EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT dated as of May 1, 2006, by and between PIEDMONT NATURAL GAS
COMPANY, INC., a North Carolina corporation (the “Corporation”), and, XXXXXXX X. XXXXX, (the
“Officer”).
WITNESSETH:
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 obtain and retain the services of a well-qualified executive officer
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 Corporation’s
industry, and his reputation and contacts in the Corporation’s industry are 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 –
Utility Operations 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 or the Chief Executive Officer
of the Corporation. 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.
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 $275,000 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 Corporation, 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 May 1, 2006; 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 anniversary of the date of notice. Provided, further, no extension shall cause this
Agreement to extend beyond the date on
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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.
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.
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(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.
(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 a 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 that 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.
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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.
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 provisions 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/ Xxxxxx X. Xxxxxx
|
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| President & CEO | ||||||
| OFFICER: | ||||||
| By: | /s/ Xxxxxxx X. Xxxxx
|
|||||
| Name of Officer | ||||||
| Address: 000 Xxxxxx Xxxxx | ||||||
| Xxxxxxxxx, XX 00000 | ||||||
Employment Agreement reviewed and approved by the Board of Directors this 7th Day of
June, 2006.
| By: | /s/ Xxxx X. Xxxxxx
|
|||||
| Chairman of Compensation Committee |
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