EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of January 1, 1998,
between DOMINION RESOURCES, INC. (the "Company") and Xxxxxxx X. Xxxxx (the
"Executive").
RECITALS:
The Board of Directors of Dominion Resources, Inc. (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 Organization and Compensation Committee of the Board of Directors (the
"Committee") has recommended, and the 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
Executive to serve as an employee of the Company and to devote his 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 January 1, 1998 (the "Effective Date") and ending
on December 31, 1999 (the "Term of this Agreement").
2. Duties. The Company and the Executive agree that, during the Term of
this Agreement, the Executive will serve as a Vice President with the
Company. The Executive (i) will devote his knowledge, skill and best
efforts on a full-time basis to ensure the information systems
operated by the Company and its subsidiaries are prepared
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to meet the year 2000 with no interruption in service ("Year 2000
Project") (with the exception of absences on the 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.
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
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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 paid to the Executive under the Employment Continuity
Agreement, according to the terms 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 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.
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4. Affiliates. Employment by an Affiliate of the Company or a successor
to the Company will be considered employment by the Company for
purposes of this Agreement, and termination of employment with the
Company means termination of employment with the Company and all its
Affiliates and successors. The term "Company" as used in this
Agreement will be deemed to include Affiliates and successors. 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 compensation for services rendered to the Company:
(i) The Company will pay to the Executive an annual salary of
$175,000 (payable monthly), effective January 1,1998. 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) In addition to incentive awards as described in Sec. 5 (b),
Executive will be entitled to receive an incentive award of
up to $200,000 in cash ("Completion Bonus"), if and to the
extent that the Board of Directors determines that the
Executive's performance merits payment of such incentive
award. Such award, if any, will be paid to Executive at the
completion of the Term of this Agreement.
(iii) Executive will receive an allowance of up to $25,000 per
year for reimbursement of round trip travel expenses for
Executive's immediate family (spouse and/or children) from
the United States to England while Executive is located at
East Midlands Electricity during the Term of this Agreement.
If the cost of U.S. - U.K. round trip tickets for both
Executive and spouse is less than or equal to round trip
Business Class ticket for Executive alone, such cost will
not apply toward $25,000 allowance.
If the Executive is employed by an Affiliate or a successor (as
described in Section 4), the term "Board of Directors" as used
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in this Section 5 (a) and in Section 6 (a) (iii) means the Board
of Directors of the Executive's employer.
(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.
6. Termination of Employment.
(a) If the Company terminates the Executive's employment, other than
for Cause (as defined in Section 8 below), 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, Completion Bonus 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 annual base
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salary rate in effect for the Executive during the two-year
period preceding his termination of employment. For purposes
of this calculation, the Executive's Completion Bonus will
be assumed to be $200,000. 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 two-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.
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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 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.
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(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 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
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requirements described in Section 10 with respect to the
restricted stock.
(ii) The Executive will be credited with age and service credit
through the end of the Term of this Agreement for purposes
of computing benefits under the Company's pension, medical
and other benefit plans, and the Company will continue the
Executive's coverage under the Company's welfare benefit
plans as if the Executive remained employed through the end
of the Term of this Agreement. Notwithstanding the
foregoing, if the Company determines that giving such age
and service credit or continued coverage could adversely
affect the tax qualification or tax treatment of a benefit
plan, or otherwise have adverse legal ramifications, the
Company may pay the Executive a lump sum cash amount that
reasonably approximates the after-tax value to the Executive
of such age and service credit and continued coverage
through the end of the Term of this Agreement, in lieu of
giving such credit and continued coverage.
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(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 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), or (iv) the Company demotes the Executive to a
position that is not a senior management position (other than on
account of the Executive's disability, as defined in Section 7
below). For this purpose, a "senior management position" means a
position that reports directly to the Chief Executive Officer,
Chief Operating Officer, Executive Vice President or Senior Vice
President of the Company or to the President of a subsidiary of
the Company. 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
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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 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.
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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 during the Term of this Agreement and while he
is employed by the Company the Executive qualifies to receive benefits
under the Company's short-term disability policy, the Executive will be
treated as having eleven or more years of service with the Company for
purposes of determining the amount of his benefits under that policy. 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 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
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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 wilful 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 this Agreement and that result from a
breach of this Agreement by the Company.
10. Payment of Compensation and Taxes.
(a) All amounts payable under this Agreement (other than restricted stock,
which will be paid according to the terms of the Company's Incentive
Compensation Plan) 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
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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.
(b) Executive will be subject to Company's "tax equalization" policy as
described in the Dominion Resources international Human Resources
Manual with regard to his foreign tax liability (if any) incurred by
Executive during the Term of Agreement.
11. Administration. The Committee 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 Committee. 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 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
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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 Company. The
interest of the Executive under the Agreement cannot be
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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 Chairman of the Committee. 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.
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
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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.
DOMINION RESOURCES, INC.
By: /s/ Xxxx. X. Xxxxx
-----------------------------
Xxxx. X. Xxxxx
Chief Executive Officer
Dated: 1-19-98
/s/ Xxxxxxx X. Xxxxx
----------------------------
Dated: 1-20-98 Xxxxxxx X. Xxxxx
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