consulting services rendered by the Executive during the Consulting Period shall in no event exceed twenty percent (20%) of the average level of services performed by the Executive for the Company over the thirty-six (36) month period immediately preceding the Executive’s Separation from Service (or the full period of services to the Company, if the Executive has been providing services to the Company for less than thirty-six (36) months).  The Company agrees to use its best efforts during the Consulting Period to secure the benefit of the Executive’s consulting services so as to minimize the interference with the Executive’s other activities, including requiring the performance of consulting services at the Company’s offices only when such services may not be reasonably performed off-site by the Executive.
Section 15.Legal Fees.  
(a)Reimbursement of Legal Fees.  Subject to subsection (b), in the event of the Executive’s Separation from Service either (1) prior to a Change in Control, or (2) on or within two (2) years following a Change in Control, the Company shall reimburse the Executive for all legal fees and expenses (including but not limited to fees and expenses in connection with any arbitration) incurred by the Executive in disputing any issue arising under this Agreement relating to the Executive’s Separation from Service or in seeking to obtain or enforce any benefit or right provided by this Agreement.  
(b)Requirements for Reimbursement.  The Company shall reimburse the Executive’s legal fees and expenses pursuant to subsection (a) above only to the extent the arbitrator or court determines the following:  (i) the Executive disputed such issue, or sought to obtain or enforce such benefit or right, in good faith, (ii) the Executive had a reasonable basis for such claim, and (iii) in the case 

of subsection (a)(1) above, the Executive is the prevailing party.  In addition, the Company shall reimburse such legal fees and expenses, only if such legal fees and expenses are incurred during the twenty (20) year period beginning on the date of the Executive’s Separation from Service.   The legal fees and expenses paid to the Executive for any taxable year of the Executive shall not affect the legal fees and expenses paid to the Executive for any other taxable year of the Executive.  The legal fees and expenses shall be paid to the Executive on or before the last day of the Executive’s taxable year following the taxable year in which the fees or expenses are determined to be payable pursuant to this Agreement.  The  Executive’s right to reimbursement of legal fees and expenses shall not be subject to liquidation or exchange for any other benefit.  Such right to reimbursement of legal fees and expenses shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv).
Section 16.Successors.
(a)Assignment by the Executive.  This Agreement is personal to the Executive and without the prior written consent of Sempra Energy shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.
(b)Successors and Assigns of Sempra Energy.  This Agreement shall inure to the benefit of and be binding upon Sempra Energy and its successors and assigns.  Sempra Energy may not assign this Agreement to any person or entity (except for a successor described in Section 16(c), (d) or (e) below) without the Executive’s written consent.
(c)Assumption.  Sempra Energy shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Sempra Energy to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities of this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement if no such succession had taken place, and Sempra Energy shall have no further obligations and liabilities under this Agreement.  Upon such assumption, references to Sempra Energy in this Agreement shall be replaced with references to such successor.
(d)Sale of Subsidiary.  In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy that is a member of the Sempra Energy Control Group, (ii) Sempra Energy, directly or indirectly through one or more intermediaries, sells or otherwise disposes of such subsidiary, and (iii) such subsidiary ceases to be a member of the Sempra Energy Control Group, then if, on the date such subsidiary ceases to be a member of the Sempra Energy Control Group, the Executive continues in employment with such subsidiary and the Executive does not have a Separation from Service, Sempra Energy shall require such subsidiary or any successor (whether direct or indirect, by purchase merger, consolidation or otherwise) to such subsidiary, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if such subsidiary had not ceased to be part of the Sempra Energy Control Group, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement.  Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to such subsidiary, or such successor or parent thereof, assuming this Agreement, and (ii) subsection (b) of the definition of “Cause” and subsection (b) of the definition of “Good Reason” shall apply thereafter, as if a Change in Control had occurred on the date of such cessation.

(e)Sale of Assets of Subsidiary.  In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) such subsidiary sells or otherwise disposes of substantial assets of such subsidiary to an unrelated service recipient, as determined under Treasury Regulation Section 1.409A-1(f)(2)(ii) (the “Asset Purchaser”), in a transaction described in Treasury Regulation Section 1.409A-1(h)(4) (an “Asset Sale”), then if, on the date of such Asset Sale, the Executive becomes employed by the Asset Purchaser, Sempra Energy and the Asset Purchaser may specify, in accordance with Treasury Regulation Section 1.409A-1(h)(4), that the Executive shall not be treated as having a Separation from Service, and in such event, Sempra Energy may require such Asset Purchaser, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that the Company would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if the Asset Sale had not taken place, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement.  Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to the Asset Purchaser or the parent thereof, as applicable, and (ii) subsection (b) of the definition of “Cause” and subsection (b) of the definition of “Good Reason” shall apply thereafter, as if a Change in Control had occurred on the date of the Asset Sale.
Section 17.Administration Prior to Change in Control.  Prior to a Change in Control, the Compensation Committee shall have full and complete authority to construe and interpret the provisions of this Agreement, to determine an individual’s entitlement to benefits under this Agreement, to make in its sole and absolute discretion all determinations contemplated under this Agreement, to investigate and make factual determinations necessary or advisable to administer or implement this Agreement, and to adopt such rules and procedures as it deems necessary or advisable for the administration or implementation of this Agreement.  All determinations made under this Agreement by the Compensation Committee shall be final, conclusive and binding on all interested persons.  Prior to a Change in Control, the Compensation Committee may delegate responsibilities for the operation and administration of this Agreement to one or more officers or employees of the Company.  The provisions of this Section 17 shall terminate and be of no further force and effect upon the occurrence of a Change in Control.   
Section 18.Compliance with Section 409A of the Code.  All payments and benefits payable under this Agreement (including, without limitation, the Section 409A Payments) are intended to comply with the requirements of Section 409A of the Code.  Certain payments and benefits payable under this Agreement are intended to be exempt from the requirements of Section 409A of the Code.  This Agreement shall be interpreted in accordance with the applicable requirements of, and exemptions from, Section 409A of the Code and the Treasury Regulations thereunder.  To the extent the payments and benefits under this Agreement are subject to Section 409A of the Code, this Agreement shall be interpreted, construed and administered in a manner that satisfies the requirements of Sections 409A(a)(2), (3) and (4) of the Code and the Treasury Regulations thereunder  If the Company and the Executive determine that any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not comply with Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, to the extent permitted under Section 409A of the Code, the Treasury Regulations thereunder and any applicable authority issued by the Internal Revenue Service, the Company and the Executive agree to amend this Agreement, or take such other actions as the Company and the Executive deem reasonably necessary or appropriate, to cause such compensation, benefits and other payments to comply with the requirements of Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, while providing compensation, benefits and 

other payments that are, in the aggregate, no less favorable than the compensation, benefits and other payments provided under this Agreement.  In the case of any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code, if any provision of the Agreement would cause such compensation, benefits or other payments to fail to so comply, such provision shall not be effective and shall be null and void with respect to such compensation, benefits or other payments to the extent such provision would cause a failure to comply, and such provision shall otherwise remain in full force and effect.
Section 19.Miscellaneous.
(a)Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to its principles of conflict of laws.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  Except as provided herein, the Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing signed by the parties hereto.  No person, other than pursuant to a resolution of the Board or a committee thereof, shall have authority on behalf of Sempra Energy to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto.
(b)Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party, by a reputable overnight carrier or by registered or certified mail, return receipt requested, postage prepaid, addressed, in either case, to the Company’s headquarters or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notices and communications shall be effective when actually received by the addressee.
(c)Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d)Taxes.  The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(e)No Waiver.  The  Executive’s or the Company’s failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 1 hereof, or the right of the Company to terminate the Executive’s employment for Cause pursuant to Section 1 hereof shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(f)Entire Agreement; Exclusive Benefit; Supersession of Prior Agreement.  This instrument contains the entire agreement of the Executive, the Company or any predecessor or subsidiary thereof with respect to any severance or termination pay.  The Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and all other benefits provided hereunder shall be in lieu of any other severance payments to which the Executive is entitled under any other severance plan or program or arrangement sponsored by the Company, as well as pursuant to any individual employment or severance agreement that was entered into by the Executive and the Company, and, upon the Effective Date of this Agreement, all such plans, programs, arrangements and agreements are hereby automatically superseded and terminated.  

(g)No Right of Employment.  Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of the Company or shall interfere in any way with the right of the Company to terminate the Executive’s employment at any time, with or without Cause.
(h)Unfunded Obligation.  The obligations under this Agreement shall be unfunded.  Benefits payable under this Agreement shall be paid from the general assets of the Company.  The Company shall have no obligation to establish any fund or to set aside any assets to provide benefits under this Agreement.
(i)Termination upon Sale of Assets of Subsidiary.  Notwithstanding anything contained herein, this Agreement shall automatically terminate and be of no further force and effect and no benefits shall be payable hereunder in the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) an Asset Sale (as defined in Section 16(e)) occurs (other than such a sale or disposition which is part of a transaction or series of transactions which would result in a Change in Control), and (iii) as a result of such Asset Sale, the Executive is offered employment by the Asset Purchaser in an executive position with reasonably comparable status, compensation, benefits and severance agreement (including the assumption of this Agreement in accordance with Section 16(e)) and which is consistent with the Executive’s experience and education, but the Executive declines to accept such offer and the Executive fails to become employed by the Asset Purchaser on the date of the Asset Sale.  
(j)Term.  The term of this Agreement shall commence on the Effective Date and shall continue until the third (3rd) anniversary of the Effective Date; provided, however, that commencing on the second (2nd) anniversary of the Effective Date (and each anniversary of the Effective Date thereafter), the term of this Agreement shall automatically be extended for one (1) additional year, unless at least ninety (90) days prior to such date, the Company or the Executive shall give written notice to the other party that it or he, as the case may be, does not wish to so extend this Agreement.  Notwithstanding the foregoing, if the Company gives such written notice to the Executive (i) at a time when Sempra Energy is a party to an agreement that, if consummated, would constitute a Change in Control or (ii) less than two (2) years after a Change in Control, the term of this Agreement shall be automatically extended until the later of (A) the date that is one (1) year after the anniversary of the Effective Date that follows such written notice or (B) the second (2nd) anniversary of the Change in Control Date.
(k)Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from its Board of Directors, the Company have caused this Agreement to be executed as of the day and year first above written.
SEMPRA ENERGY

_____________________________________
G. Joyce Rowland
Senior Vice President, Chief Human Resources and Administrative Officer 

_____________________________________
Date

EXECUTIVE

_____________________________________
Steven D. Davis
Corporate Group President - Utilities

_____________________________________
Date

EXHIBIT A

GENERAL RELEASE
This GENERAL RELEASE (the “Agreement”), dated ___________, is made by and between ______________________________, a California corporation (the “Company”) and  ___________________________ (“you” or “your”).
WHEREAS, you and the Company have previously entered into that certain Severance Pay Agreement dated ____________, 20___ (the “Severance Pay Agreement”); and
WHEREAS, your right to receive certain severance pay and benefits pursuant to the terms of Section 4 or Section 5 of the Severance Pay Agreement, as applicable, are subject to and conditioned upon your execution and non‐revocation of a general release of claims by you against the Company and its subsidiaries and affiliates.
WHEREAS, your right to receive the Consulting Payment provided pursuant to Section 14(e) of the Severance Pay Agreement is subject to and conditioned upon your execution and non‐revocation of a general release of claims by you against the Company and its subsidiaries and affiliates; and your adherence to the covenants described under Section 14 of the Severance Pay Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, you and the Company hereby agree as follows:
ONE:  Your signing of this Agreement confirms that your employment with the Company shall terminate at the close of business on ____________, or earlier upon our mutual agreement.
TWO:  As a material inducement for the payment of the severance and benefits of the Severance Pay Agreement, and except as otherwise provided in this Agreement, you and the Company hereby irrevocably and unconditionally release, acquit and forever discharge the other from any and all Claims either may have against the other.  For purposes of this Agreement and the preceding sentence, the words “Releasee” or “Releasees” and “Claim” or “Claims” shall have the meanings set forth below:
(a)    The words “Releasee” or “Releasees” shall refer to you and to the Company and each of the Company’s owners, stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, advisors, parent companies, divisions, subsidiaries, affiliates (and agents, directors, officers, employees, representatives, attorneys and advisors of such parent companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them.
(b)    The words “Claim” or “Claims” shall refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, which you or the Company now, in the past or, in the future may have, own or hold against any of the Releasees; provided, however, that the word “Claim” or “Claims” shall not refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) arising under [identify severance, employee benefits, stock option, indemnification and D&O  and other agreements containing 

duties, rights obligations etc. of either party that are to remain operative].  Claims released pursuant to this Agreement by you and the Company include, but are not limited to, rights arising out of alleged violations of any contracts, express or implied, any tort, claim, any claim that you failed to perform or negligently performed or breached your duties during employment at the Company, any legal restrictions on the Company’s right to terminate employment relationships; and any federal, state or other governmental statute, regulation, or ordinance, governing the employment relationship including, without limitation, all state and federal laws and regulations prohibiting discrimination based on protected categories, and all state and federal laws and regulations prohibiting retaliation against employees for engaging in protected activity or legal off-duty conduct.  This release does not extend to claims for workers’ compensation or other claims which by law may not be waived or released by this Agreement.
THREE:  You and the Company expressly waive and relinquish all rights and benefits afforded by any statute (including but not limited to Section 1542 of the Civil Code of the State of California and analogous laws of other states) which limits the effect of a release with respect to unknown claims.  You and the Company do so understanding and acknowledging the significance of the release of unknown claims and the waiver of statutory protection against a release of unknown claims (including but not limited to Section 1542).  Section 1542 of the Civil Code of the State of California states as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
Thus, notwithstanding the provisions of Section 1542 or of any similar statute, and for the purpose of implementing a full and complete release and discharge of the Releasees, you and the Company expressly acknowledge that this Agreement is intended to include in its effect, without limitation, all Claims which are known and all Claims which you or the Company do not know or suspect to exist in your or the Company’s favor at the time of execution of this Agreement and that this Agreement contemplates the extinguishment of all such Claims.
FOUR:  The parties acknowledge that they might hereafter discover facts different from, or in addition to, those they now know or believe to be true with respect to a Claim or Claims released herein, and they expressly agree to assume the risk of possible discovery of additional or different facts, and agree that this Agreement shall be and remain effective, in all respects, regardless of such additional or different discovered facts.
FIVE:  As a further material inducement to the Company to enter into this Agreement, you hereby agree to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys’ fees incurred by the Releasees, arising out of any breach of this Agreement by you or the fact that any representation made in this Agreement by you was false when made.
As a further material inducement to you to enter into this Agreement, the Company hereby agrees to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys’ fees incurred by the Releasees, arising out of any breach of this Agreement by it or the fact that any representation made in this Agreement by it was knowingly false when made.

SIX:  You and the Company represent and acknowledge that in executing this Agreement, neither is relying upon any representation or statement not set forth in this Agreement or the Severance Agreement.
SEVEN:    (a)    This Agreement shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to you or any other person, or that you have any rights whatsoever against the Company, and the Company specifically disclaims any liability to or wrongful acts against you or any other person, on the part of itself, its employees or its agents.  This Agreement shall not in any way be construed as an admission by you that you have acted wrongfully with respect to the Company, or that you failed to perform your duties or negligently performed or breached your duties, or that the Company had good cause to terminate your employment.
(b)    If you are a party or are threatened to be made a party to any proceeding by reason of the fact that you were an officer or director of the Company, the Company shall indemnify you against any expenses (including reasonable attorneys’ fees; provided, that counsel has been approved by the Company prior to retention, which approval shall not be unreasonably withheld), judgments, fines, settlements and other amounts actually or reasonably incurred by you in connection with that proceeding; provided, that you acted in good faith and in a manner you reasonably believed to be in the best interest of the Company.  The limitations of California Corporations Code Section 317 shall apply to this assurance of indemnification.
(c)    You agree to cooperate with the Company and its designated attorneys, representatives and agents in connection with any actual or threatened judicial, administrative or other legal or equitable proceeding in which the Company is or may become involved.  Upon reasonable notice, you agree to meet with and provide to the Company or its designated attorneys, representatives or agents all information and knowledge you have relating to the subject matter of any such proceeding.  The Company agrees to reimburse you for any reasonable costs you incur in providing such cooperation.
EIGHT:  This Agreement is entered into in California and shall be governed by substantive California law, except as provided in this section.  If any dispute arises between you and the Company, including but not limited to, disputes relating to this Agreement, or if you prosecute a claim you purported to release by means of this Agreement (“Arbitrable Dispute”), you and the Company agree to resolve that Arbitrable Dispute through final and binding arbitration under this section.  You also agree to arbitrate any Arbitrable Dispute which also involves any other released party who offers or agrees to arbitrate the dispute under this section.  Your agreement to arbitrate applies, for example, to disputes about the validity, interpretation, or effect of this Agreement or alleged violations of it, claims of discrimination under federal or state law, or other statutory violation claims.  
As to any Arbitrable Dispute, you and the Company waive any right to a jury trial or a court bench trial.  You and the Company also waive the right to bring, maintain, or participate in any class, collective, or representative proceeding, whether in arbitration or otherwise.  Further, Arbitrable Disputes must be brought in the individual capacity of the party asserting the claim, and cannot be maintained on a class, collective, or representative basis.  
Arbitration shall take place in San Diego, California under the employment dispute resolution rules of the Judicial Arbitration and Mediation Service (“JAMS”), (or, if you are employed outside of California at the time of the termination of your employment, at the nearest location of the American Arbitration Association and in accordance with the AAA rules), before an experienced employment arbitrator selected in accordance with those rules.  The arbitrator may not modify or change this Agreement in any way.  The Company will be responsible for paying any filing fee and the fees and costs of the Arbitrator; provided, however, that if you are the party initiating the claim, you will contribute an amount equal to the filing fee 

to initiate a claim in the court of general jurisdiction in the state in which you are employed by the Company.  Each party shall pay for its own costs and attorneys’ fees, if any.  However if any party prevails on a statutory claim which affords the prevailing party attorneys’ fees and costs, or if there is a written agreement providing for attorneys’ fees and/or costs, the Arbitrator may award reasonable attorney’s fees and/or costs to the prevailing party, applying the same standards a court would apply under the law applicable to the claim.  The Arbitrator shall apply the Federal Rules of Evidence and shall have the authority to entertain a motion to dismiss or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure.  The Federal Arbitration Act shall govern the arbitration and shall govern the interpretation or enforcement of this section or any arbitration award.  The arbitrator will not have the authority to consider, certify, or hear an arbitration as a class action, collective action, or any other type of representative action.
To the extent that the Federal Arbitration Act is inapplicable, California law pertaining to arbitration agreements shall apply.  Arbitration in this manner shall be the exclusive remedy for any Arbitrable Dispute.  Except as prohibited by the ADEA, should you or the Company attempt to resolve an Arbitrable Dispute by any method other than arbitration pursuant to this section, the responding party will be entitled to recover from the initiating party all damages, expenses, and attorneys’ fees incurred as a result of this breach.  This Section TEN supersedes any existing arbitration agreement between the Company and me as to any Arbitrable Dispute.  Notwithstanding anything in this Section TEN to the contrary, a claim for benefits under an ERISA-covered plan shall not be an Arbitrable Dispute.
NINE:  Both you and the Company understand that this Agreement is final and binding eight (8) days after its execution and return.  Should you nevertheless attempt to challenge the enforceability of this Agreement as provided in Paragraph EIGHT or, in violation of that Paragraph, through litigation, as a further limitation on any right to make such a challenge, you shall initially tender to the Company, by certified check delivered to the Company, all monies received pursuant to Sections 4 or 5 of the Severance Pay Agreement, as applicable, plus interest, and invite the Company to retain such monies and agree with you to cancel this Agreement and void the Company’s obligations under the Severance Pay Agreement.  In the event the Company accepts this offer, the Company shall retain such monies and this Agreement shall be canceled and the Company shall have no obligation under Section 14(e) of the Severance Pay Agreement.  In the event the Company does not accept such offer, the Company shall so notify you and shall place such monies in an interest-bearing escrow account pending resolution of the dispute between you and the Company as to whether or not this Agreement and the Company’s obligations under the Severance Pay Agreement shall be set aside and/or otherwise rendered voidable or unenforceable.  Additionally, any consulting agreement then in effect between you and the Company shall be immediately rescinded with no requirement of notice.
TEN:  Any notices required to be given under this Agreement shall be delivered either personally or by first class United States mail, postage prepaid, addressed to the respective parties as follows:
To Company:    [TO COME]
Attn:  [TO COME]
To You:______________________
______________________
______________________

ELEVEN:  You understand and acknowledge that you have been given a period of forty-five (45) days to review and consider this Agreement (as well as certain data on other persons eligible for similar benefits, if any) before signing it and may use as much of this forty-five (45) day period as you wish prior to signing.  You are encouraged, at your personal expense, to consult with an attorney before signing this Agreement.  You understand and acknowledge that whether or not you do so is your decision.  You may revoke this Agreement within seven (7) days of signing it.  If you wish to revoke, the Company’s Vice President, Human Resources must receive written notice from you no later than the close of business on the seventh (7th) day after you have signed the Agreement.  If revoked, this Agreement shall not be effective and enforceable, and you will not receive payments or benefits under Sections 4 or 5 of the Severance Pay Agreement, as applicable
TWELVE:  This Agreement constitutes the entire agreement of the parties hereto and supersedes any and all other agreements (except the Severance Pay Agreement) with respect to the subject matter of this Agreement, whether written or oral, between you and the Company.  All modifications and amendments to this Agreement must be in writing and signed by the parties.
THIRTEEN:  Each party agrees, without further consideration, to sign or cause to be signed, and to deliver to the other party, any other documents and to take any other action as may be necessary to fulfill the obligations under this Agreement.
FOURTEEN:  If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or application; and to this end the provisions of this Agreement are declared to be severable.
FIFTEEN:  This Agreement may be executed in counterparts.
I have read the foregoing General Release, and I accept and agree to the provisions it contains and hereby execute it voluntarily and with full understanding of its consequences.  I am aware it includes a release of all known or unknown claims.
DATED:  __________
__________________________________________
DATED:  __________
__________________________________________
You acknowledge that you first received this Agreement on [date].
_________________________

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