Exhibit 10(xxx)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of August
12, 1994, between DOMINION RESOURCES, INC. (the "Company") and THOS. E.
CAPPS (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 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 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 employ of the Company, as Chief Executive
Officer of the Company for the period beginning August 12, 1994 and ending
August 12, 1997 (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.
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. The existing
Employment Continuity Agreement between the Executive and the Company will
terminate as of the date on which this Agreement is executed. This
Agreement supersedes and replaces the Executive's existing Employment
Continuity Agreement, the letter dated April 21, 1994 to the Executive from
James F. Betts, 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(b). The Executive and the Company agree that, effective as of
the execution of this Agreement, 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. Benefits Upon Completion of the Term of this Agreement.
(a) If the Executive continues in the employment of the
Company through August 12, 1997, the Executive will be entitled to receive
the following additional benefits:
(i) 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
annual salary during his final year of employment or (B) the
Executive's final five-year average compensation, as
described in the Company's Retirement Plan. Any
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) The restricted stock held by the Executive as of
August 12, 1997 will become fully vested (that is,
transferable and nonforfeitable) as of that date. The
Executive must satisfy the tax withholding requirements
described in Section 10 with respect to the restricted
stock.
(b) As set forth in the existing credited service agreement
between the Executive and the Company, if the Executive continues in the
employment of the Company until he attains age 60, the Executive will be
credited with a total of 30 years of service upon attainment of age 60 for
purposes of the Company's retirement plans.
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; provided that, if the
Executive has not yet received payment of his annual cash
incentive award for the year in which his employment
terminates, the lump sum payment will be increased to
include a full year's award, in an amount determined
according to clause (i) above, for the year in which the
Executive's employment terminates.
(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 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.
(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) The Executive will receive the retirement benefits
described in Section 5(a)(i), (ii) and (iii) above as of the
date of his termination of employment.
(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 restricted stock held by the Executive at the
time of his termination of employment will become fully
vested (that is, transferable and nonforfeitable) as of the
date of the Executive's termination of employment. The
Executive must satisfy the tax withholding requirements
described in Section 10 with respect to the restricted
stock.
(iv) 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) If the Executive voluntarily terminates employment
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 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, or (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). 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 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 (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. 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.
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), (ii) and (iii) 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), (ii) and (iii) 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. Upon the Executive's
death or disability, the provisions of Sections 1, 2, 4, 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 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) fraud or 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) conduct that constitutes disloyalty to the
Company, and that materially harms 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. 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. 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
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.
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/ John W. Snow
John W. Snow,
Chairman, Organization and
Compensation Committee
Dated: 8-24-94
/s/ Thos. E. Capps
Thos. E. Capps
Dated: 8-24-94