Exhibit 10(i)*
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of June 20, 1997,
between DOMINION RESOURCES, INC. (the "Company") and XXXX. X. XXXXX (the
"Executive").
RECITALS:
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 has and continues to believe that it is
particularly important to have stable, excellent management. The Board of
Directors has and continues to believe 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. To accomplish this purpose, the Company and the Executive
entered into an agreement as of April 12, 1995, which was amended as of
September 15, 1995 (the "1995 Employment Agreement").
The Board of Directors wishes to xxxxxx an atmosphere of cooperation
among the key management employees of the Company and its subsidiaries, and
provide an incentive for such employees to continue to contribute to the
future growth and success of the Company and its subsidiaries. To accomplish
this objective, the Organization and Compensation Committee of the Board of
Directors
(the "Committee") has recommended, and the Board of Directors has approved,
entering into a new employment agreement with the Executive, which shall
replace the Executive's 1995 Employment Agreement. The Company acknowledges
that the Executive's contributions to the past and future growth and success
of the Company have been and will continue to be substantial. The Company and
the Executive are entering into this Agreement to induce the Executive to
remain an employee of the Company and to continue to devote his full energy to
the Company's affairs. The Executive has agreed to continue 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 continue in the employment of the Company, as Chief Executive
Officer and President of the Company for the period beginning on the date of
this Agreement and ending December 31, 2002 (the "Term of this Agreement"),
according to the terms of this Agreement.
2. Duties. The Company and the Executive agree that, during the Term
of this Agreement, the Executive will be Chief Executive Officer of the
Company and will report directly to the Board of Directors. During the Term
of this Agreement, the Executive will continue to exercise such authority and
perform such executive duties as are commensurate with his position as Chief
Executive Officer. The Executive (i) will devote his 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 of the Company with
respect to the performance of his duties. The Executive shall also be
President of the Company and will perform such executive duties as are
commensurate with his position as President.
3. Effect on Other Agreements. This Agreement sets forth the entire
understanding of the parties with respect to the terms of the Executive's
employment with the Company and its subsidiaries. This Agreement supersedes
and replaces the Executive's 1995 Employment Agreement, which will terminate
as of the date on which this Agreement is executed. This Agreement supersedes
and replaces all agreements that were superseded and replaced by the 1995
Employment Agreement, including the Executive's Employment Continuity
Agreement, the letter dated April 21, 1994 to the Executive from Xxxxx X.
Xxxxx, the employment agreement between the Executive and the Company dated
August 12, 1994 (the "1994 Employment Agreement"), and any other employment
agreements between the Executive and the Company or a subsidiary
(collectively, the "Prior Agreements"). 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 the credited
service agreement described in Section 5(c). The Executive and the Company
agree that the Executive's Prior Agreements are null and void.
4. 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.
(ii) The Executive will be entitled to receive incentive
awards based on the Executive's job performance, 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 Board of Directors 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.
5. Completion Benefits.
(a) The Executive will be entitled to receive the following
additional benefits upon his termination of employment with the Company:
(i) The Executive's retirement benefits under the
Company's Retirement Plan and Benefit Restoration Plan will be
computed using compensation based on the Executive's highest rate
of annual salary in effect at any time during his employment. The
supplemental benefit to be provided under this subsection (i) will
be provided as a supplemental benefit under this Agreement and
will not be provided directly from the Retirement Plan.
(ii) The Executive's "Final Compensation" under the
Company's Executive Supplemental Retirement Plan (the "SRP") will
be determined by computing the "Incentive Compensation Amount" as
if the Executive's short-term incentive compensation target award
was the unreduced percentage (which will be at least 45%) of his
salary midpoint as approved by the Committee for the year (for
example, for 1993 and 1994, the unreduced percentage was 45% of
his salary midpoint, as compared to the reduced target that was
used for 1993 and 1994 in order to make long-term compensation a
larger part of the Executive's incentive compensation for those
years).
(iii) The benefit under the SRP will continue to be computed
as an equal periodic payment for 120 months, according to the SRP
document. However, this periodic payment will be payable for the
Executive's life (or for 120 payments, if longer).
(iv) All restricted stock held by the Executive as of the
date of termination of his employment, including the restricted
stock awarded to the Executive under the Restricted Stock Award
Agreement dated as of February 20, 1995, will become fully vested
(that is, transferable and nonforfeitable) as of the date of
termination of his employment.
(v) The Company will pay to the Executive a single lump
sum payment equal to nine hundred fifty thousand dollars
($950,000) on the day following the date of termination of his
employment.
(b) In addition to the foregoing, the Executive will receive
upon his termination of employment with the Company a single lump sum cash
payment equal to the present value of the annual base salary and annual cash
incentive awards (computed as described below) that the Executive is projected
to receive for employment in the period from January 1, 2002 to December 31,
2002. The lump sum will be computed as follows:
(i) For purposes of this calculation, the annual base
salary that the Executive is projected to receive for employment
from January 1, 2002 to December 31, 2002, will be calculated at
the highest annual base salary rate in effect for the Executive
during the three-year period ending on December 31, 2001. For
purposes of this calculation, the annual cash incentive awards
that the Executive is projected to receive for employment from
January 1, 2002 to December 31, 2002 will be calculated at a rate
equal to the highest annual cash incentive award paid to the
Executive during the three-year period ending on December 31,
2001. 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
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 4(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 Internal Revenue Code of
1986, as amended (the "Code"), compounded monthly, in effect on
the date on which the present value is determined.
(v) The lump sum payment will be paid within 30 days after
the Executive's termination of employment.
(c) As set forth in the existing credited service agreement
between the Executive and the Company, the Executive will be credited with a
total of 30 years of service for purposes of the Company's retirement plans.
6. Termination of Employment.
(a) During the Term of this Agreement, the Company may terminate
the Executive's employment only for Cause. During the Term of this Agreement,
the Executive may voluntarily terminate employment under the circumstances
described in clauses (i)-(v) of this subsection (a). After July 31, 1998, the
Executive may voluntarily terminate employment under the circumstance
described in clause (vi) of this subsection (a). If the Executive's
employment is terminated for Cause, or if the Executive voluntarily terminates
employment pursuant to this Section 6(a), the Executive will be entitled to
receive the benefits described in subsection (b). Subject to the provisions
of this subsection (a), the Executive may voluntarily terminate employment
after (i) the Executive's base salary is reduced, (ii) the Executive is not in
good faith considered for incentive awards as described in Section 4(a)(ii),
(iii) the Company fails to provide benefits as required by Section 4(b), (iv)
the Executive's place of employment is relocated to a location further than 30
miles from Richmond, Virginia, (v) the Executive's working conditions or
management responsibilities are substantially diminished (other than on
account of the Executive's disability, as defined in Section 7 below), or (vi)
the Executive voluntarily terminates employment on or after August 1, 1998
upon 90 days prior written notice to the Company and the Committee consents in
writing to such termination. In order for clause (i), (ii), (iii), (iv) or
(v) of this subsection (a) to be effective: (1) the Executive must give
written notice to the Company indicating that the Executive intends to
terminate employment under this subsection (a), (2) the Executive's voluntary
termination under this subsection must occur within 60 days after an event
described in clause (i), (ii), (iii), (iv) or (v) of the preceding sentence,
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), (iv) or (v), 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), (iv) or (v), as the case may be, within 30 days after
receiving the Executive's written notice, the Executive may not terminate
employment under this subsection (a) on account of the event specified in the
Executive's notice.
(b) In accordance with the provisions of Section 6(a), the
Executive will be entitled to receive the following benefits determined as of
the date of his termination of employment:
(i) The Executive will receive the benefits described in
Section 5(a)(i), (ii), (iii), (iv) and (v) above as of the date of
his termination of employment. In addition, the Executive will
receive the single lump sum cash payment described in Section 5(b)
of this Agreement if such payment is not otherwise payable under
the terms of Section 5(b).
(ii) The Executive will be credited with a total of 30
years of service and will be considered to have attained age 60
(if he has not already done so) for purposes of the Company's
retirement plans.
(iii) 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 medical and other
welfare 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.
(c) The amounts under this Agreement will be paid in lieu of
severance benefits under any severance plan or program maintained by the
Company. 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 voluntarily terminates employment prior to the end of the Term
of this Agreement for a reason not described in subsection (a) above or
Section 7 below, this Agreement will immediately terminate and the Executive
shall be entitled to the payment of the benefits under Sections 5(a), 5(b) and
5(c).
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
Sections 5(a)(i), 5(a)(ii), 5(a)(iii), 5(a)(iv), 5(a)(v), 5(b), and 6(b)(ii)
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 Sections 5(a)(i),
5(a)(ii), 5(a)(iii), 5(a)(iv), 5(a)(v), 5(b), and 6(b)(ii) will be provided to
the Executive's beneficiary designated under the terms of the applicable
benefit plan. 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. Except to the extent provided in this
Section 7, the provisions of Sections 1, 2, 4, 5 and 6 of this Agreement will
terminate upon the Executive's death or disability. 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 any and every duty 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)
material misappropriation with respect to the business or assets of the
Company, (ii) persistent refusal or wilful failure of the Executive materially
to perform his duties and responsibilities to the Company, which continues
after the Executive receives notice of such refusal or failure, (iii)
conviction of a felony involving moral turpitude, or (iv) the use of drugs or
alcohol that interferes materially with the Executive's performance of his
duties. The foregoing acts or events will constitute "Cause" for purposes of
this Agreement only to the extent that they were committed on or after
September 15, 1995 (i.e., the date on which the 1995 Employment Agreement was
amended).
9. Parachute Tax. If the Company determines that any amounts payable
under this Agreement would be subject to the excise tax imposed under Code
Section 4999 on "excess parachute payments", the Company will compute the
after-tax amount that would be payable to the Executive if the total amounts
that are payable to the Executive by the Company, an affiliate, or a plan of
the Company or an affiliate and are considered "parachute payments" for
purposes of Code Section 280G ("Parachute Payments") were limited to the
maximum amount that may be paid to the Executive under Code Sections 280G and
4999 without imposition of the excise tax (this after-tax amount is referred
to as the "Capped Amount"). The Company will also compute the after-tax
amount that would be payable to the Executive if the total Parachute Payments
were payable without regard to the Code Sections 280G and 4999 limit (this
after-tax amount is referred to as the "Uncapped Amount"). Notwithstanding
anything in this Agreement to the contrary, if the Capped Amount is greater
than or equal to 97% of the Uncapped Amount, then the total benefits and other
amounts that are considered Parachute Payments and are payable to the
Executive under this Agreement will be reduced to the largest amount that will
result in no portion of any such payment being subject to the excise tax
imposed by Code Section 4999. Tax counsel selected by mutual consent of the
Company and the Executive will determine the amount of any such reduction in
good faith. The determination will be made before the payments are due and
payable to the Executive, to the extent possible. The Executive will
determine which payments will be reduced, subject to approval by the Company
(which approval may not be unreasonably withheld). The Executive will have no
right to receive Parachute Payments under this Agreement in excess of the
reduced amount. The calculations under this Section will be made in a manner
consistent with the requirements of Code Sections 280G and 4999, as in effect
at the time the calculations are made.
10. 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.
11. Form of Payment. All amounts payable under this Agreement (other
than restricted stock, which will be paid according to the terms of the
Company's Long-Term Incentive Plan and Incentive Compensation Plan) will be
paid in cash, subject to required income and payroll tax withholdings.
12. 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 to remedy the default
within the claims procedure period, then all amounts payable to the Executive
under this Agreement will become due and owing.
13. 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 (or other beneficiary designated under the terms of the applicable
benefit plan) will receive any amounts payable under this Agreement after the
death of the Executive.
14. 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 assigned, anticipated, sold,
encumbered or pledged and will not be subject to the claims of the Executive's
creditors.
15. 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.
16. 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.
DOMINION RESOURCES, INC.
By:/s/ X. X. XXXXXXX
Xxxxxxx X. Xxxxxxx,
Chairman, Organization
and Compensation
Committee
Dated: 6/20/97
/s/ XXXX. E. XXXXX
Xxxx. X. Xxxxx
Dated: 6/20/97
