<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-B
FOR REGISTRATION OF SECURITIES OF CERTAIN
SUCCESSOR ISSUERS FILED
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PG&E Corporation
- ------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
California 94-3234914
- ------------------------------------------------------------------------------
(State of Incorporation) (IRS Employer
Identification No.)
77 Beale Street, P.O. Box 770000, San Francisco, California 94177
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
- ------------------- ------------------------------
Common Stock New York Stock Exchange and Pacific
without par value Stock Exchange
- ----------------- -----------------------------------
Securities to be registered pursuant to section 12(g) of the Act:
None
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(Title of Class)
<PAGE>
Item 1. General Information
The registrant, PG&E Corporation, was organized on November 17, 1995 as a
corporation under the laws of the State of California. The registrant's fiscal
year ends on December 31. The registrant has filed a registration statement on
Form S-4 (the "Form S-4") under the Securities Act of 1933, as amended, with
respect to the issuance of certain shares of the registrant's common stock,
without par value (Registration No. 333-1103).
Item 2. Transaction of Succession
Pacific Gas and Electric Company, a California corporation ("PG&E"), formed
the registrant for the purpose of creating a holding company structure. The
structure will result from a merger (the "Merger") of a second-tier subsidiary
of PG&E (PG&E Merger Company) with and into PG&E, whereby the registrant, a
first-tier subsidiary of PG&E (and the parent of PG&E Merger Company), will
become the parent of PG&E. The transaction is more fully explained in the proxy
statement and prospectus of PG&E and the registrant which is included as part of
the Form S-4 and which is an exhibit hereto.
The common stock, $5 par value, of PG&E is registered pursuant to Section
12(b) of the Securities Exchange Act of 1934, as amended (the "1934 Act"). In
addition, all series of PG&E's First Preferred Stock, with par value of $25 per
share, are registered pursuant to Section 12(b) of the 1934 Act (and will remain
so registered despite the Merger). The Merger will cause shares of PG&E's
common stock, $5 par value, to be converted, on a share-for-share basis, into
shares of the registrant's common stock, without par value. Issued and
outstanding shares of PG&E's First Preferred Stock, with par value of $25 per
share, will remain outstanding and be unaffected by the Merger.
2
<PAGE>
Item 3. Securities to be Registered
The registrant is authorized to issue 800,000,000 shares of the
registrant's common stock, without par value. Upon the effectiveness of the
Merger, approximately 409,964,990 shares of the registrant's common stock,
without par value, will be issued and outstanding, none of which will be held by
or for the account of the registrant.
Item 4. Description of Registrant's Securities to be Registered
The registrant's common stock, without par value, is described in the proxy
statement and prospectus of PG&E and the registrant which is included as part of
the Form S-4 and which is an exhibit hereto. The section entitled "Item No. 2:
Formation of a Holding Company Structure--Articles of Incorporation and Bylaws
of ParentCo" is incorporated herein by reference.
Item 5. Financial Statements and Exhibits
Financial Statements.
As provided in Instruction (a) of Instructions to Financial Statements
for Form 8-B, no financial statements are required to be filed herewith because
the capital structure and balance sheet of the registrant immediately after the
Merger will be substantially the same as those of PG&E immediately prior to the
Merger.
Exhibits.
1 Agreement of Merger
2 The Proxy Statement and Prospectus (contained in the Registration
Statement on Form S-4 of the registrant (Registration No. 333-1103)
and incorporated herein by reference).
3.1 Restated Articles of Incorporation of the Registrant
3.2 Bylaws of the Registrant
4 First and Refunding Mortgage of PG&E dated December 1, 1920, and
supplements thereto dated April 23, 1925, October 1, 1931, March 1,
1941, September 1, 1947, May 15, 1950, May 1, 1954, May 21, 1958,
November 1, 1964, July 1, 1965, July 1, 1969, January 1, 1975, June
1, 1979, August 1, 1983, and December 1, 1988 (Registration No. 2-
1324, Exhibits B-1, B-2, B-3; Registration No. 2-4676, Exhibit B-22;
Registration No. 2-7203, Exhibit
3
<PAGE>
B-23; Registration No. 2-8475, Exhibit B-24; Registration No. 2-10874,
Exhibit 4B; Registration No. 2-14144, Exhibit 4B; Registration No. 2-
22910, Exhibit 2B; Registration No. 2-23759, Exhibit 2B; Registration
No. 2-35106, Exhibit 2B; Registration No. 2-54302, Exhibit 2C;
Registration No. 2-64313, Exhibit 2C; Registration No. 2-86849,
Exhibit 4.3; PG&E's Form 8-K dated January 18, 1989 (File No. 1-2348),
Exhibit 4.2).
10.1 Firm Transportation Service Agreement between PG&E and Pacific Gas
Transmission Company dated October 26, 1993 (PG&E's Form 10-K for
fiscal year 1993 (File No. 1-2348), Exhibit 10.4), rate schedule FTS-
1, and general terms and conditions. (PG&E's Form 10-K for fiscal year
1995 (File No. 1-2348), Exhibit 10.1).
10.2 Transportation Service Agreement as Amended and Restated between PG&E
and El Paso Natural Gas Company dated November 1, 1993 (PG&E's Form
10-K for fiscal year 1993 (File No. 1-2348), Exhibit 10.5), rate
schedule FT-1, and general terms and conditions. (PG&E's Form 10-K for
fiscal year 1995 (File No. 1-2348), Exhibit 10.2).
10.3 Diablo Canyon Settlement Agreement (Diablo Settlement) dated June 24,
1988 (PG&E's Form 8-K dated June 27, 1988) (File No. 1-2348), Exhibit
10.1), Implementing Agreement dated July 15, 1988 (PG&E's Form 10-Q
for the quarter ended June 30, 1988 (File No. 1-2348), Exhibit 10.1),
portions of the California Public Utilities Commission Decision No.
88-12-083, dated December 19, 1988, interpreting the Diablo Settlement
(PG&E's Form 10-K for fiscal year 1988 (File No. 1-2348), Exhibit
10.4) and Settlement Agreement dated December 14, 1994, modifying the
Diablo Settlement (PG&E's Form 10-K for fiscal year 1995 (File No. 1-
2348), Exhibit 10.3).
10.4 Pacific Gas and Electric Company Deferred Compensation Plan for
Directors (PG&E's Form 10-K for fiscal year 1992 (File No. 1-2348),
Exhibit 10.5).
10.5 PG&E Corporation Deferred Compensation Plan for Directors.
10.6 Pacific Gas and Electric Company Deferred Compensation Plan for
Officers (PG&E's Form 10-K for fiscal year 1991 (File No. 1-2348),
Exhibit 10.6).
10.7 Savings Fund Plan for Employees of Pacific Gas and Electric Company
applicable to non-union employees, as amended and restated effective
as of January 1, 1997.
4
<PAGE>
10.8 Short-Term Incentive Plan for Officers of Pacific Gas and Electric
Company, effective January 1, 1996 (PG&E's Form 10-K for fiscal year
1995 (File No. 1-2348), Exhibit 10.7).
10.9 The Pacific Gas and Electric Company Retirement Plan applicable to
non-union employees, as amended October 18, 1995, effective January
1, 1996 (PG&E's Form 10-K for fiscal year 1995 (File No. 1-2348),
Exhibit 10.8).
10.10 Pacific Gas and Electric Company Supplemental Executive Retirement
Plan, as amended through October 16, 1991 (PG&E's Form 10-K for
fiscal year 1991 (File No. 1-2348), Exhibit 10.11).
10.11 Pacific Gas and Electric Company Relocation Assistance Program for
Officers (PG&E's Form 10-K for fiscal year 1989 (File No. 1-2348),
Exhibit 10.16).
10.12 Pacific Gas and Electric Company Executive Flexible Perquisites
Program (PG&E's Form 10-K for fiscal year 1993 (File No. 1-2348),
Exhibit 10.16).
10.13 PG&E Postretirement Life Insurance Plan (PG&E's Form 10-K for fiscal
year 1991 (File No. 1-2348), Exhibit 10.16).
10.14 PG&E Corporation Retirement Plan for Non-Employee Directors.
10.15 Pacific Gas and Electric Company Retirement Plan for Non-Employee
Directors.
10.16 Executive Compensation Insurance Indemnity in respect of Deferred
Compensation Plan for Directors, Deferred Compensation Plan for
Officers, Supplemental Executive Retirement Plan and Retirement Plan
for Non-Employee Directors (PG&E's Form 10-K for fiscal year 1991
(File No. 1-2348), Exhibit 10.19).
10.17 PG&E Corporation Long-Term Incentive Program, as amended and restated
effective as of January 1, 1997, including the PG&E Corporation Stock
Option Plan, Performance Unit Plan and Restricted Stock Plan for Non-
Employee Directors.
21 Subsidiaries of the Registrant.
5
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: December 20, 1996
PG&E CORPORATION
By: /s/ Bruce R. Worthington
--------------------------
Name: Bruce R. Worthington
Title: General Counsel
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1 Agreement of Merger
2 The Proxy Statement and Prospectus (contained in the Registration
Statement on Form S-4 of the registrant (Registration No. 333-
1103) and incorporated herein by reference).
3.1 Restated Articles of Incorporation of the Registrant
3.2 Bylaws of the Registrant
4 First and Refunding Mortgage of PG&E dated December 1, 1920, and
supplements thereto dated April 23, 1925, October 1, 1931, March
1, 1941, September 1, 1947, May 15, 1950, May 1, 1954, May 21,
1958, November 1, 1964, July 1, 1965, July 1, 1969, January 1,
1975, June 1, 1979, August 1, 1983, and December 1, 1988
(Registration No. 2-1324, Exhibits B-1, B-2, B-3; Registration
No. 2-4676, Exhibit B-22; Registration No. 2-7203, Exhibit B-23;
Registration No. 2-8475, Exhibit B-24; Registration No. 2-10874,
Exhibit 4B; Registration No. 2-14144, Exhibit 4B; Registration
No. 2-22910, Exhibit 2B; Registration No. 2-23759, Exhibit 2B;
Registration No. 2-35106, Exhibit 2B; Registration No. 2-54302,
Exhibit 2C; Registration No. 2-64313, Exhibit 2C; Registration
No. 2-86849, Exhibit 4.3; PG&E's Form 8-K dated January 18, 1989
(File No. 1-2348), Exhibit 4.2).
10.1 Firm Transportation Service Agreement between PG&E and Pacific
Gas Transmission Company dated October 26, 1993 (PG&E's Form 10-K
for fiscal year 1993 (File No. 1-2348), Exhibit 10.4), rate
schedule FTS-1, and general terms and conditions. (PG&E's Form
10-K for fiscal year 1995 (File No. 1-2348), Exhibit 10.1).
10.2 Transportation Service Agreement as Amended and Restated between
PG&E and El Paso Natural Gas Company dated November 1, 1993
(PG&E's Form 10-K for fiscal year 1993 (File No. 1-2348), Exhibit
10.5), rate schedule FT-1, and general terms and conditions.
(PG&E's Form 10-K for fiscal year 1995 (File No. 1-2348), Exhibit
10.2).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
10.3 Diablo Canyon Settlement Agreement (Diablo Settlement) dated June
24, 1988 (PG&E's Form 8-K dated June 27, 1988) (File No. 1-2348),
Exhibit 10.1), Implementing Agreement dated July 15, 1988 (PG&E's
Form 10-Q for the quarter ended June 30, 1988 (File No. 1-2348),
Exhibit 10.1), portions of the California Public Utilities
Commission Decision No. 88-12-083, dated December 19, 1988,
interpreting the Diablo Settlement (PG&E's Form 10-K for fiscal
year 1988 (File No. 1-2348), Exhibit 10.4) and Settlement
Agreement dated December 14, 1994, modifying the Diablo
Settlement (PG&E's Form 10-K for fiscal year 1995 (File No. 1-
2348), Exhibit 10.3.
10.4 Pacific Gas and Electric Company Deferred Compensation Plan for
Directors (PG&E's Form 10-K for fiscal year 1992 (File No. 1-
2348), Exhibit 10.5).
10.5 PG&E Corporation Deferred Compensation Plan for Directors.
10.6 Pacific Gas and Electric Company Deferred Compensation Plan for
Officers (PG&E's Form 10-K for fiscal year 1991 (File No. 1-
2348), Exhibit 10.6).
10.7 Savings Fund Plan for Employees of Pacific Gas and Electric
Company applicable to non-union employees, as amended and
restated effective as of January 1, 1997.
10.8 Short-Term Incentive Plan for Officers of Pacific Gas and
Electric Company, effective January 1, 1996 (PG&E's Form 10-K for
fiscal year 1995 (File No. 1-2348), Exhibit 10.7).
10.9 The Pacific Gas and Electric Company Retirement Plan applicable
to non-union employees, as amended October 18, 1995, effective
January 1, 1996 (PG&E's Form 10-K for fiscal year 1995 (File No.
1-2348), Exhibit 10.8).
10.10 Pacific Gas and Electric Company Supplemental Executive
Retirement Plan, as amended through October 16, 1991 (PG&E's Form
10-K for fiscal year 1991 (File No. 1-2348), Exhibit 10.11).
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
10.11 Pacific Gas and Electric Company Relocation Assistance Program
for Officers (PG&E's Form 10-K for fiscal year 1989 (File No. 1-
2348), Exhibit 10.16).
10.12 Pacific Gas and Electric Company Executive Flexible Perquisites
Program (PG&E's Form 10-K for fiscal year 1993 (File No. 1-2348),
Exhibit 10.16).
10.13 PG&E Postretirement Life Insurance Plan (PG&E's Form 10-K for
fiscal year 1991 (File No. 1-2348), Exhibit 10.16).
10.14 PG&E Corporation Retirement Plan for Non-Employee Directors.
10.15 Pacific Gas and Electric Company Retirement Plan for Non-Employee
Directors.
10.16 Executive Compensation Insurance Indemnity in respect of Deferred
Compensation Plan for Directors, Deferred Compensation Plan for
Officers, Supplemental Executive Retirement Plan and Retirement
Plan for Non-Employee Directors (PG&E's Form 10-K for fiscal year
1991 (File No. 1-2348), Exhibit 10.19).
10.17 PG&E Corporation Long-Term Incentive Program, as amended and
restated effective as of January 1, 1997, including the PG&E
Corporation Stock Option Plan, Performance Unit Plan and
Restricted Stock Plan for Non-Employee Directors.
21 Subsidiaries of the Registrant.
</TABLE>
3
<PAGE>
Exhibit 1
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement") is made as of December 19,
1996, by and among PACIFIC GAS AND ELECTRIC COMPANY, a California corporation
("PG&E"), PG&E MERGER COMPANY, a California corporation ("MergeCo"), and PG&E
CORPORATION, a California corporation ("ParentCo"), with reference to the
following facts:
A. PG&E has authorized capital consisting of (i) 800,000,000 shares
of Common Stock, with par value of $5 per share ("PG&E Common Stock"), of which
approximately 409,964,990 shares are issued and outstanding; (ii) 75,000,000
shares of First Preferred Stock, with par value of $25 per share ("First
Preferred Stock"), of which 21,582,229 shares (consisting of 13 separate series)
are issued and outstanding; and (iii) 10,000,000 shares of $100 First Preferred
Stock, with par value of $100 per share ("$100 First Preferred Stock"), of which
no shares are issued and outstanding.
B. MergeCo has authorized capital consisting of 1,000 shares of
Common Stock ("MergeCo Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by ParentCo.
C. ParentCo has authorized capital consisting of 800,000,000 shares
of Common Stock ("ParentCo Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by PG&E, and 85,000,000 shares
of Preferred Stock, none of which have been issued.
D. The Boards of Directors of the respective parties hereto deem it
advisable to merge MergeCo with and into PG&E (the "Merger") in accordance with
the California General Corporation Law ("California GCL") and this Agreement for
the purpose of establishing ParentCo as the parent corporation for PG&E in a
transaction intended to qualify for tax-free treatment.
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties agree that (i) MergeCo shall be merged with and
into PG&E (the "Merger"), (ii) PG&E shall be the corporation surviving the
Merger, and (iii) the terms and conditions of the Merger, the mode of carrying
it into effect, and the manner of converting and exchanging shares of capital
stock shall be as follows:
<PAGE>
ARTICLE 1
THE MERGER
----------
1.1 Officers' Certificates. Subject to and in accordance with the
----------------------
provisions of this Agreement, officers' certificates of PG&E and MergeCo shall
be signed and verified and thereafter delivered, together with a copy of this
Agreement, to the office of the Secretary of State of California for filing, all
as provided in Section 1103 of the California GCL.
1.2 Effective Time. The Merger shall become effective at 12:01 a.m.
--------------
on January 1, 1997 (the "Effective Time"). At the Effective Time, the separate
existence of MergeCo shall cease and MergeCo shall be merged with and into PG&E,
which shall continue its corporate existence as the surviving corporation (PG&E
and MergeCo being sometimes referred to herein as the "Constituent Corporations"
and PG&E, as the surviving corporation, being sometimes referred to herein as
the "Surviving Corporation"). PG&E shall succeed, without other transfer, to all
the rights and property of MergeCo and shall be subject to all the debts and
liabilities of MergeCo in the same manner as if PG&E had itself incurred them.
All rights of creditors and all liens upon the property of each of PG&E and
MergeCo shall be preserved unimpaired.
1.3 Appropriate Actions. Prior to and after the Effective Time,
-------------------
ParentCo, PG&E and MergeCo, respectively, shall take all such actions as may be
necessary or appropriate in order to effectuate the Merger. In this connection,
ParentCo shall issue the shares of ParentCo Common Stock into which outstanding
shares of PG&E Common Stock will be converted on a share-for-share basis to the
extent provided in Article 2 of this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full title
to all properties, assets, privileges, rights, immunities and franchises of
either of the Constituent Corporations, the officers and directors of each of
the Constituent Corporations as of the Effective Time shall take all such
further action.
ARTICLE 2
TERMS OF CONVERSION AND EXCHANGE OF SHARES
------------------------------------------
At the Effective Time:
2.1 PG&E Common Stock. Each share of PG&E Common Stock issued and
-----------------
outstanding immediately prior to the Merger shall be automatically changed and
converted into one share of ParentCo Common Stock, which shall thereupon be
issued and fully-paid and non-assessable; provided, however, that such
conversion shall not affect shares of holders, if any, who perfect their rights
as dissenting shareholders under Chapter 13 of the California GCL.
2
<PAGE>
2.2 PG&E Preferred Stock. Shares of the First Preferred Stock and
--------------------
$100 First Preferred Stock of PG&E issued and outstanding immediately prior to
the Merger shall not be converted or otherwise affected by the Merger. Each such
share shall continue to be (i) issued and outstanding and (ii) a fully-paid and
non-assessable share (of First Preferred Stock or $100 First Preferred Stock, as
the case may be) of the Surviving Corporation.
2.3 MergeCo Shares. The shares of MergeCo Common Stock issued and
--------------
outstanding immediately prior to the Merger shall be automatically changed and
converted into all of the issued and outstanding shares of Common Stock of the
Surviving Corporation, which shall thereupon be issued and fully-paid and non-
assessable, with the effect that the number of issued and outstanding shares of
Common Stock of the Surviving Corporation shall be the same as the number of
issued and outstanding shares of PG&E Common Stock immediately prior to the
Effective Time.
2.4 ParentCo Shares. Each share of ParentCo Common Stock issued and
---------------
outstanding immediately prior to the Merger shall be canceled.
ARTICLE 3
ARTICLES OF INCORPORATION AND BYLAWS
------------------------------------
3.1 PG&E's Restated Articles. From and after the Effective Time, and
------------------------
until thereafter amended as provided by law, the Restated Articles of
Incorporation of PG&E as in effect immediately prior to the Merger shall be and
continue to be the Restated Articles of Incorporation of the Surviving
Corporation, except that Article NINTH shall be deleted in its entirety.
3.2 PG&E's Bylaws. From and after the Effective Time, and until
-------------
thereafter amended as provided by law, the Bylaws of PG&E as in effect
immediately prior to the Merger shall be and continue to be the Bylaws of the
Surviving Corporation.
ARTICLE 4
DIRECTORS AND OFFICERS
----------------------
The persons who are directors and officers of PG&E immediately prior
to the Merger shall continue as directors and officers, respectively, of the
Surviving Corporation and shall continue to hold office as provided in the
Bylaws of the Surviving Corporation. If, at or following the Effective Time, a
vacancy shall exist in the Board of Directors or in the position of any officer
of the Surviving Corporation, such vacancy may be filled in the manner provided
in the Bylaws of the Surviving Corporation.
3
<PAGE>
ARTICLE 5
STOCK CERTIFICATES
------------------
5.1 Pre-Merger PG&E Common Stock. Following the Effective Time, each
----------------------------
holder of an outstanding certificate or certificates theretofore representing
shares of PG&E Common Stock may, but shall not be required to, surrender the
same to ParentCo for cancellation or transfer, and each such holder or
transferee will be entitled to receive a certificate or certificates
representing the same number of shares of ParentCo Common Stock as the shares of
PG&E Common Stock previously represented by the stock certificate(s)
surrendered.
5.2 Outstanding Certificates. Until surrendered or presented for
------------------------
transfer in accordance with Section 5.1 above, each outstanding certificate
which, prior to the Effective Time, represented PG&E Common Stock shall be
deemed and treated for all corporate purposes to represent the ownership of the
same number of shares of ParentCo Common Stock as though such surrender or
transfer and exchange had taken place.
5.3 PG&E Stock Transfer Books. The stock transfer books for PG&E
-------------------------
Common Stock shall be deemed to be closed at the Effective Time and no transfer
of shares of PG&E Common Stock outstanding prior to the Effective Time shall
thereafter be made on such books.
5.4 Post-Merger Rights of Holders. Following the Effective Time,
------------------------------
the holders of certificates representing PG&E Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to stock of the Surviving Corporation and their sole rights shall be
with respect to the ParentCo Common Stock into which their shares of PG&E Common
Stock shall have been converted by the Merger, subject to the rights of any
dissenting shareholders under Chapter 13 of the California GCL.
ARTICLE 6
CONDITIONS OF THE MERGER
------------------------
Completion of the Merger is subject to the satisfaction of the
following conditions:
6.1 Shareholder Approval. The principal terms of this Agreement
--------------------
shall have been approved by such holders of capital stock of each of the
Constituent Corporations as is required by the California GCL.
6.2 ParentCo Common Stock Listed. The ParentCo Common Stock to be
----------------------------
issued and to be reserved for issuance pursuant to the Merger shall have been
approved for listing, upon official notice of issuance, by the New York Stock
Exchange.
4
<PAGE>
ARTICLE 7
AMENDMENT AND TERMINATION
-------------------------
7.1 Amendment. The parties to this Agreement, by mutual consent of
---------
their respective boards of directors, may amend, modify or supplement this
Agreement in such manner as may be agreed upon by them in writing at any time
before or after approval of this Agreement by the pre-Merger shareholders of
PG&E (as provided in Section 6.1 above); provided, however, that no such
amendment, modification or supplement shall, if agreed to after such approval by
the pre-Merger shareholders of PG&E, change any of the principal terms of this
Agreement.
7.2 Termination. This Agreement may be terminated and the Merger and
-----------
other transactions provided for by this Agreement may be abandoned at any time,
whether before or after approval of this Agreement by the pre-Merger
shareholders of PG&E, by action of the board of directors of PG&E if such board
of directors determines for any reason that the completion of the transactions
provided for herein would for any reason be inadvisable or not in the best
interests of PG&E or its shareholders.
ARTICLE 8
MISCELLANEOUS
-------------
8.1 Approval of ParentCo Shares. By its execution and delivery of
---------------------------
this Agreement, PG&E, as the sole pre-Merger shareholder of ParentCo, consents
to, approves and adopts this Agreement and approves the Merger, subject to
approval of this Agreement by the pre-Merger shareholders of PG&E (as provided
in Section 6.1 above).
8.2 Approval of MergeCo Shares. By its execution and delivery of
--------------------------
this Agreement, ParentCo, as the sole pre-Merger shareholder of MergeCo,
consents to, approves and adopts this Agreement and approves the Merger, subject
to approval of this Agreement by the pre-Merger shareholders of PG&E (as
provided in Section 6.1 above).
8.3 No Counterparts. This Agreement may not be executed in
---------------
counterparts.
5
<PAGE>
IN WITNESS WHEREOF, PG&E, ParentCo and MergeCo, pursuant to approval
and authorization duly given by resolutions adopted by their respective boards
of directors, have each caused this Agreement to be executed by its chairman of
the board or its president or one of its vice presidents and by its secretary or
one of its assistant secretaries.
PG&E:
PACIFIC GAS AND ELECTRIC COMPANY,
a California corporation
By: /s/ Stanley T. Skinner
--------------------------------------------
Its: Chairman and Chief Executive Officer
By: /s/ Leslie Everett
--------------------------------------------
Its: Secretary
ParentCo:
PG&E CORPORATION,
a California corporation
By: /s/ Stanley T. Skinner
--------------------------------------------
Its: Chairman and Chief Executive Officer
By: /s/ Leslie Everett
--------------------------------------------
Its: Secretary
6
<PAGE>
MergeCo:
PG&E MERGER COMPANY,
a California corporation
By: /s/ Bruce R. Worthington
---------------------------------------------
Its: President
By: /s/ Bruce R. Worthington
---------------------------------------------
Its: Secretary
7
<PAGE>
Exhibit 3.1
RESTATED ARTICLES OF INCORPORATION
OF
PG&E PARENT CO., INC.
Dated December 19, 1996
STANLEY T. SKINNER and LESLIE H. EVERETT certify that:
1. They are the Chairman of the Board and Chief Executive Officer, and
the Corporate Secretary, respectively, of PG&E Parent Co., Inc., a
California corporation.
2. The Articles of Incorporation of the corporation, as amended to the
date of the filing of this certificate, including the amendments set
forth herein but not separately filed (and with the omissions required
by Section 910 of the California Corporations Code) are amended and
restated as follows:
FIRST: The name of the Corporation shall be
PG&E CORPORATION
SECOND: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust company
business or the practice of a profession permitted to be incorporated by the
California Corporations Code.
THIRD:
I. The Board of Directors of the Corporation shall consist of such
number of directors, not less than nine (9) nor more than seventeen (17), as
shall be prescribed in the Bylaws.
II. The Board of Directors by a vote of two-thirds of the whole Board
may appoint from the directors an Executive Committee, which Committee may
exercise such powers as may lawfully be conferred upon it by the Bylaws of the
Corporation. Such Committee may prescribe rules for its own government and its
meetings may be held at such places within or without California as said
Committee may determine or authorize.
<PAGE>
FOURTH: No shareholder may cumulate votes in the election of
directors. This Article FOURTH shall become effective only when the Corporation
shall have become a "listed corporation" within the meaning of Section 301.5 of
the California Corporations Code.
FIFTH: The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
SIXTH: The Corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the California Corporations Code) through
bylaws, resolutions, agreements with agents, vote of shareholders or
disinterested directors, or otherwise, in excess of the indemnification
otherwise permitted by Section 317 of the California Corporations Code, subject
only to the applicable limits set forth in Section 204 of the California
Corporations Code.
SEVENTH:
I. The Corporation is authorized to issue two classes of shares, to
be designated respectively Preferred Stock ("Preferred Stock") and Common Stock
("Common Stock"). The total number of shares of capital stock that the
Corporation is authorized to issue is 885,000,000, of which 85,000,000 shall be
Preferred Stock and 800,000,000 shall be Common Stock.
II. The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors of the Corporation is expressly authorized
to provide for the issue of all or any of the shares of the Preferred Stock in
one or more series, and to fix the designation and number of shares and to
determine or alter for each such series, such voting powers, full or limited, or
no voting powers, and such designations, preferences and relative,
participating, optional or other rights and such qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions adopted by the Board of Directors providing for the issue of such
shares and as may be permitted by the General Corporation Law of California. The
Board of Directors is also expressly authorized to increase or decrease (but not
below the number of shares of such series then outstanding) the number of shares
of any series subsequent to the issue of shares of that series. If the number of
shares of any such series shall be so decreased, the shares constituting such
decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
EIGHTH:
I. The affirmative vote of the holders of not less than seventy-five
percent (75%) of the outstanding shares of "Voting Stock" (as hereinafter
defined) shall be required to implement or effect any "Business Combination" (as
hereinafter defined) involving the Corporation or any "Subsidiary" (as
hereinafter defined) of the Corporation and any "Related
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Person" (as hereinafter defined), or any "Affiliate" or "Associate" (as
hereinafter defined) of a Related Person, notwithstanding the fact that no vote
may be required or that a lesser percentage may be specified by law, in any
agreement with any national securities exchange or otherwise; provided, however,
that the seventy-five percent (75%) voting requirement shall not be applicable
and such Business Combination shall require only such affirmative vote as is
required by law, any agreement with any national securities exchange or
otherwise if:
(1) The Business Combination shall have been approved by the Board of
Directors without counting the vote of any director who is not a
"Disinterested Director" (as hereinafter defined); or
(2) All of the following conditions are met:
(i) The cash or "Fair Market Value" (as hereinafter defined) as
of the date of the consummation of the Business Combination (the
"Combination Date") of the property, securities or other consideration
to be received per share by holders of a particular class or series of
capital stock, as the case may be, of the Corporation in the Business
Combination is not less than the highest of:
(a) the highest per share price (including brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by or
on behalf of the Related Person in acquiring beneficial ownership of
any of its holdings of such class or series of capital stock of the
Corporation (A) within the two-year period immediately prior to the
first public announcement of the proposed Business Combination (the
"Announcement Date") or (B) in the transaction or series of
transactions in which the Related Person became a Related Person,
whichever is higher; or
(b) the highest Fair Market Value per share of the shares of
capital stock being acquired in the Business Combination as of any
date within the one-year period preceding: (A) the Announcement Date
or (B) the date on which the Related Person became a Related Person,
whichever is higher; or
(c) in the case of Common Stock, the highest per share book
value of the Common Stock as reported at the end of the three fiscal
quarters which preceded the Announcement Date, and in the case of
Preferred Stock the highest preferential amount per share to which the
holders of shares of such class or series of Preferred Stock would be
entitled as of the Combination Date in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of
the Corporation, regardless of whether the Business Combination to be
consummated constitutes such an event.
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The provisions of this paragraph I(2)(i) shall be required to be
met with respect to every class or series of outstanding capital
stock, whether or not the Related Person has previously acquired any
shares of a particular class or series of capital stock. In all of the
above instances, appropriate adjustments shall be made for
recapitalizations and for stock dividends, stock splits and like
distributions; and
(ii) The consideration to be received by holders of a particular
class or series of capital stock shall be in cash or in the same form
as previously has been paid by or on behalf of the Related Person in
connection with its direct or indirect acquisition of beneficial
ownership of shares of such class or series of stock. If the
consideration so paid for any such shares varied as to form, the form
of consideration for such shares shall be either cash or the form used
to acquire beneficial ownership of the largest number of shares of
such class or series of capital stock previously acquired by the
Related Person; and
(iii) After such Related Person has become a Related Person and
prior to the consummation of such Business Combination: (a) except as
approved by the Board of Directors without counting the vote of any
director who is not a Disinterested Director, there shall have been no
failure to declare and pay at the regular date therefor any full
quarterly dividends (whether or not cumulative) on the outstanding
Preferred Stock; (b) there shall have been (A) no reduction in the
annual rate of dividends paid on the Common Stock (except as necessary
to reflect any subdivision of the Common Stock) except as approved by
the Board of Directors without counting the vote of any director who
is not a Disinterested Director, and (B) an increase in such annual
rate of dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization
or any similar transaction which has the effect of reducing the number
of outstanding shares of the Common Stock, unless the failure so to
increase such annual rate is approved by the Board of Directors
without counting the vote of any director who is not a Disinterested
Director; and (c) such Related Person shall not have become the
beneficial owner of any additional shares of Voting Stock except as
part of the transaction which results in such Related Person becoming
a Related Person; and
(iv) After such Related Person has become a Related Person, the
Related Person shall not have received the benefit, directly or
indirectly (except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation, whether
in anticipation of or in connection with such Business Combination or
otherwise; and
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(v) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any provisions subsequently replacing such Act, rules
or regulations) shall be mailed to public shareholders of the
Corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or subsequent
provisions).
II. For purpose of this Article EIGHTH:
(1) The term "Business Combination" shall mean any (i) merger or
consolidation of the Corporation or a Subsidiary with a Related Person or
any other person which is or after such merger or consolidation would be an
Affiliate or Associate of a Related Person; (ii) sale, lease, exchange,
mortgage, pledge, transfer or other disposition or guarantee (in one
transaction or a series of transactions) to or with or for the benefit of
any Related Person or any Affiliate or Associate of any Related Person, of
any assets of the Corporation or of a Subsidiary having an aggregate Fair
Market Value of $100 million or more; (iii) sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a
series of transactions), to the Corporation or a Subsidiary of any assets
of a Related Person or any Affiliate or Associate of any Related Person
having an aggregate Fair Market Value of $100 million or more; (iv)
issuance, pledge or transfer of securities of the Corporation or a
Subsidiary (in one transaction or a series of transactions) to or with a
Related Person or any Affiliate or Associate of any Related Person in
exchange for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of $100 million or more; (v)
reclassification of securities (including any reverse stock split) or
recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other transaction that
would have the effect, either directly or indirectly, of increasing the
voting power or the proportionate share of any class of equity or
convertible securities of the Corporation or any Subsidiary which is
directly or indirectly beneficially owned by any Related Person or any
Affiliate or Associate of any Related Person; and (vi) any merger or
consolidation of the Corporation with any of its Subsidiaries after which
the provisions of this Article EIGHTH of the Articles of Incorporation
shall not be contained in the Articles of Incorporation of the surviving
entity.
(2) The term "person" shall mean any individual, firm, corporation or
other entity and shall include any group comprised of any person and any
other person with whom such person or any Affiliate or Associate of such
person has any agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or disposing of
Voting Stock of the Corporation.
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(3) The term "Related Person" shall mean any person (other than the
Corporation, or any Subsidiary and other than any dividend reinvestment
plan or profit-sharing, employee stock ownership or other employee benefit
or savings plan of the Corporation or any Subsidiary or any trustee of or
fiduciary with respect to any such plan when acting in such capacity) who
or which:
(i) is the beneficial owner (as hereinafter defined) of five
percent (5%) or more of the Voting Stock;
(ii) is an Affiliate or Associate of the Corporation and at any
time within the two-year period immediately prior to the date in
question was the beneficial owner of five percent (5%) or more of the
then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock which were at any
time within the two-year period immediately prior to such time
beneficially owned by any Related Person, if such assignment or
succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(4) A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) which such person or any of its Affiliates or Associates
has, directly or indirectly, (a) the right to acquire (whether such
right is exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options,
or otherwise, or (b) the right to vote pursuant to any agreement,
arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
(5) For the purposes of determining whether a person is a Related
Person pursuant to subparagraph (3) of this paragraph II, the number of
shares of Voting Stock deemed to be outstanding shall include shares deemed
owned through application of subparagraph (4) of this paragraph II but
shall not include any other shares of Voting Stock which may be issuable
pursuant to any agreement,
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arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(6) The term "Affiliate," used to indicate a relationship with a
specified person, shall mean a person that directly, or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under
common control with, such specified person. The term "Associate," used to
indicate a relationship with a specified person, shall mean (i) any person
(other than the Corporation or a Subsidiary) of which such specified person
is an officer or partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities, (ii) any trust or
other estate in which such specified person has a substantial beneficial
interest or as to which such specified person serves as trustee or in a
similar fiduciary capacity, (iii) any relative or spouse of such specified
person or any relative of such spouse, who has the same home as such
specified person or who is a director or officer of the Corporation or any
Subsidiary, and (iv) any person who is a director or officer of such
specified person or any of its parents or subsidiaries (other than the
Corporation or a Subsidiary).
(7) The term "Subsidiary" means any corporation of which a majority of
any class of equity securities is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Related Person set forth in subparagraph (3) of this paragraph II, the term
"Subsidiary" shall mean only a corporation of which a majority of the
outstanding shares of capital stock of such corporation entitled to vote
generally in the election of directors is owned, directly or indirectly, by
the Corporation.
(8) The term "Disinterested Director" means any member of the Board of
Directors, while such person is a member of the Board of Directors, who is
not an Affiliate, Associate or a representative of the Related Person
involved in a proposed Business Combination and was a member of the Board
of Directors immediately prior to the time that the Related Person became a
Related Person, and any successor of a Disinterested Director, while such
successor is a member of the Board of Directors, who is not an Affiliate,
Associate or a representative of the Related Person and is recommended or
elected to succeed a Disinterested Director by the Board of Directors
without counting the vote of any director who is not a Disinterested
Director.
(9) For the purposes of paragraph I(2)(i) of this Article EIGHTH, the
term "other consideration to be received" shall include, without
limitation, capital stock retained by the shareholders.
(10) The term "Voting Stock" shall mean all of the outstanding shares
of capital stock of the Corporation entitled to vote generally in the
election of directors, and each reference to a proportion of shares of
Voting Stock shall refer to such proportion of the votes entitled to be
cast by such shares voting together as one class.
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(11) The term "Fair Market Value" means: (i) in case of capital stock,
the highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the Composite
Tape for the New York Stock Exchange Listed Stocks, or, if such stock is
not quoted on the Composite Tape, on the New York Stock Exchange, or if
such stock is not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or, if such stock is not listed on any such
stock exchange, the highest closing bid quotation with respect to a share
of such stock during the 30-day period preceding the date in question on
the National Association of Securities Dealers, Inc. Automated Quotations
System or any successor system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of such
stock as determined in good faith by the Board of Directors without
counting the vote of any director who is not a Disinterested Director; and
(ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined in good faith
by the Board of Directors without counting the vote of any director who is
not a Disinterested Director.
(12) A Related Person shall be deemed to have acquired a share of
Voting Stock at the time when such Related Person became the beneficial
owner thereof. If the Board of Directors without counting the vote of any
director who is not a Disinterested Director is not able to determine the
price at which a Related Person has acquired a share of Voting Stock, such
price shall be deemed to be the Fair Market Value of the shares in question
at the time when the Related Person becomes the beneficial owner thereof.
With respect to shares owned by Affiliates or other persons whose ownership
is attributed to a Related Person under the foregoing definition of Related
Person, the price deemed to be paid therefor by such Related Person shall
be the price paid upon the acquisition thereof by such Affiliate, Associate
or other person, or, if such price is not determinable by the Board of
Directors without counting the vote of any director who is not a
Disinterested Director, the Fair Market Value of the shares in question at
the time when the Affiliate, Associate, or other such person became the
beneficial owner thereof.
III. The fact that any Business Combination complies with the
provisions of paragraph I(2) of this Article EIGHTH shall not be construed to
impose any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Combination or
recommend its adoption or approval to the shareholders of the Corporation, nor
shall such compliance limit, prohibit or otherwise restrict in any manner the
Board of Directors, or any member thereof, with respect to evaluations of or
actions and responses taken with respect to such Business Combination.
IV. The Board of Directors of the Corporation shall have the power
and duty to determine for the purposes of this Article EIGHTH, on the basis of
information known to them after reasonable inquiry and in accordance with the
terms of this Article
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EIGHTH, whether a person is a Related Person and whether a director is a
Disinterested Director. Once the Board of Directors has made a determination
pursuant to the preceding sentence that a person is a Related Person, the Board
of Directors of the Corporation, without counting the vote of any director who
is not a Disinterested Director with respect to such Related Person, shall have
the power and duty to interpret all of the terms and provisions of this Article
EIGHTH and to determine on the basis of the information known to them after
reasonable inquiry all facts necessary to ascertain compliance with this Article
EIGHTH including, without limitation, (1) the number of shares of Voting Stock
beneficially owned by any person, (2) whether a person is an Affiliate or
Associate of another, (3) whether the assets which are the subject of any
Business Combination have, or the consideration to be received for the issuance
or transfer of securities by the Corporation or any Subsidiary of the
Corporation in any Business Combination has, an aggregate Fair Market Value of
$100 million or more, and (4) whether all of the applicable conditions set forth
in paragraph I(2) of this Article EIGHTH have been met with respect to any
Business Combination. Any determination pursuant to this Article EIGHTH made in
good faith shall be binding and conclusive on all parties.
V. The directors of the Corporation, when evaluating any proposal or
offer which would involve a Business Combination or the merger or consolidation
of the Corporation or any of its Subsidiaries with another corporation, the sale
of all or substantially all of the assets of the Corporation or any of its
Subsidiaries, a tender offer or exchange offer for any capital stock of the
Corporation or any of its Subsidiaries or any similar transaction shall give due
consideration to all factors they may consider relevant. Such factors may
include, without limitation, (a) the adequacy, both in amount and form, of the
consideration offered in relation not only to the current market price of the
Corporation's outstanding securities, but also the current value of the
Corporation in a freely negotiated transaction with other potential acquirers
and the Board's estimate of the Corporation's future value (including the
unrealized value of its properties, assets and prospects) as an independent
going concern, (b) the financial and managerial resources and future prospects
of the acquirer, and (c) the legal, economic, environmental, regulatory and
social effects of the proposed transaction on the Corporation's and its
Subsidiaries' employees, customers, suppliers and other affected persons and
entities and on the communities and geographic areas in which the Corporation
and its Subsidiaries provide utility service or are located, and in particular,
the effect on the Corporation's and its Subsidiaries' ability to safely and
reliably meet any public utility obligations at reasonable rates.
VI. Nothing herein shall be construed to relieve any Related Person
from any fiduciary obligation imposed by law.
VII. Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that a lesser percentage may otherwise be specified by law, these Articles of
Incorporation or the Bylaws), the affirmative vote of not less than seventy-five
percent (75%) of the total voting power of all outstanding Voting Stock voting
as a class shall be required to alter, amend or repeal or adopt any
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provisions inconsistent with the provisions set forth in this Article EIGHTH,
provided, however, that this Article EIGHTH or any provision hereof may be
altered, amended or repealed, or any inconsistent provision may be adopted, upon
the affirmative vote of the holders of not less than a majority of the total
voting power of all outstanding Voting Stock voting as a class, if such
alteration, amendment or repeal, or if such adoption of any inconsistent
provision, shall first have been approved and recommended by the Board of
Directors without counting the vote of any director who is not a Disinterested
Director.
3. The foregoing amendments and restatement of the Articles of
Incorporation have been duly approved by the Board of Directors of the
corporation.
4. The foregoing amendments and restatement of the Articles of
Incorporation (other than the omissions required by Section 910 of the
California Corporations Code) have been duly approved by the required
vote of the shareholders in accordance with Section 902 of the
California Corporations Code. The corporation has only one class of
shares issued and outstanding (common stock) and the number of
outstanding shares is 100. The shares voted unanimously in favor of
the amendments, which exceeded the vote required. The percentage vote
required for approval of the amendments was more than 50%.
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We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Date: December 19, 1996
/s/ Stanley T. Skinner
--------------------------------
STANLEY T. SKINNER
Chairman of the Board and
Chief Executive Officer
/s/ Leslie H. Everett
--------------------------------
LESLIE H. EVERETT
Corporate Secretary
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Exhibit 3.2
BYLAWS
OF
PG&E CORPORATION
AS AMENDED AS OF DECEMBER 19, 1996
----------------------------------
ARTICLE I.
SHAREHOLDERS.
1. PLACE OF MEETING. All meetings of the shareholders shall be held at
the office of the Corporation in the City and County of San Francisco, State of
California, or at such other place within the State of California as may be
designated by the Board of Directors.
2. ANNUAL MEETINGS. The annual meeting of shareholders shall be held
each year on a date and at a time designated by the Board of Directors.
Written notice of the annual meeting shall be given not less than ten (or,
if sent by third-class mail, thirty) nor more than sixty days prior to the date
of the meeting to each shareholder entitled to vote thereat. The notice shall
state the place, day, and hour of such meeting, and those matters which the
Board, at the time of mailing, intends to present for action by the
shareholders.
Notice of any meeting of the shareholders shall be given by mail or
telegraphic or other written communication, postage prepaid, to each holder of
record of the stock entitled to vote thereat, at his address, as it appears on
the books of the Corporation.
3. SPECIAL MEETINGS. Special meetings of the shareholders shall be
called by the Corporate Secretary or an Assistant Corporate Secretary at any
time on order of the Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board, the Chairman of the Executive Committee, or the
President. Special meetings of the shareholders shall also be called by the
Corporate Secretary or an Assistant Corporate Secretary upon the written request
of holders of shares entitled to cast not less than ten percent of the votes at
the meeting. Such request shall state the purposes of the meeting, and shall be
delivered to the Chairman of the Board, the Vice Chairman of the Board, the
Chairman of the Executive Committee, the President, or the Corporate Secretary.
A special meeting so requested shall be held on the date requested, but not
less than thirty-five nor more than sixty days after the date of the original
request. Written notice of each special meeting of shareholders, stating the
place, day, and hour of such meeting and
<PAGE>
the business proposed to be transacted thereat, shall be given in the manner
stipulated in Article I, Section 2, Paragraph 3 of these Bylaws within twenty
days after receipt of the written request.
4. ATTENDANCE AT MEETINGS. At any meeting of the shareholders, each
holder of record of stock entitled to vote thereat may attend in person or may
designate an agent or a reasonable number of agents, not to exceed three to
attend the meeting and cast votes for his or her shares. The authority of
agents must be evidenced by a written proxy signed by the shareholder
designating the agents authorized to attend the meeting and be delivered to the
Corporate Secretary of the Corporation prior to the commencement of the meeting.
ARTICLE II.
DIRECTORS.
1. NUMBER. The Board of Directors shall consist of sixteen (16)
directors.
2. POWERS. The Board of Directors shall exercise all the powers of the
Corporation except those which are by law, or by the Articles of Incorporation
of this Corporation, or by the Bylaws conferred upon or reserved to the
shareholders.
3. EXECUTIVE COMMITTEE. There shall be an Executive Committee of the
Board of Directors consisting of the Chairman of the Committee, the Chairman of
the Board, if these offices be filled, the President, and four Directors who are
not officers of the Corporation. The members of the Committee shall be elected,
and may at any time be removed, by a two-thirds vote of the whole Board.
The Executive Committee, subject to the provisions of law, may exercise any
of the powers and perform any of the duties of the Board of Directors; but the
Board may by an affirmative vote of a majority of its members withdraw or limit
any of the powers of the Executive Committee.
The Executive Committee, by a vote of a majority of its members, shall fix
its own time and place of meeting, and shall prescribe its own rules of
procedure. A quorum of the Committee for the transaction of business shall
consist of three members.
4. TIME AND PLACE OF DIRECTORS' MEETINGS. Regular meetings of the Board
of Directors shall be held on such days and at such times and at such locations
as shall be fixed by resolution of the Board, or designated by the Chairman of
the Board or, in his absence, the Vice Chairman of the Board, or the President
of the Corporation and contained in the notice of any such meeting. Notice of
meetings shall be delivered personally or sent by mail or telegram at least
seven days in advance.
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5. SPECIAL MEETINGS. The Chairman of the Board, the Vice Chairman of the
Board, the Chairman of the Executive Committee, the President, or any five
directors may call a special meeting of the Board of Directors at any time.
Notice of the time and place of special meetings shall be given to each Director
by the Corporate Secretary. Such notice shall be delivered personally or by
telephone to each Director at least four hours in advance of such meeting, or
sent by first-class mail or telegram, postage prepaid, at least two days in
advance of such meeting.
6. QUORUM. A quorum for the transaction of business at any meeting of
the Board of Directors shall consist of six members.
7. ACTION BY CONSENT. Any action required or permitted to be taken by
the Board of Directors may be taken without a meeting if all Directors
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
Board of Directors.
8. MEETINGS BY CONFERENCE TELEPHONE. Any meeting, regular or special, of
the Board of Directors or of any committee of the Board of Directors, may be
held by conference telephone or similar communication equipment, provided that
all Directors participating in the meeting can hear one another.
ARTICLE III.
OFFICERS.
1. OFFICERS. The officers of the Corporation shall be a Chairman of the
Board, a Vice Chairman of the Board, a Chairman of the Executive Committee
(whenever the Board of Directors in its discretion fills these offices), a
President, a Chief Financial Officer, a General Counsel, one or more Vice
Presidents, a Corporate Secretary and one or more Assistant Corporate
Secretaries, a Treasurer and one or more Assistant Treasurers, and a Controller,
all of whom shall be elected by the Board of Directors. The Chairman of the
Board, the Vice Chairman of the Board, the Chairman of the Executive Committee,
and the President shall be members of the Board of Directors.
2. CHAIRMAN OF THE BOARD. The Chairman of the Board, if that office be
filled, shall preside at all meetings of the shareholders and of the Directors,
and shall preside at all meetings of the Executive Committee in the absence of
the Chairman of that Committee. He shall be the chief executive officer of the
Corporation if so designated by the Board of Directors. He shall have such
duties and responsibilities as may be prescribed by the Board of Directors or
the Bylaws. The Chairman of the Board shall have authority to sign on behalf of
the Corporation agreements and instruments of every character, and, in the
absence or disability of the President, shall exercise the President's duties
and responsibilities.
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3. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board, if that
office be filled, shall have such duties and responsibilities as may be
prescribed by the Board of Directors, the Chairman of the Board, or the Bylaws.
He shall be the chief executive officer of the Corporation if so designated by
the Board of Directors. In the absence of the Chairman of the Board, he shall
preside at all meetings of the Board of Directors and of the shareholders; and,
in the absence of the Chairman of the Executive Committee and the Chairman of
the Board, he shall preside at all meetings of the Executive Committee. The
Vice Chairman of the Board shall have authority to sign on behalf of the
Corporation agreements and instruments of every character.
4. CHAIRMAN OF THE EXECUTIVE COMMITTEE. The Chairman of the Executive
Committee, if that office be filled, shall preside at all meetings of the
Executive Committee. He shall aid and assist the other officers in the
performance of their duties and shall have such other duties as may be
prescribed by the Board of Directors or the Bylaws.
5. PRESIDENT. The President shall have such duties and responsibilities
as may be prescribed by the Board of Directors, the Chairman of the Board, or
the Bylaws. He shall be the chief executive officer of the Corporation if so
designated by the Board of Directors. If there be no Chairman of the Board, the
President shall also exercise the duties and responsibilities of that office.
The President shall have authority to sign on behalf of the Corporation
agreements and instruments of every character.
6. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be
responsible for the overall management of the financial affairs of the
Corporation. He shall render a statement of the Corporation's financial
condition and an account of all transactions whenever requested by the Board of
Directors, the Chairman of the Board, the Vice Chairman of the Board, or the
President.
The Chief Financial Officer shall have such other duties as may from time
to time be prescribed by the Board of Directors, the Chairman of the Board, the
Vice Chairman of the Board, the President, or the Bylaws.
7. GENERAL COUNSEL. The General Counsel shall be responsible for
handling on behalf of the Corporation all proceedings and matters of a legal
nature. He shall render advice and legal counsel to the Board of Directors,
officers, and employees of the Corporation, as necessary to the proper conduct
of the business. He shall keep the management of the Corporation informed of
all significant developments of a legal nature affecting the interests of the
Corporation.
The General Counsel shall have such other duties as may from time to time
be prescribed by the Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board, the President, or the Bylaws.
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8. VICE PRESIDENTS. Each Vice President, if those offices are filled,
shall have such duties and responsibilities as may be prescribed by the Board of
Directors, the Chairman of the Board, the Vice Chairman of the Board, the
President, or the Bylaws. Each Vice President's authority to sign agreements
and instruments on behalf of the Corporation shall be as prescribed by the Board
of Directors. The Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board, or the President may confer a special title upon any Vice
President.
9. CORPORATE SECRETARY. The Corporate Secretary shall attend all
meetings of the Board of Directors and the Executive Committee, and all meetings
of the shareholders, and he shall record the minutes of all proceedings in books
to be kept for that purpose. He shall be responsible for maintaining a proper
share register and stock transfer books for all classes of shares issued by the
Corporation. He shall give, or cause to be given, all notices required either by
law or the Bylaws. He shall keep the seal of the Corporation in safe custody,
and shall affix the seal of the Corporation to any instrument requiring it and
shall attest the same by his signature.
The Corporate Secretary shall have such other duties as may be prescribed
by the Board of Directors, the Chairman of the Board, the Vice Chairman of the
Board, the President, or the Bylaws.
The Assistant Corporate Secretaries shall perform such duties as may be
assigned from time to time by the Board of Directors, the Chairman of the Board,
the Vice Chairman of the Board, the President, or the Corporate Secretary. In
the absence or disability of the Corporate Secretary, his duties shall be
performed by an Assistant Corporate Secretary.
10. TREASURER. The Treasurer shall have custody of all moneys and funds
of the Corporation, and shall cause to be kept full and accurate records of
receipts and disbursements of the Corporation. He shall deposit all moneys and
other valuables of the Corporation in the name and to the credit of the
Corporation in such depositaries as may be designated by the Board of Directors
or any employee of the Corporation designated by the Board of Directors. He
shall disburse such funds of the Corporation as have been duly approved for
disbursement.
The Treasurer shall perform such other duties as may from time to time be
prescribed by the Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board, the President, the Chief Financial Officer, or the
Bylaws.
The Assistant Treasurers shall perform such duties as may be assigned from
time to time by the Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board, the President, the Chief Financial Officer, or the
Treasurer. In the absence or disability of the Treasurer, his duties shall be
performed by an Assistant Treasurer.
5
<PAGE>
11. CONTROLLER. The Controller shall be responsible for maintaining the
accounting records of the Corporation and for preparing necessary financial
reports and statements, and he shall properly account for all moneys and
obligations due the Corporation and all properties, assets, and liabilities of
the Corporation. He shall render to the officers such periodic reports covering
the result of operations of the Corporation as may be required by them or any
one of them.
The Controller shall have such other duties as may from time to time be
prescribed by the Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board, the President, the Chief Financial Officer, or the
Bylaws. He shall be the principal accounting officer of the Corporation, unless
another individual shall be so designated by the Board of Directors.
ARTICLE IV.
MISCELLANEOUS.
1. RECORD DATE. The Board of Directors may fix a time in the future as a
record date for the determination of the shareholders entitled to notice of and
to vote at any meeting of shareholders, or entitled to receive any dividend or
distribution, or allotment of rights, or to exercise rights in respect to any
change, conversion, or exchange of shares. The record date so fixed shall be
not more than sixty nor less than ten days prior to the date of such meeting nor
more than sixty days prior to any other action for the purposes for which it is
so fixed. When a record date is so fixed, only shareholders of record on that
date are entitled to notice of and to vote at the meeting, or entitled to
receive any dividend or distribution, or allotment of rights, or to exercise the
rights, as the case may be.
2. TRANSFERS OF STOCK. Upon surrender to the Corporate Secretary or
Transfer Agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, and payment of transfer taxes, the Corporation shall issue a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction upon its books. Subject to the foregoing, the Board of
Directors shall have power and authority to make such rules and regulations as
it shall deem necessary or appropriate concerning the issue, transfer, and
registration of certificates for shares of stock of the Corporation, and to
appoint and remove Transfer Agents and Registrars of transfers.
3. LOST CERTIFICATES. Any person claiming a certificate of stock to be
lost, stolen, mislaid, or destroyed shall make an affidavit or affirmation of
that fact and verify the same in such manner as the Board of Directors may
require, and shall, if the Board of Directors so requires, give the Corporation,
its Transfer Agents, Registrars, and/or other agents a bond of indemnity in form
approved by counsel, and in amount and with such sureties as may be satisfactory
to the Corporate Secretary of the Corporation, before a new
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certificate may be issued of the same tenor and for the same number of shares as
the one alleged to have been lost, stolen, mislaid, or destroyed.
ARTICLE V.
AMENDMENTS.
1. AMENDMENT BY SHAREHOLDERS. Except as otherwise provided by law, these
Bylaws, or any of them, may be amended or repealed or new Bylaws adopted by the
affirmative vote of a majority of the outstanding shares entitled to vote at any
regular or special meeting of the shareholders.
2. AMENDMENT BY DIRECTORS. To the extent provided by law, these Bylaws,
or any of them, may be amended or repealed or new Bylaws adopted by resolution
adopted by a majority of the members of the Board of Directors.
7
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Exhibit 10.5
PG&E CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
1. Establishment and Purpose
-------------------------
The PG&E Corporation Deferred Compensation Plan for Directors was adopted
on December 18, 1996, by the Board of Directors of PG&E Corporation to
provide Directors of PG&E Corporation an opportunity to defer payment of
their Meeting Fees and Retainer Fees. The Plan is also intended to
establish a method of paying Meeting Fees and Retainer Fees which will
assist the Corporation in attracting and retaining persons of outstanding
achievement and ability as members of the Board of Directors of the
Corporation.
2. Definitions
-----------
(a) "Beneficiary" means the person, persons, or entity designated by the
Director to receive payment of the Director's Deferred Compensation
Account in the event of the death of the Director.
(b) "Board" and "Board of Directors" means the Board of Directors of the
Corporation.
(c) "Committee" shall mean the Nominating and Compensation Committee of
the Board.
(d) "Corporation" means PG&E Corporation, a California corporation.
(e) "Deferred Compensation Account" means the bookkeeping account
established pursuant to Section 6 on behalf of each Director who
elects to participate in the Plan.
(f) "Deferred Election Form" means a participation form to be supplied by
the Secretary of the Corporation.
(g) "Director" means a member of the Board of Directors who is not an
employee of the Corporation or any subsidiary thereof.
(h) "Director's Termination Date" shall mean the effective date of the
Director's resignation from the Board of Directors of the Corporation.
(i) "Meeting Fee" means the amount of compensation paid by the Corporation
to a Director for his or her attendance and services at a meeting of
the Board of
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Directors or any committee thereof. A Meeting Fee shall not include
(i) any Retainer Fee, (ii) any reimbursement by the Corporation of
expenses incurred by a Director incidental to attendance at a meeting
of the Board of Directors or of a committee thereof or of any other
expense incurred on behalf of the Corporation, or (iii) any amount
payable with respect to services rendered prior to January 1, 1997.
(j) "Plan" shall mean the PG&E Corporation Deferred Compensation Plan for
Directors.
(k) "Retainer Fee" means the amount of compensation paid by the
Corporation to a Director for retaining his or her services during a
calendar quarter. A Retainer Fee shall not include (i) any Meeting
Fee, (ii) any reimbursement by the Corporation of expenses incurred by
a Director incidental to attendance at a meeting of the Board of
Directors or of a committee thereof or of any other expense incurred
on behalf of the Corporation, or (iii) any amount payable with respect
to services rendered prior to January 1, 1997.
(l) "Year" shall mean the calendar year.
3. Eligibility
-----------
Each Director who receives a Meeting Fee or Retainer Fee for service on the
Board of Directors shall be eligible to participate in the Plan.
4. Participation
-------------
In order to commence participation in the Plan in 1997, a Director must
file a deferral election with the Secretary of the Corporation prior to
January 1, 1997. In order to commence participation in the Plan for
calendar quarters commencing on or after April 1, 1997, a Director must
file a Deferral Election Form with the Secretary of the Corporation prior
to the first day of the calendar quarter for which participation is to
become effective. Notwithstanding the foregoing, in the case of a newly
elected Director, an election to participate shall be effective for the
calendar quarter in which the Director is first elected if it is filed
before the date the Director first receives a Meeting Fee or Retainer Fee
(but in no event later than one month following the date of election).
A participating Director may defer:
(a) All Retainer Fees only; or
(b) All Meeting Fees only; or
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(c) All Retainer Fees and all Meeting Fees.
The Retainer Fees and Meeting Fees deferred under (a), (b), or (c), above,
shall be net of any amounts which a Director has authorized the Corporate
Secretary to transmit to the Corporation's Dividend Reinvestment and Common
Stock Purchase Plan. Partial deferral of Retainer Fees or Meeting Fees is
not permitted.
Payment to the Director of deferred compensation may, at the election of
the participating Director, be paid in a lump sum or in a series of ten or
less approximately equal annual installments. Payment to the Director may
commence in the Year following the Director's Termination Date or in such
earlier year as the Director may specify on the Deferral Election Form.
5. Deferral Election
-----------------
A Director who elects to participate in the Plan shall file an executed
Deferral Election Form with the Secretary of the Corporation indicating the
compensation to be deferred, the time and form of distribution, and the
Beneficiary designations described in Section 9.
The Director's deferral election shall become effective and apply with
respect to Meeting Fees and Retainer Fees earned for the first calendar
quarter after the Deferral Election Form is filed with the Secretary of the
Corporation and all subsequent calendar quarters until revoked (by electing
not to further defer either Meeting Fees or Retainer Fees) or modified by
the Director. The Director shall notify the Secretary of the Corporation
in writing of any such revocation or modification, which shall apply solely
to amounts deferred with respect to calendar quarters following the
calendar quarter in which the revocation or modification is received by the
Secretary of the Corporation.
Notwithstanding the foregoing, the Director's designation as to time and
form of distribution to the Director of deferred compensation may not be
revoked or modified by the Director either as to amounts already deferred
or as to amounts to be deferred in the future.
6. Credits to Deferred Compensation Account
----------------------------------------
Upon receipt of a duly filed Deferral Election Form, the Corporation shall
establish a Deferred Compensation Account to which shall be credited an
amount equal to the Meeting Fees and/or Retainer Fees which would have been
payable currently to the Director but for the terms of the deferral
election.
Retainer Fees and Meeting Fees shall be credited to the Director's Deferred
Compensation Account as of the following dates:
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(a) The deferred Retainer Fee for each calendar quarter shall be credited
to such Account as of the first day of such calendar quarter; and
(b) The deferred Meeting Fee shall be credited to such Account as of the
first business day following the date of the meeting for which the
Meeting Fee was earned.
7. Interest During Deferral Period
-------------------------------
On the first day of each calendar quarter, interest shall be credited on
the balance in each Director's Deferred Compensation Account as of the last
day of the immediately preceding calendar quarter. Such interest shall be
at a rate equal to the AA Utility Bond Yield reported in Moody's Public
--------------
Utility, published in the issue of Moody's Investors Service immediately
-------
preceding the first day of the calendar quarter in which the interest is to
be credited. Such interest shall become a part of the Deferred
Compensation Account and shall be paid at the same time or times as the
balance of the Deferred Compensation Account.
8. Form and Time of Payment to a Director of Deferred Compensation Account
-----------------------------------------------------------------------
Payment to a Director of his or her Deferred Compensation Account shall be
made in cash prior to January 31 in each Year in which payment is to be
made in accordance with the Director's deferral election.
9. Effect of Death of Participant
------------------------------
Upon the death of a Director who participated in the Plan, all amounts, if
any, remaining in his or her Deferred Compensation Account shall be
distributed to the Beneficiary designated by the Director. Such
distribution shall be made at the time or times specified as part of the
Beneficiary designation of the Director's deferral election (but, in no
event shall such distribution be made later than ten years after the death
of the Director or in more than ten approximately equal annual
installments). The Committee, however, reserves the right to determine in
its sole discretion that payment shall be made at a different time or times
(but no later than ten years after the death of the Director). If the
designated Beneficiary does not survive the Director or dies before
receiving payment in full of the Director's Deferred Compensation Account,
payment of the remaining balance shall be made as soon as practicable in a
lump sum to the estate of the last to die of the Director or the designated
Beneficiary. All Beneficiary designations (including selection of the
timing and manner of payments to any Beneficiary) may be revoked or
modified at the Director's option. The Director shall notify the Secretary
of the Corporation in writing of any such revocation or modification.
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10. Participant's Rights Unsecured
------------------------------
The interest under the Plan of any participating Director and such
Director's right to receive a distribution of his or her Deferred
Compensation Account shall be an unsecured claim against the general assets
of the Corporation. The Deferred Compensation Account shall consist of
bookkeeping entries only, and no Director shall have an interest in or
claim against any specific asset of the Corporation pursuant to the Plan.
11. Statement of Deferred Compensation Account
------------------------------------------
The Secretary of the Corporation shall provide to each participating
Director an annual statement of his or her Deferred Compensation Account no
later than January 31 each year.
12. Nonassignability of Interests
-----------------------------
The interests and property rights of any Director under the Plan shall not
be assignable either by voluntary or involuntary assignment or by operation
of law, including (without limitation) bankruptcy, garnishment, attachment
or other creditor's process, and any act in violation of this Section 12
shall be void.
13. Administration of the Plan
--------------------------
The Plan shall be administered by the Committee. In addition to the powers
and duties otherwise set forth in the Plan, the Committee shall have full
power and authority to administer and interpret the Plan, to establish
procedures for administering the Plan, and to take any and all necessary
action in connection therewith. The Committee's interpretation and
construction of the Plan shall be conclusive and binding on all persons.
14. Amendment or Termination of the Plan
------------------------------------
The Board of Directors may amend, suspend, or terminate the Plan at any
time. In the event of such termination, the Deferred Compensation Accounts
of participating Directors shall be paid at such times and in such forms as
shall be determined pursuant to Section 8, unless the Board of Directors
shall prescribe a different time or times for payments of such Accounts.
5
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Exhibit 10.7
THE PACIFIC GAS AND ELECTRIC COMPANY
SAVINGS FUND PLAN
FOR NON-UNION EMPLOYEES
_________________________________________
This is the controlling and definitive statement of the Pacific Gas
and Electric Company Savings Fund Plan for Non-Union EMPLOYEES /1/ in effect on
and after January 1, 1997. The PLAN, which covers ELIGIBLE EMPLOYEES of the
COMPANY and other EMPLOYERS, is a further revision of the one originally placed
in effect by the COMPANY as of April 1, 1959. It has since been amended from
time to time. The PLAN as amended may be further amended retroactively in order
to meet applicable rules and regulations of the Internal Revenue Service, the
United States Department of Labor and all other applicable rules and
regulations.
The PLAN is maintained for the exclusive benefit of participants or
their BENEFICIARIES, and contributions or benefits under the PLAN do not
discriminate in favor of HIGHLY COMPENSATED EMPLOYEES.
ELIGIBILITY AND PARTICIPATION
-----------------------------
1. Eligibility
-----------
A non-union EMPLOYEE becomes an ELIGIBLE EMPLOYEE upon completion of one
year of SERVICE. Once eligibility occurs it continues as long as the
EMPLOYEE remains a non-union EMPLOYEE and SERVICE continues.
2. Participation
-------------
To become a participant, an ELIGIBLE EMPLOYEE must provide NOTICE to the
PLAN ADMINISTRATOR of the ELIGIBLE EMPLOYEE'S election to participate and
to be bound by the terms of the PLAN. Through such NOTICE, the ELIGIBLE
EMPLOYEE shall:
(a) authorize the EMPLOYER to reduce his COVERED COMPENSATION by a stated
percentage and to contribute such amount to the PLAN as a (S) 401(k)
CONTRIBUTION; and/or
(b) elect to make NON-(S) 401(k) CONTRIBUTIONS, if any, to the PLAN; and
- ---------------
/1/ Words in all capitals are defined in Section 30.
<PAGE>
(c) instruct the PLAN ADMINISTRATOR as to the manner in which EMPLOYEE
contributions and matching EMPLOYER CONTRIBUTIONS are to be invested.
CONTRIBUTIONS
-------------
3. EMPLOYEE Contributions
----------------------
To become a contributing participant, an ELIGIBLE EMPLOYEE must make (S)
401(k) CONTRIBUTIONS, NON-(S) 401(k) CONTRIBUTIONS, or a combination of
both to the PLAN through payroll deduction.
All contributions withheld by the EMPLOYER from COVERED COMPENSATION are
paid over to the TRUSTEE, unconditionally credited to the participant's
account and invested in accordance with the participant's instructions.
(a) (S) 401(k) CONTRIBUTIONS. A (S) 401(k) CONTRIBUTION is an election to
defer the receipt of a specified whole percentage of COVERED
COMPENSATION which would otherwise be currently payable to a
participant. The EMPLOYER shall reduce the participant's COVERED
COMPENSATION by an amount equal to the percentage of the (S) 401(k)
CONTRIBUTION elected by the participant. Under current law, (S)
401(k) CONTRIBUTIONS deferred by a participant under the PLAN are not
subject to federal or state income tax until actually withdrawn or
distributed from the PLAN.
(b) FLEXDOLLARS. By giving NOTICE, a participant in the COMPANY'S Flex
Plan may elect to have any unused FLEXDOLLARS contributed to this
PLAN. Any FLEXDOLLARS contributed to this PLAN shall be deemed (S)
401(k) CONTRIBUTIONS and shall be subject to all restrictions and
limitations applicable to (S) 401(k) CONTRIBUTIONS. FLEXDOLLAR
contributions shall not be eligible for matching EMPLOYER
CONTRIBUTIONS as described in Section 4.
(c) NON-(S) 401(k) CONTRIBUTIONS. NON-(S) 401(k) CONTRIBUTIONS differ
from (S) 401(k) CONTRIBUTIONS in that a participant has already paid
taxes on the amounts contributed to the PLAN. All EMPLOYEE
Contributions made to the PLAN as it existed prior to October 1, 1984,
are considered to be NON-(S) 401(k) CONTRIBUTIONS and are so recorded
in the accounts maintained by the PLAN ADMINISTRATOR.
NON-(S) 401(k) CONTRIBUTIONS must be made in whole percentages of
COVERED COMPENSATION, and the sum of all (S) 401(k) CONTRIBUTIONS and
NON-(S) 401(k) CONTRIBUTIONS made by a
2
<PAGE>
participant may not exceed 15 percent of the participant's COVERED
COMPENSATION.
(d) CHANGING CONTRIBUTIONS. By giving NOTICE to the PLAN ADMINISTRATOR, a
participant may direct the PLAN ADMINISTRATOR to cease or resume
making contributions, or to change the rate of contributions. Any
such change shall become effective within 30 days of receipt by the
PLAN ADMINISTRATOR of such NOTICE.
4. Employer Contributions
----------------------
(a) Each and every time that participants make (S) 401(k) or non-(S)
401(K) CONTRIBUTIONS to the PLAN eligible for matching EMPLOYER
CONTRIBUTIONS, the COMPANY shall make a matching EMPLOYER CONTRIBUTION
to the PLAN in cash or in whole shares of COMMON STOCK, or partly in
both. Matching EMPLOYER CONTRIBUTIONS shall be limited to an amount
equal to three-quarters of the aggregate participant contributions
eligible for matching EMPLOYER CONTRIBUTIONS under the provisions of
Subsection 4(a)(1). The COMPANY shall charge to each EMPLOYER its
appropriate share of matching EMPLOYER CONTRIBUTIONS.
(1) (S) 401(k) and NON-(S) 401(k) CONTRIBUTIONS Eligible for Matching
EMPLOYER CONTRIBUTIONS. Although a participant may elect to
defer up to 15 percent of COVERED COMPENSATION to the PLAN, the
maximum amount of a participant's contributions eligible for
matching EMPLOYER CONTRIBUTIONS shall be one of the following
percentages of COVERED COMPENSATION:
a) up to 3 percent, with at least one but less than three years
of SERVICE; or
b) up to 6 percent, with at least three years of SERVICE.
c) for a participant who is absent from work and receiving
temporary compensation under any state Worker's Compensation
Law or under the COMPANY'S LONG TERM DISABILITY PLAN, the
larger of:
i) the maximum percentage calculated under (i) or (ii),
whichever is applicable; or
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<PAGE>
ii) the dollar amount which was eligible for matching
EMPLOYER CONTRIBUTIONS immediately before the
participant's absence began.
(b) Investment of EMPLOYER CONTRIBUTIONS. All EMPLOYER CONTRIBUTIONS made
to the PLAN shall be invested by the TRUSTEE in accordance with a
participant's INVESTMENT FUND directions.
5. Limitations
-----------
(a) Average Deferral Percentage Limitation. In any PLAN YEAR, the average
rate of (S) 401(k) CONTRIBUTIONS as a percentage of compensation for
all participating HIGHLY COMPENSATED ELIGIBLE EMPLOYEES shall not
exceed the larger of:
(1) the average rate of (S) 401(k) CONTRIBUTIONS as a percentage of
compensation for all other participating ELIGIBLE EMPLOYEES
multiplied by 1.25 percent; or
(2) the lesser of:
a) the average rate of (S) 401(k) CONTRIBUTIONS as a percentage
of compensation for all other participating ELIGIBLE
EMPLOYEES multiplied by 2; or
b) the average rate of (S) 401(k) CONTRIBUTIONS as a percentage
of compensation for all other participating ELIGIBLE
EMPLOYEES plus 2 percentage points, or such lesser amount as
the Secretary of the Treasury may prescribe in order to
prevent the multiple use of this alternative limitation with
respect to any HIGHLY COMPENSATED participant. If multiple
use of the alternative limitation occurs with respect to the
Average Deferral Percentage Limitation and Average
Contribution Percentage Limitation in this PLAN, it will be
corrected by reducing the actual contribution percentage of
HIGHLY COMPENSATED participants in the manner described in
Section 5(c), below.
The average rate of (S) 401(k) CONTRIBUTIONS for a PLAN YEAR for a
designated group of ELIGIBLE EMPLOYEES shall be the average of the
ratios, calculated separately for each participating ELIGIBLE EMPLOYEE
in the group, of the amount of (S) 401(k) CONTRIBUTIONS made by each
EMPLOYEE for the PLAN YEAR, to the EMPLOYEE'S compensation for such
PLAN YEAR. As used in this subsection, compensation shall mean
4
<PAGE>
compensation paid by an EMPLOYER to the participant during the PLAN
YEAR which is required to be reported as wages on the participant's
form W-2 and shall also include compensation which is not currently
includable in the participant's gross income by reason of the
application of CODE Sections 125 and 402(e)(3).
For purposes of this subsection, the ratio of the amount of (S) 401(k)
CONTRIBUTIONS to a participant's compensation for any participant who
is HIGHLY COMPENSATED for the PLAN YEAR and who is eligible to have
elective deferrals or qualified employer deferral contributions
allocated to his account under two or more plans or arrangements
described in Section 401(k) of the CODE that are maintained by an
employer or affiliated employer shall be determined as if all such (S)
401(k) CONTRIBUTIONS, elective deferrals and qualified employer
deferral contributions were made under a single arrangement.
For purposes of determining the ratio of the amount of (S) 401(k)
CONTRIBUTIONS to a participant's compensation for a participant who is
HIGHLY COMPENSATED by reason of being one of the ten highest-paid
EMPLOYEES or a 5 percent owner of the controlled group of
corporations, as defined in Section 414 of the CODE, the (S) 401(k)
CONTRIBUTIONS and compensation of such participant shall include the
(S) 401(k) CONTRIBUTIONS and compensation of the participant's family
members, as defined in Section 414 of the CODE, and such family
members shall be disregarded in determining the average rate of (S)
401(k) CONTRIBUTIONS for non-HIGHLY COMPENSATED participants.
The determination and treatment of (S) 401(k) CONTRIBUTIONS of any
participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
(b) Average Contribution Percentage Limitation. In any PLAN YEAR, the
average rate of NON-(S) 401(k) CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS as a percentage of compensation for all participating
HIGHLY COMPENSATED ELIGIBLE EMPLOYEES shall not exceed the larger of:
(1) the average rate of NON-(S) 401(k) CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS as a percentage of compensation for all other
participating ELIGIBLE EMPLOYEES multiplied by 1.25; or
5
<PAGE>
(2) the lesser of:
a) the average rate of NON-(S) 401(k) CONTRIBUTIONS and
EMPLOYER CONTRIBUTIONS as a percentage of compensation for
all other participating ELIGIBLE EMPLOYEES multiplied by 2;
or
b) the average rate of NON-(S) 401(k) CONTRIBUTIONS and
EMPLOYER CONTRIBUTIONS for all other participating ELIGIBLE
EMPLOYEES plus 2 percentage points, or such lesser amount as
the Secretary of the Treasury may prescribe in order to
prevent the multiple use of this alternative limitation with
respect to any HIGHLY COMPENSATED participant. If multiple
use of the alternative limitation occurs with respect to the
Average Deferral Percentage Limitation and Average
Contribution Percentage Limitation in this PLAN, it will be
corrected by reducing the actual contribution percentage of
HIGHLY COMPENSATED participants in the manner described in
Section 5(c), below.
The average rate of NON-(S) 401(k) CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS for a PLAN YEAR for a designated group of ELIGIBLE
EMPLOYEES shall be the average of the ratios, calculated separately
for each participating ELIGIBLE EMPLOYEE in the group, of the amount
of NON-(S) 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS made by and
on behalf of each EMPLOYEE for the PLAN YEAR, to the EMPLOYEE'S
compensation for such PLAN YEAR. As used in this subsection,
compensation shall mean compensation paid by an EMPLOYER to the
participant during the PLAN YEAR which is required to be reported as
wages on the participant's form W-2 and shall also include
compensation which is not currently includable in the participant's
gross income by reason of the application of CODE Sections 125 and
402(e)(3).
For purposes of this subsection, the ratio of the amount of NON-(S)
401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS to a participant's
compensation for any participant who is HIGHLY COMPENSATED for the
PLAN YEAR and who is eligible to have elective deferrals or qualified
employer deferral contributions allocated to his account under two or
more plans or arrangements described in Section 401(k) of the CODE
that are maintained by an employer or affiliated employer shall be
determined as if all such NON-(S) 401(k) CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS, elective deferrals and qualified employer deferral
contributions were made under a single arrangement.
6
<PAGE>
For purposes of determining the ratio of the amount of NON-(S) 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS to a participant's
compensation for a participant who is HIGHLY COMPENSATED by reason of
being one of the ten highest-paid EMPLOYEES or a 5 percent owner of
the controlled group of corporations, as defined in Section 414 of the
CODE, the NON-(S) 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS and
compensation of such participant shall include the NON-(S) 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS and compensation of the
participant's family members, as defined in Section 414 of the CODE,
and such family members shall be disregarded in determining the
average rate of NON-(S) 401(k) CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS for non-HIGHLY COMPENSATED participants.
The determination and treatment of NON-(S) 401(k) CONTRIBUTIONS and
EMPLOYER CONTRIBUTIONS of any participant shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(c) In the event that the EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE, in
its sole and absolute discretion, determines that the rate of (S)
401(k) CONTRIBUTIONS, and/or the rate of NON-(S) 401(k) CONTRIBUTIONS
and EMPLOYER CONTRIBUTIONS will exceed either or both of the maximum
limitations contained in subsections 5(a) and 5(b), the EMPLOYEE
BENEFIT ADMINISTRATIVE COMMITTEE shall instruct the PLAN ADMINISTRATOR
to reduce the rate of contributions made by HIGHLY COMPENSATED
participants so that the limitations will be met.
The PLAN ADMINISTRATOR shall first determine the maximum average rate
of contributions which can be made by the HIGHLY COMPENSATED
participants. The contributions made by HIGHLY COMPENSATED
participants shall then be reduced, on a prospective basis, until the
limitations are met. Any necessary reduction shall be made by first
reducing the highest rate of (S) 401(k) CONTRIBUTIONS or NON-(S)
401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS as may be appropriate,
currently authorized by participants, with such rate to be reduced in
one percent increments until the maximum permissible average rate of
contributions is met.
Notwithstanding any other provision of the PLAN, if, as of the end of
a PLAN YEAR, the PLAN fails to meet either or both of the tests
described in subsections 5(a) or 5(b), the PLAN ADMINISTRATOR shall,
on or before December 31 of the following PLAN YEAR distribute to each
HIGHLY COMPENSATED participant, beginning with the participant having
the higher ratio, such excess portion of the participant's (S) 401(k)
CONTRIBUTIONS, and/or NON-(S) 401(k) CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS (and any income allocable to such portion), until the
7
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PLAN satisfies both of the tests. Distributions made to satisfy the
limitations described in subsection 5(b) shall include both NON-(S)
401(k) CONTRIBUTIONS and related matching EMPLOYER CONTRIBUTIONS in
accordance with the requirements of Treasury Regulation (S) 1.401(m)-
l(e)(4). If there is a loss allocable to such excess amount, the
amount of the distribution shall in no event be less than the lesser
of the (i) participant's account or (ii) the participant's (S) 401(k)
CONTRIBUTIONS, or NON-(S) 401(k) CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS, as appropriate, for the PLAN YEAR.
For the PLAN YEARS 1987, 1988, 1989, 1990 and 1991 only, the PLAN
ADMINISTRATOR may elect to make qualified non-elective employer
contributions within the meaning of Section 401(m)(4)(c) of the CODE,
on behalf of such non-HIGHLY COMPENSATED participants who are
EMPLOYEES of Pacific Service Employees Association as will cause the
PLAN to meet the appropriate limits set forth in subsections 5(a) and
5(b). For purposes of PLAN withdrawals qualified non-elective
employer contributions shall be treated as (S) 401(k) CONTRIBUTIONS.
For purposes of determining whether the PLAN meets either or both of
the limits set forth in subsections 5(a) and 5(b), the PLAN
ADMINISTRATOR may elect to make the look-back year calculation as
provided in Regulation 1.414(q)-ITA-14(b)(1) for any determination
year on the basis of the calendar year ending with the applicable
determination year.
(d) Annual (S) 401(k) Limitation. Effective as of January 1, 1987, no
participant shall be permitted to make (S) 401(k) CONTRIBUTIONS to the
PLAN during any PLAN YEAR in excess of $7,000, multiplied by the
adjustment factor prescribed by the Secretary of the Treasury under
Section 415(d) of the CODE for years beginning after December 31,
1987, as applied to elective deferrals. A participant who is unable
to make (S) 401(k) CONTRIBUTIONS which would have been eligible for
matching EMPLOYER CONTRIBUTIONS because of the limitation contained in
this subsection 5(d), shall be entitled to make NON-(S) 401(k)
CONTRIBUTIONS in an amount equal to the amount of (S) 401(k)
CONTRIBUTIONS that could have been made but for the subsection 5(d)
limitation. Such NON-(S) 401(k) CONTRIBUTIONS shall be eligible for
matching EMPLOYER CONTRIBUTIONS as though they were (S) 401(k)
CONTRIBUTIONS, subject to the limitations contained in Section 5.
(e) Section 415 Limitation. Anything herein to the contrary
notwithstanding, in no event shall the annual additions to a
participant's accounts in a YEAR exceed the lesser of (1) 25 percent
of the participant's compensation (as defined in subparagraph 5(e)(1),
below) for the YEAR or (2) $30,000, or, if greater, one-fourth of the
defined benefit dollar limitation set forth in Section
8
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415(b)(1) of the CODE as in effect for the PLAN YEAR. For purposes of
applying the limitations of Section 415 of the CODE, the annual
additions which must be kept within the limits set forth above, shall
mean the sum credited to a participant's account for any PLAN YEAR of
(i) EMPLOYER CONTRIBUTIONS and (S) 401(k) CONTRIBUTIONS, (ii) NON-(S)
401(k) CONTRIBUTIONS, and (iii) any amounts allocated to an individual
medical account, as defined in Sections 415(l)(2) and 419A(d)(2) of
the CODE. The compensation limitation percentage referred to above
shall not apply to (i) any contribution for medical benefits, as
defined in Section 419A(f)(2) of the CODE, after a participant's
separation from SERVICE which is otherwise treated as an annual
addition, or (ii) any amount which is otherwise treated as an annual
addition under Section 415(l)(1) of the CODE.
(1) Solely for purposes of applying the Section 415 limitations,
compensation shall include all of a participant's wages,
salaries, fees for professional service, and other amounts
received for personal services actually rendered in the course of
employment with an EMPLOYER (including, but not limited to,
commissions paid to salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, and bonuses). For purposes of applying the
Section 415 limitations, compensation shall not include any of
the following:
a) Contributions made by an EMPLOYER to a plan of deferred
compensation to the extent that, before the application of
the Section 415 limitations to that plan, the contributions
are not includable in the gross income of the participant
for the taxable year in which contributed. Any distributions
from a plan of deferred compensation are not considered as
compensation for Section 415 purposes, regardless of whether
such amounts are includable in the gross income of the
EMPLOYEE when distributed. However, any amounts received by
a participant pursuant to an unfunded, nonqualified plan may
be considered as compensation for Section 415 purposes in
the year such income is includable in the gross income of
the EMPLOYEE.
b) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by a
participant either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture.
c) Amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock
option.
9
<PAGE>
d) Other amounts which receive special tax benefits such as
premiums for group term life insurance (but only to the
extent that the premiums are not includable in the gross
income of the participant).
In the event that the annual additions to a participant's
accounts would exceed the Section 415 Limitations, the PLAN
ADMINISTRATOR shall first reduce the participant's NON-(S)
401(k) CONTRIBUTIONS until the Section 415 limitations are
met.
(f) If a participant of this PLAN is also a participant in the COMPANY'S
RETIREMENT PLAN, Section 415 of the CODE imposes a combined benefit
limitation. Contributions to this PLAN will nevertheless be permitted
to the maximum extent permitted by Section 415 of the CODE and the
terms of the PLAN. If the combined maximum benefit permitted would be
exceeded, the benefit from the COMPANY'S RETIREMENT PLAN shall be
reduced so that the limitation will be met. The combined maximum
benefit for a participant shall be determined pursuant to the
provisions of Section 415(e) of the CODE.
At the election of the PLAN ADMINISTRATOR, special transitional rules
may apply for both the defined benefit fraction and the defined
contribution fraction for EMPLOYEES who were participants as of
December 31, 1982.
(g) Top Heavy Provisions. In the event that the PLAN is or becomes "Top
Heavy", as that term is defined in Section 416(g) of the CODE, the
provision contained in Special Provision A shall supersede any
conflicting provision of the PLAN.
(h) For purposes of determining all benefits under the PLAN, for PLAN
YEARS beginning after 1988 and before 1994, the maximum compensation
of each EMPLOYEE that may be taken into account each PLAN YEAR shall
not exceed $200,000 (as adjusted by the Secretary of the Treasury
under Section 401(a)(17) of the CODE. For purposes of determining all
benefits under the PLAN, for PLAN YEARS beginning after 1993, the
maximum compensation of each EMPLOYEE that may be taken into account
each PLAN YEAR shall not exceed $150,000 (as adjusted by the Secretary
of the Treasury under Section 401(a)(17) of the CODE). In determining
the compensation of a HIGHLY COMPENSATED EMPLOYEE for purposes of this
limitation, the rules of Section 414(q)(6) of the CODE shall apply,
except that the term "family" shall include only the spouse of the
EMPLOYEE and any lineal descendants of the EMPLOYEE who have not
attained age 19 before the close of the YEAR. If the aggregate
compensation of family members exceeds the applicable compensation
limit of compensation as limited by Section 401(a)(17)
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<PAGE>
of the CODE, then the amount of compensation considered under the PLAN
for each family member is proportionately reduced so that the total
equals the applicable compensation limitation under Section 401(a)(17)
of the CODE.
SELECTION OF INVESTMENT FUNDS
-----------------------------
6.
(a) (S) 401(k) CONTRIBUTIONS, NON-(S) 401(k) CONTRIBUTIONS, and EMPLOYER
CONTRIBUTIONS. By giving NOTICE, a participant shall instruct the
PLAN ADMINISTRATOR to invest his (S) 401(k) CONTRIBUTIONS, NON-(S)
401(k) CONTRIBUTIONS, and EMPLOYER CONTRIBUTIONS in one or more
INVESTMENT FUNDS. The minimum amount which can be invested in any
single INVESTMENT FUND shall be one percent of a participant's current
contributions to the PLAN. A participant may elect to invest more
than the minimum amount in any INVESTMENT FUND, provided that any such
increase must be in increments of one percent.
(b) CHANGE OF INVESTMENT FUND ALLOCATIONS. By giving NOTICE to the PLAN
ADMINISTRATOR, a participant may (1) change the percentage levels of
future contributions which are to be allocated to any INVESTMENT FUND
or FUNDS or, (2) change the INVESTMENT FUNDS in which his future
contributions are to be invested. Each election regarding investment
of future contributions shall be effective with the next deposit of
contributions.
THE INVESTMENT FUNDS
--------------------
7. PG&E Corporation Common Stock Fund
----------------------------------
This FUND is invested primarily in common stock of PG&E Corporation/2/,
with a small portion invested in cash or cash equivalents. The FUND also
holds COMMON STOCK and the earnings thereon attributable to EMPLOYER
CONTRIBUTIONS and participant contributions made to the Basic Fund of the
PLAN as it existed prior to April 1, 1983, as well as all COMMON STOCK
which has been transferred to this PLAN from the TRASOP and PAYSOP Plan.
All cash dividends received by the TRUSTEE on COMMON STOCK are reinvested
in the FUND.
(a) Investment Generally. Whenever the TRUSTEE invests cash in COMMON
STOCK, the EMPLOYEE BENEFIT FINANCE COMMITTEE shall direct
- ---------------
/2/ Prior to January 1, 1997, this FUND was invested primarily in the common
stock of the Pacific Gas and Electric Company. Effective January 1, 1997,
all PG&E common stock was converted to common stock of PG&E Corporation by
operation of the formation of PG&E Corporation.
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<PAGE>
the TRUSTEE to purchase the COMMON STOCK either (i) at a public sale
on a recognized stock exchange, (ii) directly from PG&E Corporation at
a price equal to that day's closing price for COMMON STOCK on the New
York Stock Exchange, or (iii) from a private source at a price no
higher than the price that would have been payable under (i).
(b) Voting of COMMON STOCK. Each and every time common shareholders of
PG&E Corporation who are not participants in the PLAN are entitled to
vote COMMON STOCK, participants shall have an absolute right to vote
COMMON STOCK. Whenever participants are given the opportunity to vote
COMMON STOCK, the TRUSTEE shall inform each participant of all
relevant material received by the TRUSTEE with a written request for
confidential voting instructions. The TRUSTEE is required to vote the
COMMON STOCK credited to a participant's account as the participant
directs. If the participant does not give such instructions within
the required time, the TRUSTEE may not vote any COMMON STOCK credited
to a participant's account.
(c) Cost of UNITS. The cost of a UNIT shall be the current value of a
UNIT as determined by the TRUSTEE as of the valuation date immediately
preceding the date that the TRUSTEE invests contributions in the
COMMON STOCK FUND.
(d) Value of UNITS. The value of a UNIT is the value of the COMMON STOCK
held in the FUND at the closing price on the New York Stock Exchange
plus the cash held in the FUND, as determined by the TRUSTEE each
BUSINESS DAY, less any fees or other expenses which are charged to the
FUND which shall reduce the earnings of that fund, divided by the
number of UNITS. Each payment into the COMMON STOCK FUND of
contributions shall increase, and each payment out of the COMMON STOCK
FUND shall decrease, the number of UNITS by a number equal to the
amount of the payment divided by the last UNIT value determination
immediately preceding the date of payment.
8. United States Bond Fund
-----------------------
This FUND was maintained for the purpose of investing EMPLOYEE
contributions in United States BONDS. This FUND also holds all BONDS
attributable to participant contributions made to the Basic Fund of the
PLAN as it existed prior to April 1, 1983. Income from BONDS is reflected
in the greater redemption values of the BONDS. BONDS held in this FUND
cannot be transferred to another INVESTMENT FUND under the transfer
provisions of Section 14.
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<PAGE>
Effective July 1, 1991, the U.S. BOND FUND no longer accepts EMPLOYEE
contributions. BONDS purchased to date with EMPLOYEE contributions will
continue to be held in the PLAN until a distribution is requested by the
EMPLOYEE in accordance with current PLAN provisions.
9. Diversified Equity Fund (DEF)
-----------------------------
This FUND is maintained for the purpose of investing in a diversified
portfolio consisting principally of common stock and securities convertible
into common stock. However, at no time shall the DEF be invested in
securities issued or guaranteed by the COMPANY or any of its subsidiaries,
except to the extent that any such securities are held in a commingled
account invested in by the DEF INVESTMENT MANAGER. The DEF INVESTMENT
MANAGER directs the day-to-day investment of the FUND. Contributions to
this FUND are paid over to the TRUSTEE and invested in accordance with
instructions received from the DEF INVESTMENT MANAGER. A participant's
account is credited with the number of DEF UNITS purchased with
contributions allocated to his account. All Diversified Investment Fund
Units attributable to participant contributions made to the PLAN as it
existed prior to April 1, 1983 are held in this FUND under the new
designation of DEF UNITS.
(a) Cost of DEF UNITS. The cost of a DEF UNIT shall be the current value
of a UNIT as determined by the DEF INVESTMENT MANAGER as of the
valuation date immediately preceding the date that the TRUSTEE invests
contributions in the DEF.
(b) Value of DEF UNITS. The value of a DEF UNIT is the value of the FUND
assets, as determined each BUSINESS DAY by the TRUSTEE, less any
liabilities (other than the interests of participants in the FUND),
divided by the number of DEF UNITS. Each payment into the FUND of
contributions shall increase, and each payment out of the FUND shall
decrease, the number of FUND UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination immediately
preceding the date of the payment.
10. Utility Stock Fund (USF)
------------------------
This FUND is maintained for the purpose of investing in an index fund
consisting of common stocks of publicly traded electric utility companies
that are members of the Edison Electric Institute. However, at no time
shall the FUND be invested in securities issued or guaranteed by the
COMPANY or any of its subsidiaries, except to the extent that any such
securities are held in a commingled account invested in by the USF
INVESTMENT MANAGER. The FUND seeks to provide investment results that
correspond to the price and yield performance of common stocks of selected
utilities engaged in the generation, transmission, or distribution of
electric energy, as
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<PAGE>
represented by an index comprising the common stocks of companies that are
members of the Edison Electric Institute. Stocks in the FUND's portfolio
are generally held in the same proportions that each stock has within the
index. Seeking to duplicate the index as closely as possible, the
portfolio is monitored and adjusted by computer; no attempt is made to
manage the portfolio in the traditional sense using economic, financial,
and market analyses.
Contributions to the USF are paid to the TRUSTEE and invested in accordance
with the instructions from the USF INVESTMENT MANAGER. A participant's
account is credited with the number of USF UNITS purchased with
contributions allocated to his account.
(a) Cost of USF UNITS. The cost of a USF UNIT shall be the current value
of a UNIT as determined by the TRUSTEE as of the valuation date
immediately preceding the date that the TRUSTEE invests contributions
in the USF.
(b) Value of USF UNITS. The value of a USF UNIT is the value of the
assets, as determined each BUSINESS DAY by the TRUSTEE, less any
liabilities (other than interests of participants in the USF), divided
by the number of USF UNITS. Each payment into the USF of
contributions shall increase, and each payment out of the USF shall
decrease the number of USF UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination immediately
preceding the date of payment.
11. Guaranteed Income Fund (GIF)
----------------------------
This FUND is designed to provide participants with a stable and consistent
rate of return. The FUND is made up of investment contracts with a
diversified group of insurance companies, banks, and other financial
institutions which provide for credited interest rates and terms that are
negotiated at the time of purchase.
Contributions made to the GIF are invested in a portfolio of investment
contracts. The GIF INVESTMENT MANAGER directs the day-to-day investment of
the FUND. The blended interest earned on all contracts held in the
portfolio is posted daily to the participant's account.
(a) COST OF GIF UNITS. The cost of a GIF UNIT shall be the current value
of a UNIT as determined by the TRUSTEE as of the valuation date
immediately preceding the date that the TRUSTEE invests contributions
in the GIF.
(b) VALUE OF GIF UNITS. The value of a GIF UNIT is the value of the GIF
assets, as determined each BUSINESS DAY by the TRUSTEE, less any
liabilities (other than the interests of participants in the GIF),
divided by the number of GIF UNITS. Each payment into the GIF of
contributions shall
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<PAGE>
increase, and payments out of the GIF shall decrease, the number of
GIF UNITS by a number equal to the amount of the payment divided by
the last UNIT value determination immediately preceding the date of
payment.
12. Bond Index Fund (BIF)
---------------
The BIF is maintained for the purpose of investing in a diversified
portfolio consisting principally of marketable fixed-income securities. At
no time shall the BIF be invested in securities issued or guaranteed by the
COMPANY or any of its subsidiaries, except to the extent that any such
securities are held in a commingled account invested in by the BIF
INVESTMENT MANAGER. The BIF INVESTMENT MANAGER directs the day-to-day
investment of the BIF.
Contributions to the BIF are paid over to the TRUSTEE and invested in
accordance with instructions received from the BIF INVESTMENT MANAGER. A
participant's account is credited with the number of BIF UNITS purchased
with contributions allocated to his account.
(a) Cost of BIF UNITS. The cost of a BIF UNIT shall be the current value
of a UNIT as determined by the TRUSTEE as of the valuation date
immediately preceding the date that the TRUSTEE invests contributions
in the FUND.
(b) Value of BIF UNITS. The value of a BIF UNIT is the value of the BIF
assets, as determined each BUSINESS DAY by the TRUSTEE, less any
liabilities (other than the interests of participants in the BIF),
divided by the number of BIF UNITS. Each payment into the BIF of
contributions shall increase, and each payment out of the BIF shall
decrease, the number of BIF UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination immediately
preceding the date of payment.
13. Stock and Bond Fund (SBF)
-------------------------
The SBF is maintained for the purpose of investing in a diversified
portfolio consisting principally of U.S. equities and U.S. fixed income
investments. At no time shall the SBF be invested in securities issued or
guaranteed by the COMPANY or any of its subsidiaries, except to the extent
that any such securities are held in a commingled account invested in by
the SBF INVESTMENT MANAGER. The SBF INVESTMENT MANAGER directs the day-to-
day investment of the SBF.
Contributions to the SBF are paid over to the TRUSTEE and invested in
accordance with instructions from the SBF INVESTMENT MANAGER. A
participant's account is credited with the number of SBF UNITS purchased
with contributions allocated to his account.
15
<PAGE>
(a) Cost of SBF UNITS. The cost of an SBF UNIT shall be the current value
of a UNIT as determined by the TRUSTEE as of the valuation date
immediately preceding the date that the TRUSTEE invests contributions
in the SBF.
(b) Value of SBF UNITS. The value of an SBF UNIT is the value of the
assets, as determined each BUSINESS DAY by the TRUSTEE, less any
liabilities (other than the interests of participants in the SBF),
divided by the number of SBF UNITS. Each payment into the SBF of
contributions shall increase, and each payment out of the SBF shall
decrease, the number of SBF UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination immediately
preceding the date of payment.
14. Transfer of Investment Fund Balances
------------------------------------
(a) By giving NOTICE to the PLAN ADMINISTRATOR, a participant may elect to
transfer any portion of the contributions held in his account, plus
the earnings thereon, from any INVESTMENT FUND to another INVESTMENT
FUND or FUNDS. A transfer shall be effective and shall be valued on
the day it is made, if such day is a BUSINESS DAY, and the participant
provides NOTICE of such transfer prior to the closing time of the New
York Stock Exchange. All other transfers shall be effective and
valued as of the next BUSINESS DAY.
Upon receipt of a transfer NOTICE, the TRUSTEE shall value the UNITS
to be transferred from the FUND and convert the UNITS to cash. The
FUND account of the participant shall be debited with the number of
UNITS transferred from that FUND and the TRUSTEE shall purchase with
the cash proceeds realized from the converted UNITS, UNITS in the
appropriate FUND or FUNDS, as designated by the participant. The cost
of the UNITS purchased shall be the value of the FUND UNITS as
determined on the date of transfer, and the number of UNITS purchased
shall be credited to the appropriate INVESTMENT FUND account of the
participant.
(b) COMMON STOCK FUND -- Overall Limitation. Anything herein to the
contrary notwithstanding, if, as of any single month, the TRUSTEE is
required, as a result of the transfer provisions of this Section 14,
to sell on the open market more than one percent of the number of
outstanding shares of COMMON STOCK, then the TRUSTEE shall immediately
so advise the EMPLOYEE BENEFIT FINANCE COMMITTEE. The EMPLOYEE
BENEFIT FINANCE COMMITTEE may, in its sole discretion, limit, prorate,
or temporarily suspend further sales of COMMON STOCK by the PLAN or
take whatever steps necessary to ensure an orderly market in COMMON
STOCK. The percentage limitation set forth in this subsection shall
be applied
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<PAGE>
to the excess of shares sold on the open market less shares purchased
to meet Section 14 requirements for the applicable period.
PARTICIPANT'S INTEREST IN THE PLAN
----------------------------------
15. Participant Accounts
--------------------
The PLAN ADMINISTRATOR maintains a separate account for each PLAN
participant which records the participant's interest in each of the
INVESTMENT FUNDS, together with EMPLOYER CONTRIBUTIONS made on his behalf.
Each account is charged with participant transfers and withdrawals and
credited with its appropriate share of FUND income. The account maintained
by the PLAN ADMINISTRATOR for each participant also records separately the
participant's (S) 401(k) CONTRIBUTIONS and NON-(S) 401(k) CONTRIBUTIONS,
the UNITS purchased therewith, and the earnings thereon. All Basic
Contributions and Supplemental Contributions made to the PLAN as it existed
prior to October 1, 1984, are recorded as NON-(S) 401(k) CONTRIBUTIONS on
the records maintained by the PLAN ADMINISTRATOR.
Whenever UNITS attributable to a participant's (S) 401(k) CONTRIBUTIONS are
transferred to another FUND OR FUNDS, the resulting UNITS are also recorded
as attributable to (S) 401(k) CONTRIBUTIONS. Similarly, UNITS attributable
to NON-(S) 401(k) CONTRIBUTIONS which are transferred to another FUND or
FUNDS are also recorded as NON-(S) 401(k) CONTRIBUTIONS. A participant is
at all times fully vested in his own contributions and all EMPLOYER
CONTRIBUTIONS credited to his account, together with income attributable
thereto.
16. Account Statements
------------------
As soon as practicable after the end of each CALENDAR QUARTER, all
participants will receive from the ADMINISTRATOR a statement of their
interest in the PLAN.
PLAN WITHDRAWALS
----------------
17. Withdrawal During Service
-------------------------
Except as provided in this Section, withdrawals of any part of a
participant's interest in the PLAN are not permitted as long as SERVICE
continues. A participant may never replace in the TRUST FUND any UNITS or
cash which have been withdrawn. By submitting a withdrawal Form, a
participant may make withdrawals as provided below.
17
<PAGE>
(a) (S) 401(k) CONTRIBUTIONS.
(1) A participant may withdraw all or part of the UNITS, including
income thereon and including additional UNITS attributable
thereto, bought with the participant's (S) 401(k) CONTRIBUTIONS
upon the occurrence of any of the following events:
a) the participant is disabled and is receiving benefits under
the LONG TERM DISABILITY PLAN; or
b) the participant has attained age 59 1/2.
(2) A participant may withdraw an amount equal to his (S) 401(k)
CONTRIBUTIONS, as well as any income and UNITS attributable to
income accrued thereon prior to January 1, 1989, upon receipt of
satisfactory proof by the PLAN ADMINISTRATOR that the withdrawal
is required to meet immediate and heavy financial needs of the
participant which constitute a valid hardship as defined under
the CODE and regulations issued by the Secretary of the Treasury.
A request for a withdrawal for one of the following reasons will
be deemed to be on account of a valid hardship:
a) To cover medical expenses (as defined in Section 213(d) of
the CODE) of the participant, the participant's spouse or
dependents (as defined in Section 152 of the CODE);
b) The purchase of a participant's principal place of residence,
but not including mortgage payments;
c) To meet tuition payments for the next semester or quarter of
post-secondary education for the participant, his spouse,
children or dependents; or
d) To prevent the eviction of the participant from his principal
place of residence, or to prevent a foreclosure of the
mortgage on the participant's principal place of residence.
A request for a withdrawal under this subsection 17(a)(2) will
not be deemed to be for immediate and heavy financial needs
unless the participant represents that the need cannot be met
from the following resources:
a) through reimbursement or compensation by insurance or
otherwise,
18
<PAGE>
b) by reasonable liquidation of the participant's resources,
c) by cessation of contributions to the PLAN, or
d) by other distributions, withdrawals or nontaxable loans from
any plans maintained by an EMPLOYER, or by borrowing from
commercial sources on reasonable commercial terms.
For purposes of this Subsection 17(a)(2), a participant's
resources shall be deemed to include any assets of his spouse and
minor children that are reasonably available to the participant.
In addition, withdrawals under Subsection 17(a)(2) may not exceed
the amount actually required to meet the participant's immediate
financial needs.
(3) A participant who withdraws UNITS under Subsection 17(a) will
automatically be suspended from the PLAN and will not be
permitted to resume making contributions to the PLAN for six
months following the date upon which the withdrawal Form is
processed by the PLAN ADMINISTRATOR. After suspension ends,
contributions may be resumed by giving NOTICE to the PLAN
ADMINISTRATOR.
(b) NON-(S) 401(k) CONTRIBUTIONS. A participant may at any time elect to
withdraw all or any part of the UNITS including income thereon and
including additional UNITS attributable thereto, bought with the
participant's NON-(S) 401(k) CONTRIBUTIONS to the PLAN. Such an
election will not cause suspension from the PLAN.
(c) EMPLOYER CONTRIBUTIONS.
(1) A participant may withdraw all or any part of the UNITS,
including the income attributable thereto, bought with EMPLOYER
CONTRIBUTIONS which were made to the PLAN at anytime prior to the
second YEAR preceding the current YEAR. For example, UNITS,
including the income attributable thereto, purchased with
EMPLOYER CONTRIBUTIONS made in 1981 and prior years may be
withdrawn in 1984 or anytime thereafter. Such an election will
not cause suspension from the PLAN.
(2) UNITS, including the income attributable thereto, bought with
EMPLOYER CONTRIBUTIONS which would not be withdrawable under
Subsection 17(c)(1), shall nonetheless be withdrawable upon the
occurrence of any of the following events:
19
<PAGE>
a) the participant is disabled and is receiving benefits under
the LONG TERM DISABILITY PLAN;
b) the participant attains 59-1/2; or
c) the participant has requested and is entitled to receive a
hardship distribution which meets the requirements of
Subsection 17(a)(2) but only if all amounts distributable
under Subsection 17(a) have been exhausted.
Anything herein to the contrary notwithstanding, if as of any single
month, the TRUSTEE is required as a result of the withdrawal
provisions of this Subsection 17(c), to sell on the open market more
than one percent of the outstanding shares of COMMON STOCK, then the
TRUSTEE shall immediately so advise the EMPLOYEE BENEFIT FINANCE
COMMITTEE. The EMPLOYEE BENEFIT FINANCE COMMITTEE may, in its sole
discretion, limit, prorate, or temporarily suspend further sales of
COMMON STOCK by the PLAN or take whatever steps necessary to ensure an
orderly market in COMMON STOCK.
A participant shall submit the appropriate Form to the SAVINGS FUND
PLAN directing the PLAN ADMINISTRATOR as to the amount of the
withdrawal. Distribution will be made as soon as practicable after
receipt of the withdrawal Form. Upon each withdrawal, the UNITS
credited to the appropriate FUND or FUNDS will be reduced by the
number of UNITS withdrawn. Withdrawals from the BOND FUND can only be
made in United States BONDS. Withdrawals from the COMMON STOCK FUND
may be made in cash or whole shares of stock at the election of the
participant. Withdrawals of DEF, USF, BIF, SBF, or GIF UNITS will be
made in cash at the then current value of the UNITS; or, at the
election of the participant, the UNITS will be transferred to the
COMMON STOCK FUND pursuant to Section 14 and distribution will be made
in whole shares of COMMON STOCK.
(d) Ordering of Withdrawals. Whenever the PLAN ADMINISTRATOR is required
to make a distribution under this Section 17 or Section 18, the PLAN
ADMINISTRATOR shall first withdraw UNITS and earnings thereon
attributable to a participant's NON-(S) 401(k) CONTRIBUTIONS made
prior to 1987, followed by UNITS and earnings thereon attributable to
NON-(S) 401(k) CONTRIBUTIONS made after 1986, followed by UNITS
withdrawable under Subsection 17(c)(1) followed by UNITS withdrawable
under Subsection 17(c)(2), but only if available for withdrawal under
that subsection, followed by UNITS and earnings thereon attributable
to a participant's (S) 401(k)
20
<PAGE>
CONTRIBUTIONS, but only to the extent that such UNITS can be withdrawn
by the participant under Subsection 17(a).
18. Termination of Participation
----------------------------
Participation in the PLAN ends as of the date that a participant ceases to
be an ELIGIBLE EMPLOYEE. Although a former participant may elect to have
an account balance held in the PLAN under Section 19 after participation
ends, a former participant may not contribute to the PLAN, except that
contributions to the PLAN will be accepted with respect to retroactive wage
payments. A former participant who has an account balance in the PLAN may
make withdrawals from the account balance, and transfer from one or more
FUNDS to another FUND or FUNDS pursuant to the terms of the PLAN.
Upon the death of a participant, the PLAN ADMINISTRATOR shall distribute
the participant's account balance to the participant's BENEFICIARY within a
reasonable time but not later than 60 days after receipt of a completed
withdrawal form or 180 days after the PLAN ADMINISTRATOR receives NOTICE of
the participant's death. If the BENEFICIARY does not complete a withdrawal
form within the time periods set forth above, the distribution shall be in
cash and paid directly to the BENEFICIARY.
19. Distribution of Plan Benefits
-----------------------------
(a) Upon termination of participation, a distribution shall be made of the
balances allocated to a participant's accounts if the value of the
participant's account is $3,500 or less. Such distribution shall be
made no later than the 60th day following the close of the PLAN YEAR
in which participation terminates, unless the participant elects to
receive distribution at an earlier date. If the value of a
participant's account exceeds $3,500, distribution will be made upon
receipt by the PLAN ADMINISTRATOR of the written distribution request
of the participant. Distribution will therefore be made within 60
days of the receipt of such distribution request. Any provision of
the PLAN notwithstanding, if participation continues beyond the end of
the YEAR in which the participant attains age 70-1/2, distribution of
the participant's entire interest in the PLAN shall be made no later
than April 1 of the YEAR following the YEAR in which the participant
attains age 70-1/2.
All distributions due under the PLAN shall be payable only out of the
PLAN's assets as directed by the ADMINISTRATOR. Unless a cash
distribution is requested the TRUSTEE will distribute a certificate
for the whole shares of COMMON STOCK, the United States BONDS, and the
TRUSTEE'S check for the then current value of all other UNITS credited
to the participant's account, plus any uninvested cash.
Alternatively, at the direction of the
21
<PAGE>
participant, FUND UNITS other than U.S. SAVINGS BONDS UNITS may be
transferred to the COMMON STOCK FUND pursuant to Section 14 and
distribution will be made in whole shares of COMMON STOCK.
If a participant elects a cash distribution, upon receipt of the
appropriate Form requesting such distribution, the TRUSTEE will
distribute the then current value of the INVESTMENT FUND UNITS and
uninvested cash. Until the TRUSTEE converts INVESTMENT FUND UNITS to
cash, all UNITS shall continue to share in investment gains and
losses. Distributions from the BOND FUND can only be made in United
States BONDS.
(b) Any provision of the PLAN notwithstanding:
Unless the participant otherwise elects, distribution to such
participant shall be made (or shall commence) not later than the 60th
day after the close of the PLAN YEAR in which occurs the latest of the
following events:
(1) The participant attains age 65;
(2) The participant attains the 10th anniversary of the date on which
he or she became a participant under the PLAN; or
(3) The participant's termination of employment with the EMPLOYER.
(c) Distributions hereunder will be made in accordance with Section
401(a)(9) of the CODE and the regulations thereunder, including
Treasury regulation Section 1.401(a)(9)-2, which are incorporated by
reference herein.
20. Direct Rollovers
----------------
Notwithstanding any provision of the PLAN to the contrary that would
otherwise limit a participant's election under this section, effective
January 1, 1993, a participant or BENEFICIARY who is a surviving spouse may
elect, at the time and in the manner prescribed by the PLAN ADMINISTRATOR,
to have any portion of an eligible rollover distribution, as defined below,
paid directly to an eligible retirement plan, as defined below, specified
by the participant or BENEFICIARY who is a surviving spouse in a direct
rollover. Any taxable portion of an eligible rollover distribution that is
not transferred directly to an eligible retirement plan will be subject to
mandatory federal income tax withholding.
(a) An eligible rollover distribution shall mean any distribution of all
or any portion of the balance to the credit of the participant, except
that an eligible rollover distribution does not include any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made
22
<PAGE>
for the life (or life expectancy) of the participant or the joint
lives (joint life expectancies) of the participant and his or her
designated BENEFICIARY, or for a specified period of 10 years or more;
any distribution to the extent such distribution is required under
Section 401(a)(9) of the CODE; and the portion of any distribution
that is not includable in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect to employer
securities).
(b) An eligible retirement plan shall mean an individual retirement
account described in Section 408(a) of the CODE, an individual
retirement annuity described in Section 408(b) of the CODE, an annuity
plan described in Section 403(a) of the CODE, or a qualified trust
described in Section 401(a) of the CODE, that accepts the
participant's eligible rollover distribution. However, in the case of
an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
ADMINISTRATIVE PROVISIONS
-------------------------
21. Company's Powers and Duties
---------------------------
The COMPANY, acting through its BOARD OF DIRECTORS or Executive Committee,
reserves to itself the exclusive power to amend, suspend or terminate the
PLAN as provided below and to appoint and remove from time to time:
(a) The individuals comprising the EMPLOYEE BENEFIT FINANCE COMMITTEE;
(b) The individuals comprising the EMPLOYEE BENEFIT ADMINISTRATIVE
COMMITTEE; and
(c) The EMPLOYERS whose EMPLOYEES may participate in the PLAN.
All powers and duties not reserved to the COMPANY are delegated to the
EMPLOYEE BENEFIT FINANCE COMMITTEE and to the EMPLOYEE BENEFIT
ADMINISTRATIVE COMMITTEE. Action of either committee shall be by vote of a
majority of the members of the committee at a meeting, or in writing
without a meeting and evidenced by the signature of any member who is so
authorized by the committee. The COMPANY indemnifies each member of each
committee against any personal liability or expense arising out of any
action or inaction of the committee or of any member of the committee or of
such individual, except that due to his own willful misconduct.
23
<PAGE>
22. Funding and Investment Provisions
---------------------------------
The EMPLOYEE BENEFIT FINANCE COMMITTEE appointed by the COMPANY'S BOARD OF
DIRECTORS to serve at its pleasure has the express powers and duties
described in this section.
(a) Appointments. The EMPLOYEE BENEFIT FINANCE COMMITTEE has the sole
power and duty from time to time to appoint and remove the TRUSTEE,
the INVESTMENT MANAGER, actuaries, accountants and such other advisors
and consultants as may be needed for the proper financial
administration and investment of the assets of the PLAN.
Supplementing such appointments, the EMPLOYEE BENEFIT FINANCE
COMMITTEE may enter into appropriate agreements with each TRUSTEE,
INVESTMENT MANAGER or other advisors appointed under this paragraph
and delegate to them appropriate powers and duties. The EMPLOYEE
BENEFIT FINANCE COMMITTEE may appoint and delegate to one or more
individuals the power and duty to handle the day-to-day financial
administration of the PLAN. Such individuals need not be members of
the committee and shall serve at the pleasure of the committee.
(b) Investment Policy. The funding policy is set forth in Sections 3 and
4. The EMPLOYEE BENEFIT FINANCE COMMITTEE has the sole power and duty
to establish the investment policy and to review and revise it from
time to time as the committee shall determine in its sole discretion.
A copy of the current investment policy will be available for
participants' review in the ADMINISTRATOR'S office. Any revision of
the investment policy shall not be an amendment of the PLAN.
23. Administration
--------------
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE, appointed by the COMPANY'S
BOARD OF DIRECTORS to serve at its pleasure, is the ADMINISTRATOR of the
PLAN and is responsible for the overall administration of the PLAN. The
ADMINISTRATOR has the sole power and duty to establish, and from time to
time revise, such rules and regulations as may be necessary to administer
the PLAN in a nondiscriminatory manner for the exclusive benefit of
participants and all other persons entitled to benefits under the PLAN.
The ADMINISTRATOR shall also maintain such records and make such
computations, interpretations and decisions as may be necessary or
desirable for the proper administration of the PLAN. The ADMINISTRATOR
shall maintain for participants' inspection copies of the PLAN, TRUST
AGREEMENT, investment policy, each agreement with an INVESTMENT MANAGER,
the latest annual report, PLAN description and summary description and any
amendments or changes in any of
24
<PAGE>
these documents. On written request, participants may obtain from the
ADMINISTRATOR a copy of any of these documents at a cost established by the
ADMINISTRATOR from time to time.
The ADMINISTRATOR may appoint and delegate to one or more individuals the
power and duty to handle the day-to-day administration of the PLAN. Such
individuals need not be members of the committee and shall serve at the
pleasure of the committee.
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall serve as the final
review committee under the PLAN, to determine conclusively for all parties
any and all questions arising from the administration of the PLAN and shall
have sole and complete discretionary authority and control to manage the
operation and administration of the PLAN, including, but not limited to,
the determination of all questions relating to eligibility for
participation and benefits, interpretation of all PLAN provisions,
determination of the amount and kind of benefits payable to any participant
or BENEFICIARY, and construction of disputed or doubtful terms. Such
decisions shall be conclusive and binding on all parties and not subject to
further review.
24. Claims and Appeals Procedure
----------------------------
If a claim is denied in whole or in part, the ADMINISTRATOR shall furnish
to the claimant a written notice setting forth:
(a) Specific reason(s) for the denial,
(b) The PLAN provision(s) on which the denial is based,
(c) A description of any material or information, if any, necessary for
the claimant to perfect the claim, and an explanation of why such
material or information is necessary, and
(d) Information concerning the steps to be taken if claimant wishes to
submit a claim for review.
The above information shall be furnished to the claimant within 90 days
after the claim is received by the ADMINISTRATOR.
If a claimant is not satisfied with the written NOTICE described in the
preceding paragraph, such claimant may request a full and fair review by so
notifying the ADMINISTRATOR in writing within 90 days after receiving such
notice. If a review is requested the claimant shall also be entitled, upon
written request, to review pertinent documents and to submit issues and
comments in writing. The EMPLOYEE
25
<PAGE>
BENEFIT ADMINISTRATIVE COMMITTEE shall furnish the claimant with a written
final decision within 60 days after receipt of the request for review.
25. Qualified Domestic Relations Orders
-----------------------------------
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall apply the provisions of
this section with regard to a Domestic Relations Order (as defined below)
to the extent not inconsistent with Section 414(p) of the CODE.
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall establish procedures,
consistent with Section 414(p) of the CODE, to determine the qualified
status of any Domestic Relations Order, to administer distributions under
any Qualified Domestic Relations Order (as defined below), and to provide
to the Participant and the Alternate Payee(s) (as defined below) all
notices required under Section 414(p) of the CODE with respect to any
Domestic Relations Order.
Within a reasonable period of time after the receipt of a Domestic
Relations Order (or any modification thereof), the EMPLOYEE BENEFIT
ADMINISTRATIVE COMMITTEE shall determine whether such order is a Qualified
Domestic Relations Order.
For purposes of this section:
(a) Alternate Payee shall mean any spouse, former spouse, child, or other
dependent of a participant who is recognized by a Domestic Relations
Order as having a right to receive all, or a portion of, the benefits
payable under the PLAN with respect to such Participant.
(b) Domestic Relations Order shall mean any judgment, decree, or order
(including approval of a property settlement agreement) which:
(1) relates to the provision of child support, alimony payments, or
marital property rights to a spouse, former spouse, child, or
other dependent of a participant; and
(2) is made pursuant to a state domestic relations law (including a
community property law).
(c) Qualified Domestic Relations Order shall mean a Domestic Relations
Order which meets the requirements of Section 414(p)(1) of the CODE.
26
<PAGE>
26. Lost Participant or Beneficiary
-------------------------------
If, after three years, the ADMINISTRATOR cannot locate a participant or
BENEFICIARY who is entitled to a distribution from an account, the UNITS,
cash or COMMON STOCK in the account shall be applied to reduce the amount
of future EMPLOYER CONTRIBUTIONS payable to the PLAN. A participant or
BENEFICIARY who is entitled to a distribution from an account which has
previously been applied to reduce EMPLOYER CONTRIBUTIONS under this Section
24 shall, upon filing a written claim, have the account reinstated in full
and upon such reinstatement shall receive a distribution of the balance in
the reinstated account, with interest at the prevailing legal rate accrued
from the date his account was applied to reduce EMPLOYER CONTRIBUTIONS.
27. Benefits Are Not Assignable
---------------------------
Except as may be required by law, a participant's interest in the PLAN and
that of a participant's BENEFICIARY or spouse shall not be subject in any
manner to assignment, anticipation, alienation, sale, transfer, pledge,
encumbrance or charge, whether voluntary or involuntary, and any attempt to
so assign, anticipate, sell, transfer, pledge, encumber or charge the same
shall be void.
28. Facility of Payment
-------------------
If the ADMINISTRATOR determines that any individual entitled to any payment
under the PLAN is physically or mentally incompetent and no guardian or
conservator has been appointed to receive such payment, the ADMINISTRATOR
may cause all payments thereafter becoming due to such individual to be
applied for and on behalf of and for the benefit of such individual.
Payments made pursuant to this provision shall completely discharge the
EMPLOYER, the ADMINISTRATOR, the TRUSTEE and all fiduciaries of all further
responsibility with respect to such individual.
29. Future of the Plan
------------------
If participation in the PLAN is ended because a substantial portion of an
EMPLOYER'S property is sold or otherwise disposed of or because an EMPLOYER
withdraws from the PLAN, a participant's interest is determined in
accordance with the provisions of the next paragraphs as if the PLAN itself
has been terminated.
The COMPANY hopes and expects to continue this PLAN indefinitely, but
because future conditions cannot be foreseen, its BOARD OF DIRECTORS
necessarily reserves the right to amend or terminate the PLAN at any time.
However, no amendment, merger or consolidation of the PLAN may be made
which would reduce the right that any individual may then have with respect
to the PLAN's assets then being held under the PLAN or permit any funds to
revert to an EMPLOYER or to be
27
<PAGE>
used for any purpose except for the exclusive benefit of participants,
spouses and BENEFICIARIES.
If the PLAN is terminated, all contributions to the PLAN shall cease but
the PLAN shall continue to operate in all other respects until all of the
TRUST assets have been distributed in accordance with the provisions of the
PLAN in effect on the date of its termination. In the event of a merger or
consolidation with, or transfer of assets or liabilities to any other plan,
if such other plan is then terminated, participant shall receive a benefit
immediately after such merger, consolidation, or transfer which is equal to
or greater than the benefit which participant would have received had the
PLAN terminated immediately prior to such merger, consolidation, or
transfer.
<TABLE>
30. Definitions
-----------
<S> <C>
Administrator: Employee Benefit Administrative
- ------------- Committee, 245 Market Street, 3d Floor,
Mail Code N3X, P.O. Box 770000, San
Francisco, California 94177
BIF: The Bond Index Fund.
- ----
Beneficiary: The person or persons entitled to receive
- ----------- any distribution due under the Plan in the
event of a participant's death. For a
married participant, the participant's
spouse shall automatically be the
Beneficiary unless the participant, with
the written consent of his spouse, elects
to designate another person or persons to
be Beneficiary. The consent of the
spouse shall be in writing, shall
acknowledge the effect of the consent,
and shall be witnessed by a notary public
or Plan representative. A participant
designates a Beneficiary on a Designation
of Beneficiary Form available from the
Plan Administrator. In the event an
unmarried participant does not designate
a Beneficiary, the participant's estate
shall be deemed to be the Beneficiary.
Board of Directors: The Board of Directors of Pacific Gas
- ------------------ and Electric Company.
Bond Fund: A fund invested in United States Savings
- --------- Bonds. (See Section 8)
</TABLE>
28
<PAGE>
<TABLE>
<S> <C>
Bond Index Fund: A fund invested in marketable fixed-
- --------------- income securities. (See Section 12)
Bonds: Series "EE" Savings Bonds issued by the
- ----- United States Treasury. If the issuance
of Series "EE" Bonds is discontinued,
Bonds will refer to any other Bond issued
by the United States Treasury which the
Employee Benefit Finance Committee
selects for purchase under the Plan.
Business Day: Any day that the New York Stock
- ------------ Exchange is open for business.
Calendar Quarter: The three month period commencing on
- ---------------- January 1, April 1, July 1 or October 1.
Code: The Internal Revenue Code of 1986, as
- ----- amended from time to time.
Company: Pacific Gas and Electric Company.
- -------
Common Stock: The common stock issued by PG&E
- ------------ Corporation.
Common Stock Fund: A fund invested in the common stock
- ----------------- issued by PG&E Corporation. (See
Section 7)
</TABLE>
29
<PAGE>
<TABLE>
<S> <C>
Covered Compensation: Earnings from an Employer, including
- -------------------- straight-time pay for hours worked, shift
and nuclear premiums at the straight-time
rate, straight-time pay for temporary
upgrades, vacation pay (including
vacation pay upon retirement), inclement
weather pay, sick leave pay, holiday pay,
differential pay for military training, pay
for other time off with permission
carrying full pay, temporary
compensation under any state Worker's
Compensation Law, payments under the
Long Term Disability Plan, or
supplemental benefits for industrial
injury. Covered Compensation shall not
include pay or shift and nuclear
premiums for more than 40 hours per
week, overtime bonuses, vacation or
holiday pay requests other special fees or
allowances, per diem allowances,
payments, other than temporary
compensation, made under any Workers'
Compensation Law, voluntary wage
benefit or state disability plans, or any
other benefit plan. For Plan Years
beginning after 1988 and before 1994, the
maximum Covered Compensation of each
Employee that may be taken into account
each Plan Year shall not exceed $200,000
(as adjusted by the Secretary of the
Treasury under Section 401(a)(17) of the
Code. For Plan Years beginning after
1993, the maximum Covered
Compensation of each Employee that may
be taken into account each Plan Year
shall not exceed $150,000 (as adjusted by
the Secretary of the Treasury under
Section 401(a)(17) of the Code). In
determining the Covered Compensation
of a Highly Compensated Employee for
purposes of this limitation, the rules of
Section 414(q)(6) of the Code shall apply,
except that the term "family" shall
include only the spouse of the Employee
and any lineal descendants of the
Employee who have not attained age 19
before the close of the Year. If the
aggregate Covered Compensation of
family members exceeds the applicable
compensation limit as limited by
Section 401(a)(17) of the Code, then
the amount of Covered Compensation
considered under the Plan for each
family member is proportionately
reduced so that the total equals the
applicable compensation limitation
under Section 401(a)(17) of the Code.
</TABLE>
30
<PAGE>
<TABLE>
<S> <C>
DEF: The Diversified Equity Fund.
- ---
Diversified Equity Fund: A fund invested in a diversified portfolio
- ----------------------- of securities. (See Section 9)
Eligible Employee: One entitled to become a contributing
- ----------------- participant, provided, however, a "leased
employee," as defined in Section
414(n)(2) of the Code shall not be entitled
to become an Eligible Employee
Employee: An Employee of an Employer who is not
- -------- represented by a union.
Employee Benefit Administrative The Employee Benefit Administrative
- ------------------------------- Committee referred to in Section 23.
Committee:
- ---------
Employee Benefit Finance Committee: The Employee Benefit Finance
- ---------------------------------- Committee referred to in Section 22.
Employer: Pacific Gas and Electric Company,
- -------- Pacific Service Employees Association,
and any other company, association, or
credit union designated by the Board of
Directors as eligible to participate in this
Plan as an Employer.
Employer Contributions: Any contributions to the Plan by
- ---------------------- Company.
FlexDollars: Amounts which a participant elects
- ----------- pursuant to the Company's Flex Plan to
contribute as (S) 401(k) Contributions.
Rules governing FlexDollars are
contained in the Company's Flex Plan;
rules governing the treatment of
FlexDollars under this Plan are contained
in Subsection 3(b).
Fund: The Common Stock Fund, the U.S. Bond
- ---- Fund, the Diversified Equity Fund, the
Guaranteed Income Fund, the Bond Index
Fund, the Stock and Bond Fund, and the
Utility Stock Fund, or any of them.
GIF: The Guaranteed Income Fund.
- ---
Guaranteed Income Fund: A fund invested in fixed rate, fixed term
- ---------------------- contracts. (See Section 11)
</TABLE>
31
<PAGE>
<TABLE>
<S> <C>
Highly Compensated: Whether an Eligible Employee is Highly
- ------------------ Compensated shall be determined using
the simplified method under Code Section
414(q)(12) as described in applicable
Treasury regulations or other guidance
issued by the Internal Revenue Service.
Investment Fund: The Common Stock Fund, the U.S. Bond
- --------------- Fund, the Diversified Equity Fund, the
Guaranteed Income Fund, the Bond Index
Fund, the Stock and Bond Fund, and the
Utility Stock Fund, or any of them.
Investment Manager: 1. Diversified Equity Fund.
- ------------------ J.P. Morgan, 522 Fifth Avenue,
New York, NY 10036, or such other
firm or individual as may be
selected from time to time by the
Employee Benefit Finance
Committee.
2. Guaranteed Income Fund.
PRIMCO Capital Management, Inc.,
101 South Fifth Street,
Louisville, Kentucky 40202, or
such other firm or individual as
may be selected from time to time
by the Employee Benefit Finance
Committee.
3. Bond Index Fund.
The Vanguard Group, Vanguard
Financial Center, Valley Forge,
Pennsylvania 19482, or such other
firm or individual as may be
selected from time to time by the
Employee Benefit Finance
Committee.
</TABLE>
32
<PAGE>
<TABLE>
<S> <C>
4. Stock and Bond Fund.
Columbia Trust Company, 1301 S.W.
Fifth Avenue, P.O. Box 1350,
Portland, Oregon 97207, or such
other firm or individual as may
be selected from time to time by
the Employee Benefit Finance
Committee.
5. Utility Stock Fund.
Wells Fargo Nikko Investment
Advisors, 45 Fremont Street, San
Francisco, California 94105, or
such other firm or individual as
may be selected from time to time
by the Employee Benefit Finance
Committee.
Long Term Disability Plan: Part B of the Group Life Insurance and
- ------------------------- Long Term Disability Plan of
Pacific Gas and Electric Company
as amended January 1, 1991.
Non-(S) 401(k) Contributions: Employee contributions to the Plan as
- ---------------------------- described in Subsection 3(c) and all
Employee Contributions made prior to
October 1, 1984. Non- (S) 401(k)
Contributions are made with after-tax
dollars.
Notice: Any method of communication, whether
- ------ electronic, telephonic, written or other,
provided that the Plan Administrator has
communicated in writing to participants
any such method and its format as
appropriate and acceptable.
Plan: This Company's Savings Fund Plan for
- ---- Non-Union Employees, as amended,
revised and set forth herein.
Retirement Plan: The Company's Retirement Plan as
- --------------- revised from time to time.
SBF: The Stock and Bond Fund.
- ---
</TABLE>
33
<PAGE>
<TABLE>
<S> <C>
Savings Fund Plan Office: 245 Market Street, 3d Floor
- ------------------------ Mail Code N3X
P.O. Box 770000
San Francisco, CA 94177
/S/ 401(k) Contributions: Amounts deferred from a Participant's
- ------------------------ Covered Compensation as described in
Subsection 3(a). (S) 401(k) Contributions
are made with pre-tax dollars.
Service: The period of time commencing with the
- ------- first day of employment or reemployment
for an Employer and ending on
participant's Severance from Service
Date. If an Employee with less than one
year of Service is rehired after a period
of severance which extends for 12 months
or more, the Employee shall be treated as
a new Employee for all purposes, and the
Service and compensation before the
Severance from Service Date shall not be
recognized for any purpose of the Plan.
Participants who have a period of
severance after they have completed at
least one year of Service and who are
later rehired, immediately become
Eligible Employees entitled to contribute
in accordance with their total years of
Service.
Service shall also include all years of
Service with:
(a) Any corporation which is a
member of the same controlled group of
corporations as the Company or of any
other Employer (within the meaning of
Section 414(b) of the Code);
(b) Any trade or business
under the common control of the
Company or of any other Employer
(within the meaning of Section 414(c) of
the Code);
</TABLE>
34
<PAGE>
<TABLE>
<S> <C>
(c) Any service organization
which is a member of the same affiliated
service group as the Company or of any
other Employer (within the meaning of
Section 414(m) of the Code).
</TABLE>
35
<PAGE>
<TABLE>
<S> <C>
Severance From Service Date: A. The date on which an Employee
- --------------------------- quits, retires, is discharged or
dies; or
B. The first anniversary of the
first date of a period in which a
participant remains absent from work
for an Employer for any reason other
than resignation, retirement,
discharge, or death.
C. For the purpose of determining
the Severance from Service Date, the
following periods shall not be
considered as absences from work for an
Employer:
(1) Absence on a leave
of absence authorized by an
Employer.
(2) Absence because of
illness or injury as long as the
participant is entitled to receive
sick leave pay or is entitled to
receive benefits under the
provisions of the Voluntary Wage
Benefit Plan, a state disability
plan, the Long Term Disability
Plan, or a Workers' Compensation
Law.
(3) Absence for military
service or service in the Merchant
Marines so long as reemployment
rights are protected by law.
(4) Absence caused by
layoff for lack of work of less
than 12 continuous months for a
Participant who has less than five
years of service, or 24 continuous
months for a Participant who has
five or more years of service.
Stock and Bond Fund: A fund invested in U.S. equities and U.S.
- ------------------- fixed-income investments. (See Section
13)
</TABLE>
36
<PAGE>
<TABLE>
<S> <C>
Trust: The Trust into which all contributions are
- ----- deposited and from which all distributions
are made.
Trustee: State Street Bank and Trust Company,
- ------- 225 Franklin Street, Boston,
Massachusetts 02101, or such other bank
or trust company selected by the
Employee Benefit Finance Committee
which agrees to act as Trustee or
successor Trustee of the Trust pursuant to
the Trust Agreement.
Trust Agreement: The agreement between the Company and
- --------------- the Trustee.
Unit: A measurement of participant's interest in
- ---- the Investment Funds. For purposes of
the Bond Fund, a unit shall be a United
States Bond.
USF: The Utility Stock Fund.
- ---
Utility Stock Fund: An index fund invested in common stocks
- ------------------ of companies engaged in the generation,
transmission or distribution of electric
energy (See Section 10).
Year: The calendar year beginning January 1
- ---- and ending December 31.
</TABLE>
37
<PAGE>
SPECIAL PROVISION A
TOP HEAVY PROVISIONS
--------------------
(a) General Rule
------------
For any PLAN YEAR for which this PLAN is a "top-heavy plan" as defined in
subsection (g) below, any other provisions of this PLAN to the contrary
notwithstanding, this PLAN shall be subject to the following provisions:
(1) The minimum contribution provisions of subsection (b).
(2) The limitation on contribution set by subsection (d).
(b) Minimum Contribution Provisions
-------------------------------
Each participant who (i) is a non-key EMPLOYEE (as defined in subsection
(i) below) and (ii) is employed on the last day of the PLAN YEAR, even if
such individual is excluded from the PLAN for failing to make mandatory
contributions to the PLAN, shall be entitled to have contributions
allocated to his account of not less than three percent (the "minimum
contribution percentage") of the participant's compensation (within the
meaning of Section 415 of the CODE). In determining the minimum
contribution percentage to be allocated to an EMPLOYEE'S account, a key
EMPLOYEE'S (S) 401(k) CONTRIBUTIONS shall be considered as an EMPLOYER
CONTRIBUTION. However, (S) 401(k) CONTRIBUTIONS on behalf of EMPLOYEES
other than key EMPLOYEES will not be considered as EMPLOYER CONTRIBUTIONS.
The minimum contribution percentage set forth above shall be reduced for
any PLAN YEAR in which the percentage at which contributions are made (or
required to be made) under the PLAN for the PLAN YEAR for the key EMPLOYEE
for whom such percentage is the highest for such PLAN YEAR is less than
three percent. For this purpose, the percentage with respect to a key
EMPLOYEE (as defined in subsection (g) below) shall be determined by
dividing the contributions (including forfeitures and (S) 401(k)
CONTRIBUTIONS) made for such key EMPLOYEES by so much of his total
compensation for the PLAN YEAR.
Contributions taken into account under the immediately preceding sentence
shall include contributions under this PLAN and under all other defined
contribution plans required to be included in an aggregation group (as
defined in subsection (f)(2) below) but shall not include any plan required
to be included in such aggregation group if such plan enables a defined
contribution plan required to be included in such group to meet the
requirements of the CODE prohibiting discrimination as to contributions or
38
<PAGE>
benefits in favor of EMPLOYEES who are officers, shareholders or the
highly-compensated or prescribing the minimum participation standards.
Contributions taken into account under this subsection (b) shall not
include any contributions under the Social Security Act or any other
Federal or State law.
(c) Limitations on Contributions
----------------------------
In the event that the EMPLOYER also maintains a defined benefit PLAN
providing benefits on behalf of participants in this PLAN, one of the two
following provisions shall apply:
(1) If for the PLAN YEAR this PLAN would not be a "top-heavy PLAN" as
defined in subsection (a)(2) above if "90 percent" were substituted
for "60 percent," then subsection (b) shall apply for such PLAN YEAR
as if amended so that "four percent" were substituted for "three
percent".
(2) If for the PLAN YEAR this PLAN would continue to be a "top-heavy PLAN"
as defined in subsection (f) below if "90 percent" were substituted
for "60 percent," then the denominator of both the defined
contribution PLAN fraction and the defined benefit PLAN fraction shall
be calculated as set forth in Section 415 (e) of the CODE for the
limitation year ending in such PLAN YEAR by substituting "1.0" for
"1.25" in each place such figure appears, except with respect to any
individual for whom there are no EMPLOYER CONTRIBUTIONS allocated or
any accruals for such individual under the defined benefit PLAN.
Furthermore, the transitional rule set forth in Section 415 (e) of the
CODE shall be applied by substituting "$41,500" for "$51,875".
(d) Coordination with Other Plans
-----------------------------
In the event that another defined contribution or defined benefit plan
maintained by the EMPLOYER provides contributions or benefits on behalf of
participants in this PLAN, such other plan shall be treated as a part of
this PLAN pursuant to applicable principles (such as Rev. Rul. 81-202 or
any successor ruling or regulations) in determining whether this PLAN
satisfies the requirements of subsection (b), (c) and (d). Such
determination shall be made upon the advice of counsel by the EMPLOYEE
BENEFIT ADMINISTRATIVE COMMITTEE.
(e) Top-Heavy Plan Definition
-------------------------
This PLAN shall be a "top-heavy plan" for any PLAN YEAR if, as of the
determination date (as defined in subsection (f)(1) below), the aggregate
of the accounts under the PLAN and any required aggregation group or
permissive
39
<PAGE>
aggregation group of plans for participants (including former participants)
who are key EMPLOYEES (as defined in subsection (g) below but not including
accounts of individuals excluded under section 416(g)(4)(E) of the CODE)
exceeds 60 percent of the present value of the aggregate of the accounts
for all participants, excluding former key EMPLOYEES, or if this PLAN is
required to be in an aggregate group (as defined in subsection (f)(3)
below) which for such PLAN YEAR is a top-heavy group (as defined in
subsection (f)(4) below).
(1) "Determination date" means for any PLAN YEAR the last day of the
immediately preceding PLAN YEAR.
(2) "Valuation date" means the last day of each PLAN YEAR.
(3) "Aggregation group" means the group of plans, if any, that includes
both the group of plans that are required to be aggregated and the
group of plans that are permitted to be aggregated.
(A) The group of plans that are required to be aggregated (the
"required aggregation group") includes
(i) Each plan of the EMPLOYER (as defined in subsection (i)
below) in which a key EMPLOYEE is a participant, including
collectively-bargained plans, and
(ii) Each other plan, including collectively-bargained plans of
the EMPLOYER (as defined in subsection (i) below) which
enables a plan in which a key EMPLOYEE is a participant to
meet the requirements of the CODE prohibiting discrimination
as to contributions or benefits in favor of EMPLOYEES who
are officers, shareholders or the highly-compensated or
prescribing the minimum participation standards.
(B) The group of plans that are permitted to be aggregated (the
"permissive aggregation group") includes the required aggregation
group plus one or more plans of the EMPLOYER (as defined in
subsection (i) below) that is not part of the required
aggregation group and that the EMPLOYEE BENEFIT ADMINISTRATIVE
COMMITTEE certifies as constituting a plan within the permissive
aggregation group. Such plan or plans may be added to the
permissive aggregation group only if, after the addition, the
aggregation group as a whole continues not to discriminate as to
contributions or benefits in favor of officers, shareholders or
the highly-compensated and to meet the minimum participation
standards under the CODE.
40
<PAGE>
(4) "Top-heavy group" means the aggregation group, if as of the applicable
determination date, the sum of the present value of the cumulative
accrued benefits for key EMPLOYEES under all defined benefit plans
included in the aggregation group plus the aggregate of the accounts
of key EMPLOYEES under all defined contribution plans included in the
aggregation group exceeds 60% of the sum of the present value of the
cumulative accrued benefits for all EMPLOYEES, excluding former key
EMPLOYEES, under all such defined benefit plans plus the aggregate
accounts for all EMPLOYEES, excluding former key EMPLOYEES, under such
defined contribution plans. If the aggregation group that is a top-
heavy group is a required aggregation group, each plan in the group
will be top heavy. If the aggregation group that is a top-heavy group
is a permissive aggregation group, only those plans that are part of
the required aggregation group will be treated as top-heavy. If the
aggregation group is not a top-heavy group, no plan within such group
will be top-heavy.
(5) In determining whether this PLAN constitutes a "top-heavy plan," the
EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE (or its agent) shall make
the following adjustments in connection therewith:
(A) When more than one plan is aggregated, the EMPLOYEE BENEFIT
ADMINISTRATIVE COMMITTEE shall determine separately for each plan
as of each plan's determination date the present value of the
accrued benefits or account balance. The results shall then be
aggregated separately by adding the results of each plan as of
the determination dates for such plans that fall with the same
calendar year.
(B) In determining the present value of the cumulative accrued
benefit or the amount of the account of any EMPLOYEE, such
present value or account shall include the amount in dollar value
of the aggregate distributions made to such EMPLOYEE under the
applicable plan during the five-year period ending on the
determination date, unless reflected in the value of the accrued
benefit or account balance as of the most recent valuation date.
Such amounts shall include distributions to EMPLOYEES which
represented the entire amount credited to their accounts under
the applicable plan.
(C) Further, in making such determination, in any case where an
individual is a "non-key EMPLOYEE" as defined in subsection (h)
below, with respect to an applicable plan, but was a key EMPLOYEE
with respect to such plan for any prior PLAN YEAR, any accrued
benefit and any account of such EMPLOYEE shall be altogether
disregarded. For this purpose, to the extent that a key EMPLOYEE
is deemed to be a key EMPLOYEE if he or she met the definition of
key EMPLOYEE within
41
<PAGE>
any of the four preceding PLAN YEARS, this provision shall apply
following the end of such period of time.
(f) Key EMPLOYEE
------------
The term "key EMPLOYEE" means any EMPLOYEE or former EMPLOYEE under this
PLAN who, at any time during the PLAN YEAR containing the determination
date or during any of the four preceding PLAN YEARS, is or was one of the
following:
(1) An officer of the EMPLOYER having an annual compensation greater than
50 percent of the amount in effect under Section 415(b)(1)(A) of the
CODE for such PLAN YEAR. Whether an individual is an officer shall be
determined by the EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE on the
basis of all the facts and circumstances, such as an individual's
authority, duties and term of office, not on the mere fact that the
individual has the title of officer. For any such PLAN YEAR, these
shall be treated as officers no more than the lesser of:
(A) 50 EMPLOYEES, or
(B) the greater of three EMPLOYEES or 10 percent of the EMPLOYEES.
For this purpose, if there are more than 50 officers, the 50 highest-
paid officers shall be the key EMPLOYEES.
(2) One of the ten EMPLOYEES owning (or considered as owning, within the
meaning of the constructive ownership rules of the CODE) the largest
interests in the EMPLOYER (as defined in subsection (i)). An EMPLOYEE
who has some ownership interest is considered to be one of the top ten
owners unless at least ten other EMPLOYEES own a greater interest than
that EMPLOYEE. However, an EMPLOYEE will not be considered a top ten
owner for a PLAN YEAR if the EMPLOYEE earns an amount equal to or less
than the maximum dollar limitation on contributions and other annual
additions to a participant's account in a defined contribution PLAN
under the CODE as in effect for the calendar year in which the
determination date falls.
(3) Any person who owns (or is considered as owning within the meaning of
the constructive ownership rules of the CODE) more than five percent
of the outstanding stock of the EMPLOYER or stock possessing more than
five percent of the combined total voting power of all stock of the
EMPLOYER.
(4) A one percent owner of the EMPLOYER having an annual compensation from
the EMPLOYER of more than $150,000, and who owns more than one
42
<PAGE>
percent of the outstanding stock of the EMPLOYER or stock possessing
more than one percent of the combined total voting power of all stock
of the EMPLOYER. For purposes of this subsection, compensation means
all items includable as compensation for purposes of applying the
limitations on contributions and other annual additions to a
participant's account in a defined contribution plan and the maximum
benefit payable under a defined benefit plan under the CODE.
For purposes of parts (1), (2), (3) and (4) of this definition, a
BENEFICIARY of a key EMPLOYEE shall be treated as a key EMPLOYEE. For
purposes of parts (3) and (4), each EMPLOYER is treated separately
(without regard to the definition in subsection (i)) in determining
ownership percentages; but, in determining the amount of compensation,
the definition of EMPLOYER in subsection (i) is taken into account.
(g) Non-key EMPLOYEE
----------------
The term "non-key EMPLOYEE" means any EMPLOYEE (and any beneficiary or an
EMPLOYEE) who is not a key EMPLOYEE.
(h) Employer
--------
The term "employer" as defined in Section 30 of this PLAN.
-------------------------
I, Leslie H. Everett, do hereby certify that I am the Vice President
and Corporate Secretary of the PACIFIC GAS AND ELECTRIC COMPANY, a corporation
organized and existing under the laws of the State of California, and that the
above and foregoing is a full, true and correct copy of the Pacific Gas and
Electric Company SAVINGS FUND PLAN FOR NON-UNION EMPLOYEES as the same exists at
the date of this certification.
WITNESS my hand and the seal of the said corporation hereunto affixed
this ____ day of __________, ____.
Leslie H. Everett
Vice President and Corporate
Secretary of
PACIFIC GAS AND ELECTRIC COMPANY
43
<PAGE>
Exhibit 10.14
PG&E CORPORATION
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose and Effective Date
--------------------------
The purpose of the Plan is to promote the interests of the PG&E
Corporation ("Corporation") by providing Retirement benefits to non-employee
directors in order to encourage their continued service on the Board of
Directors of the Corporation.
The Plan shall be effective January 1, 1997.
2. Definitions
-----------
The following terms shall have the meanings set forth below, if
capitalized:
(a) "Retainer" means the annual retainer paid to Board members for
service on the Board of Directors as adjusted from time to time. The definition
does not include any additional amount paid for service on a Board committee or
as Board committee chairman or any amount specifically paid for attendance at
Board or Board committee meetings.
(b) "Corporation" means PG&E Corporation.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Director" means a non-employee director or advisory director of
PG&E Corporation.
(e) "Plan" means the PG&E Corporation Retirement Plan for Non-Employee
Directors, as amended from time to time.
(f) "Eligible Director" means a Director who (i) is not an employee of
the Corporation or its subsidiaries or affiliates at the time of the Director's
Retirement; (ii) was a Director on or after January 1, 1997; and (iii) has
served as a Director for a total of sixty calendar months or more, including
service as an employee-director. Solely for purposes of determining whether a
Director is an Eligible Director, service also shall include calendar months
during which a Director (i) was serving as a director or advisory director of
Pacific Gas and Electric Company, or (ii) was serving concurrently as a Director
and as a director or advisory director of Pacific Gas and Electric Company. A
month in which a Director was serving concurrently as a director or advisory
director of Pacific Gas and Electric Company shall be counted as one month.
<PAGE>
(g) "Retirement" occurs when an Eligible Director ceases to be a
member of the Board for any reason other than as a result of gross misconduct.
(h) "Length of Service" is the Eligible Director's number of months of
service as a Director, rounded to the next highest calendar quarter (for
example, a Director who served 73 months would receive 25 quarterly payments--73
divided by 3, rounded to the next highest integer). Length of Service shall
also include (i) service prior to January 1, 1997, as a director or advisory
director of Pacific Gas and Electric Company; and (ii) concurrent service as
both a Director of this Corporation and as a director or advisory director of
the Pacific Gas and Electric Company. Length of Service shall not include
service after December 31, 1996, as a director or advisory director of Pacific
Gas and Electric Company. Service as an employee-director shall not be included
in the computation of Length of Service for purposes of determining the amount
of Retirement benefits.
3. Retirement Payments
-------------------
(a) Upon Retirement, an Eligible Director shall be paid each quarter
an amount equal to the quarterly retainer paid to Directors at the time of the
Eligible Director's Retirement from the Board. Retirement payments shall not be
adjusted to reflect changes in the quarterly retainer effective after the date
of the Eligible Director's Retirement.
(b) Retirement payments shall begin in the calendar quarter
immediately following the calendar quarter in which the Eligible Director
retired from the Board or attained the age of 65, whichever comes later. The
payments shall continue on a quarterly basis for a period equal to the Eligible
Director's Length of Service.
(c) If an Eligible Director dies after completing the service
requirement for Retirement, but prior to receiving all Retirement payments, any
remaining payments shall be made to such deceased Director's surviving spouse.
(d) If an Eligible Director dies after completing the service
requirement for Retirement, but prior to Retirement, his or her surviving spouse
will receive payments equal to the amount to which the Eligible Director would
have been entitled had he or she retired on the day prior to his or her date of
death.
4. Disability
----------
If an Eligible Director ceases to serve on the Board as a result of
disability, the Board in its sole discretion may waive the minimum service
requirements or permit the commencement of Retirement benefits prior to age 65.
2
<PAGE>
5. Gross Misconduct
----------------
If an Eligible Director ceases to serve on the Board as a result of
gross misconduct, any Retirement benefits payable under the Plan to such
Eligible Director shall be canceled immediately and irrevocably. For purposes
of this section, "gross misconduct" shall mean that an Eligible Director has (i)
disclosed confidential business information of any type concerning the
Corporation or any of its subsidiaries or affiliates to any party for any form
of compensation which constitutes "gross income," as defined under Section 61 of
the Internal Revenue Code or Regulations issued thereunder; or (ii) been
indicted for intentionally or knowingly committing a crime against the
Corporation or any of its subsidiaries or affiliates under federal law or the
law of the state in which such act occurred; provided, however, an Eligible
Director shall not be deemed to have committed gross misconduct if subsequent to
being indicted for such a crime, the indictment is dismissed, a plea of nolo
----
contendere is accepted, or the Eligible Director has been found to be "not
- ----------
guilty" in a trial before an appropriate criminal court.
6. Amendment and Termination
-------------------------
The Board reserves the right to amend, suspend, or terminate this Plan
at any time. However, no such amendment, suspension, or termination shall have
an adverse effect on Retirement payments to be made to an Eligible Director who
retires prior to such amendment, suspension, or termination.
7. Prohibition or Alienation
-------------------------
No Director shall have the right to alienate, assign, encumber,
hypothecate, or pledge his or her interest in any payments to be made under the
Plan, voluntarily or involuntarily, and any attempt to so dispose of any such
interest shall be void. The Corporation shall have the right to set off against
Retirement payments under the Plan any amounts due and owing from the Eligible
Director to the Corporation and its parent, subsidiaries, or affiliates, to the
extent permitted by law.
8. Unfunded Plan
-------------
The Plan is unfunded, and the Corporation shall not be required to
segregate any cash or establish any separate account or accounts to fund any
Retirement payment to be made under the Plan.
9. Entire Plan
-----------
This document is a complete statement of the Plan and as of its
effective date supersedes all prior plans, proposals, representations, promises,
inducements, written or oral, relating to its subject matter. The Corporation
shall not be bound or liable to any Director
3
<PAGE>
for any representation, promise, or inducement made by any person which is not
embodied in this document or in any authorized written amendment to the Plan.
10. Applicable Law
--------------
The Plan will be construed and enforced in accordance with the laws of
California.
4
<PAGE>
Exhibit 10.15
PACIFIC GAS AND ELECTRIC COMPANY
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
(As Amended December 18, 1996)
1. Purpose and Effective Date
--------------------------
The purpose of the Plan, which was effective January 1, 1990, was to
promote the interests of the Pacific Gas and Electric Company ("Company") by
providing Retirement benefits to non-employee directors in order to encourage
their continued service on the Board of Directors of the Company.
The Plan was terminated effective January 1, 1997, except that non-
employee directors who had retired from the Company's Board of Directors prior
to that date continue to receive retirement payments under the Plan in
accordance with the terms of the Plan as they existed prior to said date.
2. Definitions
-----------
The following terms shall have the meanings set forth below, if
capitalized:
(a) "Retainer" means the annual retainer paid to Board members for
service on the Board of Directors as adjusted from time to time. The definition
does not include any additional amount paid for service on a Board committee or
as Board committee chairman or any amount specifically paid for attendance at
Board or Board committee meetings.
(b) "Company" means Pacific Gas and Electric Company.
(c) "Director" means a non-employee director or advisory director of
Pacific Gas and Electric Company.
(d) "Board" means the Board of Directors of the Company.
(e) "Plan" means the Pacific Gas and Electric Company Retirement Plan
for Non-Employee Directors, as amended from time to time.
(f) "Eligible Director" means a Director who (i) is not an employee of
the Company or its subsidiaries at the time of the Director's Retirement; (ii)
was a Director on or after January 1, 1990; (iii) has served as a Director for a
total of sixty calendar months or more, including service as an employee-
director; and (iv) retired as a Director on or before January 1, 1997.
<PAGE>
(g) "Retirement" occurs when an Eligible Director ceases to be a
member of the Board for any reason other than as a result of gross misconduct.
(h) "Length of Service" is the Eligible Director's number of months of
service as a Director, rounded to the next highest calendar quarter (for
example, a Director who served 73 months would receive 25 quarterly payments--73
divided by 3, rounded to the next highest integer)./1/
3. Retirement Payments
-------------------
(a) Upon Retirement, an Eligible Director shall be paid each quarter
an amount equal to the quarterly retainer paid to Directors at the time of the
Eligible Director's Retirement from the Board. Retirement payments shall not be
adjusted to reflect changes in the quarterly retainer effective as of the date
of the Eligible Director's Retirement.
(b) Retirement payments shall begin in the calendar quarter
immediately following the calendar quarter in which the Eligible Director
retired from the Board or attained the age of 65, whichever comes later. The
payments shall continue on a quarterly basis for a period equal to the Eligible
Director's Length of Service; provided, however, that in the event that a
Director is also eligible to receive retirement benefits under the PG&E
Corporation Retirement Plan for Non-Employee Directors, benefits earned under
that plan that are not attributable to concurrent service shall be paid prior to
any benefits payable under this Plan.
(c) If an Eligible Director dies after completing the service
requirement for Retirement, but prior to receiving all Retirement payments, any
remaining payments shall be made to such deceased Director's surviving spouse.
(d) If an Eligible Director dies after completing the service
requirement for Retirement, but prior to Retirement, his or her surviving spouse
will receive payments equal to the amount to which the Eligible Director would
have been entitled had he or she retired on the day prior to his or her date of
death.
4. Disability
----------
If an Eligible Director ceases to serve on the Board as a result of
disability, the Board in its sole discretion may waive the minimum service
requirements or permit the commencement of Retirement benefits prior to age 65.
- -----------------
/1/ Past Board service for directors as of January 1, 1990, shall be included
in determining service eligibility and pension payments.
2
<PAGE>
5. Gross Misconduct
----------------
If an Eligible Director ceases to serve on the Board as a result of
gross misconduct, any Retirement benefits payable under the Plan to such
Eligible Director shall be canceled immediately and irrevocably. For purposes
of this section, "gross misconduct" shall mean that an Eligible Director has (i)
disclosed confidential business information of any type concerning the Company
to any party for any form of compensation which constitutes "gross income," as
defined under Section 61 of the Internal Revenue Code or Regulations issued
thereunder; or (ii) been indicted for intentionally or knowingly committing a
crime against the Company under federal law or the law of the state in which
such act occurred; provided, however, an Eligible Director shall not be deemed
to have committed gross misconduct if subsequent to being indicted for such a
crime, the indictment is dismissed, a plea of nolo contendere is accepted, or
---- ----------
the Eligible Director has been found to be "not guilty" in a trial before an
appropriate criminal court.
6. Amendment and Termination
-------------------------
The Board reserves the right to amend, suspend, or terminate this Plan
at any time. However, no such amendment, suspension, or termination shall have
an adverse effect on Retirement payments to be made to an Eligible Director who
retires prior to such amendment, suspension, or termination.
7. Prohibition or Alienation
-------------------------
No Director shall have the right to alienate, assign, encumber,
hypothecate, or pledge his or her interest in any payments to be made under the
Plan, voluntarily or involuntarily, and any attempt to so dispose of any such
interest shall be void. The Company shall have the right to set off against
Retirement payments under the Plan any amounts due and owing from the Eligible
Director to the Company and its parent, subsidiaries, or affiliates, to the
extent permitted by law.
8. Unfunded Plan
-------------
The Plan is unfunded, and the Company shall not be required to
segregate any cash or establish any separate account or accounts to fund any
Retirement payment to be made under the Plan.
9. Entire Plan
-----------
This document is a complete statement of the Plan and as of its
effective date supersedes all prior plans, proposals, representations, promises,
inducements, written or oral, relating to its subject matter. The Company shall
not be bound or liable to any Director for any representation, promise, or
inducement made by any person which is not embodied in this document or in any
authorized written amendment to the Plan.
3
<PAGE>
10. Applicable Law
--------------
The Plan will be construed and enforced in accordance with the laws of
California.
4
<PAGE>
Exhibit 10.17
PG&E CORPORATION
LONG-TERM INCENTIVE PROGRAM
(As amended and restated effective as of January 1, 1997)
1. Purpose of the Program
----------------------
This is the controlling and definitive statement of the PG&E
Corporation Long-Term Incentive Program, as amended and restated herein
(hereinafter called the PROGRAM/1/). The purpose of the PROGRAM is to advance
the interests of the CORPORATION by providing ELIGIBLE PARTICIPANTS with
financial incentives to promote the success of its long-term (five to ten years)
business objectives, and to increase their proprietary interest in the success
of the CORPORATION. It is the intent of the CORPORATION to reward those
ELIGIBLE PARTICIPANTS who have a significant impact on improved long-term
corporate achievements. Inasmuch as the PROGRAM is designed to encourage
financial performance and to improve the value of shareholders' investment in
PG&E CORPORATION, the costs of the PROGRAM will be funded from corporate
earnings.
2. Program Administration
----------------------
The PROGRAM shall be administered by the COMMITTEE, which shall be
constituted in such a manner as to comply with the rules governing a plan
intended to qualify as a discretionary plan under RULE 16b-3.
Subject to the provisions of the PROGRAM, the COMMITTEE shall have
full and final authority, in its sole discretion:
(a) to determine the ELIGIBLE PARTICIPANTS to whom INCENTIVE AWARDS shall
be granted and the number of shares of COMMON STOCK to be awarded under each
INCENTIVE AWARD, based on the recommendation of the CHIEF EXECUTIVE OFFICER
(except that awards to the CHIEF EXECUTIVE OFFICER shall be based on the
recommendation of the BOARD OF DIRECTORS);
(b) to determine the time or times at which INCENTIVE AWARDS shall be
granted;
(c) to designate the types of INCENTIVE AWARD being granted;
- -------------------
/1/ Capitalized words are defined in Section 20 hereof.
1
<PAGE>
(d) to vary the OPTION vesting schedule described in the STOCK OPTION PLAN;
(e) to determine the terms and conditions, not inconsistent with the terms
of the PROGRAM, of any INCENTIVE AWARD granted hereunder (including, but not
limited to, the consideration and method of payment for shares purchased upon
the exercise of an INCENTIVE AWARD, and any vesting acceleration or
exercisability provisions in the event of a CHANGE IN CONTROL or TERMINATION),
based in each case on such factors as the COMMITTEE shall deem appropriate;
(f) to approve forms of agreement for use under the PROGRAM;
(g) to construe and interpret the PROGRAM and any related INCENTIVE AWARD
agreement and to define the terms employed herein and therein;
(h) except as provided in Section 18 hereof, to modify or amend any
INCENTIVE AWARD or to waive any restrictions or conditions applicable to any
INCENTIVE AWARD or the exercise or realization thereof;
(i) except as provided in Section 18 hereof, to prescribe, amend and
rescind rules, regulations and policies relating to the administration of the
PROGRAM;
(j) except as provided in Section 18 hereof, to suspend, terminate, modify
or amend the PROGRAM;
(k) to delegate to one or more agents such administrative duties as the
COMMITTEE may deem advisable, to the extent permitted by applicable law; and
(l) to make all other determinations and take such other action with
respect to the PROGRAM and any INCENTIVE AWARD granted hereunder as the
COMMITTEE may deem advisable, to the extent permitted by applicable law.
Notwithstanding the provisions contained in the foregoing paragraph,
the CHIEF EXECUTIVE OFFICER shall have the authority, in his sole discretion:
(a) to grant INCENTIVE AWARDS to any ELIGIBLE PARTICIPANT who, at the time of
the INCENTIVE AWARD grant, (i) is not an officer of the CORPORATION or a
DIRECTOR, and (ii) if such ELIGIBLE PARTICIPANT is an EMPLOYEE, is receiving an
annual salary which is below the level which requires approval by the COMMITTEE;
(b) to determine the time or times at which INCENTIVE AWARDS shall be granted to
such ELIGIBLE PARTICIPANTS; (c) to designate the types of INCENTIVE AWARD being
granted to such ELIGIBLE PARTICIPANTS; and (d) to vary the OPTION vesting
schedule described in the STOCK OPTION PLAN for the OPTIONS granted to such
ELIGIBLE PARTICIPANTS; provided, however, that all grants of INCENTIVE AWARDS by
the CHIEF EXECUTIVE OFFICER shall conform to the guidelines previously approved
by the COMMITTEE.
2
<PAGE>
3. Shares of Stock Subject to the Program
--------------------------------------
There shall be reserved for use under the PROGRAM (subject to the
provisions of Section 13 hereof) a total of 23,389,230 shares of COMMON STOCK,
which shares may be authorized but unissued shares of COMMON STOCK or issued
shares of COMMON STOCK which shall have been reacquired by PG&E CORPORATION.
Such shares consist of (i) 13,000,000 shares of COMMON STOCK originally reserved
for use under the PROGRAM at the time it first became effective on January 1,
1992, (ii) 389,230 shares of COMMON STOCK remaining under the 1986 OPTION PLAN
and carried over to the PROGRAM, and (iii) 10,000,000 shares of COMMON STOCK
added to the PROGRAM effective as of January 1, 1996.
If (i) any INCENTIVE AWARD expires or terminates for any reason
without having been exercised or purchased in full, (ii) an INCENTIVE AWARD is
surrendered in exchange for one or more other INCENTIVE AWARDS, or (iii) any
RESTRICTED STOCK is forfeited, then, in each such case, any unexercised,
unpurchased, surrendered or forfeited shares which were subject to such
INCENTIVE AWARD (except shares as to which a related TANDEM SAR has been
exercised) shall again be available for the future grant of INCENTIVE AWARDS
under the PROGRAM (unless the PROGRAM has terminated). In addition, shares may
be reused or added back to the PROGRAM to the extent permitted by applicable
law.
4. Eligibility
-----------
INCENTIVE AWARDS will be granted only to ELIGIBLE PARTICIPANTS. ISOS
will be granted only to EMPLOYEES. NON-EMPLOYEE DIRECTORS will only be eligible
to be granted DIRECTOR RESTRICTED STOCK. The COMMITTEE, in its sole discretion,
may grant INCENTIVE AWARDS to an ELIGIBLE PARTICIPANT who is a resident or
citizen of a foreign country, with such modifications as the COMMITTEE may deem
advisable to reflect the laws, tax policy or customs of such foreign country.
The PROGRAM shall not confer upon any RECIPIENT any right to
continuation of employment, service as a DIRECTOR or consulting relationship
with the CORPORATION; nor shall it interfere in any way with the right of the
RECIPIENT or the CORPORATION to terminate such employment, service as a DIRECTOR
or consulting relationship at any time, with or without cause.
5. Designation of Incentive Awards
-------------------------------
At the time of the grant of each INCENTIVE AWARD under the Program,
the COMMITTEE (or the CHIEF EXECUTIVE OFFICER, in the case of INCENTIVE AWARDS
granted by the CHIEF EXECUTIVE OFFICER to certain ELIGIBLE PARTICIPANTS pursuant
to Section 2 hereof) shall determine whether such INCENTIVE AWARD is to be
designated as an ISO, NON-QUALIFIED STOCK OPTION, SAR,
3
<PAGE>
DIVIDEND EQUIVALENT, PERFORMANCE UNIT, stock grant, RESTRICTED STOCK, LSAR,
PHANTOM STOCK or other STOCK-BASED AWARD; provided, however, that (i) ISOS may
be granted only to EMPLOYEES, and (ii) NON-EMPLOYEE DIRECTORS will only be
eligible to be granted DIRECTOR RESTRICTED STOCK.
Notwithstanding such designation, to the extent that the aggregate
FAIR MARKET VALUE (determined for each share as of the date of grant of the
OPTION covering each share) of the shares with respect to which OPTIONS
designated as ISOS become exercisable for the first time by any RECIPIENT during
any calendar year exceeds $100,000, such OPTIONS shall be treated as NON-
QUALIFIED STOCK OPTIONS.
INCENTIVE AWARDS shall be awarded at no cost to the RECIPIENT. Any
INCENTIVE AWARD may be granted alone, contingent upon, in addition to or in
TANDEM with one or more other INCENTIVE AWARDS granted under the PROGRAM. In
addition, except as provided in Section 12 hereof, any INCENTIVE AWARD may be
granted in exchange for one or more other INCENTIVE AWARDS.
6. Stock Options, Tandem Stock Appreciation Rights and Tandem Dividend
-------------------------------------------------------------------
Equivalents
-----------
Except as provided in Section 9 below (relating to grants of INCENTIVE
AWARDS to NON-EMPLOYEE DIRECTORS), the COMMITTEE, in its sole discretion, may
grant ISOS, NON-QUALIFIED STOCK OPTIONS, TANDEM SARS and TANDEM DIVIDEND
EQUIVALENTS to ELIGIBLE PARTICIPANTS, subject to the terms and conditions set
forth in the STOCK OPTION PLAN attached hereto as Exhibit A.
7. Performance Units
-----------------
Except as provided in Section 9 below (relating to grants of INCENTIVE
AWARDS to NON-EMPLOYEE DIRECTORS), the COMMITTEE, in its sole discretion, may
grant PERFORMANCE UNITS to ELIGIBLE PARTICIPANTS, subject to the terms and
conditions set forth in the PERFORMANCE UNIT PLAN attached hereto as Exhibit B.
8. Other Incentive Awards
----------------------
Except as provided in Section 9 below (relating to grants of INCENTIVE
AWARDS to NON-EMPLOYEE DIRECTORS), the COMMITTEE, in its sole discretion, may
grant other INCENTIVE AWARDS (including, but not limited to, SARS granted
without OPTIONS, DIVIDEND EQUIVALENTS granted without OPTIONS, stock grants,
RESTRICTED STOCK, LSARS, PHANTOM STOCK or other STOCK-BASED AWARDS) to ELIGIBLE
PARTICIPANTS, subject to such terms and conditions as the COMMITTEE shall deem
appropriate.
4
<PAGE>
9. Grants of Incentive Awards to Non-Employee Directors
----------------------------------------------------
NON-EMPLOYEE DIRECTORS will only be eligible to be granted DIRECTOR
RESTRICTED STOCK; NON-EMPLOYEE DIRECTORS will not be eligible to receive any
other form of INCENTIVE AWARD. Any grants of DIRECTOR RESTRICTED STOCK to NON-
EMPLOYEE DIRECTORS under the PROGRAM will be made strictly in accordance with,
and subject to the terms and conditions contained in, the NON-EMPLOYEE DIRECTOR
RESTRICTED STOCK PLAN RULES attached hereto as Exhibit C.
10. Termination of Employment or Relationship with the CORPORATION
--------------------------------------------------------------
The COMMITTEE may, in its sole discretion, establish terms and
conditions pertaining to the effect of TERMINATION on INCENTIVE AWARDS granted
to a RECIPIENT prior to TERMINATION, to the extent permitted by applicable law.
11. Tax Withholding
---------------
When a RECIPIENT incurs tax liability in connection with the exercise
of an INCENTIVE AWARD or the receipt of shares of COMMON STOCK pursuant to an
INCENTIVE AWARD, which tax liability is subject to tax withholding under
applicable tax laws, and the RECIPIENT is obligated to pay the CORPORATION an
amount required to be withheld under applicable tax laws, the RECIPIENT may
satisfy the withholding tax obligation by (i) electing to have the CORPORATION
withhold such amount from his or her current compensation through payroll
deductions, or (ii) making a direct payment to the CORPORATION in cash or by
check.
The COMMITTEE may, in its sole discretion, permit a RECIPIENT to
satisfy all or part of his or her withholding tax obligations by having the
CORPORATION withhold from the shares to be issued to the RECIPIENT that number
of shares having a FAIR MARKET VALUE equal to the amount required to be withheld
determined on the date when taxes otherwise would be withheld in cash. The
payment of withholding taxes in this manner, if permitted by the COMMITTEE,
shall be subject to such restrictions as the COMMITTEE may impose, including any
restrictions required by rules of the Securities and Exchange Commission.
12. Replacement of Grants
---------------------
The COMMITTEE may, in its sole discretion, offer a RECIPIENT the
option of surrendering an unexercised OPTION or other INCENTIVE AWARD in
exchange for another INCENTIVE AWARD of the same type or for a different type of
INCENTIVE AWARD; provided, however, that no OPTION or INCENTIVE AWARD may be
exchanged for a new OPTION or INCENTIVE AWARD having an OPTION PRICE or purchase
price
5
<PAGE>
that is lower than the OPTION PRICE or purchase price of the original OPTION or
INCENTIVE AWARD.
13. Deferral of Payments
--------------------
The COMMITTEE may, in its sole discretion, approve a RECIPIENT'S
deferral of any cash payments which may become due under the PROGRAM. Such
deferrals shall be subject to any conditions, restrictions or requirements as
the COMMITTEE may determine.
14. Adjustments Upon Changes in Number or Value of Shares of Common Stock
---------------------------------------------------------------------
If there are any changes in the number or value of shares of COMMON
STOCK by reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, mergers, consolidations or other events that materially
increase or decrease the number or value of issued and outstanding shares of
COMMON STOCK, the COMMITTEE may make such adjustments as it shall deem
appropriate, in order to prevent dilution or enlargement of rights.
15. Non-Transferability of Incentive Awards
---------------------------------------
An INCENTIVE AWARD shall not be transferable by the RECIPIENT
otherwise than by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined by the CODE, Title I of ERISA or
the rules thereunder. During the lifetime of the RECIPIENT, an INCENTIVE AWARD
may be exercised only by the RECIPIENT or by an alternate payee under a
qualified domestic relations order.
16. Change in Control
-----------------
Upon the occurrence of a CHANGE IN CONTROL (as defined below):
(a) Any time periods relating to the exercise or realization of any
INCENTIVE AWARD granted hereunder shall be accelerated so that such INCENTIVE
AWARD may be immediately exercised or realized in full;
(b) All shares of RESTRICTED STOCK granted hereunder shall immediately
cease to be forfeitable;
(c) All conditions relating to the realization of any STOCK-BASED AWARD
granted hereunder shall immediately terminate; and
(d) The COMMITTEE may offer any RECIPIENT the option of having the
CORPORATION purchase his or her INCENTIVE AWARD for an amount of cash which
6
<PAGE>
could have been attained upon the exercise or realization of such INCENTIVE
AWARD had it been fully exercisable or realizable;
unless the COMMITTEE in its sole discretion determines that such CHANGE IN
CONTROL will not adversely impact the RECIPIENTS of INCENTIVE AWARDS hereunder
and is in the best interests of the shareholders of PG&E CORPORATION. The
COMMITTEE may make such further provisions with respect to a CHANGE IN CONTROL
as it shall deem equitable and in the best interests of the shareholders of PG&E
CORPORATION. Such provision may be made in any agreement relating to any
INCENTIVE AWARD granted hereunder, by amendment to any such agreement or by
resolution of the COMMITTEE.
The phrase "CHANGE IN CONTROL" shall have such meaning as ascribed
thereto from time to time by the COMMITTEE and set forth in any agreement
relating to any INCENTIVE AWARD granted hereunder or by resolution of the
COMMITTEE; provided, however, that, notwithstanding the foregoing, a "CHANGE IN
CONTROL" shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the EXCHANGE ACT, but excluding any benefit plan for EMPLOYEES or any trustee,
agent or other fiduciary for any such plan acting in such person's capacity as
such fiduciary), directly or indirectly, becomes the beneficial owner of
securities of PG&E CORPORATION representing twenty percent (20%) or more of the
combined voting power of PG&E CORPORATION's then outstanding securities;
(b) during any two consecutive years, individuals who at the beginning of
such a period constitute the BOARD OF DIRECTORS cease for any reason to
constitute at least a majority of the BOARD OF DIRECTORS, unless the election,
or the nomination for election by the shareholders of PG&E CORPORATION, of each
new DIRECTOR was approved by a vote of at least two-thirds (2/3) of the
DIRECTORS then still in office who were DIRECTORS at the beginning of the
period; or
(c) the shareholders of PG&E CORPORATION shall have approved (i) any
consolidation or merger of PG&E CORPORATION in which PG&E CORPORATION is not the
continuing or surviving corporation or pursuant to which shares of COMMON STOCK
are converted into cash, securities or other property, other than a merger of
PG&E CORPORATION in which the holders of the COMMON STOCK immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the CORPORATION, or
(iii) any plan or proposal for the liquidation or dissolution of PG&E
CORPORATION.
7
<PAGE>
Notwithstanding the foregoing, the phrase "CHANGE IN CONTROL" shall
not apply to any reorganization or merger initiated voluntarily by PG&E
CORPORATION in which PG&E CORPORATION is the continuing surviving entity.
17. Listing and Registration of Shares
----------------------------------
Each INCENTIVE AWARD shall be subject to the requirement that if at
any time the COMMITTEE shall determine, in its discretion, that the listing,
registration or qualification of the shares covered thereby under any securities
exchange or under any state or federal law or the consent or approval of any
governmental regulatory body, including the California Public Utilities
Commission, is necessary or desirable as a condition of, or in connection with,
the granting of such INCENTIVE AWARD or the issue or purchase of shares
thereunder, such INCENTIVE AWARD may not be exercised in whole or in part unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
COMMITTEE.
18. Amendment and Termination of the Program and Incentive Awards
-------------------------------------------------------------
The BOARD OF DIRECTORS or the COMMITTEE may at any time suspend,
terminate, modify or amend the PROGRAM in any respect; provided, however, that
(i) to the extent necessary and desirable to comply with RULE 16b-3 or with
Section 422 of the CODE (or any other applicable law or regulation, including
the requirements of any stock exchange on which the COMMON STOCK is listed or
quoted), shareholder approval of any PROGRAM amendment shall be obtained in such
a manner and to such a degree as is required by the applicable law or
regulation, and (ii) any provisions contained in the PROGRAM or in the NON-
EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN RULES stating the amount or price of
INCENTIVE AWARDS to be granted to NON-EMPLOYEE DIRECTORS or specifying the
timing of such awards, or any provisions setting forth a formula that determines
the amount, price or timing, shall not be amended more than once every six
months, other than to comport with changes in the CODE, ERISA or the rules
thereunder.
No suspension, termination, modification or amendment of the PROGRAM
may, without the consent of the RECIPIENT, adversely affect his or her rights
under INCENTIVE AWARDS theretofore granted to such RECIPIENT. In the event of
amendments to the CODE or applicable rules or regulations relating to ISOS
subsequent to the date hereof, the CORPORATION may amend the PROGRAM, and the
CORPORATION and RECIPIENTS holding OPTION agreements may agree to amend
outstanding OPTION agreements, to conform to such amendments.
The COMMITTEE may make such amendments or modifications in the terms
and conditions of any INCENTIVE AWARD as it may deem advisable, or cancel or
annul any grant of an INCENTIVE AWARD; provided, however, that no such
amendment, modification, cancellation or annulment may, without the consent of
the RECIPIENT,
8
<PAGE>
adversely his or her rights under such INCENTIVE AWARD; and provided further the
COMMITTEE may not reduce the OPTION PRICE or purchase price of any OPTION or
INCENTIVE AWARD below the original OPTION PRICE or purchase price.
Notwithstanding the foregoing, the COMMITTEE reserves the right, in
its sole discretion, to (i) convert any outstanding ISOS to NON-QUALIFIED STOCK
OPTIONS, (ii) to require a RECIPIENT to forfeit any unexercised or unpurchased
INCENTIVE AWARDS, any shares received or purchased pursuant to an INCENTIVE
AWARD, or any gains realized by virtue of the receipt of an INCENTIVE AWARD in
the event that such RECIPIENT competes against the CORPORATION, and (iii) to
cancel or annul any grant of an INCENTIVE AWARD in the event of a RECIPIENT'S
TERMINATION FOR CAUSE. For purposes of the PROGRAM, "TERMINATION FOR CAUSE"
shall include, but not be limited to, termination because of dishonesty,
criminal offense or violation of a work rule, and shall be determined by, and in
the sole discretion of, the COMMITTEE.
19. Effective Date of the Program and Duration
------------------------------------------
The Program first became effective as of January 1, 1992. It has
since been amended and restated. The amended and restated PROGRAM became
effective as of January 1, 1996, upon approval by the shareholders of Pacific
Gas and Electric Company at its Annual Meeting on April 17, 1996. Effective
January 1, 1997, the PROGRAM was assumed by PG&E CORPORATION. Unless terminated
sooner pursuant to Section 16 hereof, the PROGRAM shall terminate on December
31, 2005.
20. Definitions
-----------
a. BOARD OF DIRECTORS means the Board of Directors of PG&E CORPORATION.
------------------
b. CHANGE IN CONTROL has the meaning set forth in Section 16 hereof.
-----------------
c. CHIEF EXECUTIVE OFFICER means the Chief Executive Officer of PG&E
-----------------------
CORPORATION.
d. CODE means the Internal Revenue Code of 1986, as amended from time to
----
time.
e. COMMITTEE means the Nominating and Compensation Committee of the BOARD
---------
OF DIRECTORS or any successor to such committee.
f. COMMON STOCK means common shares of PG&E CORPORATION with no par value
------------
and any class of common shares into which such common shares hereafter
may be converted.
9
<PAGE>
g. CONSULTANT means any person, including an advisor, who is engaged by
----------
the CORPORATION to render services.
h. CORPORATION means PG&E CORPORATION, and any parent corporation (as
-----------
defined in Section 424(e) of the CODE) or subsidiary corporation (as
defined in Section 424(f) of the CODE).
i. DIRECTOR means any person who is a member of the BOARD OF DIRECTORS or
--------
the Board of Directors of any parent corporation (as defined in
Section 424(e) of the CODE) which may hereafter be established,
including an advisory, emeritus or honorary director.
j. DIRECTOR RESTRICTED STOCK means RESTRICTED STOCK granted to a NON-
-------------------------
EMPLOYEE DIRECTOR under the NON-EMPLOYEE DIRECTOR RESTRICTED STOCK
PLAN.
k. DIVIDEND EQUIVALENT means a right that entitles the RECIPIENT to
-------------------
receive cash or COMMON STOCK based on the dividends declared on the
COMMON STOCK covered by such right.
l. ELIGIBLE PARTICIPANT means any KEY EMPLOYEE. It also means, if so
--------------------
identified by the COMMITTEE (or by the CHIEF EXECUTIVE OFFICER, in the
case of INCENTIVE AWARDS granted by the CHIEF EXECUTIVE OFFICER to
certain ELIGIBLE PARTICIPANTS pursuant to Section 2 hereof), other
EMPLOYEES, DIRECTORS, CONSULTANTS, employees or consultants of any
affiliates of PG&E CORPORATION, and other persons whose participation
in the PROGRAM is deemed by the COMMITTEE (or by the CHIEF EXECUTIVE
OFFICER, in the case of INCENTIVE AWARDS granted by the CHIEF
EXECUTIVE OFFICER to certain ELIGIBLE PARTICIPANTS pursuant to Section
2 hereof) to be in the best interests of the CORPORATION.
m. EMPLOYEE means any person who is employed by the CORPORATION. The
--------
payment of a director's fee or consulting fee by the CORPORATION shall
not be sufficient to constitute "employment" by the CORPORATION.
n. ERISA means the Employee Retirement Income Security Act of 1974, as
-----
amended.
o. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
------------
10
<PAGE>
p. FAIR MARKET VALUE means the closing price of the COMMON STOCK reported
-----------------
on the New York Stock Exchange Composite Transactions for the date
specified for determining such value.
q. INCENTIVE AWARD means any ISO, NON-QUALIFIED STOCK OPTION, SAR,
---------------
DIVIDEND EQUIVALENT, PERFORMANCE UNIT or other STOCK-BASED AWARD
granted under the PROGRAM.
r. ISO means an OPTION intended to qualify as an incentive stock option
---
under Section 422 of the CODE.
s. KEY EMPLOYEE means the Corporate Secretary, Treasurer, Vice Presidents
------------
and other executive officers of PG&E CORPORATION above the rank of
Vice President. It also means, if so identified by the COMMITTEE (or
by the CHIEF EXECUTIVE OFFICER, in the case of INCENTIVE AWARDS
granted by the CHIEF EXECUTIVE OFFICER to certain ELIGIBLE
PARTICIPANTS pursuant to Section 2 hereof), executive officers of
wholly-owned subsidiaries of PG&E CORPORATION (including subsidiaries
which become such after adoption of the PROGRAM) and any other key
management employee of PG&E CORPORATION or any wholly-owned subsidiary
of PG&E CORPORATION.
t. LSAR means a limited stock appreciation right which is exercisable
----
only in the event of a CHANGE IN CONTROL.
u. 1986 OPTION PLAN means the Pacific Gas and Electric CORPORATION 1986
----------------
Stock Option Plan, as amended to date.
v. NON-EMPLOYEE DIRECTOR means a DIRECTOR who is not an EMPLOYEE.
--------------------
w. NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN RULES means the Restricted
-------------------------------------------------
Stock Plan for Non-Employee Directors attached hereto as Exhibit C or
any successor rules which the COMMITTEE may adopt from time to time
with respect to the grant of DIRECTOR RESTRICTED STOCK to NON-EMPLOYEE
DIRECTORS under the PROGRAM.
x. NON-QUALIFIED STOCK OPTION means any OPTION which is not an ISO.
--------------------------
y. OPTION means an option to purchase shares of COMMON STOCK granted
------
under the STOCK OPTION PLAN.
11
<PAGE>
z. OPTION PRICE means the purchase price for the COMMON STOCK upon
------------
exercise of an OPTION.
aa. PERFORMANCE UNIT means a performance unit granted under the
----------------
PERFORMANCE UNIT PLAN.
ab. PERFORMANCE UNIT PLAN means the Performance Unit Plan Rules attached
---------------------
hereto as Exhibit B or any successor rules which the COMMITTEE may
adopt from time to time with respect to the grant of PERFORMANCE UNITS
under the PROGRAM.
ac. PG&E CORPORATION means PG&E CORPORATION, a California corporation.
----------------
ad. PHANTOM STOCK means allocated hypothetical shares of COMMON STOCK that
-------------
can be converted at a future date into cash or stock.
ae. PROGRAM means the PG&E Corporation Long-Term Incentive Program as
-------
amended and restated herein and as may be amended from time to time.
af. RECIPIENT means the ELIGIBLE PARTICIPANT receiving the INCENTIVE
---------
AWARD, or his or her legal representative, legatees, distributees or
alternate payees, as the case may be.
ag. RESTRICTED STOCK means COMMON STOCK that is subject to forfeiture by
----------------
the RECIPIENT to the CORPORATION under such circumstances as may be
specified by the COMMITTEE in its sole discretion.
ah. RETIREMENT means the Actual Retirement Date under the Pacific Gas and
----------
Electric Company Retirement Plan.
ai. RULE 16b-3 means Rule 16b-3 under the EXCHANGE ACT or any successor to
----------
Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
aj. SAR means a stock appreciation right whose value is based on the
---
increase in the FAIR MARKET VALUE of the COMMON STOCK covered by such
right.
ak. SECTION 16 OFFICER means any person who is designated by the BOARD OF
------------------
DIRECTORS as an executive officer of PG&E CORPORATION and any other
person who is designated as an officer of PG&E CORPORATION for
purposes of Section 16 of the EXCHANGE ACT.
12
<PAGE>
al. STOCK-BASED AWARD means any award that is valued in whole or in part
-----------------
by reference to, or is otherwise based on, the COMMON STOCK,
including, but not limited to, stock grants, RESTRICTED STOCK, LSARS
and PHANTOM STOCK.
am. STOCK OPTION PLAN means the Stock Option Plan Rules attached hereto as
-----------------
Exhibit A or any successor rules which the COMMITTEE may adopt from
time to time with respect to the grant of OPTIONS under the PROGRAM.
an. TANDEM refers to an INCENTIVE AWARD granted in conjunction with
------
another INCENTIVE AWARD.
ao. TERMINATION occurs when an EMPLOYEE ceases to be employed by the
-----------
CORPORATION as a common law employee, when a DIRECTOR ceases to be a
member of the BOARD OF DIRECTORS or the Board of Directors of any
parent corporation which may hereafter be established (as the case may
be), or when the relationship between the CORPORATION and a CONSULTANT
or other ELIGIBLE PARTICIPANT terminates, as the case may be.
ap. TERMINATION FOR CAUSE has the meaning set forth in Section 18 hereof.
---------------------
13
<PAGE>
EXHIBIT A
PG&E CORPORATION
STOCK OPTION PLAN
(As amended and restated effective as of January 1, 1997)
1. Purpose of the Plan
-------------------
This is the controlling and definitive statement of the PG&E
Corporation Stock Option Plan, as amended and restated herein (hereinafter
called the PLAN/1/). The purpose of the PLAN is to advance the interests of the
CORPORATION by providing ELIGIBLE PARTICIPANTS with financial incentives to
promote the success of its long-term (five to ten years) business objectives,
and to increase their proprietary interest in the success of the CORPORATION.
It is the intent of the CORPORATION to reward those ELIGIBLE PARTICIPANTS who
have a significant impact on improved long-term corporate achievements.
Inasmuch as the PLAN is designed to encourage financial performance and to
improve the value of shareholders' investment in PG&E CORPORATION, the costs of
the PLAN will be funded from corporate earnings.
2. Plan Administration
-------------------
The PLAN shall be administered by the COMMITTEE, which shall be
constituted in such a manner as to comply with the rules governing a plan
intended to qualify as a discretionary plan under RULE 16b-3.
Subject to the provisions of the PLAN, the COMMITTEE shall have full
and final authority, in its sole discretion:
(a) to determine the ELIGIBLE PARTICIPANTS to whom OPTIONS shall be granted
and the number of shares of COMMON STOCK to be awarded under each OPTION, based
on the recommendation of the CHIEF EXECUTIVE OFFICER (except that awards to the
CHIEF EXECUTIVE OFFICER shall be shall be based on the recommendation of the
BOARD OF DIRECTORS); provided, however, that the number of shares of COMMON
STOCK to be awarded under each OPTION shall be subject to the limitations
specified in Section 5 hereof;
(b) to determine the time or times at which OPTIONS shall be granted;
(c) to designate the OPTIONS being granted as ISOS or NON-QUALIFIED STOCK
OPTIONS;
- ---------------
/1/ Capitalized words are defined in Section 20 hereof.
<PAGE>
(d) to vary the OPTION vesting schedule described in Section 11 hereof;
(e) to determine the terms and conditions, not inconsistent with the terms
of the PLAN, of any OPTION granted hereunder (including, but not limited to, the
consideration and method of payment for shares purchased upon the exercise of an
OPTION, and any vesting acceleration or exercisability provisions in the event
of a CHANGE IN CONTROL or TERMINATION), based in each case on such factors as
the COMMITTEE shall deem appropriate;
(f) to approve forms of agreement for use under the PLAN;
(g) to construe and interpret the PLAN and any related OPTION agreement and
to define the terms employed herein and therein;
(h) except as provided in Section 18 hereof, to modify or amend any OPTION
or to waive any restrictions or conditions applicable to any OPTION or the
exercise thereof;
(i) except as provided in Section 18 hereof, to prescribe, amend and
rescind rules, regulations and policies relating to the administration of the
PLAN;
(j) except as provided in Section 18 hereof, to suspend, terminate, modify
or amend the PLAN;
(k) to delegate to one or more agents such administrative duties as the
COMMITTEE may deem advisable, to the extent permitted by applicable law; and
(l) to make all other determinations and take such other action with
respect to the PLAN and any OPTION granted hereunder as the COMMITTEE may deem
advisable, to the extent permitted by applicable law.
Notwithstanding the provisions contained in the foregoing paragraph,
the CHIEF EXECUTIVE OFFICER shall have the authority, in his sole discretion:
(a) to grant OPTIONS to any ELIGIBLE PARTICIPANT who, at the time of the OPTION
grant, (i) is not an officer of the CORPORATION or a DIRECTOR, and (ii) if such
ELIGIBLE PARTICIPANT is an EMPLOYEE, is receiving an annual salary which is
below the level which requires approval by the COMMITTEE; (b) to determine the
time or times at which OPTIONS shall be granted to such ELIGIBLE PARTICIPANTS;
(c) to designate the OPTIONS being granted to such ELIGIBLE PARTICIPANTS as ISOS
or NON-QUALIFIED STOCK OPTIONS; and (d) to vary the OPTION vesting schedule
described in Section 11 hereof for the OPTIONS granted to such ELIGIBLE
PARTICIPANTS; provided, however, that (x) all grants of OPTIONS by the CHIEF
EXECUTIVE OFFICER shall conform to the guidelines previously approved by the
COMMITTEE, and (y) the number of shares of COMMON STOCK to be awarded under each
OPTION shall be subject to the limitations specified in Section 5 hereof.
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<PAGE>
3. Shares of Stock Subject to the Plan
-----------------------------------
There shall be reserved for use under the PLAN and for the grant of
any other incentive awards pursuant to the PROGRAM (subject to the provisions of
Section 14 hereof) a total of 23,389,230 shares of COMMON STOCK, which shares
may be authorized but unissued shares of COMMON STOCK or issued shares of COMMON
STOCK which shall have been reacquired by PG&E CORPORATION.
If any OPTION expires or terminates for any reason without having been
exercised in full, then any unexercised, shares which were subject to such
OPTION (except shares as to which a related TANDEM SAR has been exercised) shall
again be available for the future grant of OPTIONS under the PLAN (unless the
PLAN has terminated). In addition, shares may be reused or added back to the
PLAN to the extent permitted by applicable law.
4. Eligibility
-----------
OPTIONS will be granted only to ELIGIBLE PARTICIPANTS. ISOS will be
granted only to EMPLOYEES. The COMMITTEE, in its sole discretion, may grant
OPTIONS to an ELIGIBLE PARTICIPANT who is a resident or citizen of a foreign
country, with such modifications as the COMMITTEE may deem advisable to reflect
the laws, tax policy or customs of such foreign country.
The PLAN shall not confer upon any OPTIONEE any right to continuation
of employment, service as a DIRECTOR or consulting relationship with the
CORPORATION; nor shall it interfere in any way with the right of the OPTIONEE or
the CORPORATION to terminate such employment, service as a DIRECTOR or
consulting relationship at any time, with or without cause.
5. Limitation on Options and SARs Awarded to Any Eligible Participant
------------------------------------------------------------------
The aggregate number of shares of COMMON STOCK with respect to which
any ELIGIBLE PARTICIPANT may be granted OPTIONS and SARS under the PLAN during
any calendar year shall in no event exceed two percent (2%) of the total number
of shares reserved for use under the PLAN.
6. Designation of Options
----------------------
At the time of the grant of each OPTION under the PLAN, the COMMITTEE
(or the CHIEF EXECUTIVE OFFICER, in the case of OPTIONS granted by the CHIEF
EXECUTIVE OFFICER to certain ELIGIBLE PARTICIPANTS pursuant to Section 2 hereof)
shall determine whether such OPTION is to be designated as an ISO or a NON-
QUALIFIED STOCK OPTION; provided, however, that ISOS may be granted only to
EMPLOYEES.
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<PAGE>
Notwithstanding such designation, to the extent that the aggregate
FAIR MARKET VALUE (determined for each share as of the date of grant of the
OPTION covering each share) of the shares with respect to which OPTIONS
designated as ISOS become exercisable for the first time by any OPTIONEE during
any calendar year exceeds $100,000, such OPTIONS shall be treated as NON-
QUALIFIED STOCK OPTIONS.
OPTIONS shall be awarded at no cost to the OPTIONEE.
7. Option Price
------------
The OPTION PRICE of the COMMON STOCK under each OPTION issued shall be
the FAIR MARKET VALUE of the COMMON STOCK on the date of grant.
8. Stock Appreciation Rights
-------------------------
At the discretion of the COMMITTEE, an OPTION may be granted with or
without a TANDEM SAR which permits the OPTIONEE to surrender unexercised an
OPTION or portion thereof and to receive in exchange a payment having a value
equal to the difference between (x) the FAIR MARKET VALUE of the COMMON STOCK
covered by the surrendered portion of the OPTION on the date the SAR is
exercised and (y) the OPTION PRICE for such COMMON STOCK. The SAR is subject to
the same terms and conditions as the related OPTION, except that (i) the SAR may
be exercised only when there is a positive spread (i.e., when the FAIR MARKET
VALUE of the COMMON STOCK subject to the OPTION exceeds the OPTION PRICE), (ii)
in accordance with Section 9 hereof, payment of the DEA (if any) to the OPTIONEE
may be restricted, and (iii) if the OPTIONEE is a SECTION 16 OFFICER, DIRECTOR
or other person whose transactions in the COMMON STOCK are subject to Section
16(b) of the EXCHANGE ACT, the SAR may be exercised only during the period
beginning on the third (3rd) business day following the date of release of the
CORPORATION's quarterly or annual statement of earnings and ending on the
twelfth (12th) business day following such date. Upon the exercise of a SAR,
the number of shares subject to exercise under the related OPTION shall be
automatically reduced by the number of shares represented by the OPTION or
portion thereof surrendered. No payment will be required from the OPTIONEE upon
the exercise of a SAR, except that any amount necessary to satisfy applicable
federal, state or local tax requirements shall be withheld.
9. Dividend Equivalent Account
---------------------------
At the discretion of the COMMITTEE, an OPTION may be granted with or
without TANDEM DIVIDEND EQUIVALENTS. When an OPTION is granted with TANDEM
DIVIDEND EQUIVALENTS, a Dividend Equivalent Account ("DEA") shall be established
for the OPTIONEE. This DEA shall be credited quarterly on each dividend record
date with dividends which would have been paid on the COMMON STOCK subject to
the unexercised portion of the OPTION (including any portion which has not yet
vested on
A-4
<PAGE>
the record date), if such portion had been exercised. Except as provided in
Section 12(d) hereof, at the time the OPTION or any related SAR is exercised,
the OPTIONEE shall receive all funds which have accumulated in the DEA with
respect to the shares of COMMON STOCK for which the OPTION or SAR is being
exercised; provided, however, that if the OPTIONEE exercises a SAR, such DEA
funds shall only be paid to the OPTIONEE if (i) the percentage increase in the
FAIR MARKET VALUE of the COMMON STOCK over the OPTION PRICE averages at least
five percent (5%) per year for the first five (5) years after the grant, or (ii)
in the case of OPTIONS held for longer than five (5) years from the date of
grant, such FAIR MARKET VALUE has increased by at least twenty-five percent
(25%) over the OPTION PRICE.
10. Terms of Options
----------------
The term of each ISO shall be for ten (10) years from the date of
grant, subject to earlier termination as provided in Section 12 hereof. The
term of each NON-QUALIFIED STOCK OPTION shall be ten (10) years and one (1) day
from the date of grant, subject to earlier termination as provided in Section 12
hereof. Any provision of the PROGRAM to the contrary notwithstanding, no OPTION
shall be exercised after the time limitations stated in this Section 10.
11. Limitations on Exercise
-----------------------
(a) Each OPTION granted under the PROGRAM shall become exercisable and
vested only to the following extent: (i) up to one-third (1/3) of the OPTIONS
granted may be exercised on or after the second (2nd) anniversary of the date of
grant; (ii) up to two-thirds (2/3) of the OPTIONS granted may be exercised on or
after the third (3rd) anniversary of the date of grant; and (iii) up to one
hundred percent (100%) of the OPTIONS granted may be exercised on or after the
fourth (4th) anniversary of the date of grant.
(b) No OPTION under the PROGRAM designated by the COMMITTEE as an ISO
and granted before January 1, 1987 may be exercised while there is outstanding
in the hands of the OPTIONEE any ISO which was granted before the granting of
the ISO hereunder sought to be exercised. For this purpose an ISO shall be
treated as outstanding until such OPTION is (i) exercised in full, (ii)
surrendered in full by exercising SARS pursuant to Section 8 hereof, or (iii)
rendered void by reason of lapse of time.
12. Termination of Employment or Relationship with the CORPORATION
--------------------------------------------------------------
(a) In the event of a TERMINATION by reason of a discharge or
TERMINATION FOR CAUSE, any unexercised OPTIONS theretofore granted to an
OPTIONEE under the PROGRAM shall forthwith terminate.
(b) In the event of a TERMINATION by reason of RETIREMENT, all OPTIONS
held by the OPTIONEE, to the extent that such OPTIONS have not previously
A-5
<PAGE>
expired or been exercised, shall become fully exercisable and vested,
notwithstanding the provisions of Section 11(a) hereof, and the OPTIONEE shall
have the right to exercise such OPTIONS in full at any time within their
respective terms or within five (5) years after such RETIREMENT, whichever is
shorter. This five-year period shall be extended if an OPTIONEE remains on the
BOARD OF DIRECTORS after RETIREMENT. In such case, the OPTIONS may be exercised
as long as the OPTIONEE remains a DIRECTOR and for a period of six (6) months
thereafter, or within five (5) years after RETIREMENT, whichever is longer;
provided, however, that no OPTION may be exercised after the expiration of its
term. Notwithstanding the foregoing, any ISOS held by the OPTIONEE may be
exercised only within their respective terms or within three (3) months after
RETIREMENT, whichever is shorter.
(c) In the event of a TERMINATION by reason of disability or death,
all OPTIONS held by the OPTIONEE, to the extent that such OPTIONS have not
previously expired or been exercised, shall become fully exercisable and vested,
notwithstanding the provisions of Section 11(a) hereof, and the OPTIONEE (or the
OPTIONEE'S estate or a person who acquired the right to exercise such OPTIONS by
bequest or inheritance) shall have the right to exercise such OPTIONS at any
time within their respective terms or within one (1) year after the date of such
TERMINATION, whichever is shorter. The term "disability" shall, for the
purposes of the PLAN, be defined in Section 22(e)(3) of the CODE.
(d) In the event of a TERMINATION by reason of a divestiture or change
in control of a subsidiary of PG&E CORPORATION, which divestiture or change in
control results in such subsidiary no longer qualifying as a subsidiary
corporation under Section 424(f) of the CODE, all OPTIONS held by the OPTIONEE,
to the extent that such OPTIONS have not previously expired or been exercised,
shall become fully exercisable and vested, notwithstanding the provisions of
Section 11(a) hereof, and the OPTIONEE shall have the right to exercise such
OPTIONS in full at any time within their respective terms or within three (3)
years after such TERMINATION, whichever is shorter. This three-year period
shall be extended if an OPTIONEE remains on the BOARD OF DIRECTORS after such
TERMINATION. In such case, the OPTIONS may be exercised as long as the OPTIONEE
remains a DIRECTOR and for a period of six (6) months thereafter, or within
three (3) years after such TERMINATION, whichever is longer; provided, however,
that no OPTION may be exercised after the expiration of its term.
Notwithstanding the foregoing, any ISOS held by the OPTIONEE may be exercised
only within their respective terms or within three (3) months after such
TERMINATION, whichever is shorter.
(e) In the event of a TERMINATION for any reason other than those
specified in subparagraphs (a) through (d) above, (i) any unexercised OPTION or
OPTIONS granted under the PROGRAM shall be deemed canceled and terminated
forthwith, except that the OPTIONEE may exercise any unexercised OPTIONS
theretofore granted which are otherwise exercisable and vested within the
provisions of Section 11(a) hereof, during the balance of their respective terms
or within thirty (30) days of such TERMINATION,
A-6
<PAGE>
whichever is shorter, and (ii) the DEA (if any) shall not be credited with any
dividends paid after the date of such TERMINATION.
(f) Notwithstanding the provisions of subparagraphs (a) through (e)
above, the COMMITTEE may, in its sole discretion, establish different terms and
conditions pertaining to the effect of TERMINATION, to the extent permitted by
applicable federal and state law.
13. Payment for Shares Upon Exercise of Options
-------------------------------------------
The exercise of any OPTION shall be contingent upon receipt by the
CORPORATION of (i) cash (including any DEA funds payable to the OPTIONEE in
connection with the exercise of such OPTION), (ii) check, (iii) shares of COMMON
STOCK, (iv) an executed exercise notice together with irrevocable instructions
to a broker to either sell the shares subject to the OPTION or hold such shares
as collateral for a margin loan and to promptly deliver to the CORPORATION the
amount of sale or loan proceeds required to pay the OPTION PRICE, (v) any
combination of the foregoing in an amount equal to the full OPTION PRICE of the
shares being purchased, or (vi) such other consideration and method of payment,
other than a note from the OPTIONEE, as the COMMITTEE, in its sole discretion,
may allow (which, in the case of an ISO shall be determined at the time of
grant), to the extent permitted by applicable law. For purposes of this
paragraph, shares of COMMON STOCK that are delivered in payment of the OPTION
PRICE must have been previously owned by the OPTIONEE for a minimum of one year,
and shall be valued at their FAIR MARKET VALUE as of the date of the exercise of
the OPTION. The CORPORATION shall not make loans to any OPTIONEE for the
purpose of exercising OPTIONS.
14. Adjustments Upon Changes in Number or Value of Shares of Common Stock
---------------------------------------------------------------------
If there are any changes in the number or value of shares of COMMON
STOCK by reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, mergers, consolidations or other events that materially
increase or decrease the number or value of issued and outstanding shares of
COMMON STOCK, the COMMITTEE may make such adjustments as it shall deem
appropriate, in order to prevent dilution or enlargement of rights.
15. Non-Transferability of Options
------------------------------
An OPTION shall not be transferable by the OPTIONEE otherwise than by
will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the CODE, Title I of ERISA or the rules
thereunder. During the lifetime of the OPTIONEE, an OPTION may be exercised
only by the OPTIONEE or by an alternate payee under a qualified domestic
relations order.
A-7
<PAGE>
16. Change in Control
-----------------
Upon the occurrence of a CHANGE IN CONTROL (as defined below):
(a) Any time periods relating to the exercise of any OPTION granted
hereunder shall be accelerated so that such OPTION may be immediately exercised
in full; and
(b) The COMMITTEE may offer any OPTIONEE the option of having the
CORPORATION purchase his or her OPTION for an amount of cash which could have
been attained upon the exercise of such OPTION had it been fully exercisable;
unless the COMMITTEE in its sole discretion determines that such CHANGE IN
CONTROL will not adversely impact the OPTIONEES of OPTIONS hereunder and is in
the best interests of the shareholders of PG&E CORPORATION. The COMMITTEE may
make such further provisions with respect to a CHANGE IN CONTROL as it shall
deem equitable and in the best interests of the shareholders of PG&E
CORPORATION. Such provision may be made in any agreement relating to any OPTION
granted hereunder, by amendment to any such agreement or by resolution of the
COMMITTEE.
The phrase "CHANGE IN CONTROL" shall have such meaning as ascribed
thereto from time to time by the COMMITTEE and set forth in any agreement
relating to any OPTION granted hereunder or by resolution of the COMMITTEE;
provided, however, that, notwithstanding the foregoing, a "CHANGE IN CONTROL"
shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the EXCHANGE ACT, but excluding any benefit plan for EMPLOYEES or any
trustee, agent or other fiduciary for any such plan acting in such person's
capacity as such fiduciary), directly or indirectly, becomes the beneficial
owner of securities of PG&E CORPORATION representing twenty percent (20%) or
more of the combined voting power of PG&E CORPORATION's then outstanding
securities;
(b) during any two consecutive years, individuals who at the beginning
of such a period constitute the BOARD OF DIRECTORS cease for any reason to
constitute at least a majority of the BOARD OF DIRECTORS, unless the election,
or the nomination for election by the shareholders of PG&E CORPORATION, of each
new DIRECTOR was approved by a vote of at least two-thirds (2/3) of the
DIRECTORS then still in office who were DIRECTORS at the beginning of the
period; or
(c) the shareholders of PG&E CORPORATION shall have approved (i) any
consolidation or merger of PG&E CORPORATION in which PG&E CORPORATION is not the
continuing or surviving corporation or pursuant to which shares of COMMON STOCK
are converted into cash, securities or other property, other than a
A-8
<PAGE>
merger of PG&E CORPORATION in which the holders of the COMMON STOCK immediately
prior to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the CORPORATION, or
(iii) any plan or proposal for the liquidation or dissolution of PG&E
CORPORATION.
Notwithstanding the foregoing, the phrase "CHANGE IN CONTROL" shall
not apply to any reorganization or merger initiated voluntarily by PG&E
CORPORATION in which PG&E CORPORATION is the continuing surviving entity.
17. Listing and Registration of Shares
----------------------------------
Each OPTION shall be subject to the requirement that if at any time
the COMMITTEE shall determine, in its discretion, that the listing, registration
or qualification of the shares covered thereby under any securities exchange or
under any state or federal law or the consent or approval of any governmental
regulatory body, including the California Public Utilities Commission, is
necessary or desirable as a condition of, or in connection with, the granting of
such OPTION or the issue or purchase of shares thereunder, such OPTION may not
be exercised in whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the COMMITTEE.
18. Amendment and Termination of the Plan and Options
-------------------------------------------------
The BOARD OF DIRECTORS or the COMMITTEE may at any time suspend,
terminate, modify or amend the PLAN in any respect; provided, however, that, to
the extent necessary and desirable to comply with RULE 16b-3 or with Section 422
of the CODE (or any other applicable law or regulation, including the
requirements of any stock exchange on which the COMMON STOCK is listed or
quoted), shareholder approval of any PLAN amendment shall be obtained in such a
manner and to such a degree as is required by the applicable law or regulation.
No suspension, termination, modification or amendment of the PLAN may,
without the consent of the OPTIONEE, adversely affect his or her rights under
OPTIONS theretofore granted to such OPTIONEE. In the event of amendments to the
CODE or applicable rules or regulations relating to ISOS subsequent to the date
hereof, the CORPORATION may amend the PLAN, and the CORPORATION and OPTIONEES
holding OPTION agreements may agree to amend outstanding OPTION agreements, to
conform to such amendments.
The COMMITTEE may make such amendments or modifications in the terms
and conditions of any OPTION as it may deem advisable, or cancel or annul any
grant of an OPTION; provided, however, that no such amendment, modification,
cancellation or
A-9
<PAGE>
annulment may, without the consent of the OPTIONEE, adversely affect his or her
rights under such OPTION; and provided further the COMMITTEE may not reduce the
OPTION PRICE or purchase price of any OPTION or OPTION below the original OPTION
PRICE or purchase price.
Notwithstanding the foregoing, the COMMITTEE reserves the right, in
its sole discretion, to (i) convert any outstanding ISOS to NON-QUALIFIED STOCK
OPTIONS, (ii) to require a OPTIONEE to forfeit any unexercised or unpurchased
OPTIONS, any shares received or purchased pursuant to an OPTION, or any gains
realized by virtue of the receipt of an OPTION in the event that such OPTIONEE
competes against the CORPORATION, and (iii) to cancel or annul any grant of an
OPTION in the event of a OPTIONEE'S TERMINATION FOR CAUSE. For purposes of the
PROGRAM, "TERMINATION FOR CAUSE" shall include, but not be limited to,
termination because of dishonesty, criminal offense or violation of a work rule,
and shall be determined by, and in the sole discretion of, the COMMITTEE.
19. Effective Date of the Plan and Duration
---------------------------------------
The PLAN first became effective as of January 1, 1992. It has since
been amended and restated. The amended and restated PLAN became effective as of
January 1, 1996, upon approval by the shareholders of Pacific Gas and Electric
Company at its Annual Meeting on April 17, 1996. Effective January 1, 1997, the
PLAN was assumed by PG&E CORPORATION. Unless terminated sooner pursuant to
Section 18 hereof, the PLAN shall terminate on December 31, 2005.
20. Definitions
-----------
a. BOARD OF DIRECTORS means the Board of Directors of PG&E CORPORATION.
------------------
b. CHANGE IN CONTROL has the meaning set forth in Section 16 hereof.
-----------------
c. CHIEF EXECUTIVE OFFICER means the Chief Executive Officer of PG&E
-----------------------
CORPORATION.
d. CODE means the Internal Revenue Code of 1986, as amended from time to
----
time.
e. COMMITTEE means the Nominating and Compensation Committee of the BOARD
---------
OF DIRECTORS or any successor to such committee.
f. COMMON STOCK means common shares of PG&E CORPORATION with no par value
------------
and any class of common shares into which such common shares hereafter
may be converted.
A-10
<PAGE>
g. CONSULTANT means any person, including an advisor, who is engaged by
----------
the CORPORATION to render services.
h. CORPORATION means PG&E CORPORATION, and any parent corporation (as
-----------
defined in Section 424(e) of the CODE) or subsidiary corporation (as
defined in Section 424(f) of the CODE).
i. DEA means a Dividend Equivalent Account described in Section 9 hereof.
---
j. DIRECTOR means any person who is a member of the BOARD OF DIRECTORS or
--------
the Board of Directors of any parent corporation (as defined in
Section 424(e) of the CODE) which may hereafter be established,
including an advisory, emeritus or honorary director.
k. DIVIDEND EQUIVALENT means a right that entitles the OPTIONEE to
-------------------
receive cash or COMMON STOCK based on the dividends declared on the
COMMON STOCK covered by such right.
l. ELIGIBLE PARTICIPANT means any KEY EMPLOYEE. It also means, if so
--------------------
identified by the COMMITTEE (or by the CHIEF EXECUTIVE OFFICER, in the
case of OPTIONS granted by the CHIEF EXECUTIVE OFFICER to certain
ELIGIBLE PARTICIPANTS pursuant to Section 2 hereof), other EMPLOYEES,
DIRECTORS, CONSULTANTS, employees or consultants of any affiliates of
PG&E CORPORATION, and other persons whose participation in the PROGRAM
is deemed by the COMMITTEE (or by the CHIEF EXECUTIVE OFFICER, in the
case of OPTIONS granted by the CHIEF EXECUTIVE OFFICER to certain
ELIGIBLE PARTICIPANTS pursuant to Section 2 hereof) to be in the best
interests of the CORPORATION; provided, however, that DIRECTORS who
are not EMPLOYEES shall not be ELIGIBLE PARTICIPANTS for purposes of
the PLAN.
m. EMPLOYEE means any person who is employed by the CORPORATION. The
--------
payment of a director's fee or consulting fee by the CORPORATION shall
not be sufficient to constitute "employment" by the CORPORATION.
n. ERISA means the Employee Retirement Income Security Act of 1974, as
-----
amended.
o. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
------------
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<PAGE>
p. FAIR MARKET VALUE means the closing price of the COMMON STOCK reported
-----------------
on the New York Stock Exchange Composite Transactions for the date
specified for determining such value.
q. ISO means an OPTION intended to qualify as an incentive stock option
---
under Section 422 of the CODE.
r. KEY EMPLOYEE means the Corporate Secretary, Treasurer, Vice Presidents
------------
and other executive officers of PG&E CORPORATION above the rank of
Vice President. It also means, if so identified by the COMMITTEE (or
by the CHIEF EXECUTIVE OFFICER, in the case of OPTIONS granted by the
CHIEF EXECUTIVE OFFICER to certain ELIGIBLE PARTICIPANTS pursuant to
Section 2 hereof), executive officers of wholly-owned subsidiaries of
PG&E CORPORATION (including subsidiaries which become such after
adoption of the PROGRAM) and any other key management employee of PG&E
CORPORATION or any wholly-owned subsidiary of PG&E CORPORATION.
s. NON-EMPLOYEE DIRECTOR means a DIRECTOR who is not an EMPLOYEE.
---------------------
t. NON-QUALIFIED STOCK OPTION means any OPTION which is not an ISO.
--------------------------
u. OPTION means an option to purchase shares of COMMON STOCK granted
------
under the PLAN.
v. OPTIONEE means the ELIGIBLE PARTICIPANT receiving the OPTION, or his
--------
or her legal representative, legatees, distributees or alternate
payees, as the case may be.
w. OPTION PRICE means the purchase price for the COMMON STOCK upon
------------
exercise of an OPTION.
x. PG&E CORPORATION means PG&E CORPORATION, a California corporation.
----------------
y. PLAN means this Stock Option Plan as amended and restated herein and
----
as may be amended from time to time, or any successor plan which the
COMMITTEE may adopt from time to time with respect to the grant of
OPTIONS under the PROGRAM.
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<PAGE>
z. PROGRAM means the PG&E Corporation Long-Term Incentive Program, as
-------
amended and restated effective as of January 1, 1997 and as may be
amended from time to time, pursuant to which the PLAN is adopted.
aa. RETIREMENT means the Actual Retirement Date under the Pacific Gas and
----------
Electric Company Retirement Plan.
ab. RULE 16b-3 means Rule 16b-3 under the EXCHANGE ACT or any successor to
----------
Rule 16b-3, as in effect when discretion is being exercised with
respect to the PLAN.
ac. SAR means a stock appreciation right whose value is based on the
---
increase in the FAIR MARKET VALUE of the COMMON STOCK covered by such
right.
ad. SECTION 16 OFFICER means any person who is designated by the BOARD OF
------------------
DIRECTORS as an executive officer of PG&E CORPORATION and any other
person who is designated as an officer of PG&E CORPORATION for
purposes of Section 16 of the EXCHANGE ACT.
ae. TANDEM refers to a DIVIDEND EQUIVALENT or SAR (as the case may be)
------
granted in conjunction with an OPTION.
af. TERMINATION occurs when an EMPLOYEE ceases to be employed by the
-----------
CORPORATION as a common law employee, when a DIRECTOR ceases to be a
member of the BOARD OF DIRECTORS or the Board of Directors of any
parent corporation which may hereafter be established (as the case may
be), or when the relationship between the CORPORATION and a CONSULTANT
or other ELIGIBLE PARTICIPANT terminates, as the case may be.
ag. TERMINATION FOR CAUSE has the meaning set forth in Section 12 hereof.
---------------------
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<PAGE>
EXHIBIT B
PERFORMANCE UNIT PLAN
OF
PG&E CORPORATION
___________________________
This is the controlling and definitive statement of the Performance Unit
Plan ("PLAN"/1/) for ELIGIBLE EMPLOYEES of PG&E CORPORATION ("CORPORATION") and
such other companies, affiliates, subsidiaries, or associations as the BOARD OF
DIRECTORS may designate from time to time. The PLAN was first adopted by the
BOARD in 1989 and was effective January 1, 1990. It has since been amended from
time to time.
ARTICLE I
DEFINITIONS
-----------
1.01 Board of Directors or Board shall mean the BOARD OF DIRECTORS of the
------------------
CORPORATION or, when appropriate, any committee of the BOARD which has been
delegated the authority to take action with respect to the PLAN.
1.02 Committee shall mean the Nominating and Compensation Committee of the
---------
BOARD OF DIRECTORS.
1.03 Corporation shall mean PG&E CORPORATION, a California corporation.
-----------
1.04 Eligible Employee shall mean employees of the CORPORATION who are
-----------------
officers at the vice presidential level or above, the corporate secretary, the
controller, and the treasurer of the CORPORATION, and such other employees of
the CORPORATION, other companies, affiliates, subsidiaries, or associations as
may be designated by the COMMITTEE.
1.05 Performance Targets shall mean the annual CORPORATION financial and
-------------------
operational goals adopted by the COMMITTEE to be used in determining awards
under the PLAN.
1.06 Plan shall mean the Performance Unit Plan ("PUP") as set forth herein
----
and as may be amended from time to time.
- -----------------
/1/ Words in all capitals are defined in Article I.
B-1
<PAGE>
1.07 Plan Administrator shall mean the COMMITTEE or such individual or
------------------
individuals as that COMMITTEE may appoint to handle the day-to-day affairs of
the PLAN.
1.08 Price shall mean the average market price of STOCK for the last 30-
-----
day period of the YEAR preceding the YEAR in which UNITS are payable.
1.09 PUP Units shall mean the units granted to ELIGIBLE EMPLOYEES who
---------
participate in the PLAN. A PUP UNIT has the equivalent value of the current
market price of a share of STOCK at the time of grant.
1.10 Stock shall mean the common stock of the CORPORATION and any class of
-----
common shares into which such STOCK hereafter may be converted.
1.11 Vesting Period shall mean the three calendar YEARS commencing with
--------------
the YEAR in which PUP UNITS are granted.
1.12 Year shall mean a calendar year.
----
ARTICLE II
2.01 Prior to the beginning of each YEAR, the COMMITTEE shall determine
whether PUP UNITS will be granted for such YEAR, the ELIGIBLE EMPLOYEES to whom
PUP UNITS will be granted, and the number of PUP UNITS to be granted to each
ELIGIBLE EMPLOYEE. Employees who become ELIGIBLE EMPLOYEES after the beginning
of a YEAR shall be entitled to a prorata grant of PUP UNITS.
2.02 At the same time that the COMMITTEE makes its determination as to the
granting of PUP UNITS, it shall also establish PERFORMANCE TARGETS. Although it
is intended that PERFORMANCE TARGETS will not change in the course of the YEAR,
the COMMITTEE reserves the right to modify or adjust a previously set
PERFORMANCE TARGET if, in its sole discretion, extraordinary events warrant such
modification or adjustment; provided, however, that no such modification or
adjustment shall increase the amount of any payment that would otherwise be due
based upon performance as measured against the original PERFORMANCE TARGET.
2.03 Each grant of PUP UNITS shall have its own VESTING PERIOD. Subject
to modification as measured against a given YEAR's applicable PERFORMANCE
TARGET, each grant of PUP UNITS shall be payable as follows:
a. One-third after the end of the first YEAR of the VESTING PERIOD;
b. One-third after the end of the second YEAR of the VESTING PERIOD; and
c. One-third after the end of the third YEAR of the VESTING PERIOD.
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2.04 To determine the number of PUP UNITS earned, the applicable
PERFORMANCE TARGET shall be the PERFORMANCE TARGET for the YEAR in which the PUP
UNITS vest. Performance as measured against the applicable PERFORMANCE TARGET
for a YEAR shall modify all PUP UNITS that vest at the end of such YEAR. The
PERFORMANCE TARGETS established by the COMMITTEE may modify the number of UNITS
earned from 0% to 200% of the number of vested UNITS.
2.05 ELIGIBLE EMPLOYEES shall receive a cash payment as soon as
practicable following the YEAR PUP UNITS vest pursuant to the schedule set forth
in Section 2.03. The amount of the payment shall be equal to the product of the
number of PUP UNITS earned multiplied by the PRICE of STOCK.
2.06 Each time that the CORPORATION declares a dividend on its STOCK, an
amount equal to the dividend multiplied by an ELIGIBLE EMPLOYEE's outstanding,
but unearned PUP UNITS, shall be accrued on behalf of each ELIGIBLE EMPLOYEE.
As soon as practicable following the end of each YEAR, ELIGIBLE EMPLOYEES shall
receive a cash payment of the dividends accrued for that YEAR, modified by
performance for that YEAR as measured under Section 2.04.
2.07 An ELIGIBLE EMPLOYEE may elect to defer the payment of PUP UNITS
and/or dividends paid on PUP UNITS by making a timely election under the
Deferred Compensation Plan. Deferrals of benefits payable under this Plan shall
be subject to the rules contained in the Deferred Compensation Plan governing
elections to defer and receipt of deferred amounts.
ARTICLE III
3.01 Retirement. Upon retirement under the terms of Pacific Gas and
----------
Electric Company's Retirement Plan, all outstanding PUP UNITS continue to be
payable according to the terms of the PLAN. Thus, the number of UNITS
eventually earned by a retired employee is still subject to modification
depending on the extent to which applicable PERFORMANCE TARGETS are met during
the YEAR preceding the January in which UNITS become payable under the schedule
of Section 2.03. A retired employee is not entitled to receive grants of PUP
UNITS after normal or early retirement date, as those terms are defined under
Pacific Gas and Electric Company's Retirement Plan.
3.02 Disability. If an ELIGIBLE EMPLOYEE is both disabled and entitled to
----------
receive benefits under Pacific Gas and Electric Company's Long Term Disability
Plan, UNITS granted prior to the date of disability shall continue to be payable
according to the terms of this PLAN. An ELIGIBLE EMPLOYEE is not entitled to
receive grants of PUP UNITS after the date of disability as determined under the
provisions of the Long Term Disability Plan. If an ELIGIBLE EMPLOYEE ceases to
be an ELIGIBLE EMPLOYEE because of disability and is not entitled to receive
benefits under Pacific Gas and Electric
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Company's Long Term Disability Plan, all outstanding grants of PUP UNITS become
vested and payable as soon as practicable in the YEAR following the YEAR in
which the ELIGIBLE EMPLOYEE ceases to be an ELIGIBLE EMPLOYEE. All of the UNITS
payable shall be subject to modification based upon performance as measured
against the PERFORMANCE TARGET for the YEAR in which the ELIGIBLE EMPLOYEE
ceases to be an ELIGIBLE EMPLOYEE.
3.03 Death. In the event of the death of an ELIGIBLE EMPLOYEE, all
-----
outstanding grants of PUP UNITS held by the ELIGIBLE EMPLOYEE at the date of
death shall become vested and payable as soon as practicable in the YEAR
following the YEAR of death. All of the UNITS payable after an ELIGIBLE
EMPLOYEE's death shall be subject to modification based upon performance as
measured against the PERFORMANCE TARGET for the YEAR in which the death of the
ELIGIBLE EMPLOYEE occurs.
3.04 Termination. If an ELIGIBLE EMPLOYEE ceases to be an ELIGIBLE
-----------
EMPLOYEE for any reason other than retirement as defined under Pacific Gas and
Electric Company's Retirement Plan, disability, or death, all outstanding grants
of PUP UNITS shall be canceled as of the date that the ELIGIBLE EMPLOYEE ceases
to be an ELIGIBLE EMPLOYEE.
ARTICLE IV
ADMINISTRATIVE PROVISIONS
-------------------------
4.01 Administration. The PLAN shall be administered by the PLAN
--------------
ADMINISTRATOR who shall have the authority to interpret the PLAN and make such
rules as it deems appropriate. The PLAN ADMINISTRATOR shall have the duty and
responsibility of maintaining records, making the requisite calculations, and
disbursing payments hereunder. The PLAN ADMINISTRATOR's interpretations,
determinations, rules, and calculations shall be final and binding on all
persons and parties concerned.
4.02 Amendment and Termination. The CORPORATION may amend or terminate
-------------------------
the PLAN at any time, provided, however, that no such amendment or termination
shall adversely affect PUP UNITS which an ELIGIBLE EMPLOYEE has earned prior to
the date of such amendment or termination. PUP UNITS outstanding but unearned
at the date of any such amendment or termination may, in the sole discretion of
the CORPORATION, be canceled, and the CORPORATION shall have no obligation to
provide a substitute benefit of lesser, equal, or greater value.
4.03 Nonassignability of Benefits. The benefits payable under this PLAN
----------------------------
or the right to receive future benefits under this PLAN may not be anticipated,
alienated, pledged, encumbered, or subject to any charge or legal process, and
if any attempt is made to do so, or a person eligible for any benefits becomes
bankrupt, the interest under the PLAN of the
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<PAGE>
person affected may be terminated by the PLAN ADMINISTRATOR which, in its sole
discretion, may cause the same to be held if applied for the benefit of one or
more of the dependents of such person or make any other disposition of such
benefits that it deems appropriate.
4.04 No Guarantee of Employment. Nothing contained in this PLAN shall be
--------------------------
construed as a contract of employment between the CORPORATION or the ELIGIBLE
EMPLOYEE, or as a right of the ELIGIBLE EMPLOYEE to be continued in the employ
of the CORPORATION, to remain as an officer of the CORPORATION, or as a
limitation on the right of the CORPORATION to discharge any of its employees,
with or without cause.
4.05 Benefits Unfunded and Unsecured. The benefits under this PLAN are
-------------------------------
unfunded, and the interest under this PLAN of any ELIGIBLE EMPLOYEE and such
ELIGIBLE EMPLOYEE's right to receive a distribution of benefits under this PLAN
shall be an unsecured claim against the general assets of the CORPORATION.
4.06 Applicable Law. All questions pertaining to the construction,
--------------
validity, and effect of the PLAN shall be determined in accordance with the laws
of the United States, and to the extent not preempted by such laws, by the laws
of the State of California.
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EXHIBIT C
PG&E CORPORATION
RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(As adopted effective as of January 1, 1996)
1. Purpose of the Plan
-------------------
This is the controlling and definitive statement of the PG&E
Corporation Restricted Stock Plan for Non-Employee Directors (hereinafter called
the PLAN/1/). The purpose of the PLAN is to advance the interests of the
CORPORATION by providing NON-EMPLOYEE DIRECTORS with financial incentives to
promote the success of its long-term (five to ten years) business objectives,
and to increase their proprietary interest in the success of the CORPORATION.
Inasmuch as the PLAN is designed to encourage financial performance and to
improve the value of shareholders' investment in PG&E CORPORATION, the costs of
the PLAN will be funded from corporate earnings.
2. Restricted Stock Grants to Non-Employee Directors
-------------------------------------------------
(a) All grants of DIRECTOR RESTRICTED STOCK under the PLAN shall be
automatic and non-discretionary, and shall be made strictly in accordance with
the provisions contained herein. No person shall have any discretion to select
which NON-EMPLOYEE DIRECTORS shall be granted DIRECTOR RESTRICTED STOCK or to
determine the number of shares of DIRECTOR RESTRICTED STOCK granted.
(b) As soon as practicable following the receipt of all required
shareholder and regulatory approvals in 1996 and on the first business day of
each calendar year thereafter during the duration of the PLAN, each person who
is a NON-EMPLOYEE DIRECTOR on the first business day of the applicable calendar
year shall receive a grant of DIRECTOR RESTRICTED STOCK in an amount to be
determined in accordance with the formula set forth in this Section 2(b). The
number of shares of DIRECTOR RESTRICTED STOCK to be granted to each NON-EMPLOYEE
DIRECTOR each calendar year shall be determined by (i) dividing ten thousand
dollars ($10,000) by the FAIR MARKET VALUE of the COMMON STOCK on the first
business day of the applicable calendar year, and (ii) rounding the resulting
number down to the nearest whole share. No person shall receive more than one
(1) grant of DIRECTOR RESTRICTED STOCK during any calendar year.
(c) Any provisions contained in the PROGRAM or in the PLAN stating the
amount or price of INCENTIVE AWARDS to be granted to NON-EMPLOYEE DIRECTORS and
specifying the timing of such awards, or any provisions setting forth a
- -------------------
/1/ Capitalized words are defined in Section 12 hereof.
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<PAGE>
formula that determines the amount, price or timing of such awards, shall not be
amended more than once every six (6) months, other than to comport with changes
in the CODE, ERISA or the rules thereunder.
3. Shares of Stock Subject to the Plan
-----------------------------------
There shall be reserved for use under the PLAN and for the grant of
any other incentive awards pursuant to the PROGRAM (subject to the provisions of
Section 7 hereof) a total of 23,289,230 shares of COMMON STOCK, which shares may
be authorized but unissued shares of COMMON STOCK or issued shares of COMMON
STOCK which shall have been reacquired by PG&E CORPORATION.
4. Vesting of Director Restricted Stock
------------------------------------
(a) Shares of DIRECTOR RESTRICTED STOCK shall vest cumulatively as
follows: (i) twenty percent (20%) of such shares on the first (1st) anniversary
of the date of grant; (ii) forty percent (40%) of such shares on the second
(2nd) anniversary of the date of grant; (iii) sixty percent (60%) of such shares
on the third (3rd) anniversary of the date of grant; (iv) eighty percent (80%)
of such shares on the fourth (4th) anniversary of the date of grant; and (v) one
hundred percent (100%) of such shares on the fifth (5th) anniversary of the date
of grant. Solely for purposes of determining the vesting of shares of DIRECTOR
RESTRICTED STOCK granted in 1996, the date of grant of such shares shall be
deemed to be the first business day of 1996. For all other purposes under the
PLAN, the date of grant of such shares shall be the actual date on which such
shares were granted.
(b) Shares of DIRECTOR RESTRICTED STOCK may not be resold or otherwise
transferred by a GRANTEE until such shares are vested in accordance with the
provisions of this Section 4.
5. Dividend, Voting and Other Shareholder Rights
---------------------------------------------
Except as otherwise provided in the PLAN, each GRANTEE shall have all
of the rights of a shareholder of PG&E CORPORATION with respect to all
outstanding shares of DIRECTOR RESTRICTED STOCK registered in his or her name,
whether or not such shares are vested, including the right to receive dividends
and other distributions paid or made with respect to such shares and the right
to vote such shares.
6. Termination of Status as a Non-Employee Director
------------------------------------------------
(a) In the event of a TERMINATION by reason of disability or death,
all shares of DIRECTOR RESTRICTED STOCK held by the GRANTEE shall become fully
vested, notwithstanding the provisions of Section 4(a) hereof, and the GRANTEE
(or the GRANTEE'S estate or a person who acquired the shares of DIRECTOR
RESTRICTED STOCK by bequest or inheritance) shall have the right to resell or
transfer such shares at any
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<PAGE>
time. The term "disability" shall, for the purposes of the PLAN, be defined in
Section 22(e)(3) of the CODE.
(b) In the event of a TERMINATION by reason of MANDATORY RETIREMENT,
all shares of DIRECTOR RESTRICTED STOCK held by the GRANTEE shall become fully
vested, notwithstanding the provisions of Section 4(a) hereof, and the GRANTEE
shall have the right to resell or transfer such shares at any time.
(c) In the event of a TERMINATION for any reason other than those
specified in subparagraphs (a) and (b) above, (i) any unvested shares of
DIRECTOR RESTRICTED STOCK granted hereunder shall be forfeited; (ii) the GRANTEE
shall return to the CORPORATION for cancellation any stock certificates
representing such forfeited shares; (iii) all such forfeited shares shall be
deemed to be canceled and no longer outstanding as of the date of TERMINATION;
and (vi) from and after the date of TERMINATION, the GRANTEE shall cease to be a
shareholder with respect to such forfeited shares and shall have no dividend,
voting or other rights with respect thereto.
(d) Notwithstanding the provisions of subparagraphs (a) through (c)
above, the COMMITTEE may, in its sole discretion, establish different terms and
conditions pertaining to the effect of TERMINATION, to the extent permitted by
applicable federal and state law.
7. Adjustments Upon Changes in Number or Value of Shares of Common Stock
---------------------------------------------------------------------
If there are any changes in the number or value of shares of COMMON
STOCK by reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, mergers, consolidations or other events that materially
increase or decrease the number or value of issued and outstanding shares of
COMMON STOCK, the COMMITTEE may make such adjustments as it shall deem
appropriate, in order to prevent dilution or enlargement of rights.
8. Non-Transferability of Unvested Director Restricted Stock
---------------------------------------------------------
Shares of DIRECTOR RESTRICTED STOCK that have not vested in accordance
with the provisions of Section 4(a) hereof shall not be transferable by the
GRANTEE otherwise than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined by the CODE, Title I
of ERISA or the rules thereunder.
9. Change in Control
-----------------
Upon the occurrence of a CHANGE IN CONTROL (as defined below), any
time periods relating to the vesting of any shares if DIRECTOR RESTRICTED STOCK
granted hereunder shall be accelerated so that all such shares immediately
become fully
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<PAGE>
vested, unless the COMMITTEE in its sole discretion determines that such CHANGE
IN CONTROL will not adversely impact the GRANTEES of DIRECTOR RESTRICTED STOCK
hereunder and is in the best interests of the shareholders of PG&E CORPORATION.
The COMMITTEE may make such further provisions with respect to a CHANGE IN
CONTROL as it shall deem equitable and in the best interests of the shareholders
of PG&E CORPORATION. Such provision may be made in any agreement relating to
any DIRECTOR RESTRICTED STOCK granted hereunder, by amendment to any such
agreement or by resolution of the COMMITTEE.
The phrase "CHANGE IN CONTROL" shall have such meaning as ascribed
thereto from time to time by the COMMITTEE and set forth in any agreement
relating to any DIRECTOR RESTRICTED STOCK granted hereunder or by resolution of
the COMMITTEE; provided, however, that, notwithstanding the foregoing, a "CHANGE
IN CONTROL" shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the EXCHANGE ACT, but excluding any benefit plan for EMPLOYEES or any
trustee, agent or other fiduciary for any such plan acting in such person's
capacity as such fiduciary), directly or indirectly, becomes the beneficial
owner of securities of PG&E CORPORATION representing twenty percent (20%) or
more of the combined voting power of PG&E CORPORATION's then outstanding
securities;
(b) during any two consecutive years, individuals who at the beginning
of such a period constitute the BOARD OF DIRECTORS cease for any reason to
constitute at least a majority of the BOARD OF DIRECTORS, unless the election,
or the nomination for election by the shareholders of PG&E CORPORATION, of each
new DIRECTOR was approved by a vote of at least two-thirds (2/3) of the
DIRECTORS then still in office who were DIRECTORS at the beginning of the
period; or
(c) the shareholders of PG&E CORPORATION shall have approved (i) any
consolidation or merger of PG&E CORPORATION in which PG&E CORPORATION is not the
continuing or surviving corporation or pursuant to which shares of COMMON STOCK
are converted into cash, securities or other property, other than a merger of
PG&E CORPORATION in which the holders of the COMMON STOCK immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the CORPORATION, or
(iii) any plan or proposal for the liquidation or dissolution of PG&E
CORPORATION.
Notwithstanding the foregoing, the phrase "CHANGE IN CONTROL" shall
not apply to any reorganization or merger initiated voluntarily by PG&E
CORPORATION in which PG&E CORPORATION is the continuing surviving entity.
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10. Amendment and Termination of the Plan
-------------------------------------
Except as provided in Section 2(c) hereof, the BOARD OF DIRECTORS or
the COMMITTEE may at any time suspend, terminate, modify or amend the PLAN in
any respect; provided, however, that, to the extent necessary and desirable to
comply with RULE 16b-3 or with the CODE (or any other applicable law or
regulation, including the requirements of any stock exchange on which the COMMON
STOCK is listed or quoted), shareholder approval of any PLAN amendment shall be
obtained in such a manner and to such a degree as is required by the applicable
law or regulation.
No suspension, termination, modification or amendment of the PLAN may,
without the consent of the GRANTEE, adversely affect his or her rights with
respect to DIRECTOR RESTRICTED STOCK theretofore granted to such GRANTEE.
Except as provided in Section 2(c) hereof, the COMMITTEE may make such
amendments or modifications in the terms and conditions of any grant of DIRECTOR
RESTRICTED STOCK as it may deem advisable, or cancel or annul any grant of
DIRECTOR RESTRICTED STOCK; provided, however, that no such amendment,
modification, cancellation or annulment may, without the consent of the GRANTEE,
adversely affect his or her rights with respect to such grant.
11. Effective Date of the Plan and Duration
---------------------------------------
This PLAN became effective as of January 1, 1996, upon approval by the
shareholders of Pacific Gas and Electric Company at its Annual Meeting on April
17, 1996. Effective January 1, 1997, the PLAN was assumed by PG&E CORPORATION.
Unless terminated sooner pursuant to Section 10 hereof, the PLAN shall terminate
on December 31, 2005.
12. Definitions
-----------
a. BOARD OF DIRECTORS means the Board of Directors of PG&E CORPORATION.
------------------
b. CHANGE IN CONTROL has the meaning set forth in Section 9 hereof.
-----------------
c. CODE means the Internal Revenue Code of 1986, as amended from time to
----
time.
d. COMMITTEE means the Nominating and Compensation Committee of the BOARD
---------
OF DIRECTORS or any successor to such committee.
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e. COMMON STOCK means common shares of PG&E CORPORATION with no par value
------------
and any class of common shares into which such common shares hereafter
may be converted.
f. CORPORATION means PG&E CORPORATION, and any parent corporation (as
-----------
defined in Section 424(e) of the CODE) or subsidiary corporation (as
defined in Section 424(f) of the CODE).
g. DIRECTOR means any person who is a member of the BOARD OF DIRECTORS or
--------
the Board of Directors of any parent corporation (as defined in
Section 424(e) of the CODE) which may hereafter be established,
including an advisory, emeritus or honorary director.
h. DIRECTOR RESTRICTED STOCK means RESTRICTED STOCK granted to a NON-
-------------------------
EMPLOYEE DIRECTOR under the PLAN.
i. EMPLOYEE means any person who is employed by the CORPORATION. The
--------
payment of a director's fee or consulting fee by the CORPORATION shall
not be sufficient to constitute "employment" by the CORPORATION.
j. ERISA means the Employee Retirement Income Security Act of 1974, as
-----
amended.
k. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
------------
l. FAIR MARKET VALUE means the closing price of the COMMON STOCK reported
-----------------
on the New York Stock Exchange Composite Transactions for the date
specified for determining such value.
m. GRANTEE means the NON-EMPLOYEE DIRECTOR receiving the DIRECTOR
-------
RESTRICTED STOCK, or his or her legal representative, legatees,
distributees or alternate payees, as the case may be.
n. MANDATORY RETIREMENT means retirement as a DIRECTOR at age 70 or at
--------------------
such other age as may be specified in the retirement policy for the
BOARD OF DIRECTORS or the Board of Directors of any parent corporation
which may hereafter be established (as the case may be), as in effect
at the time of a NON-EMPLOYEE DIRECTOR'S TERMINATION.
o. NON-EMPLOYEE DIRECTOR means a DIRECTOR who is not an EMPLOYEE.
---------------------
p. PG&E CORPORATION means PG&E CORPORATION, a California corporation.
----------------
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<PAGE>
q. PLAN means this Restricted Stock Plan for Non-Employee Directors, as
----
may be amended from time to time, or any successor plan which the
COMMITTEE may adopt from time to time with respect to the grant of
DIRECTOR RESTRICTED STOCK under the PROGRAM.
r. PROGRAM means the PG&E Corporation Long-Term Incentive Program, as
-------
amended and restated effective as of January 1, 1996 and as may be
amended from time to time, pursuant to which this PLAN is adopted.
s. RESTRICTED STOCK means COMMON STOCK that is subject to forfeiture by
----------------
the GRANTEE to the CORPORATION under such circumstances as may be
specified by the COMMITTEE.
t. RULE 16b-3 means Rule 16b-3 under the EXCHANGE ACT or any successor to
----------
Rule 16b-3, as in effect when discretion is being exercised with
respect to the PLAN.
u. TERMINATION occurs when a NON-EMPLOYEE DIRECTOR ceases to be a member
-----------
of the BOARD OF DIRECTORS or the Board of Directors of any parent
corporation which may hereafter be established (as the case may be).
C-7
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
1. Pacific Gas and Electric Company, a California corporation ("PG&E"). PG&E
has the following subsidiaries:
1.1 Alberta and Southern Gas Co. Ltd., incorporated under the laws of
Alberta, Canada
1.1.1 Alberta and Southern Gas Marketing Inc., incorporated under the
laws of Alberta, Canada
1.2 Mission Trail Insurance (Cayman) Ltd., incorporated under the laws of
the Cayman Islands
1.3 Natural Gas Corporation of California, a California corporation
1.3.1 NGC Production Company, a California corporation
1.4 Pacific Conservation Services Company, a California corporation
1.5 Calaska Energy Company, a California corporation
1.6 Eureka Energy Company, a California corporation
1.7 Standard Pacific Gas Line Incorporated, a California corporation
1.8 Pacific California Gas System, Inc., a California corporation
1.9 Pacific Energy Fuels Company, a California corporation
1.10 Pacific Gas Properties Company, a California corporation
