2.
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PURPOSE
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3.
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ADMINISTRATION
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4.
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ELIGIBILITY; PARTICIPATION
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5.
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AMOUNT OF BENEFITS
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6.
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PAYMENT OF BENEFITS
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7.
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EMPLOYEE’S RIGHTS
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8.
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AMENDMENT AND DISCONTINUANCE
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9.
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DEFINITIONS
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10.
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EMPLOYEES OF SEMPRA ENERGY TRADING CORPORATION AND SEMPRA ENERGY SOLUTIONS LLC
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11.
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SECTION 409A OF THE CODE
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12.
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CLAIMS PROCEDURE
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13.
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MISCELLANEOUS
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--
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1.
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BACKGROUND
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2.
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PURPOSE
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3.
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ADMINISTRATION
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4.
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ELIGIBILITY; PARTICIPATION
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(A)
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All Employees whose pension benefits under the Basic Plan are limited by the compensation and benefits limitations imposed by Sections 401(a)(17) and 415 of the Code shall be eligible for benefits under this Plan. In no event shall an Employee who is not entitled to benefits under the Basic Plan be eligible for a benefit under this Plan. An Employee who is a participant in the Basic Plan shall first become an Eligible Employee on the first date on which such Employee’s benefits under the Basic Plan are limited by the provisions of Section 415 of the Code, or such Employee’s benefits under the Basic Plan are limited by the covered compensation limitations of Section 401(a)(17) of the Code.
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(B)
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Except as provided in subsections (C) and (D), an Eligible Employee shall be a Participant and shall be entitled to benefits in accordance with Section 5.
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(C)
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Effective as of the Participant’s Transfer Date (if any), a Participant’s benefit under this Plan (determined immediately prior to the Participant’s Transfer Date) shall be transferred from this Plan to the SERP, and this Plan shall cease to provide such benefit to such Participant and the SERP shall thereafter provide such benefit to such Participant in lieu thereof. The transfer of such Participant’s benefit to the SERP shall be made in accordance with Section 409A of the Code and the Treasury Regulations thereunder and the time and form of payment of such benefit under the SERP (determined as of such Participant’s Transfer Date) shall be same as the time and form of payment of the Participant’s benefit under this Plan (determined immediately prior to such Participant’s Transfer Date).
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(D)
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Effective as of the Participant’s Transfer Date, the Participant shall cease to be a Participant in this Plan and no further benefits shall be paid to or in respect of such Participant under this Plan. In no event shall the Participant be paid a benefit under this Plan that duplicates any benefit paid under the SERP.
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(E)
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For purposes of subsections (C) and (D), a Participant’s “Transfer Date” shall be July 1, 2009 (if the Participant is then a participant in the SERP), or, if later, the date on which such Participant becomes a participant in the SERP.
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5.
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AMOUNT OF BENEFITS
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(A)
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415 Make-Up
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(i)
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the benefits which would be paid to such Participant or on his behalf to his beneficiary(ies) under the Basic Plan, if the provisions of such Basic Plan were administered without regard to the benefit limitations under Section 415 of the Code set forth in the Basic Plan, over
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(ii)
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the benefits which are paid to such Participant or on his behalf to his beneficiary(ies) under the Basic Plan.
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(B)
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401(a) (17) Make-Up
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(i)
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the benefits which would be paid to such Participant or on his behalf to his beneficiary(ies) under the Basic Plan, and, if applicable, to the Participant, under subsection (A), if the provisions of such Basic Plan were administered without regard to the covered compensation limitations under Section 401(a)(17) of the Code set forth in the Basic Plan (and, with respect to covered compensation paid or payable in plan years beginning on or after January 1, 2007, with a maximum compensation limit for each plan year of Two Million Dollars ($2,000,000)), over
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(ii)
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the benefits which are paid to such Participant or on his behalf to his beneficiary(ies) under the Basic Plan and, if applicable to the Participant, under subsection (A).
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(C)
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Conformance with Treasury Regulations
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6.
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PAYMENT OF BENEFITS
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(A)
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Distribution Options for Certain SERP Participants
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(i)
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In the case of a Participant who is an Eligible Employee, and is a participant under the SERP (as defined below) as of December 31, 2005, the payment of benefits to such Participant under this Plan shall be made in accordance with this subsection (A).
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(ii)
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Unless the Participant exercises the Lump Sum Option and receives a lump sum distribution from the Basic Plan, the payment of such Participant’s Pre-Section 409A Benefit under this Plan shall be in the same payment form and at the same time as the payment of benefits to the Participant or on his behalf to his beneficiary(ies) under the Basic Plan. In the event a Participant receives a lump sum distribution from the Basic Plan, payment of such Participant’s Pre-Section 409A Benefit under this Plan will be made in the form of a straight life annuity. However, the Participant may request, in writing, payment of such Participant’s Pre-Section 409A Benefit under one of the following alternatives provided such request is filed with Sempra Energy at least three months prior to his Retirement Date or Termination under the Basic Plan:
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(a)
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The Participant may request payment of such Participant’s Pre-Section 409A Benefit under any of the other annuity options for which he is eligible under the Basic Plan. The amount of such optional annuity benefit with respect to his or her Pre-Section 409A Benefit under this Plan shall be computed as specified in Section 5 of this Plan using the interest and mortality factors specified in the Basic Plan. The request will be subject to approval of the Company’s Senior Human Resources Officer and, if approved, will be irrevocable as long as the Participant receives a lump sum distribution from the Basic Plan.
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(b)
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The Participant may request payment of such Participant’s Pre-Section 409A Benefit in a lump sum. The amount of the distribution with respect to his or her Pre-Section 409A Benefit under this Plan shall be computed as specified in Section 5 of this Plan using the actuarial factors specified in the Basic Plan. In the event such a request is timely filed, the request shall be considered by the Senior Human Resources Officer who shall have the sole discretion, considering the best interests of the Company, to allow a lump sum distribution. The decision of the Senior Human Resources Officer shall be final. The Participant will be required to show good reason for receiving a lump sum distribution and, file the request at least three months prior to separation from service as a condition of having the request approved. If the lump sum pay out is approved, the lump sum form of pay out shall be irrevocable even if the Participant changes his election under the Basic Plan.
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(iii)
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The payment of such Participant’s Post-Section 409A Benefit under this Plan shall be in a lump sum upon the Participant’s Separation from Service, unless the Participant elects to receive an optional annuity form of payment under subparagraph (a). The amount of the Participant’s lump sum distribution with respect to his Post-Section 409A Benefit under this Plan shall be computed as specified in Section 5 of this Plan using the actuarial factors specified in the Basic Plan.
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(a)
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The Participant may elect, in writing, payment commencing upon the Participant’s Separation from Service under any of the following annuity options: (I) a straight life annuity, (II) a joint and 50% survivor annuity, and (III) a joint and 100% survivor annuity. The amount of such optional annuity benefit with respect to such Participant’s Post-Section 409A Benefit under this Plan shall be computed as specified in Section 5 of this Plan using the interest and mortality factors specified in the Basic Plan. The election will be subject to approval of the Company’s Senior Human Resources Officer, in his or her discretion, and, if approved, will become effective and irrevocable on the date of such approval (except as provided in subsection (B)). The payment of such Participant’s Post-Section 409A Benefit in an annuity form shall commence upon the Participant’s Separation from Service.
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(b)
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A Participant’s election under subparagraph (a) may be made with respect to a Participant’s Post-Section 409A Benefit on or after January 1, 2006 and on or before December 31, 2008 in accordance with the transitional relief under Section 409A of the Internal Revenue Code and Internal Revenue Service Notices 2006-79 and 2007-86; provided, however, that a Participant’s election made in 2006 shall only apply with respect to payments that would not otherwise be payable in 2006, and shall not cause payments to be made in 2006 that would not otherwise be payable in 2006; and, provided, further, that a Participant’s election made in 2007 shall apply only with respect to payments that would not otherwise be payable in 2007 and shall not cause payments to be made in 2007 that would not otherwise be payable in 2007; and provided, further, that a Participant’s election made in 2008 shall apply only with respect to payments that would not otherwise be payable in 2008, and shall not cause payments to be made in 2008 that would not otherwise be payable in 2008. A Participant’s election under subparagraph (a) shall be considered made when the election becomes irrevocable. No election under subparagraph (a) may be made by a Participant unless such election becomes irrevocable on or prior to December 31, 2008.
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(c)
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The joint and survivor annuity is only available under clause (a)(II) or (III) if the Participant designates his or her spouse as beneficiary or obtains spousal consent to the designation of another beneficiary in the same manner as under the Basic Plan as part of the Participant’s election. If the spouse, or beneficiary dies before the Participant’s Separation from Service, the joint and survivor annuity is canceled and the benefit is paid in the form of a straight life annuity; provided, that the straight life annuity is actuarially equivalent, applying reasonable actuarial methods and assumptions, to the joint and survivor annuity in effect prior to such cancellation, as determined under Treasury Regulation Section 1.409A-2(b)(2)(ii).
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(d)
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Except as provided in subsection (B), such Participant may not change the form and time of payment of such Participant’s Post-Section 409A Benefit under this Plan after December 31, 2008.
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(iv)
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Notwithstanding the foregoing, in no event shall a distribution option be available or apply to a Participant’s Pre-Section 409A Benefit if such distribution option would result in a material modification of the Participant’s Pre-Section 409A Benefit, as determined under Section 409A of the Code and Treasury Regulation Section 1.409A-6.
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(v)
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A lump sum payment of a Participant’s Post-Section 409A Benefit under this subsection (A) shall be paid on such date as is determined by Sempra Energy within thirty (30) days following the Participant’s Separation from Service. If an annuity payment is elected for purposes of the payment of such Participant’s Post-Section 409A Benefit under this subsection (A), such PostSection 409A Benefit shall be paid monthly, beginning on the last day of the month of the Participant’s Separation from Service and shall continue to be paid monthly during the life of the Participant and the life of the Participant’s designated beneficiary, if any (if such beneficiary survives the Participant). In all cases, the monthly benefit shall equal the annual benefit divided by 12.
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(B)
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Changes in Distribution Option for Certain SERP Participants
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(i)
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The Participant may elect, in writing, to change the form of payment of such Participant’s Post Section 409A Benefit to any of the following options: (a) a lump sum, (b) a straight life annuity, (c) a joint and 50% survivor annuity, and (d) a joint and 100% survivor annuity. The amount of such optional benefit under this Plan shall be computed as specified in Section 5 of this Plan using the interest and mortality factors specified in the Basic Plan. The Participant’s election shall be subject to paragraphs (ii), (iii), (iv), (v), (vi) and (vii). Except as provided in paragraph (vi), the Participant’s election under this paragraph (i) shall be irrevocable. The joint and survivor annuity is only available under subparagraph (c) or (d) if the Participant designates his or her spouse as beneficiary or obtains spousal consent to the designation of another beneficiary in the same manner as under the Basic Plan as part of the Participant’s election. If the spouse, or beneficiary dies before the Participant’s Separation from Service, the joint and survivor annuity elected under this paragraph (i) is canceled and the benefit is paid in the form of a straight life annuity; provided, that the straight life annuity is actuarially equivalent, applying reasonable actuarial methods and assumptions, to the joint and survivor annuity in effect prior to such cancellation, as determined under Treasury Regulation Section 1.409A- 2(a)(2)(ii).
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(ii)
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The Participant’s election under paragraph (i) must be made prior to the Participant’s Separation from Service.
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(iii)
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If the Participant’s form of payment, as in effect at the time of election under paragraph (i), is an annuity, such Participant’s election under paragraph (i)(b), (c) or (d) (an election of an alternative annuity form of payment) shall be effective immediately and paragraph (v) shall not apply to such Participant’s election; provided, that the alternative annuity form of payment elected by the Participant is actuarially equivalent applying reasonable actuarial methods and assumptions to the annuity form of payment, as in effect at the time of the election, as determined under Treasury Regulation Section 1.409A-2(b)(2)(ii).
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(iv)
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Except as provided in paragraph (iii), the Participant’s election under paragraph (i) shall not take effect until 12 months after his election is made, in accordance with Treasury Regulation Section 1.409A-2(b)(1)(i). If the Participant has a Separation from Service before the election under paragraph (i) becomes effective, the election under paragraph (i) shall terminate and the Participant’s Post-Section 409A Benefit shall be paid in the form of payment as in effect at the time of the election under paragraph (i).
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(v)
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Except as provided in paragraph (iii), in the event the Participant’s election under paragraph (i) becomes effective, the payment of such Participant’s Post-Section 409A Benefit under the option shall be deferred for a period of five years from the date such payment would otherwise have been paid (or, in the case of a life annuity treated as a single payment, five years from the date the first amount was scheduled to be paid), in accordance with Treasury Regulation Section 1.409A-2(b)(1)(ii).
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(vi)
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The Participant may elect to change the annuity option elected under paragraph (i) to another annuity option specified under paragraph (i) and such election shall become effective immediately, provided, that such change is made prior to the commencement of the payment of such Participant’s Post-Section 409A Benefit under this Plan; and, provided, further, that the annuity form of payment is actuarially equivalent, applying reasonable actuarial methods and assumptions, to the annuity form of payment, as in effect at the time of the election, as determined under Treasury Regulation Section 1.409A-2(b)(2)(ii).
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(vii)
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Any change in a Participant’s form of payment under this subsection (B) shall be made in accordance with Treasury Regulation Section 1.409A-2(b).
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(C)
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Distribution Options for other Participants
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(i)
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Such a Participant may elect, in writing, payment commencing upon the Participant’s Separation from Service under any of the following annuity options: (a) a straight life annuity, (b) a joint and 50% survivor annuity, and (c) a joint and 100% survivor annuity. The amount of such optional annuity benefit under this Plan shall be computed as specified in Section 5 of this Plan using the interest and mortality factors specified in the Basic Plan. The election will be subject to approval of the Senior Human Resources Officer of Sempra Energy, in his or her discretion, and, if approved, will become effective and irrevocable on the date of such approval (except as provided in subsection (D)). The payment of such Participant’s benefits under this Plan in an annuity form shall commence upon the Participant’s Separation from Service.
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(ii)
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A Participant’s election under paragraph (i) may be made with respect to such Participant’s benefit under this Plan on or after January 1, 2006 and on or before December 31, 2008 in accordance with the transitional relief under Section 409A of the Internal Revenue Code and Internal Revenue Service Notices 2006-79 and 2007-86; provided, however, that a Participant’s election made in 2006 shall apply only with respect to payments that would not otherwise be payable in 2006, and shall not cause payments to be made in 2006 that would not otherwise be payable in 2006; and, provided, further, that a Participant’s election made in 2007 shall apply only with respect to payments that would not otherwise be payable in 2007, and shall not cause payments to be made in 2007 that would not otherwise be payable in 2007; and provided, further, that a Participant’s election made in 2008 shall apply only with respect to payments that would not otherwise be payable in 2008, and shall not cause payments to be made in 2008 that would not otherwise be payable in 2008. A Participant’s election under paragraph (i) shall be considered made when the election becomes irrevocable. No election under paragraph (i) may be made by a Participant unless such election becomes irrevocable on or prior to December 31, 2008.
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(iii)
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The joint and survivor annuity is only available under subparagraphs (i)(b) or (c) if the Participant designates his or her spouse as beneficiary or obtains spousal consent to the designation of another beneficiary in the same manner as under the Basic Plan as part of the Participant’s election. If the spouse, or beneficiary dies before the Participant’s Separation from Service, the joint and survivor annuity is canceled and the benefit is paid in the form of a straight life annuity; provided, that the straight life annuity is actuarially equivalent, applying reasonable actuarial methods and assumptions, to the joint and survivor annuity in effect prior to such cancellation, as determined under Treasury Regulation Section 1.409A-2(b)(2)(ii).
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(iv)
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Except as provided in subsection (D), such Participant may not change the form and time of payment of benefits under this Plan after December 31, 2008.
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(v)
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A lump sum payment under this subsection (C) shall be paid on such date as is determined by Sempra Energy within thirty (30) days following the Participant’s Separation from Service. An annuity under this subsection (C) shall be paid monthly, beginning on the last day of the month of the Participant’s Separation from Service and shall continue to be paid monthly during the life of the Participant and the life of the Participant’s designated beneficiary, if any (if such beneficiary survives the Participant). In all cases, the monthly benefit shall equal the annual benefit divided by 12.
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(D)
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Changes in Distribution Option for other Participants
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(i)
|
The Participant may elect, in writing, to change the form of payment of such Participant’s benefit to any of the following options: (a) a lump sum, (b) a straight life annuity, (c) a joint and 50% survivor annuity, and (d) a joint and 100% survivor annuity. The amount of such optional benefit under this Plan shall be computed as specified in Section 5 of this Plan using the interest and mortality factors specified in the Basic Plan. The Participant’s election shall be subject to paragraphs (ii), (iii), (iv), (v), (vi) and (vii). Except as provided in paragraph (vi), the Participant’s election under this paragraph (i) shall be irrevocable. The joint and survivor annuity is only available under subparagraph (c) or (d) if the Participant designates his or her spouse as beneficiary or obtains spousal consent to the designation of another beneficiary in the same manner as under the Basic Plan as part of the Participant’s election. If the spouse, or beneficiary dies before the Participant’s Separation from Service, the joint and survivor annuity is canceled and the benefit is paid in the form of a straight life annuity; provided, that the straight life annuity is actuarially equivalent, applying reasonable actuarial methods and assumptions, to the joint and survivor annuity in effect prior to such cancellation, as determined under Treasury Regulation Section 1.409A-2(b)(2)(ii).
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(ii)
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The Participant’s election under paragraph (i) must be made prior to the Participant’s Separation from Service.
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(iii)
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If the Participant’s form of payment, as in effect at the time of the election under paragraph (i), is an annuity, such Participant’s election under paragraph (i)(b), (c) or (d) (an election of an alternative annuity form of payment) shall be effective immediately and paragraph (v) shall not apply to such Participant’s election; provided, that the alternative annuity form of payment elected by the Participant is actuarially equivalent applying reasonable actuarial methods and assumptions to the annuity form of payment, as in effect at the time of the election, as determined under Treasury Regulation Section 1.409A-2(b)(2)(ii).
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(iv)
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Except as provided in paragraph (iii), the Participant’s election under paragraph (i) shall not take effect until 12 months after the date his or her election is made in accordance with Treasury Regulation Section 1.409A-2(b)(1)(i). If the Participant has a Separation from Service before the election under paragraph (i) becomes effective, the election under paragraph (i) shall terminate and the Participant’s benefit shall be paid in the form of payment as in effect at the time of the election under paragraph (i).
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(v)
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Except as provided in paragraph (iii), in the event the Participant’s election under paragraph (i) becomes effective, the payment of such Participant’s benefit under the option shall be deferred for a period of five years from the date such payment would otherwise have been paid (or, in the case of a life annuity treated as a single payment, five years from the date the first amount was scheduled to be paid), in accordance with Treasury Regulation Section 1.409A-2(b)(1)(ii).
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(vi)
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The Participant may elect to change an annuity form of payment elected under paragraph (i) to another annuity form of payment specified under paragraph (i)(b), (c) or (d), and such election shall be effective immediately; provided, that such change is made prior to the commencement date of the payment of benefits under this Plan; and, provided, further, that the annuity form of payment is actuarially equivalent applying reasonable actuarial methods and assumptions to the annuity form of payment, as in effect at the time of the election, as determined under Treasury Regulation Section 1.409A-2(b)(2)(ii).
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(vii)
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Any change in a Participant’s form of payment under this subsection (D) shall be made in accordance with Treasury Regulation Section 1.409A-2(b).
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(E)
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Pre-Section 409A Benefit; Post-Section 409A Benefit.
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(i)
|
In the case of a Participant described in subsection (A), such Participant’s “Pre-Section 409A Benefit” means the portion of such Participant’s benefit under the Plan, if any, to which such Participant had a legal binding right, and which was earned and vested, as of December 31, 2004, determined in accordance with Section 409A of the Code and Treasury Regulation Section 1.409A-6. Such Participant’s “Pre-Section 409A Benefit” shall be determined by the terms of the Plan and the Basic Plan, as in effect as of October 3, 2004.
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(ii)
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In the case of a Participant described in subsection (A), such Participant’s “Post-Section 409A Benefit” means such Participant’s benefit under this Plan, less such Participant’s Pre-Section 409A Benefit (if any). In the case of any other Participant, such Participant’s “Post-Section 409A Benefit” means such Participant’s benefit under this Plan.
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(F)
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Distributions to Newly Eligible Employees
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(i)
|
In the case of a Participant who first becomes an Eligible Employee under this Plan (as determined under Section 4) after December 31, 2005, the payment of benefits under this Plan shall be made in a lump sum in accordance with this subsection (F) upon the Participant’s Separation from Service, except as provided in paragraph (ii).
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(ii)
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The Participant may elect to change the form of the payment of benefits under this Plan, as follows:
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(a)
|
The Participant may elect, in writing, to change the form of payment of such benefit to any of the following annuity options: (I) a straight life annuity, (II) a joint and 50% survivor annuity, and (III) a joint and 100% survivor annuity. The amount of such optional annuity benefit under this Plan shall be computed as specified in Section 5 of this Plan using the interest and mortality factors specified in the Basic Plan. The Participant’s election shall be subject to subparagraphs (b), (c), (d), (e) and (d). Except as provided in subparagraph (e), the Participant’s election under this subparagraph (a) shall be irrevocable. The joint and survivor annuity is only available under clause (II) or (III) if the Participant designates his or her spouse as beneficiary or obtains spousal consent to the designation of another beneficiary in the same manner as under the Basic Plan as part of the Participant’s election. If the spouse, or beneficiary dies before the Participant’s Separation from Service, the joint and survivor annuity is canceled and the benefit is paid in the form of a straight life annuity; provided, that the straight life annuity is actuarially equivalent, applying reasonable actuarial methods and assumptions, to the joint and survivor annuity in effect prior to such cancellation, as determined under Treasury Regulation Section 1.409A-2(b)(2)(ii).
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(b)
|
The Participant’s election under subparagraph (a) must be made prior to the Participant’s Separation from Service.
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(c)
|
The Participant’s election under subparagraph (a) shall not take effect until 12 months after his election is made in accordance with Treasury Regulation Section 1.409A-2(b)(1)(i). If the Participant has a Separation from Service before the election under subparagraph (a) becomes effective, the election under subparagraph (a) shall terminate and the Participant’s benefit shall be paid in a lump sum payment under paragraph (i).
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(d)
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In the event the Participant’s election under subparagraph (a) becomes effective, the payment of benefits under the annuity option shall be deferred for a period of five years from the date such payment would otherwise have been paid (or, in the case of a life annuity treated as a single payment, five years from the date the first amount was scheduled to be paid), in accordance with Treasury Regulation Section 1.409A- 2(b)(1)(ii).
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(e)
|
The Participant may elect to change the annuity form of payment elected under subparagraph (a) to another annuity form of payment specified under subparagraph (a) and such election shall be effective immediately; provided, that such change is made prior to the commencement of the payment of benefits under this Plan; and, provided, further, that the annuity form of payment is actuarially equivalent applying reasonable actuarial methods and assumptions to the annuity form of payment, as in effect at the time of the election, as determined under Treasury Regulation Section 1.409A-2(b)(2)(ii).
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(f)
|
Any change in a Participant’s form of payment under this paragraph (ii) shall be in accordance with Treasury Regulation Section 1.409A-2(b).
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(iii)
|
A lump sum payment under paragraph (F)(i) shall be paid on such date as is determined by Sempra Energy within thirty (30) days following the Participant’s Separation from Service. An annuity under this subsection (F) shall be paid monthly, beginning on the last day of the month in which the date determined under subparagraph (F)(ii)(d) occurs and shall continue to be paid monthly during the life of the Participant and the life of the Participant’s designated beneficiary, if any (if such beneficiary survives the Participant). In all cases, the monthly benefit shall equal the annual benefit divided by 12.
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(G)
|
Death Benefits
|
(i)
|
The death benefits payable to such Participant’s beneficiary(ies) under this subsection (G) shall be computed as specified in Section 5 of this Plan using the actuarial factors specified in the Basic Plan.
|
(ii)
|
The death benefits payable to such Participant’s beneficiary(ies) under this subsection (G) shall be in lieu of any benefits that would have been payable under the other provisions of this Section 6, if such Participant had survived until the date of commencement of benefits.
|
(iii)
|
The death benefits payable to such Participant’s beneficiary(ies) under this subsection (G) shall be payable in a lump sum payment on such date as is determined by Sempra Energy during the thirty (30) day period commencing upon such Participant’s death; provided, however, that, in the case of a Participant described in subsection (A), such Participant’s PreSection 409A Death Benefit (if any) shall be paid in the same payment form and at the same time as the payment of pre-commencement death benefits on behalf of such Participant under the Basic Plan and such Participant’s Post-Section 409A Death Benefit shall be payable in a lump sum on such date as is determined by Sempra Energy during the thirty (30) day period commencing upon such Participant’s death.
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(iv)
|
For purposes of this subsection (G) and Section 9,
|
(a)
|
in the case of a Participant described in subsection (A), such Participant’s “Pre-Section 409A Death Benefit” means the portion of the death benefits payable to such Participant’s beneficiary(ies) under this subsection (G), if any, to which such Participant had a legal binding right, and which was earned and vested, as of December 31, 2004, determined in accordance with Section 409A of the Code and Treasury Regulation Section 1.409A-6. Such Participant’s “Pre-Section 409A Death Benefit” shall be determined by the terms of the Plan and the Basic Plan, as in effect as of October 3, 2004 and in a manner consistent with paragraph (E)(i) and Treasury Regulation Section 1.409A-6(a)(3)(i), and
|
(b)
|
in the case of a Participant described in subsection (A), such Participant’s “Post Section 409A Death Benefit” means the death benefit payable to such Participant’s beneficiary(ies) under this subsection (G), less such Participant’s Pre-Section 409A Death Benefit.
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(H)
|
Mandatory Distribution
|
(I)
|
Distributions to Specified Employees
|
(J)
|
Prohibition on Acceleration of Distributions
|
(K)
|
Conformance of Time and Form of Payment under the SERP
|
(i)
|
If a Participant is or becomes a participant in the SERP, the payment of such Participant’s “Post-Section 409A Supplemental Retirement Benefit” (as defined in the SERP) to such Participant under the SERP shall be made or commence on the date of the payment or commencement of such Participant’s Post-Section 409A Benefit under this Plan, and the form of payment of such Participant’s “Post-Section 409A Supplemental Retirement Benefit” (as defined in the SERP) under the SERP shall be the same as the form of payment of such Participant’s Post-Section 409A Benefit under this Plan.
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(ii)
|
In the event that a Participant elects to change the form of the payment of such Participant’s Post-Section 409A Benefit under this Plan, such Participant shall be deemed to have elected to change the form of the payment of such Participant’s “Post-Section 409A Supplemental Retirement Benefit” (as defined in the SERP) under the SERP to the form of the payment of such Participant’s Post-Section 409A Benefit under this Plan. Any such election shall be subject to the provisions of subsection (B), (D) or (F), as applicable, and the provisions of the SERP and, in any event, the time and form of payment of such Participant’s “Post-Section 409A Supplemental Retirement Benefit” under the SERP shall be the same as the time and form of payment of such Participant’s Post-Section 409A Benefit under this Plan.
|
(L)
|
Transfer Date
|
7.
|
EMPLOYEE’S RIGHTS
|
8.
|
AMENDMENT AND DISCONTINUANCE
|
9.
|
DEFINITIONS
|
10.
|
EMPLOYEES OF SEMPRA ENERGY TRADING CORPORATION AND SEMPRA ENERGY SOLUTIONS LLC
|
(A)
|
Background
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(B)
|
Cessation of Participation by SET LLC and SES; Cessation of Benefit Accruals
|
(i)
|
Prior to the Closing, SET LLC shall be a participating employer in this Plan. Effective as of the Closing Date, SET LLC will cease to be a participating employer in this Plan.
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(ii)
|
Prior to the Closing, SES shall be a participating employer in this Plan. Effective as of the Closing Date, SES will cease to be a participating employer in this Plan.
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(iii)
|
Effective as of the Closing Date (or the Transfer Date, if applicable), a Transferred Employee who is a Participant shall cease to accrue any further benefits as an active participant in this Plan and shall have no rights to continue as an active participant under this Plan (without derogation of the rights of such Transferred Employee as a vested, terminated Participant in this Plan).
|
(iv)
|
No Transferred Employee shall become a Participant on or after the Closing Date.
|
(C)
|
Separation from Service
|
(i)
|
Effective as of the Closing, RBS Sempra Commodities will be a member of a group of trades or businesses (whether or not incorporated) under common control for purposes of Section 414(c) of the Code and Treasury Regulation Section 1.414(c)-2, as determined under Treasury Regulation Section 1.409A-1(h)(3), that includes Sempra Energy and its wholly-owned subsidiaries. Consequently, effective as of the Closing, RBS Sempra Commodities will be included in the “service recipient” that includes Sempra Energy and its wholly-owned subsidiaries, as defined under Treasury Regulation Section 1.409A-1(h)(3).
|
(ii)
|
A Participant who is an employee of SET LLC or SES, and who is a Transferred Employee effective as of the Closing Date, will not have a Separation from Service solely as a result of the purchase of the membership interests of SET LLC by RBS Sempra Commodities effective as of the Closing.
|
(iii)
|
A Participant who is an employee of SET LLC or SES, who is an Inactive Employee, and who becomes a Transferred Employee effective on a Transfer Date after the Closing Date, will not have a Separation from Service solely as a result of the purchase of the membership interests of SET LLC by RBS Sempra Commodities or becoming a Transferred Employee on a Transfer Date after the Closing Date.
|
(iv)
|
For purposes of the Plan, a Participant who is an employee of SET LLC or SES, and who is or becomes a Transferred Employee, will have a Separation from Service on or after the Closing Date (or the Transfer Date, if applicable), as determined under Section 10 and Treasury Regulation Section 1.409A-1(h).
|
(D)
|
Certain Defined Terms
|
11.
|
SECTION 409A OF THE CODE
|
(A)
|
This Plan shall be interpreted, construed and administered in a manner that satisfies the requirements of Sections 409A(a)(2), (3) and (4) of the Code and the Treasury Regulations thereunder (subject to the transitional relief under Internal Revenue Service Notice 2005-1, the Proposed Regulations under Section 409A of the Code, Internal Revenue Service Notices 2006-79 and 2007-86 and other applicable authority issued by the Internal Revenue Service). As provided in Internal Revenue Service Notices 2006-79 and 2007-86, notwithstanding any other provision of this Plan, with respect to an election or amendment to change a time and form of payment under the Plan made on or after January 1, 2006 and on or before December 31, 2006, the election or amendment shall apply only to amounts that would not otherwise be payable in 2006 and shall not cause an amount to be paid in 2006 that would not otherwise be payable in 2006; and, with respect to an election or amendment to change a time and form of payment under this Plan made on or after January 1, 2007 and on or before December 31, 2007, the election or amendment may apply only to amounts that would not otherwise be payable in 2007 and may not cause an amount to be paid in 2007 that would not otherwise be payable in 2007; and, with respect to an election or amendment to change a time and form of payment under this Plan made on or after January 1, 2008 and on or before December 31, 2008, the election or amendment may apply only to amounts that would not otherwise be payable in 2008 and may not cause an amount to be paid in 2008 that would not otherwise be payable in 2008. If Sempra Energy determines that any deferred compensation amounts under this Plan subject to Section 409A of the Code do not comply with Sections 409A(a)(2), (3) and (4) of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, Sempra Energy may amend this Plan, or take such other actions as Sempra Energy deems reasonably necessary or appropriate, to ensure that such amounts comply with the requirements of Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service. In the case of any deferred compensation amounts under this Plan that are subject to Section 409A of the Code, if any provision of the Plan would cause such amounts to fail to so comply, such provision shall be deemed amended, or shall not be effective and shall be null and void, to the extent necessary to cause such amounts to comply with Section 409A(a)(2), (3) and (4) of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service.
|
(B)
|
The Plan provides that benefits under the Plan are determined under the formula for determining benefits under the Basic Plan (which is a qualified employer plan, as defined in Treasury Regulation Section 1.409A-1(a)(2)), applied without regard to the limitations applicable to the Basic Plan under Sections 401(a)(17) and 415 of the Code, and after an offset of the benefits provided under the Basic Plan. Accordingly, the Plan is intended to be a nonqualified deferred compensation plan subject to Treasury Regulation Sections 1.409A-2(a)(9) and 1.409A-3(j)(5).
|
12.
|
CLAIMS PROCEDURE
|
(A)
|
Claim
|
(B)
|
Claim Decision
|
(C)
|
Request for Review
|
(D)
|
Review of Decision
|
13.
|
MISCELLANEOUS
|
(A)
|
Unsecured General Creditor
|
(B)
|
Restriction Against Assignment
|
(C)
|
Withholding
|
(D)
|
Governing Law
|
(E)
|
Receipt of Release
|
(F)
|
Payments on Behalf of Persons Under Incapacity
|
(G)
|
Limitation of Rights
|
(H)
|
Notice
|
(I)
|
Errors and Misstatements
|
(J)
|
Pronouns and Plurality
|
(K)
|
Severability
|
(L)
|
Headings
|