Exhibit 10(xxvii)
VIRGINIA ELECTRIC AND POWER COMPANY
EMPLOYMENT CONTINUITY AGREEMENT
THIS AGREEMENT is between Virginia Electric and Power Company, a Virginia
Corporation (the "Employer"), and Dr. James T. Rhodes (the "Executive").
Dominion Resources, Inc. (the "Company"), is the parent company of a group
of affiliated corporations that includes Employer. The Company's Board of
Directors (the "Board") acknowledges that Executive's contributions to the past
and future growth and success of Employer and the Company have been and will
continue to be substantial. The Board recognizes that there exists a
possibility of a change in control in the Company and of a change in control
in Employer such that Employer would no longer be a member of the Company's
group of affiliated corporations. The Board also recognizes that the
possibility of either such change may contribute to uncertainty on the part of
Employer's senior management and may result in the departure or distraction of
Employer's senior management from operating responsibilities.
Outstanding management of Employer is always essential to advancing the
best interest of the Company and its shareholders. In the event of a threat or
occurrence of a bid to acquire or change control of the Employer or the Company
or to effect a business combination such that Employer would no longer be a
member of the Company's group of affiliated corporations, it is particularly
important that Employer's business be continued with a minimum of disruption.
The Board believes that the objective of securing and retaining outstanding
management will be achieved if Employer's key management employees are given
assurances of employment security so they will not be distracted by personal
uncertainties and risks created by such circumstances.
The Board believes that such assurances will secure the continued services
of Employer's key operational and management executives in the performance of
both their regular duties and such extra duties as may be required of them
during such periods of uncertainty, enable the Company to rely on such
executives to manage Employer's affairs during any such period with less
concern for their personal risks, and enhance Employer's ability to attract
new key executives as needed.
The Organization and Compensation Committee of the Board has recommended,
and the Board has approved, entering into employment agreements with Employer's
key management executives in order to achieve the foregoing objectives; and
Executive is a key management executive of Employer.
Under this authority, Employer and Executive enter into this Agreement to
induce Executive to remain an employee of Employer and to continue to devote
his full energy to Employer's affairs.
1. Employment.
(a) Employer and Executive hereby agree that Executive's employment
will continue after this Agreement is effective on the same terms and
conditions of employment as are in effect on such date.
(b) Employer further agrees that if Executive is in the employ of
Employer on a Control Change Date, Employer will continue to employ Executive
and Executive will remain in the employ of Employer for the period commencing
on the Control Change Date and ending on the earlier of the third anniversary
of such date or Executive's Normal Retirement Date (as defined under the
Dominion Resources, Inc. Retirement Plan) (the "Employment Period"), and that
Executive will continue to exercise such authority and perform such executive
duties as are commensurate with the authority being exercised and duties
being performed by the Executive immediately before the Control Change Date.
Executive's services will be performed at the location where Executive was
employed immediately before the Control Change Date. If Employer consents,
however, Executive may elect to change the location of his employment without
affecting any of his rights under this Agreement.
(c) For purposes of this Agreement, a Change in Control occurs if,
after the date of the Agreement, (i) any person, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner
or beneficial owner of Company securities having 20% or more of the combined
voting power of the then outstanding Company securities that may be cast for
the election of the Company's directors (other than as a result of an issuance
of securities initiated by the Company, or open market purchases approved
by the Board, as long as the majority of the Board approving the purchases
is the majority at the time the purchases are made); (ii) as the direct or
indirect result of, or in connection with, a cash tender or exchange offer, a
merger or other business combination, a sale of assets, a contested election,
or any combination of these transactions, the persons who were directors of
the Company before such transactions cease to constitute a majority of the
Company's Board, or any successor's board, within two years of the last of such
transactions; or (iii) an event occurs with respect to Employer such that,
after the event, Employer is no longer an Affiliate of the Company. For
purposes of this Agreement, the Control Change Date is the date on which an
event described in (i), (ii), or (iii) occurs. If a Change in Control occurs
on account of a series of transactions, the Control Change Date is the date
of the last of such transactions.
(d) For purposes of this Agreement, as to the Company, an Affiliate is
any entity that is (i) a member of a controlled group of corporations as
defined in section 1563(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), determined without regard to Code sections 1563(a)(4) and
1563(e)(3)(c), of which the Company is a member according to Code section
414(b); (ii) an unincorporated trade or business that is under common control
with the Company, as determined according to Code section 414(c); or a member
of an affiliated service group of which the Company is a member according to
Code section 414(m).
2. Compensation and Benefits. During the Employment Period, Employer will
(i) continue to pay Executive a salary not less than the salary applicable to
Executive on the Control Change Date, (ii) pay Executive bonuses in amounts not
less in amount than those paid to Executive during the twelve-month period
preceding the Control Change Date, and (iii) continue employee benefit
programs as to Executive at levels in effect on the Control Change Date (but
subject to such reductions as may be required to maintain such plans in
compliance with applicable federal laws regulating employee benefit programs).
3. Termination of Employment.
(a) Executive is entitled to receive Continued Compensation according
to the remaining provisions of this section if Executive's employment with
Employer terminates during the Employment Period because of an event described
in section 3(b) or 3(c), but subject to sections 3(f) and 3(g). If Executive's
employment terminates during the Employment Period and an event described in
3(b) or 3(c) has not occurred, this Agreement terminates.
(b) Executive is entitled to receive Continued Compensation if
Executive's employment is terminated by Employer without cause (cause being
limited to Executive's acts of theft, embezzlement, fraud, or moral
turpitude).
(c) Executive is entitled to receive Continued Compensation if
Executive voluntarily terminates employment after (i) Executive does not
receive salary increases, bonuses, and incentive awards comparable to the
salary increases, bonuses, and incentive awards that Executive received
in prior years or, if greater, that other executives in comparable positions
receive in the current year; or (ii) Executive's compensation or employment
related benefits are reduced; or (iii) Executive's status, title(s), offices,
places of employment, working conditions, or management responsibilities
are diminished (other than changes in reporting or management responsibilities
to reflect sound practices commonly followed by enterprises comparable to
Employer or required by applicable federal or state law). Executive's
voluntary termination under this section must occur within sixty days after
an event described in (i), (ii), or (iii), or within sixty days after the last
in a series of such events.
(d) Continued Compensation must be paid in a lump sum payment. If
Executive requests and Employer (in its sole discretion) consents, however,
Executive may receive Continued Compensation in thirty-six equal monthly
installments. If Continued Compensation is paid in monthly installments,
total Continued Compensation payments must equal three times Executive's
Base Period Income. If Continued Compensation is paid in a lump sum,
Continued Compensation equals the present value of the total payments that
would be due under the preceding sentence, using the interest rate prescribed
in Code section 280G(d)(4). Continued Compensation is due and payable to
Executive on the later of the fifteenth business day after Executive's
employment termination or the first day of the month following his employment
termination. At Employer's sole discretion, however, a Continued Compensation
payment may be made on an earlier date. Continued Compensation is subject to
reduction according to sections 3(f) and 3(g).
(e) Executive's Base Period Income equals the greater of (i) his
average annual base salary and cash incentive bonuses for the thirty-six
full month period (or actual period, if shorter) of employment preceding the
Control Change Date; or (ii) his average annual base salary and cash incentive
bonuses for the thirty-six full month period (or actual period if shorter) of
employment preceding Executive's employment termination. For purposes of the
preceding sentence, cash amounts received under the Dominion Resources, Inc.
Performance Achievement Plan are not considered cash incentive bonuses. Amounts
of salary and bonus that Executive has elected to defer during the relevant
period are included in Base Period Income.
(f) If, within thirty-six months after Executive becomes entitled to
receive Continued Compensation, Executive obtains employment that is comparable
to Executive's former employment with Employer, Continued Compensation must be
reduced by amounts earned by Executive from his subsequent employer. For
purposes of this Agreement, employment is comparable if such employment
entitles Executive to the same total compensation (including employment related
benefits) and similar status, title(s), offices, and management
responsibilities. If Continued Compensation must be reduced under this
subsection, either (i) Employer must reduce installment payments of Continued
Compensation by amounts earned by Executive from such comparable employment; or
(ii) within ninety days after Executive obtains such comparable employment,
Executive must refund to Employer the amount required so that Executive retains
a total amount of Continued Compensation equal to the present value (using
the same interest rate prescribed by section 3(d)) of the amount he would
retain if installment payments were reduced under this sentence. To prevent
hardship, repayment of Continued Compensation under this subsection may be
made by Executive in installments, determined at Employer's sole discretion;
but a repayment arrangement may not be used as a disguised loan.
(g) Except as provided in sections 3(h) and 4, if any payments which
the Executive has the right to receive from Employer (including Continued
Compensation payments), the Company, or an Affiliate or any payments or
benefits under any plan maintained by the Company or an Affiliate would
constitute a "parachute payment" (as defined in Code section 280G and not
governed by terms defined in this Agreement), all such payments must be
reduced to the largest amount that will result in no portion of any such
payments being subject to the excise tax imposed by Code section 4999. The
determination of any reduction pursuant to this subsection must be made by
Employer in good faith, before any such payments are due and payable to
Executive.
(h) In addition to any other payments provided under this Agreement
or any other arrangement between Employer and Executive, Executive is entitled
to (i) any benefits that become vested under the accelerated vesting
provisions of the Dominion Resources, Inc. Executive Supplemental Retirement
Plan and any benefits due him under the Dominion Resources, Inc. Performance
Achievement Plan or as a result of the exercise of a stock option granted or a
restricted stock award made under the Dominion Resources, Inc. Long-
Term Incentive Plan, and (ii) any payments or benefits due him that are
not "parachute payments" (as defined in Code section 280G), including
amounts that Executive is entitled to receive under Employer's qualified
plans and health-care coverage under Employer's welfare plans for which
Executive pays the cost.
4. Indemnification. Employer must pay all legal fees and expenses,
if any, incurred by Executive in seeking to obtain or enforce any right or
benefit provided by this Agreement, whether successful or not. In
addition, if the excise tax imposed under Code section 4999 on "excess
parachute payments," as defined in Code section 280G, is provoked by
(i) any amount paid or payable to or for the benefit of Executive under this
section as legal fees and expenses, or (ii) any benefits that become vested
under the accelerated vesting provisions of the Dominion Resources, Inc.
Executive Supplemental Retirement Plan and any benefits due Executive
under Dominion Resources, Inc. Performance Achievement Plan or as a result
of the exercise of a stock option granted or a restricted stock award
made under the Dominion Resources, Inc. Long-Term Incentive Plan, Employer
must indemnify Executive and hold him harmless against all claims, losses,
damages, penalties, expenses, and excise taxes.
5. Governing Law. This Agreement is construed according to the laws of
the Commonwealth of Virginia.
6. Amendment. This Agreement may not be amended except by the written
agreement of the parties.
7. Binding Effect. The parties agree that this Agreement is enforceable
under the laws of the Commonwealth of Virginia. This Agreement is binding
on Employer, its successors, and assigns and on Executive and his personal
representatives. If Employer is consolidated or merged with or into another
corporation, or if another entity purchases all or substantially all of
Employer's assets, the surviving or acquiring corporation succeeds to the
rights and obligations of Employer under this Agreement. This Agreement inures
to the benefit of and is enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If Executive dies while any amounts are payable
under this Agreement, all such amounts, unless otherwise provided, shall be
paid in accordance with the terms of this Agreement to Executive's spouse,
or if none, to his devisee, legatee, or other designee or, if there be no such
designee, to his estate.
8. 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 Executive or his personal representative at his last known
address. All notices to Employer must be directed to the attention of the
Chairman of the Board. Such other addresses may be used as either party has
furnished to the other in writing. Notices of change of address are
effective only upon receipt.
9. Miscellaneous. No provisions of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is
agreed to in writing signed by Executive and Employer. 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 does not
affect the validity or enforceability of any other provision of this
Agreement, which remains in full force and effect.
10. No Assignment. Executive may not assign, alienate, anticipate, or
otherwise encumber any rights, duties, or amounts which he might be entitled
to receive under this Agreement.
11. Term. This Agreement is effective from the date of its execution by
Employer. Employer may not terminate this Agreement for thirty-six months
after it becomes effective. The Agreement automatically continues in effect
from year to year thereafter unless the Employer notifies Executive in writing
thirty days before the end of the initial thirty-six-month period or any
anniversary of its execution that the Agreement will terminate as of that
date.
The parties have executed this Agreement dated this 12 day of February,
1987.
VIRGINIA ELECTRIC AND
POWER COMPANY
By /s/ Jack H. Ferguson
________________________
Jack H. Ferguson
President and Chief
Executive Officer
_________________________
Dr. James T. Rhodes
AMENDMENT TO THE
VIRGINIA ELECTRIC AND POWER COMPANY
EMPLOYMENT CONTINUITY AGREEMENT
(the "Agreement")
The second sentence of Section 3(e) of the Agreement is amended to
read as follows:
For purposes of the preceding sentence, cash amounts received under the
Dominion Resources, Inc. Performance Achievement Plan are not considered
cash incentive bonuses; however, annual base salary includes the
annualized Retainer Fee and any Board or Committee meeting fees payable by
virtue of membership on the Board of Directors of Dominion Resources, Inc.,
or of any of its subsidiaries or affiliates.
VIRGINIA ELECTRIC AND POWER COMPANY
By /s/ Jack H. Ferguson
_________________________________
Jack H. Ferguson
President
Date: 6/4/87
_____________________________
/s/ James R. Rhodes
___________________________________
Dr. James T. Rhodes