Exhibit 10(xxxi)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of February 1,
1997, between DOMINION RESOURCES, INC. (the "Company") and Xxxxxx Xxxxx.
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 interest 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 become 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 continue in the employment of the Company as an
executive of the Company, for the period beginning March 1, 1997
and ending November 1, 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 serve in a senior management
position with the Company. 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
exceptions 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 lawful and nonarbitrary 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 will 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 U.S. 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 East Midlands Electricity plc ("EME")
(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.
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 included
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 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
paid by EME 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 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
in the Company's Benefit Restoration Plan, Executive
Supplemental Retirement Plan ("ESRP"), cash and stock
incentive plans, and such other fringe benefit and
employee benefit plans and programs that the Company makes
available to the Executive from time to time.
(c) If the Executive attains age 60 while employed by the
Company, the Executive's retirement benefits under the
Company's Benefit Restoration Plan will be computed based
on the greater of (A) the Executive's years of credited
service (determined as if the Executive was a participant
in the Company's Retirement Plan and pursuant to the terms
of the Retirement Plan), or (B) thirty (30) years of
credited service, and will be reduced by the amount of
benefits payable to the Executive under the EME Pension
Plan and Amending Deed for the Pension and Death Benefits
Arrangement for N B M Xxxxx. Any benefit to be provided
under this subsection (c) will be provided as a
supplemental benefit under this Agreement and will not be
provided from the Retirement Plan. The provisions of this
subsection (c) shall survive the termination of this
Agreement.
(d) The Executive will be entitled to a fully vested benefit
under the ESRP if the Executive attains age 58 while
employed by the Company. The Executive's benefit under the
ESRP will be funded in the Dominion Resources, Inc.
Executive Retirement Plan Trust in equal installments so
that at age 60 the Executive's benefit under the Plan is
100% funded. The provisions of this subsection (d) shall
survive the termination of this Agreement.
(e) A proforma payout schedule is attached as Appendix A
which is based on certain assumptions that may or may not
be applicable. This Appendix is attached for interpretive
purposes only and is not a binding payout schedule.
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 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 salary rate in effect for
the Executive during the three-year period
preceding his termination of employment. Salary
that the Executive elected to defer will be taken
into account for purposes of this Agreement
without regard to the deferral.
(ii) The salary for any partial year in the Term of
this Agreement will be a pro-rated portion of the
annual amount.
(iii) 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, U.S. 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.
(iv) 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 or stock
options that would become vested (that is,
transferable and nonforfeitable, or excercisable)
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
performance shares or 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 performance shares are to be
awarded, or 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 performance goals are met. The
Executive must satisfy the tax withholding
requirements described in Section 10 with respect
to the performance shares and 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 any Company pension, medical and other
benefit plan, including ESRP, in which the
Executive was participating as of the date of his
termination of employment. Service credited to
the Executive for purposes of this subsection
(ii) shall be in addition to any service credited
to the Executive pursuant to Section 5 (c). The
Company will 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 continuing
coverage under the Company's benefit plans.
(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 only 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), (iv) the Company relocates the Executive's
place of employment to a location further than 50 miles
from Nottingham, U.K. (other than in connection with a
temporary assignment to the United States of no more than
3 months), or (v) 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 the position of Chief Executive
Officer or Chief Operating Officer of Dominion Resources,
Inc. ("DRI"), the position of President or Chief Executive
Officer of a subsidiary of DRI, or a position that reports
directly to the Chief Executive Officer, Chief Operating
Officer, or Senior Vice President of DRI. 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), (iv) or (v) 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), (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 (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 in which the Executive
participates (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 this Agreement will immediately
terminate without liability on the part of the Company.
(e) If the Executive (i) voluntarily terminates employment for
a reason not described in subsection (c) above or Section
7 below, and (ii) gives the Company no less than 6 months
prior notice of termination in accordance with the
provisions of Section 15 below, the Company will pay to
the Executive an amount equal to the additional benefits
the Executive would have accrued under the EME Pension
Plan and the Amending Deed for the Pension and Death
Benefits Arrangement for N B M Xxxxx, had he remained a
participant in such plans through the Term of the
Agreement. The amount paid under this subsection (e) will
be paid as a supplemental benefit under this Agreement and
will not be provided from the EME Pension Plan or the
Amending Deed for the Pension and Death Benefits
Arrangement for N B M Xxxxx. This amount will be paid in
lieu of any other benefits payable under this Agreement,
which 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 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 wilful failure
of the Executive to perform substantially his duties or
responsibilities to the Company, including any failure to comply
with the directions or orders of the Board of Directors or the
Chief Executive Officer of the Company with respect to the
performance of his duties or responsibilities, (iii) conduct that
constitutes disloyalty to the Company, and that materially xxxxx,
or has the potential to cause material harm to the Company, (iv)
conviction of a felony or crime involving moral turpitude, or (v)
the use of drugs or alcohol that interferes materially with the
Executive's performance of his duties.
9. Post Termination.
(a) The Executive undertakes to the Company that the Executive
shall not during the period of 12 months from Executive's
date of termination of employment be directly or
indirectly interested or concerned (whether as
shareholder, director, employee, partner, consultant,
proprietor, agent or in any other capacity) in any
business firm or company which
(i) holds a public electricity supply license for the
supply of electricity anywhere within the United
Kingdom; or
(ii) carries on anywhere within the United Kingdom any
other business competing with any business
carried on by the Company at the date of the
Executive's termination of employment in which
the Executive has been engaged or interested
during the 12 months prior to the date of his
termination of employment ("other relevant
business")
but nothing in this Section 9 shall prevent the Executive
holding or being interested in listed securities not
representing more than 5% in nominal amount of the issued
securities of any class of any company which are listed on
any recognized stock exchange anywhere in the world.
(b) The Executive undertakes to the Company that the Executive
shall not during the period of 12 months from the date of
the Executive's termination of employment whether as
principal agent or employee and whether directly or
indirectly supply to any person, firm or company whom the
Executive dealt with as a customer or potential customer
of the Company in the last 12 months of the Executive's
employment either electricity or any goods or services
which are the same or substantially the same as the type
of goods or services provided by any other relevant
business of the Company at the date of termination of the
Executive's employment whether or not the Executive has
approached the customer or vice versa.
(c) The Executive undertakes to the Company that the Executive
shall not during the period of 12 months from the date of
the Executive's termination of employment whether as
principal agent or employee and whether directly or
indirectly approach any person firm or company whom the
Executive dealt with as a customer or potential customer
of the Company in the last 12 months of the Executive's
employment with the Company with an offer to supply them
with electricity or any goods or services which are the
same or substantially the same as the type of goods or
services provided by any other relevant business of the
Company at the date of termination of the Executive's
employment with the Company.
(d) The Executive undertakes to the Company that the Executive
shall not during the period of 12 months from the date of
termination of employment whether as principal agent or
employer and whether directly or indirectly recruit or try
to recruit any person as an employee or consultant or in
some other capacity if that person was at any time during
the last 12 months of the Executive's employment employed
by the Company as a director or senior employee and the
Executive had regular contact with such person through
that person's work for the Company.
(e) The Executive undertakes to the Company that the Executive
shall also perform and observe the undertakings set out in
Section 9 (a) to 9 (d) in relation to any Affiliates whose
business or affairs the Executive has been engaged or
interested in at any time during the last 12 months of the
Executive's employment with the Company as if a reference
to each such Affiliate was substituted for a reference to
the Company in each case. This undertaking shall be
construed and enforceable as a separate convenant in
relation to each Affiliate and the Company shall be deemed
to have the benefit of this covenant as trustee for any
Affiliates.
(f) It is agreed that each of the covenants contained on the
part of the Executive in each of Section 9(a) to 9(c)
inclusive is and shall be construed and enforceable as a
separate covenant.
(g) In this Section 9 references to acting directly or
indirectly include (without prejudice to the generality of
that expression) references to acting alone or jointly
with or through any other person.
(h) The Executive undertakes and covenants with the Company
that he shall not at any time after the Executive's
termination of employment hold himself out or permit
himself to be held out as being in any way interested in
or connected with the Company or any Affiliate and shall
use his best endeavors to prevent himself being so held
out, save that if and for so long as he remains a director
or an employee of an Affiliate he may hold himself out or
be held out as being so connected with that Company.
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.
In Executive's capacity as a member of the Board of Directors of
East Midlands Electricity, plc, Executive is entitled to
indemnification provided by the Articles of Incorporation of
Dominion Resources, Inc.
11. Payment of Compensation and Taxes. All amounts payable under this
Agreement (other than stock, which will be paid according to the
terms of the Company's Incentive Compensation Plan) will be paid
in cash, subject to income and payroll tax withholdings. No shares
of stock will be issued to the Executive 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.
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
immediately 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 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 [except to the extent required pursuant to
Section 5 (d)]. 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, addresses 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 U.S. federal law, the
parties contemplate and agree that this Agreement will be
construed in accordance with the laws of the Commonwealth of
Virginia, U.S.A., without reference to its conflict of laws rules.
Any action to enforce the terms of this Agreement shall be brought
in any court of competent jurisdiction in the Commonwealth of
Virginia, and each party hereby irrevocably consents to the
jurisdiction of such courts over its person and hereby waives any
defense based upon improper venue, inconvenient forum or lack of
jurisdiction. No provisions of this Agreement may be modified ,
waived or discharged unless such a 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 our
compliance with any provision or condition of this Agreement is
not a waiver of similar or dissimilar provisions or conditions.
The invalidity or enforceability 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 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: 2/21/97
_______________
/s/ XXXXXX XXXXX
--------------------------------
Xxxxxx Xxxxx Xxxxxxxx Xxxxx
2-18-97
Appendix A
Xxxxxx X.X. Xxxxx
Retirement Benefits at Specified Ages
Under Terms of Employment Agreement
Additional
Years of Service Years of Credited Service Percent
Under EME ------------------------- Vested Estimated
Date of Age at Pension & DRI Qualified DRI Under DRI Monthly
Termination Termination Amending Deed Pension Plan BRP(1) ESRP(2) Payout(3)
----------- ----------- ---------------- ------------- ------ --------- ---------
11-1-97 55 1 0 0 0 (Pounds) 3,700
11-1-98 56 2 0 0 0 (Pounds) 4,400
11-1-99 57 3 0 0 0 (Pounds) 5,200
11-1-00 58 4 0 0 100% (Pounds) 14,000
11-1-01 59 5 0 0 100% (Pounds) 15,200
11-1-02 60 6 5 30 100% (Pounds) 21,300
Notes
1. Benefit Restoration Plan
2. Executive Supplemental Retirement plan
3. Estimated payout based on the following assumptions:
(bullet) DOB: October 4, 1942 (age 54)
(bullet) Retires November 1, 2002 (age 60)
(bullet) 1997 Base Pay = (Pounds)230,000
(bullet) Exchange rate: $1.60 = (Pounds)1.00
(bullet) Target bonus = 45% x base pay
(bullet) 5% salary increases each year
(bullet) 1997 EME Pension = (Pounds)44,000/year; + (Pounds)9,374
for each additional year
