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Exhibit 10.40
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of December 1, 1999, by and between
PIEDMONT NATURAL GAS COMPANY, INC., a North Carolina corporation (the
"Corporation"), and, XXXXXX X. XXXXXX, a resident of Mecklenburg County, North
Carolina (the "Officer").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Corporation has determined that
the continued retention of the services of the Officer on a long-term basis as
described herein is in the best interest of the corporation in that (a) it
promotes the stability of senior management of the Corporation; (b) it enables
the Corporation to retain the services of a well-qualified Senior Vice President
with extensive contacts in the natural gas industry; and (c) it secures the
continued services of the Officer notwithstanding any change in control of the
Corporation; and
WHEREAS, the services of the Officer, his experience and knowledge of
the affairs of the Corporation, and his reputation and contacts in the
Corporation's industry are extremely valuable to the Corporation; and
WHEREAS, the Corporation considers the establishment and maintenance of
a sound and vital management to be part of its overall corporate strategy and to
be essential to protecting and enhancing the best interests of the Corporation
and its stockholders; and
WHEREAS, the parties desire to enter into this Agreement in order to
clearly set forth the terms and conditions of the Officer's employment
relationship with the Corporation; and
WHEREAS, contemporaneous with this Agreement, the parties have entered
into a Severance Agreement (the "Severance Agreement"), which sets forth certain
rights and obligations of the Officer and certain rights and obligations of the
Corporation in the event of a "Potential Change of Control" (as defined in the
Severance Agreement) or following a "Change in Control" (as defined in the
Severance Agreement). Use of the phrases "Potential Change of Control" and
"Change in Control" herein shall have the meanings ascribed to those phrases in
the Severance Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereby agree as follows:
1. Employment. The Corporation hereby employs the Officer and the
Officer hereby accepts such employment, upon the terms and conditions stated
herein, as Senior Vice President of the Corporation. The Officer shall render
such administrative and management services to the Corporation as are
customarily performed by persons situated in a similar executive capacity. The
Officer shall promote the business of the Corporation and perform such other
duties as shall from time to time be reasonably prescribed by the Directors. It
is understood that the Officer's continued election as an officer of the
Corporation is dependent upon action by the Board of Directors of the
Corporation from time to time and that, subject to the provisions of Section 7
of this Agreement, the Officer's title and/or duties may change from time to
time; provided that following a Change in Control and during the term of the
Severance Agreement any action affecting a change in title and/or duties shall
be subject to the Severance Agreement.
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2. Base Salary. The Corporation shall pay the Officer during the term
of this Agreement as compensation for all services rendered by him to the
Corporation a base salary in such amounts and at such intervals as shall be
commensurate with his duties and responsibilities hereunder. Initially such base
salary shall be at the rate of $217,000 per year. The Officer's base salary may
be increased from time to time to reflect the duties required of the Officer. In
reviewing the Officer's base salary, the Board of Directors of the Corporation
shall consider the overall performance of the Officer and the service of the
Officer rendered to the Corporation and its subsidiaries and changes in the cost
of living. The Board of Directors may also provide for performance or merit
increases. Participation by Officer in any incentive, deferred compensation,
stock option, stock purchase, bonus, pension, life insurance or other employee
benefit plans which may be offered by the Corporation from time to time and
participation in any fringe benefits provided by the Corporation shall not cause
a reduction of the base salary payable to the Officer. The Officer will be
entitled to such customary fringe benefits, vacation and sick leave as are
consistent with the normal practices and established policies of the
Corporation.
3. Participation in Incentive, Retirement and Employee Benefit Plans;
Fringe Benefits. The Officer shall be entitled to participate in any plan
relating to incentive compensation, stock options, stock purchase, pension,
thrift, profit sharing, group life insurance, medical coverage, disability
coverage, education, or other retirement or employee benefits that the
Corporation has adopted, or may from time to time adopt, for the benefit of its
executive employees and for employees generally, subject to the eligibility
rules of such plans.
The Officer shall also be entitled to participate in any other fringe
benefits which are now or may be or become applicable to the Corporation's
executive employees, including the payment of reasonable expenses for attending
annual and periodic meetings of trade associations, and any other benefits which
are commensurate with the duties and responsibilities to be performed by the
Officer under this Agreement. Additionally, the Officer shall be entitled to
such vacation and sick leave as shall be established under uniform employee
policies promulgated by the Board of Directors. The Corporation shall reimburse
the Officer for all out-of-pocket reasonable and necessary business expenses
which the Officer may incur in connection with his service on behalf of the
Corporation.
4. Term. The initial term of employment under this Agreement shall be
for a one-year period commencing December 1, 1999; provided that this Agreement
shall automatically be extended to a full one-year period on each successive day
during the term of this Agreement. The effect hereof shall be that the Agreement
shall at all times remain subject to a term of one year, unless (i) written
notice has been given that the Agreement shall not be extended as provided in
this Section 4, or (ii) the Agreement is terminated pursuant to Section 7. If
written notice from the Corporation or the Officer is delivered to the other
party advising the other party that this Agreement is not to be further
extended, then upon such notice, the Agreement shall terminate on the second
anniversary of the date of notice. Provided, further, no extension shall cause
this Agreement to extend beyond the date on which the Officer reaches 65 years
of age. Upon any extension, the base salary of the extended agreement shall be
the base salary in effect on the effective date of such extension.
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5. Loyalty; Noncompetition
(a) The Officer shall devote his best efforts to the
performance of his duties and responsibilities under this Agreement.
(b) During the term of this Agreement, or any renewals hereof,
the Officer agrees he will not, own, manage, operate, join, control or
participate in the management, operation or control of, or be employed by or
connected in any manner with any business which competes with the Corporation or
any of its subsidiary corporations without the prior written consent of the
Corporation. Notwithstanding the foregoing, the Officer shall be free, without
such consent, to purchase or hold as an investment or otherwise, up to five
percent of the outstanding stock or other securities of any corporation which
has its securities publicly traded on any recognized securities exchange or in
any established over-the-counter market.
The Officer shall hold in confidence all knowledge or
information of a confidential nature with respect to the business of the
Corporation or any subsidiary of the Corporation received by him during the term
of this Agreement and will not disclose or make use of such information without
the prior written consent of the Corporation.
The Officer acknowledges that it would not be possible to
ascertain the amount of monetary damages in the event of a breach by the Officer
under the provisions of this Section 5 and agrees that, in the event of a breach
of this Section, injunctive relief enforcing the terms of this Section is an
appropriate remedy.
6. Standards. The Officer shall perform his duties and responsibilities
under this Agreement in accordance with such reasonable standards expected of
employees with comparable positions in comparable organizations and as may be
established from time to time by the Board of Directors. The Corporation will
provide the Officer with the working facilities and staff customary for similar
executives and necessary for him to perform his duties.
7. Termination and Termination Pay.
(a) Change of Control. Following a Change in Control and
during the term of the Severance Agreement, this Agreement shall become null and
void except with respect to any rights or obligations accruing prior to the
Change in Control and the rights and obligations of the Officer and the Company,
including any termination of the Officer, shall be subject to the provisions of
the Severance Agreement.
(b) By Death. The Officer's employment under this Agreement
shall be terminated upon the death of the Officer during the term of this
Agreement, in which event the Officer's estate shall be entitled to receive all
compensation due the Officer through the last day of the calendar month in which
his death shall have occurred.
(c) By Total Disability. Except for that period of time
following a Change in Control and during the term of the Severance Agreement,
the Officer's employment under this Agreement shall be terminated upon the total
permanent disability of the Officer during the term of this Agreement, in which
event the Officer shall receive all compensation, including bonuses, through the
date of determination of such disability and for a period of 90 days thereafter.
For purposes of this Section, the Officer shall be deemed to have suffered
permanent disability upon the determination of such status by the United States
Social Security Administration or a certification to such effect by the
Officer's regular physician.
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(d) By Officer. Except as provided in Section 4 of the
Severance Agreement, the Officer's employment under this Agreement may be
terminated at any time by the Officer upon 60 days' written notice to the Board
of Directors. Upon such termination, the Officer shall be entitled to receive
all compensation, including bonuses, through the effective date of such
termination.
(e) By Corporation. Except for that period of time following a
Change of Control and during the term of the Severance Agreement, the Board of
Directors may terminate the Officer's employment at any time, but any such
termination by the Board of Directors, other than termination for cause, shall
not prejudice the Officer's right to continue to receive payment of all
compensation and the continuance of benefits for a period of 12 months from the
effective date of termination or until such time as the Officer reaches 65 years
of age (whichever is less) as provided below. The Officer shall have no right to
receive compensation or other benefits (other than vested benefits) for any
period after termination for "cause." Termination for cause shall mean
termination because of the Officer's personal dishonesty, incompetence, willful
material misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful material violation of an
law, rule or regulation (other than traffic or traffic-related violations or
similar offenses) or final cease-and-desist order, or material breach of any
provisions of this Agreement.
(f) Costs and Expenses. In the event any dispute shall arise
between the Officer and the Corporation as to the terms or interpretation of
this Agreement, including this Section 7, whether instituted by formal legal
proceedings or otherwise, including any action taken by Officer to enforce the
terms of this Section 7 or in defending against any action taken by the
Corporation, the Corporation shall reimburse the Officer for all costs and
expenses, proceedings or actions in the event the Officer prevails in any such
action.
8. Successors and Assigns.
(a) This Employment Agreement shall inure to the benefit of
and be binding upon any corporate or other successor of the Corporation which
shall acquire, directly or indirectly, by conversion, merger, consolidation,
purchase or otherwise, all or substantially all of the assets of the
Corporation.
(b) Since the Corporation is contracting for the unique and
personal skills of the Officer, the Officer shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Corporation.
9. Modification; Waiver; Amendments. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing, signed by the Officer and on behalf of the Corporation
by such Officer as may be specifically designated by the Board of Directors. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No amendments or additions to this Agreement shall be binding unless in
writing and signed by both parties, except as herein otherwise provided. Any
modification, waiver or amendment shall be made consistent with the terms and
conditions of the Severance Agreement.
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10. Applicable Law. This Agreement shall be governed in all respects
whether as to validity, construction, capacity, performance or otherwise, by the
laws of North Carolina.
11. Severability. The provision of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first hereinabove written.
CORPORATION:
ATTEST: Piedmont Natural Gas Company, Inc.
/s/ Xxxxxx X. Xxxxxxxxxx
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Secretary
By: /s/ Xxxx X. Xxxxxxx
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OFFICER:
/s/ Xxxxxx X. Xxxxxx (SEAL)
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Employment Agreement reviewed and approved by the Board of Directors this 3rd
Day of December, 1999.
BY: /s/ Xxxx X. XxXxxx III
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Chairman of Compensation Committee
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