Exhibit 10.24
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of September 12,
1997, between DOMINION RESOURCES, INC. (the "Company") and XXXXXX X. XXXXXXX,
XX (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 September 12, 1997 (the "Effective Date") and ending on the third
anniversary of such date, subject to the further provisions of this Section 1
(the "Term of this Agreement"). If Xxxx. X. Xxxxx ceases to be the Chief
Executive Officer of the Company before the third anniversary of the Effective
Date, the Term of this Agreement shall be extended for a period of three years
from the date Xxxx. X. Xxxxx ceases to be the Chief Executive Officer of the
Company.
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 exception of absences on account of illness or vacation in accordance
with the Company's policies and civic and charitable commitments not involving a
conflict with the Company's business), and (ii) will comply with the directions
and orders of the Board of Directors and Chief Executive Officer of the Company
with respect to the performance of his duties.
3. Effect on Other Agreements.
(a) The Board of Directors recognizes that the Executive has entered
or may enter into an Employment Continuity Agreement with the Company, which
provides benefits under certain circumstances in the event of a change in
control of the Company. Notwithstanding anything in this Agreement to the
contrary, if the Executive's employment terminates for any reason after a change
in control and payments are to be made to the Executive under the Executive's
Employment Continuity Agreement: (i) the Executive will not receive payments
under this Agreement as a result of his termination of employment for any
reason, (ii) after payment of any amounts otherwise due the Executive under this
Agreement, this Agreement will terminate without liability on the part of the
Company, and (iii) if and to the extent that any payments made under this
Agreement are considered "parachute payments" for purposes of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), the payments will be
taken into account in determining the amount to be 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 or any credited service agreement under which the
Executive receives years of service credit for retirement plan purposes.
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
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 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.
If the Executive is employed by an Affiliate or a successor (as described in
Section 4), the term "Board of Directors" as used 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.
(c) If the Executive attains age 55 while employed by the Company,
the Executive's retirement benefits under the Company's Retirement Plan and
Benefit Restoration Plan will be computed based on the greater of (A) the
Executive's years of credited service (as determined pursuant to the terms of
the Retirement Plan), or (B) twenty-five (25) years of credited service. If the
Executive attains age 60 while employed by the Company, the Executive's
retirement benefits under the Company's Retirement Plan and Benefit Restoration
Plan will be computed at such date, and at any time thereafter, based on the
greater of (A) the Executive's years of credited service (as determined pursuant
to the terms of the Retirement Plan), or (B) thirty (30) years of credited
service. Any supplemental benefit to be provided under this subsection (c) will
be provided as a supplemental benefit under this Agreement and will not be
provided directly from the Retirement Plan. The provisions of this subsection
(c) shall survive the termination of this Agreement.
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 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 salary rate in effect for the
Executive during the three-year period preceding his termination of
employment. For purposes of this calculation, the Executive's annual
cash incentive awards for the balance of the Term of the Agreement
will be calculated at a rate equal to the highest annual cash
incentive award paid to the Executive during the three-year period
preceding his termination of employment. Salary and bonus that the
Executive elected to defer will be taken into account for purposes
of this Agreement without regard to the deferral.
(ii) The salary and incentive award for any partial year in the
Term of this Agreement will be a pro-rated portion of the annual
amount.
(iii) If the Executive has not yet received an annual cash
incentive award for the year in which his employment terminates, the
lump sum payment will be increased to include a pro-rated award for
the portion of the year preceding the Executive's termination of
employment. If the Executive has not yet received payment of his
annual cash incentive award for the year preceding his termination
of employment, the lump sum payment will be increased to include an
award for the year preceding the Executive's termination of
employment. The incentive award for the year or portion of the year
preceding the Executive's termination of employment will be
determined according to clause (i) above, unless the Board of
Directors made a good faith final determination of the amount of the
applicable incentive award pursuant to Section 5(a)(ii) before the
Executive's termination of employment. If the Board of Directors
made such a determination, the applicable incentive award will be
computed according to the Board of Directors' determination.
(iv) Present value will be computed by the Company as of the
date of the Executive's termination of employment, based on a
discount rate equal to the applicable Federal short-term rate, as
determined under Section 1274(d) of the Code, compounded monthly,
in effect on the date as of which the present value is determined.
(v) The lump sum payment will be paid within 30 days after the
Executive's termination of employment.
(b) If the Company terminates the Executive's employment,
other than for Cause, during the Term of this Agreement, the Executive will be
entitled to receive the following additional benefits determined as of the date
of his termination of employment:
(i) Any outstanding restricted stock that would become vested
(that is, transferable and nonforfeitable) if the Executive remained
an employee through the Term of this Agreement will become vested as
of the date of the Executive's termination of employment (or as of
the date described in the next sentence, if applicable). In
addition, if the Company has agreed to award the Executive
restricted stock at the end of a performance period, subject to the
Company's achievement of performance goals, and the date as of which
the restricted stock is to become vested falls within the Term of
this Agreement, the stock will be awarded and become vested at the
end of the performance period if and to the extent that the
performance goals are met. The Executive must satisfy the tax
withholding requirements described in Section 10 with respect to the
restricted stock.
(ii) The Executive 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. Service credited to the Executive for purposes of the
Company's pension plans pursuant to this subsection (ii) shall be in
addition to any service credited to the Executive pursuant to
Section 5(c). 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) 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) and 5(c), 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 the position of President of a subsidiary of
the Company, or a position that reports directly to the Chief Executive Officer,
Chief Operating officer 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 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.
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 and
after Xxxx. X. Xxxxx ceases to be the Chief Executive Officer of 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 of
disability. Disability will be determined by the Company on the basis of medical
evidence satisfactory to the Company.
8. Cause. For purposes of this Agreement, the term "Cause" means (i) fraud
or material misappropriation with respect to the business or assets of the
Company, (ii) persistent refusal or willful failure of the Executive to perform
substantially his duties and responsibilities to the Company, which continues
after the Executive receives notice of such refusal or failure, (iii) conviction
of a felony or crime involving moral turpitude, or (iv) the use of drugs or
alcohol that interferes materially with the Executive's performance of his
duties.
9. Indemnification. The Company will pay all reasonable fees and expenses,
if any, (including, without limitation, legal fees and expenses) that are
incurred by the Executive to enforce this Agreement and that result from a
breach of this Agreement by the Company.
10. Payment of Compensation and Taxes. All amounts payable under this
Agreement (other than restricted stock, which will be paid according to the
terms of the Company's Long-Term Incentive 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 amount that must be withheld for
applicable income and employment taxes or the Executive has made provisions
satisfactory to the Company for the payment of such taxes.
11. Administration. The 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.
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 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 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: 9/12/97
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/s/ Xxxxxx X. Xxxxxxx, XX
Dated: 9/12/97 ------------------------------
------------------ Xxxxxx X. Xxxxxxx, XX
