Exhibit 10.20
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT (the "Agreement") is made as of August 1, 1999,
between Virginia Electric and Power Company (the "Company") and Xxxx X.
XxXxxxxxxx (the "Executive").
RECITALS:
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The Board of Directors of the Company (the "Board of Directors") recognizes
that outstanding management of the Company is essential to advancing the best
interests of the Company, its shareholders and its subsidiaries. The Board of
Directors believes that it is particularly important to have stable, excellent
management at the present time. The Board of Directors believes that this
objective may be achieved by giving key management employees assurances of
financial security for a period of time, so that they will not be distracted by
personal risks and will continue to devote their full time and best efforts to
the performance of their duties.
The Company's Board of Directors has approved entering into employment
agreements with the Company's key management executives in order to achieve the
foregoing objectives. The Executive is a key management executive of the
Company and is a valuable member of the Company's management team. The Company
acknowledges that the Executive's contributions to the growth and success of the
Company will be substantial. The Company and the Executive are entering into
this Agreement to induce the
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Executive to serve as an employee of the Company and to devote his/her full
energy to the Company's affairs. The Executive has agreed to be employed by the
Company under the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings contained in this Agreement, the parties agree as follows:
1. Employment. The Company will employ the Executive, and the Executive
will be employed by the Company, as an executive of the Company, for the period
beginning August 1, 1999 (the "Effective Date") and ending on the third
anniversary of such date, subject to the further provisions of this Section 1
(the "Term of this Agreement").
2. Duties. The Company and the Executive agree that, during the Term of
this Agreement, the Executive will serve in a senior management position with
the Company. The Executive (i) will devote his/her knowledge, skill and best
efforts on a full-time basis to performing his duties and obligations to the
Company (with the exception of absences on account of illness or vacation in
accordance with the Company's policies and civic and charitable commitments not
involving a conflict with the Company's business), and (ii) will comply with the
directions and orders of the Board of Directors and Chief Executive Officer of
the Company with respect to the performance of his duties.
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3. Effect on Other Agreements.
(a) The Board of Directors recognizes that the Executive has entered
or may enter into an Employment Continuity Agreement with the Company, which
provides benefits under certain circumstances in the event of a change in
control of the Company. Notwithstanding anything in this Agreement to the
contrary, if the Executive's employment terminates for any reason after a change
in control and payments are to be made to the Executive under the Executive's
Employment Continuity Agreement: (i) the Executive will not receive payments
under this Agreement as a result of his termination of employment for any
reason, (ii) after payment of any amounts otherwise due the Executive under this
Agreement, this Agreement will terminate without liability on the part of the
Company, and (iii) if and to the extent that any payments made under this
Agreement are considered "parachute payments" for purposes of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), the payments will be
taken into account in determining the amount to be grossed up to the Executive
under Article 6 of the Employment Continuity Agreement, If a change of control
occurs and the Executive is not entitled to receive payments under the
Executive's Employment Continuity Agreement, this Agreement will continue in
effect according to its terms.
(b) Except as provided above, this Agreement sets forth the entire
understanding of the parties with respect to the Executive's employment with the
Company. The Executive and the
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Company agree that, effective as of the execution of this Agreement, any prior
employment agreements between the Executive and the Company (other than the
Executive's Employment Continuity Agreement) are null and void. The term
"employment agreement" as used in the preceding sentence does not include any
retirement, incentive or benefit plan or program in which the Executive
participates or any credited service agreement under which the Executive
receives years of service credit for retirement plan purposes.
4. Affiliates. For purposes of this Agreement, the term "Affiliate" means
the subsidiaries of Dominion Resources, Inc. and other entities under common
control with Dominion Resources, Inc.
5. Compensation and Benefits.
(a) During the Term of this Agreement, while the Executive is employed
by the Company, the Company will pay to the Executive the following salary and
incentive awards for services rendered to the Company:
(i) The Company will pay to the Executive an annual salary in an
amount not less than the base salary in effect for the Executive as of
the date on which this Agreement is executed. The Board of Directors
will evaluate the Executive's performance at least annually and will
consider annual increases in the Executive's salary based on the
Executive's performance.
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(ii) The Executive will be entitled to receive incentive awards if
and to the extent that the Board of Directors determines that the
Executive's performance merits payment of an award. The Board of
Directors will make its determination consistent with the methodology
used by the Company for compensating its senior management employees.
(b) During the Term of this Agreement, while the Executive is employed
by the Company, the Executive will be eligible to participate in a similar
manner as other senior executives of the Company in retirement plans, cash and
stock incentive plans, fringe benefit plans and other employee benefit plans and
programs provided by the Company for its senior management employees from time
to time.
(c) If the Executive serves as an officer until his/her fiftieth(50th)
birthday, Executive will be eligible, at retirement, for five (5) additional
years of credited age and five (5) additional years of credited service to be
added for pension and other retirement benefits, including but not limited to
the DRI Executive Supplemental Retirement Plan, the DRI Retirement Benefit
Restoration Plan, medical coverage and life insurance. Any minimum age
requirements shall be waived. Any supplemental benefit to be provided under this
subsection (c) or subsection (d) below will be provided as a supplemental
benefit under this Agreement and will not be provided directly from the
Retirement Plan. The provisions of this subsection (c)
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and subsection (d) below shall survive the termination of this Agreement.
(d) If Executive is terminated, other than for Cause (as defined in
Section 8 below), prior to age 50, Executive will be credited at termination
with: (i) the number of years of age credit needed to give Executive 55 years of
credited age; and (ii) the number of additional years of service credit needed
to give Executive the same number of years of service that would have been
earned had the Executive remained employed by Company until age 55. These age
and service credits will be added for pension and other retirement benefits,
including but not limited to the DRI Executive Supplemental Retirement Plan, the
DRI Retirement Benefit Funding Plan, medical coverage and life insurance. Any
minimum age requirements shall be waived.
6. Termination of Employment.
(a) If the Company terminates the Executive's employment, other than
for Cause, during the Term of this Agreement, the Company will pay the Executive
a lump sum payment equal to the present value of the Executive's annual base
salary and annual cash incentive awards (computed as described below) for the
balance of the Term of this Agreement. The lump sum payment will be computed as
follows:
(i) For purposes of this calculation, the Executive's annual base
salary for the balance of the Term of the Agreement will be calculated
at the highest
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annual base salary rate in effect for the Executive during the three-
year period preceding his termination of employment. For purposes of
this calculation, the Executive's annual cash incentive awards for the
balance of the Term of the Agreement will be calculated at a rate
equal to the highest annual cash incentive award paid to the Executive
during the three-year period preceding his termination of employment.
Salary and bonus that the Executive elected to defer will be taken
into account for purposes of this Agreement without regard to the
deferral.
(ii) The salary and incentive award for any partial year in the
Term of this Agreement will be a pro-rated portion of the annual
amount.
(iii) If the Executive has not yet received an annual cash
incentive award for the year in which his employment terminates, the
lump sum payment will be increased to include a pro-rated award for
the portion of the year preceding the Executive's termination of
employment. If the Executive has not yet received payment of his
annual cash incentive award for the year preceding his termination of
employment, the lump sum payment will be increased to include an award
for the year preceding the Executive's termination of employment. The
incentive award for the year or portion of the year preceding the
Executive's
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termination of employment will be determined according to clause (i)
above, unless the Board of Directors made a good faith final
determination of the amount of the applicable incentive award pursuant
to Section 5(a)(ii) before the Executive's termination of employment.
If the Board of Directors made such a determination, the applicable
incentive award will be computed according to the Board of Directors'
determination.
(iv) Present value will be computed by the Company as of the date
of the Executive's termination of employment, based on a discount rate
equal to the applicable Federal short-term rate, as determined under
Section 1274(d) of the Code, compounded monthly, in effect on the date
as of which the present value is determined.
(v) The lump sum payment will be paid within 30 days after the
Executive's termination of employment.
(b) If the Company terminates the Executive's employment, other than
for Cause, during the Term of this Agreement, the Executive will be entitled to
receive the following additional benefits determined as of the date of his
termination of employment:
(i) Any outstanding restricted stock that would become vested
(that is, transferable and nonforfeitable) if the Executive remained
an employee through the Term of this Agreement will become vested
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as of the date of the Executive's termination of employment (or as of
the date described in the next sentence, if applicable). In addition,
if the Company has agreed to award the Executive restricted stock at
the end of a performance period, subject to the Company's achievement
of performance goals, and the date as of which the restricted stock is
to become vested falls within the Term of this Agreement, the stock
will be awarded and become vested at the end of the performance period
if and to the extent that the performance goals are met. The Executive
must satisfy the tax withholding requirements described in Section 10
with respect to the restricted stock.
(ii) The Executive shall become fully vested in any and all stock
options granted to the Executive under any Company plan which have not
become exercisable as of the Executive's termination of employment.
All of the Executive's stock options (including options vested as
outlined in the preceding sentence) shall remain exercisable until the
applicable option expiration date.
(c) If the Executive voluntarily terminates employment with the
Company during the Term of this Agreement under circumstances described in this
subsection (c), the Executive will be entitled to
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receive the benefits described in subsections (a) and (b) above as if
the Company had terminated the Executive's employment other than for
Cause. Subject to the provisions of this subsection (c), these
benefits will be provided if the Executive voluntarily terminates
employment after (i) the Company reduces the Executive's base salary,
(ii) the Executive is not in good faith considered for incentive
awards as described in Section 5(a)(ii), (iii) the Company fails to
provide benefits as required by Section 5(b) and 5(c), or (iv) the
Company demotes the Executive to a position that has significantly
lesser authority and/or significantly decreased duties than those
being performed by Executive at the time of the signing of this
Agreement(other than on account of the Executive's disability, as
defined in Section 7 below). In order for this subsection (c) to be
effective: (1) the Executive must give written notice to the Company
indicating that the Executive intends to terminate employment under
this subsection (c), (2) the Executive's voluntary termination under
this subsection must occur within 60 days after the Executive knows or
reasonably should know of an event described in clause (i), (ii),
(iii) or (iv) above, or within 60 days after the last in a series of
such events, and (3) the Company must have failed to remedy the event
described
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in clause (i), (ii), (iii) or (iv), as the case may be, within 30 days
after receiving the Executive's written notice. If the Company
remedies the event described in clause (i), (ii), (iii) or (iv), as
the case may be, within 30 days after receiving the Executive's
written notice, the Executive may not terminate employment under this
subsection (c) on account of the event specified in the Executive's
notice.
(d) The amounts under this Agreement will be paid in lieu of severance
benefits under any severance plan or program maintained by the Company (subject
to Section 3 above). The amounts payable under this Agreement will not be
reduced by any amounts earned by the Executive from a subsequent employer or
otherwise. If the Executive's employment is terminated by the Company for Cause
or if the Executive voluntarily terminates employment for a reason not described
in subsection (c) above or Section 7 below, this Agreement will immediately
terminate without liability on the part of the Company.
7. Disability or Death. If the Executive becomes disabled (as defined
below) during the Term of this Agreement while he is employed by the Company,
the Executive shall be entitled to receive the benefits described in Section
6(b)(i) of this Agreement as of the date on which he is determined by the
Company to be disabled. If the Executive dies during the Term of this Agreement
while he is employed by the Company, the benefits described in Section 6(b)(i)
will be provided to the personal
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representative of the Executive's estate. The foregoing benefits will be
provided in addition to any death, disability and other benefits provided under
Company benefit plans in which the Executive participates. Upon the Executive's
death or disability, the provisions of Sections 1, 2, 5, and 6 of this Agreement
will terminate. The term "disability" means a condition, resulting from bodily
injury or disease, that renders, and for a six consecutive month period has
rendered, the Executive unable to perform substantially the duties pertaining to
his employment with the Company. A return to work of less than 14 consecutive
days will not be considered an interruption in the Executive's six consecutive
months of disability. Disability will be determined by the Company on the basis
of medical evidence satisfactory to the Company.
8. Cause. For purposes of this Agreement, the term "Cause" means (i)
fraud or material misappropriation with respect to the business or assets of the
Company, (ii) persistent refusal or willful failure of the Executive to perform
substantially his duties and responsibilities to the Company, which continues
after the Executive receives notice of such refusal or failure, (iii) conviction
of a felony or crime involving moral turpitude, or (iv) the use of drugs or
alcohol that interferes materially with the Executive's performance of his
duties.
9. Indemnification. The Company will pay all reasonable fees and
expenses, if any, (including, without limitation, legal fees and expenses) that
are incurred by the Executive to enforce
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this Agreement and that result from a breach of this Agreement by the Company.
10. Payment of Compensation and Taxes. All amounts payable under this
Agreement (other than restricted stock and stock options, which will be governed
by the terms of their respective plans) will be paid in cash, subject to
required income and payroll tax withholdings. No unrestricted stock will be
issued to the Executive with respect to the vesting of restricted stock until
the Executive has paid to the Company the amount that must be withheld for
applicable income and employment taxes or the Executive has made provisions
satisfactory to the Company for the payment of such taxes.
11. Administration. The senior executive of Human Resources will be
responsible for the administration and interpretation of this Agreement on
behalf of the Company. If for any reason a benefit under this Agreement is not
paid when due, the Executive may file a written claim with the senior executive
of Human Resources. If the claim is denied or no response is received within 90
days after the filing (in which case the claim is deemed to be denied), the
Executive may appeal the denial to the Board of Directors within 60 days of the
denial. The Executive may request that the Board of Directors review the
denial, the Executive may review pertinent documents, and the Executive may
submit issues and comments in writing. A decision on appeal will be made within
60 days after the appeal is made, unless special circumstances require that the
Board of
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Directors extend the period for another 60 days. If the Company defaults in an
obligation under this Agreement, the Executive makes a written claim pursuant to
the claims procedure described above, and the Company fails to remedy the
default within the claims procedure period, then all amounts payable to the
Executive under this Agreement will become immediately due and owing.
12. Assignment. The rights and obligations of the Company under this
Agreement will inure to the benefit of and will be binding upon the successors
and assigns of the Company. If the Company is consolidated or merged with or
into another corporation, or if another entity purchases all or substantially
all of the Company's assets, the surviving or acquiring corporation will succeed
to the Company's rights and obligations under this Agreement. The Executive's
rights under this Agreement may not be assigned or transferred in whole or in
part, except that the personal representative of the Executive's estate will
receive any amounts payable under this Agreement after the death of the
Executive.
13. Rights Under the Agreement. The right to receive benefits under the
Agreement will not give the Executive any proprietary interest in the Company or
any of its assets. Benefits under the Agreement will be payable from the
general assets of the Company, and there will be no required funding of amounts
that may become payable under the Agreement. The Executive will for all
purposes be a general creditor of the
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Company. The interest of the Executive under the Agreement cannot be assigned,
anticipated, sold, encumbered or pledged and will not be subject to the claims
of the Executive's creditors.
14. Notice. For purposes of this Agreement, notices and all other
communications must be in writing and are effective when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the Executive or his personal representative at his last known
address. All notices to the Company must be directed to the attention of the
senior executive of Human Resources. Such other addresses may be used as either
party may have furnished to the other in writing. Notices of change of address
are effective only upon receipt.
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15. Miscellaneous. This instrument contains the entire agreement of the
parties. To the extent not governed by federal law, this Agreement will be
construed in accordance with the laws of the Commonwealth of Virginia, without
reference to its conflict of laws rules. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and the writing is signed by the Executive and the Company.
A waiver of any breach of or compliance with any provision or condition of this
Agreement is not a waiver of similar or dissimilar provisions or conditions.
The invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
which will remain in full force and effect. This Agreement may be executed in
one or more counterparts, all of which will be considered one and the same
agreement.
WITNESS the following signatures.
Virginia Electric and Power Company
By:__________________________
Xxxxx X. Xxxxx, Xx.
Chief Executive Officer
Dated:___________________
_____________________________
Xxxx X. XxXxxxxxxx
Dated:___________________
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