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The
LTIP and Other Agreements
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This
Agreement constitutes the entire understanding between you and
PG&E
Corporation regarding the Restricted Stock, subject to the terms
of the
LTIP. Any prior agreements, commitments or negotiations are
superseded. In the event of any conflict or inconsistency
between the provisions of this Agreement and the LTIP, the LTIP
shall
govern. Capitalized terms that are not defined in this
Agreement are defined in the LTIP. For purposes of this Agreement,
employment with PG&E Corporation shall mean employment with any member
of the Participating Company Group.
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Grant
of Restricted Stock
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PG&E
Corporation grants you the number of shares of Restricted Stock
shown on
the cover sheet of this Agreement. The shares of Restricted
Stock are subject to the terms and conditions of this Agreement
and the
LTIP.
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Lapse
of Restrictions
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As
long as you remain employed with PG&E Corporation, the restrictions
will lapse as to 40 percent of the total number of shares of Restricted
Stock originally subject to this Agreement, as shown above on the
cover
sheet, on each of the first and second anniversaries of the Date
of
Grant. The restrictions on the remaining 20 percent of the
total number of shares will lapse on the third anniversary of the
Date of
Grant. Except as described below, all shares of Restricted
Stock subject to this Agreement as to which the restrictions have
not
lapsed shall be forfeited upon termination of your
employment.
To
the extent this Agreement provides for the continued lapse of restrictions
following the termination of employment, such continued lapse shall
be
subject to your continued compliance with certain post-employment
restrictions.
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Voluntary
Termination
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In
the event that you terminate your employment with PG&E Corporation
voluntarily, you will automatically forfeit to PG&E Corporation all of
the shares of Restricted Stock as to which the restrictions have
not
lapsed subject to this Agreement as of the date of such
Termination.
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Termination
for Cause
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If
your employment with PG&E Corporation is terminated by PG&E
Corporation for cause, you will automatically forfeit to PG&E
Corporation all shares of Restricted Stock as to which the restrictions
have not lapsed subject to this Agreement as of the date of such
termination. In general, termination for “cause” means
termination of employment because of dishonesty, a criminal offense
or
violation of a work rule, and will be determined by and in the
sole
discretion of PG&E Corporation.
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Termination
other than for Cause
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If
your employment with PG&E Corporation is terminated by PG&E
Corporation other than for cause before the restrictions on your
Restricted Stock lapse, a prorated portion of the restrictions
will lapse
immediately in accordance with the percentage of time you were
employed
with PG&E Corporation during the three-year period governing the
restrictions (or as otherwise described below in connection with
a Change
in Control during such period). All other outstanding shares of
Restricted Stock shall automatically be forfeited to PG&E Corporation
upon such termination.
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Retirement
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In
the event of your Retirement, the restrictions on your outstanding
shares
of Restricted Stock will continue to lapse as though your employment
had
continued. You will be considered to have retired if you are
age 55 or older on the date of termination and if you were employed
by
PG&E Corporation for at least five consecutive years ending on the
date of termination of your employment.
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Death/Disability
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If
your employment terminates due to your death or disability, the
restrictions on all of your shares of Restricted Stock shall lapse
on the
date of termination due to your death or disability.
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Termination
Due to Disposition of Subsidiary
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(1)
If your employment is terminated (other than for cause or your
voluntary
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 Internal Revenue Code of
1986, as
amended (the “Code”), or (2) if your employment is terminated (other than
for cause or your voluntary termination) coincident with the sale
of all
or substantially all of the assets of a subsidiary of PG&E
Corporation, the restrictions on all shares of Restricted Stock
shall
lapse in the same manner as for a “Termination other than for Cause”
described above.
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Change
in Control
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In
the event of a Change in Control, the surviving, continuing, successor,
or
purchasing corporation or other business entity or parent thereof,
as the
case may be (the “Acquiror”), may, without your consent, either
assume or continue PG&E Corporation’s rights and obligations under
this Agreement or provide substantially equivalent awards associated
with
the Acquiror’s stock. If this Award is neither assumed nor
continued by the Acquiror or if the Acquiror does not provide a
substantially equivalent award, the restrictions on all of your
outstanding shares of Restricted Stock shall automatically lapse
and
become nonforfeitable immediately preceding, and contingent on,
the Change
in Control of PG&E Corporation.
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Termination
In Connection with a Change in Control
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If
your employment is terminated in connection with a Change in Control
within three months before the Change in Control occurs or within
two
years following the Change in Control, the restrictions on all
of your
outstanding shares of Restricted Stock (to the extent the restrictions
did
not previously lapse upon failure of the Acquiror to assume or
continue
this Award) shall lapse and become nonforfeitable on the date of
termination of your employment. PG&E Corporation shall have
the sole discretion to determine whether termination of your employment
was made in connection with a Change in Control.
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Escrow
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The
certificates for the Restricted Stock shall be deposited in escrow
with
the Corporate Secretary of PG&E Corporation to be held in accordance
with the provisions of this paragraph. Each deposited
certificate shall be accompanied by any assignment documents PG&E
Corporation may require you to execute. The deposited
certificates shall remain in escrow until such time as the certificates
are to be released or otherwise surrendered for cancellation as
discussed
below.
All
dividends, if any, on the Restricted Stock shall be held in escrow
and
subject to the same restrictions as the shares to which they
relate.
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Release
of Shares and Withholding Taxes
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The
shares of Restricted Stock held in escrow hereunder shall be subject
to
the following terms and conditions relating to their release from
escrow
or their surrender to PG&E Corporation:
· When
the restrictions as to your shares of Restricted Stock lapse as
described
above, the certificates for such shares shall be released from
escrow and
delivered to you, at your request within thirty (30) days of the
date the
restrictions lapsed.
· Upon
termination of your employment, any shares of Restricted Stock
as to which
the restrictions have not lapsed shall be forfeited and automatically
surrendered to PG&E Corporation as provided herein.
Note
that you must make arrangements acceptable to PG&E Corporation to
satisfy withholding or other taxes that may be due before your
shares will
be released to you. If you so elect, PG&E Corporation will
assist you in selling your shares through a broker so that you
can use the
sales proceeds to satisfy applicable taxes. You will receive
the remaining proceeds in cash. However, if you wish to receive
the stock certificates in lieu of selling your shares, you will
need to
make arrangements to pay the applicable taxes either by check or
through
payroll deduction. PG&E Corporation will notify you about
how to instruct PG&E Corporation to sell your shares when the
restrictions lapse or make other
arrangements.
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Code
Section 83(b) Election
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Under
Section 83(a) of the Code, the Fair Market Value of the Restricted
Stock
on the date any forfeiture restrictions applicable to such Restricted
Stock lapse will be reportable as ordinary income at that
time. For this purpose, “forfeiture restrictions” include
surrender to PG&E Corporation of Restricted Stock as described
above. You may elect to be taxed at the time the Restricted
Stock is granted to you, rather than when the restrictions lapse
by filing
an election under Section 83(b) of the Code with the Internal Revenue
Service within thirty (30) days after the Date of
Grant. Failure to make this filing within the thirty (30) day
period will result in the recognition of ordinary income by you
(in the
event the Fair Market Value of the Restricted Stock increases after
the
date of purchase) as the forfeiture restrictions
lapse. YOU ACKNOWLEDGE THAT IT IS YOUR SOLE
RESPONSIBILITY, AND NOT PG&E CORPORATION’S, TO FILE A TIMELY ELECTION
UNDER CODE SECTION 83(b). YOU ARE RELYING SOLELY ON YOUR OWN
ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE
A CODE
SECTION 83(b) ELECTION.
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Leaves
of Absence
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For
purposes of this Agreement, if you are on an approved leave of
absence
from PG&E Corporation, or a recipient of PG&E Corporation
sponsored disability benefits, you will continue to be considered
as
employed. If you do not return to active employment upon the
expiration of your leave of absence or the expiration of your PG&E
Corporation sponsored disability benefits, you will be considered
to have
voluntarily terminated your employment. See above under “Voluntary
Termination.”
PG&E
Corporation reserves the right to determine which leaves of absence
will
be considered as continuing employment and when your employment
terminates
for all purposes under this Agreement.
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Voting
and Other Rights
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Subject
to the terms of this Agreement, you shall have all the rights and
privileges of a shareholder of PG&E Corporation while the Restricted
Stock is held in escrow, including the right to vote. As
described above, all dividends, if any, on the Restricted Stock
shall be
held in escrow and subject to the same restrictions as the shares
to which
they relate.
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Restrictions
on
Issuance
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PG&E
Corporation will not issue any Restricted Stock if the issuance
of such
Restricted Stock at that time would violate any law or
regulation.
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Restrictions
on Resale and Hedge Transactions
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By
signing this Agreement, you agree not to sell any Restricted Stock
before
the restrictions lapse or sell any shares acquired under this grant
at a
time when applicable laws, regulations or Company or underwriter
trading
policies prohibit sale. In particular, in connection with any
underwritten public offering by PG&E Corporation of its equity
securities pursuant to an effective registration statement filed
under the
Securities Act of 1933, you shall not sell, make any short sale
of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise
dispose or transfer for value or agree to engage in any of the
foregoing
transactions with respect to any shares acquired under this grant
without
the prior written consent of PG&E Corporation or its underwriters, for
such period of time after the effective date of such registration
statement as may be requested by PG&E Corporation or the
underwriters.
If
the sale of shares acquired under this grant is not registered
under the
Securities Act of 1933, but an exemption is available which requires
an
investment or other representation and warranty, you shall represent
and
agree that the Shares being acquired are being acquired for investment,
and not with a view to the sale or distribution thereof, and shall
make
such other representations and warranties as are deemed necessary
or
appropriate by PG&E Corporation and its counsel.
By
your acceptance of the grant, you agree that while the Restricted
Stock is
subject to restrictions, you will not enter into a corresponding
hedging
transaction relating to PG&E Corporation’s stock nor engage in any
short sale of PG&E Corporation’s stock. This prohibition
shall not apply to transactions effected through PG&E Corporation’s
benefit plans that provide an opportunity to invest in Company
stock or
which provide compensation based on the price of Company
stock.
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No
Retention Rights
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This
Agreement is not an employment agreement and does not give you
the right
to be retained by PG&E Corporation. Except as otherwise
provided in an applicable employment agreement, PG&E Corporation
reserves the right to terminate your employment at any time and
for any
reason.
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Legends
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All
certificates that may be issued to represent the Restricted Stock
issued
under this grant shall, where applicable, have endorsed thereon
the
following legends:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER SET FORTH IN AN AGREEMENT BETWEEN PG&E CORPORATION AND THE
REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A
COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF PG&E
CORPORATION AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE CORPORATE
SECRETARY OF PG&E CORPORATION BY THE HOLDER
OF
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RECORD
OF THE SHARES REPRESENTED BY THIS CERTIFICATE.”
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Applicable
Law
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This
Agreement will be interpreted and enforced under the laws of the
State of
California.
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