SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-2255
VIRGINIA ELECTRIC AND POWER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
ONE JAMES RIVER PLAZA
RICHMOND, VIRGINIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
54-0418825
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
23261-6666
(ZIP CODE)
(804) 771-3000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
ON WHICH REGISTERED
Preferred Stock (cumulative) New York Stock Exchange
$100 liquidation value:
$5.00 dividend
$7.45 dividend
$7.20 dividend
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of January 31, 1995 was zero.
As of January 31, 1995, there were issued and outstanding 171,484 shares of
the registrant's common stock, without par value, all of which were held,
beneficially and of record, by Dominion Resources, Inc.
DOCUMENTS INCORPORATED BY REFERENCE.
NONE
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
ITEM NUMBER NUMBER
PART I
1. Business....................................................... 1
The Company.................................................... 1
Capital Requirements and Financing Program..................... 1
Construction and Nuclear Fuel Expenditures................... 1
Financing Program............................................ 2
Rates.......................................................... 2
Virginia..................................................... 3
County and Municipal......................................... 3
North Carolina............................................... 3
Regulation..................................................... 4
General...................................................... 4
Environmental................................................ 4
Nuclear...................................................... 5
Winter Peak.................................................. 5
Sources of Power............................................... 6
Company Generating Units..................................... 6
Net Utility Purchases........................................ 6
Non-Utility Generation....................................... 6
Sources of Energy Used and Fuel Costs.......................... 6
Nuclear Operations and Fuel Supply........................... 6
Fossil Fuel Supply........................................... 7
Purchases and Sales of Power................................. 7
Interconnections............................................... 7
Future Sources of Power........................................ 8
Company Owned Generation..................................... 8
Non-Utility Generation....................................... 9
Competition.................................................... 9
Conservation and Load Management............................... 9
2. Properties...................................................... 9
3. Legal Proceedings............................................... 10
4. Submission of Matters to a Vote of Security Holders............. 12
PART II
5. Market for the Registrant's Common Equity and Related
Stockholder Matters........................................... 12
6. Selected Financial Data......................................... 12
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 12
8. Financial Statements and Supplementary Data..................... 19
9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure....................................... 40
PART III
10. Directors and Executive Officers of the Registrant............. 40
11. Executive Compensation......................................... 43
12. Security Ownership of Certain Beneficial Owners and
Management..................................................... 46
13. Certain Relationships and Related Transactions................. 46
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K...................................................... 47
<PAGE>
PART I
ITEM 1. BUSINESS
THE COMPANY
Virginia Electric and Power Company was incorporated in Virginia in 1909
and has its principal office at One James River Plaza, Richmond, Virginia
23261-6666, telephone (804) 771-3000. It is a wholly-owned subsidiary of
Dominion Resources, Inc. (Dominion Resources), a Virginia corporation.
Virginia Electric and Power Company is a regulated public utility engaged
in the generation, transmission, distribution and sale of electric energy within
a 30,000 square mile area in Virginia and northeastern North Carolina. It
transacts business under the name VIRGINIA POWER in Virginia and under the name
NORTH CAROLINA POWER in North Carolina. It sells electricity to retail customers
(including governmental agencies) and to wholesale customers such as rural
electric cooperatives and municipalities. The Virginia service area comprises
about 65 percent of Virginia's total land area, but accounts for over 80 percent
of its population. As used herein, the terms "Virginia Power" and the "Company"
shall refer to the entirety of Virginia Electric and Power Company, including,
without limitation, its Virginia and North Carolina operations.
The Company has nonexclusive franchises or permits for electric operations
in substantially all cities and towns now served. It also has certificates of
convenience and necessity from the Virginia State Corporation Commission (the
Virginia Commission) for service in all territory served at retail in Virginia.
The North Carolina Utilities Commission (the North Carolina Commission) has
assigned territory to the Company for substantially all of its retail service
outside certain municipalities in North Carolina.
The Company strives to operate its generating facilities in accordance with
prudent utility industry practices and in conformity with applicable statutes,
rules and regulations. Like other electric utilities, the Company's generating
facilities are subject to unanticipated or extended outages for repairs,
replacements or modifications of equipment or otherwise to comply with
regulatory requirements. Such outages may involve significant expenditures not
previously budgeted, including replacement energy costs. See NUCLEAR REGULATION
under REGULATION below and NUCLEAR OPERATIONS AND FUEL SUPPLY under SOURCES OF
ENERGY USED AND FUEL COSTS.
The Company had 10,585 full-time employees on December 31, 1994. 3,794 of
the Company's employees are represented by the International Brotherhood of
Electrical Workers under a contract extending to March 31, 1995. Negotiations
are presently underway to extend the contract.
For additional information on significant corporate governance issues
relating to the nonutility business see Item 3. LEGAL PROCEEDINGS.
CAPITAL REQUIREMENTS AND FINANCING PROGRAM
CONSTRUCTION AND NUCLEAR FUEL EXPENDITURES
Virginia Power's estimated construction and nuclear fuel expenditures,
including Allowance for Funds Used During Construction (AFC), for the three-year
period 1995-1997, total $1.9 billion. It has adopted a 1995 budget for
construction and nuclear fuel expenditures as set forth below:
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<TABLE>
<CAPTION>
ESTIMATED 1995
EXPENDITURES
(MILLIONS)
<S> <C>
New Generating Facilities:
Clover Unit 1 and Unit 2............................................................ $ 52
Other Production:
North Anna Unit 2 steam generator replacement....................................... 70
Clean Air Act....................................................................... 25
Other............................................................................... 90
General Support Facilities............................................................ 56
Transmission.......................................................................... 59
Distribution.......................................................................... 262
Nuclear Fuel.......................................................................... 59
Total Construction Requirements and Nuclear Fuel.................................... 673
AFC.............................................................................. 11
Total Expenditures.................................................................. $684
</TABLE>
FINANCING PROGRAM
In 1994, Virginia Power obtained $539 million from the sale of securities.
With a portion of the proceeds of the 1994 securities sales, the Company retired
$166.5 million of securities through mandatory debt maturities and sinking fund
requirements and retired an additional $167.8 million of securities through
optional redemptions. Its long-term financings included $325.0 million of First
and Refunding Mortgage Bonds, $100 million of unsecured Medium-Term Notes, $39.0
million of Pollution Control Revenue Bonds, and $75.0 million of Common Stock
sold to Dominion Resources. See LIQUIDITY AND CAPITAL RESOURCES under
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS for, among other things, a discussion of the Company's commercial
paper program.
Virginia Power's 1995 construction and nuclear fuel requirements, exclusive
of AFC, are estimated to be $673.2 million. Of this amount, it is expected that
approximately $552 million will be obtained from cash flow from operations. The
remaining $121.2 million of construction and nuclear fuel requirements, as well
as the $312.2 million of debt maturities, will be obtained by a combination of
sales of securities and short-term borrowings. See LIQUIDITY AND CAPITAL
RESOURCES under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RATES
The Company was subject to rate regulation in 1994 as follows:
<TABLE>
<CAPTION>
1994
PERCENT PERCENT
OF OF
REVENUES KWH SALES
<S> <C> <C> <C>
Virginia retail:
Non-Governmental customers.................... Virginia Commission 78% 73%
Governmental customers........................ Negotiated Agreements 11 12
North Carolina retail........................... North Carolina Commission 4 4
Wholesale:
Requirements -- Sales for Resale.............. Federal Energy Regulatory 5 8
Commission (FERC)
Non-Requirements -- Sales for Resale.......... FERC 2 3
100% 100%
</TABLE>
Substantially all of the Company's electric sales are subject to recovery
of changes in fuel costs either through fuel adjustment factors or periodic
adjustments to base rates, each of which requires prior regulatory approval.
Each of these jurisdictions has the authority to disallow recovery of costs
it determines to be excessive or imprudently incurred. Various cost items may be
reviewed on occasion, including costs of constructing or modifying facilities,
on-going purchases of capacity or providing replacement power during generating
unit outages.
2
<PAGE>
The principal rate proceedings in which the Company was involved in 1994
are described below by jurisdiction. Rate relief obtained by the Company is
frequently less than requested.
VIRGINIA
On February 3, 1994, the Virginia Commission entered its Final Order in
Virginia Power's 1992 rate case, approving an increase in annual revenues of
$241.9 million. Refunds of $129.2 million (representing the amount recovered
under interim rates in excess of the rates finally approved, with interest) were
completed by the end of April. The Commission also approved continuation of
deferral accounting to recover purchased power capacity costs, allowed inclusion
of salary incentive pay in the cost of service, accepted the Company's
calculation of postretirement benefits other than pensions, allowed rate base to
be updated to November 30, 1992, and recommended a return on equity in the range
of 10.5% to 11.5% with rates to be based on 11.4% to reflect superior operating
performance of the Company's generating units. The Commission disapproved
proposed changes in the Company's line extension policy and a proposed increase
in its summer/winter rate differential, and it disallowed from recovery through
rates the gross receipts tax component of capacity payments under certain
previously executed power purchase contracts. The Commission directed the
Company, the Commission's Staff and other interested parties to explore the
concept of expanding the generating unit performance program to include
purchases of capacity and to present testimony on that issue in the Company's
next rate case. The Company and several non-utility generators that will be
adversely affected by the ruling that disallowed rate recovery of the gross
receipts tax component of purchased power costs appealed that ruling to the
Virginia Supreme Court. On January 13, 1995, the Court issued its Opinion
affirming the Virginia Commission's decision. On January 23, 1995, the Company
and the other appellants filed Motions of Intent to Seek Rehearing.
On January 31, 1994, a hearing before a Hearing Examiner was held on
Virginia Power's application requesting approval of Schedule DEF -- Dispersed
Energy Facility, a rate schedule that would allow the Company to respond to the
request of an industrial or commercial customer to build and operate a
generating facility at its business location and to sell to that customer all of
the electricity and associated steam from that facility under a long-term
contract. On June 23, 1994, the Hearing Examiner recommended approval on an
experimental basis (see COMPETITION below).
On January 10, 1994, a hearing was held before a Hearing Examiner on
Virginia Power's application to revise its Schedule 19 (rates to be paid to
small qualifying facilities), which sought, among other things, approval of (a)
limiting the schedule's applicability to facilities of 100 Kw or less and (b)
postponing the commencement of capacity payments until the capacity is needed by
the Company. On April 25, 1994, the Hearing Examiner issued his Report
recommending approval of these and other features of the Company's application,
and on July 1, 1994, the Commission entered its Final Order accepting the
Examiner's recommendation as to these and most other issues.
On September 19, 1994, Virginia Power filed with the Virginia Commission an
application for a $25 million increase in the fuel factor. A hearing was held on
October 28, 1994, and the Commission approved an increase of $9.9 million
effective November 1, 1994.
Virginia Power filed an application with the Virginia Commission on
December 21, 1994, seeking approval, on an experimental basis, to implement a
real time pricing (RTP) option for its industrial customers with loads in excess
of 10 Mw. Under this option, all or a portion of an industrial customer's load
growth would be supplied at projected incremental hourly production costs,
adjusted for line losses and taxes, plus a margin of 0.6 cents per Kwh, and a
marginal cost-based Generation Capacity Adder and a Transmission Capacity Adder
would be applicable during those hours when the Virginia Power system is
approaching its forecasted annual peak demand. Up to 20% of an industrial
customer's existing load could be served on an RTP basis if the customer
executes a five-year contract for such service.
COUNTY AND MUNICIPAL
On January 30, 1995, Virginia Power reached agreement on the terms of a
three-year contract governing rates for county and municipal customers in
Virginia, which will continue through June 30, 1997. This contract resulted in a
decrease of $25.5 million in annual base revenue from the previous contract and
became effective July 1, 1994, with base rates remaining constant through the
term of the new contract.
NORTH CAROLINA
In Virginia Power's 1992 rate case before the North Carolina Commission,
the Commission disallowed recovery of certain capacity costs paid to a
cogenerator and a portion of the compensation of certain Company officers. The
Company
3
<PAGE>
appealed the Commission's Order on those issues, and on December 9, 1994, the
North Carolina Supreme Court affirmed the disallowance of each by the
Commission. The Company filed a Motion for Rehearing on January 13, 1995.
Virginia Power filed an application with the North Carolina Commission on
September 9, 1994 for a $1.5 million increase in fuel rates. A hearing was held
on November 8, 1994, and the increase was approved on December 19, 1994.
On December 22, 1994, Virginia Power filed an application with the North
Carolina Commission for approval of Self-Generation Deferral Rates that are a
part of an Energy Agreement between North Carolina Power and Weyerhaeuser. The
Energy Agreement involves the use of a negotiated pricing structure which will
result in the deferral of the installation of additional self-generation
facilities by Weyerhaeuser.
REGULATION
GENERAL
In a wide variety of matters in addition to rates, Virginia Power is
presently subject to regulation by the Virginia Commission and the North
Carolina Commission, the Environmental Protection Agency (EPA), Department of
Energy (DOE), Nuclear Regulatory Commission (NRC), FERC, the Army Corps of
Engineers, and other federal, state and local authorities. Compliance with
numerous laws and regulations increases the Company's operating and capital
costs by requiring, among other things, changes in the design and operation of
existing facilities and changes or delays in the location, design, construction
and operation of new facilities. The commissions regulating the Company's rates
have historically permitted recovery of such costs.
Virginia Power may not construct, or incur financial commitments for
construction of, any substantial generating facilities or large capacity
transmission lines without the prior approval of state and federal governmental
agencies having jurisdiction over various aspects of its business. Such
approvals relate to, among other things, the environmental impact of such
activities, the relationship of such activities to the need for providing
adequate utility service and the design and operation of proposed facilities.
Various provisions of the Energy Policy Act of 1992 (Energy Act) that could
affect the Company include those provisions encouraging the development of
non-utility generation, giving FERC authority to order transmission access for
wholesale transactions, requiring higher energy efficiency and alternative fuels
use, restructuring of nuclear plant licensing procedures, and requiring state
regulatory authorities to give full rate treatment for the effects of
conservation and demand management programs, including the effects of reduced
sales. While the full impact of the Energy Act on the Company cannot at this
time be quantified, it is likely, over time, to be significant. See COMPETITION
under BUSINESS and COMPETITION under MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
ENVIRONMENTAL
From time to time, the Company may be identified as a potentially
responsible party (PRP) with respect to a Superfund site. EPA (or a state) can
either (a) allow such a party to conduct and pay for a remedial investigation
and feasibility study and remedial action or (b) conduct the remedial
investigation and action and then seek reimbursement from the parties. Each
party can be held jointly, severally and strictly liable for all costs, but the
parties can then bring contribution actions against each other and seek
reimbursement from their insurance companies. As a result of the Superfund Act
or other laws or regulations regarding the remediation of waste, the Company may
be required to expend amounts on remedial investigations and actions. Although
the Company is not currently aware of any sites or events including those sites
currently identified likely to result in significant liabilities, such amounts,
in the future, could be significant.
Permits under the Clean Water Act and state laws have been issued for all
of the Company's steam generating stations now in operation. Such permits are
subject to reissuance and continuing review.
The Company is subject to the Clean Air Act (Air Act), which provides the
statutory basis for ambient air quality standards. In order to maintain
compliance with such standards and reduce the impact of emissions on ambient air
quality, the Company may be required to incur significant additional
expenditures in constructing new facilities or in modifying existing facilities.
The Company has installed a scrubber at its Mt. Storm Unit 3 Power Station. The
scrubber began operation on October 31, 1994. The cost of this scrubber and
related equipment was $147 million. The Company is presently conducting studies
leading to the compliance plan for Phase II of the Clean Air Act, which may
involve the installation of two additional scrubbers, the addition of nitrogen
oxide (NOx) controls and other methods for compliance. The present estimate for
the total
4
<PAGE>
capital cost for compliance, assuming the installation of three scrubbers,
nitrogen oxide controls and emission monitoring instrumentation, is $481 million
(1992 dollars). Annual incremental compliance costs for operation, maintenance
and fuel costs are estimated to be $128 million. These cost estimates may change
upon completion of the study effort now underway. See CLEAN AIR ACT COMPLIANCE
under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The Company continues to work with the West Virginia Office of Air Quality
concerning opacity requirements applicable to the Mt. Storm Power Station.
For additional information on ENVIRONMENTAL MATTERS, see Note O to
FINANCIAL STATEMENTS.
NUCLEAR
All aspects of the operation and maintenance of the Company's nuclear power
stations are regulated by the NRC. Operating licenses issued by the NRC are
subject to revocation, suspension or modification, and operation of a nuclear
unit may be suspended if the NRC determines that the public interest, health or
safety so requires.
From time to time, the NRC adopts new requirements for the operation and
maintenance of nuclear facilities. In many cases, these new regulations require
changes in the design, operation and maintenance of existing nuclear facilities.
If the NRC adopts such requirements in the future, it could result in
substantial increases in the cost of operating and maintaining the Company's
nuclear generating units.
WINTER PEAK
Due to record cold weather on January 19, 1994, the Company reached a
record winter peak of 14,877 Mw, which exceeded the prior record of 13,478 Mw
that had been established one day earlier. Similar conditions were experienced
by utilities within the Pennsylvania-New Jersey-Maryland Power Pool.
5
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SOURCES OF POWER
COMPANY GENERATING UNITS
<TABLE>
<CAPTION>
TYPE SUMMER
YEARS OF CAPABILITY
NAME OF STATION, UNITS AND LOCATION INSTALLED FUEL MW
<S> <C> <C> <C>
Nuclear:
Surry Units 1 & 2, Surry, Va..................................................... 1972-73 Nuclear 1,562
North Anna Units 1 & 2, Mineral, Va.............................................. 1978-80 Nuclear 1,787(a)
Total nuclear stations........................................................ 3,349
Fossil Fuel:
Steam:
Bremo Units 3 & 4, Bremo Bluff, Va............................................ 1950-58 Coal 227
Chesterfield Units 3-6, Chester, Va........................................... 1952-69 Coal 1,250
Mt. Storm Units 1-3, Mt. Storm, W. Va......................................... 1965-73 Coal 1,596
Chesapeake Units 1-4, Chesapeake, Va.......................................... 1953-62 Coal 595
Possum Point Units 3 & 4, Dumfries, Va........................................ 1955-62 Coal 322
Yorktown Units 1 & 2, Yorktown, Va............................................ 1957-59 Coal 326
Possum Point Units 1, 2, & 5, Dumfries, Va.................................... 1948-75 Oil 929
Yorktown Unit 3, Yorktown, Va................................................. 1974 Oil & Gas 720
North Branch Unit 1, Bayard, W. Va............................................ 1994(b) Waste Coal 74
Combustion Turbines:
35 units (8 locations)........................................................... 1967-90 Oil & Gas 1,019
Combined Cycle:
Chesterfield Units 7 & 8, Chester, Va............................................ 1990-92 Oil & Gas 397
Total fossil stations......................................................... 7,455
Hydroelectric:
Gaston Units 1-4, Roanoke Rapids, N.C............................................ 1963 Conventional 225
Roanoke Rapids Units 1-4, Roanoke Rapids, N.C.................................... 1955 Conventional 96
Other............................................................................ 1930-87 Conventional 3
Bath County Units 1-6, Warm Springs, Va.......................................... 1985 Pumped Storage 1,260(c)
Total hydro stations.......................................................... 1,584
Total Company generating unit capability...................................... 12,388
NET UTILITY PURCHASES.............................................................. 830
NON-UTILITY GENERATION............................................................. 3,244
Total Capability.............................................................. 16,462
</TABLE>
(a) Includes an undivided interest of 11.6 percent (207 Mw) owned by Old
Dominion Electric Cooperative (ODEC).
(b) On December 30, 1994, the Company acquired the North Branch 80 Mw (nominal
rating) waste coal power station located in Bayard, West Virginia in Grant
County.
(c) Reflects the Company's 60 percent undivided ownership interest in the 2,100
Mw station. A 40 percent undivided interest in the facility is owned by
Allegheny Generating Company, a subsidiary of Allegheny Power System, Inc.
(APS).
The Company's highest one-hour integrated service area summer peak demand
was 13,366 Mw on July 29, 1993, and the highest one-hour integrated winter peak
demand was 14,877 Mw on January 19, 1994.
SOURCES OF ENERGY USED AND FUEL COSTS
For information as to energy supply mix and the average fuel cost of energy
supply, see RESULTS OF OPERATIONS under MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
NUCLEAR OPERATIONS AND FUEL SUPPLY
In 1994, the Company's four nuclear units achieved a combined capacity
factor of 86.7 percent.
The North Anna Unit 2 steam generator replacement project is scheduled to
begin at the end of the first quarter of 1995 at a total estimated Company cost
of $110 million.
6
<PAGE>
The Company utilizes both long-term contracts and spot purchases to support
its needs for nuclear fuel. Virginia Power's nuclear fuel supply and related
services are expected to be adequate to support current and planned nuclear
generation requirements. The Company continually evaluates worldwide market
conditions in order to obtain an adequate nuclear fuel supply. Current
agreements, inventories and market availability should support planned fuel
cycles throughout the remainder of the 1990s.
On-site spent nuclear fuel storage at the Surry Power Station is adequate
for the Company's needs through 1998 when, in accordance with the Nuclear Waste
Policy Act, the DOE is to begin acceptance of spent fuel for disposal. Should
acceptance be delayed, incremental dry storage facilities will be added under
the existing storage license. North Anna Power Station will require an interim
spent fuel storage facility in the late 1990's and the Company plans to submit a
license application to the NRC in 1995 for such a facility at North Anna.
For details regarding nuclear insurance and certain related contingent
liabilities as well as a NRC rule that requires proceeds from certain insurance
policies to be used first to pay stabilization and decontamination expenses, see
Note C to FINANCIAL STATEMENTS.
FOSSIL FUEL SUPPLY
The Company's fossil fuel mix consists of coal, oil and natural gas. In
1994, Virginia Power consumed approximately 10.0 million tons of coal. As with
nuclear fuel, the Company utilizes both long-term contracts and spot purchases
to support its needs. The Company presently anticipates that sufficient coal
supplies at reasonable prices will be available for the remainder of the 1990s.
Current projections for an adequate supply of oil remain favorable, barring
unusual international events or extreme weather conditions which could affect
both price and supply.
The Company uses natural gas as needed throughout the year for two combined
cycle units and at several combustion turbine units. For winter usage at the
combined cycle sites, gas is purchased and stored during the summer and fall and
consumed during the colder months when gas supplies are not available at
favorable prices. The Company has firm transportation contracts for the delivery
of gas to the combined cycle units. Current projections indicate gas supplies
will be available for the next several years.
PURCHASES AND SALES OF POWER
Virginia Power relies on purchases of power to meet a portion of its
capacity requirements. The Company also makes economy purchases of power from
other utility systems when it is available at a cost lower than the Company's
own generation costs.
Under contracts effective January 1, 1985, Virginia Power agreed to
purchase 400 Mw of electricity annually through 1999 from Hoosier Energy Rural
Electric Cooperative, Inc. (Hoosier), and agreed to purchase 500 Mw of
electricity annually during 1987-99 from certain operating subsidiaries of
American Electric Power Company, Inc. (AEP).
On November 26, 1991, the Company and ODEC signed an agreement whereby the
Company will provide ODEC 300 Mw of firm capacity and associated energy from
January 1, 1993, until the commercial operation of Clover Unit 1 (currently
scheduled for April 1995) or December 31, 1995, whichever occurs first. The
Company will then provide 100 Mw of firm capacity and associated energy from the
commercial operation of Clover Unit 1 until the commercial operation of Clover
Unit 2 (currently scheduled for April 1996) or December 31, 1996, whichever
occurs first.
The Company has a diversity exchange agreement with APS under which APS
delivers 200 Mw to Virginia Power in the summer and Virginia Power delivers 200
Mw to APS in the winter.
On June 28, 1994, FERC accepted a Power Sales Tariff filed by the Company
on March 8, 1994 and revised on May 27, 1994. This tariff allows the Company to
resell the 400 Mw Hoosier allotment to other eligible purchasers and also allows
the Company to sell system and emergency power.
Virginia Power also has 75 non-utility power purchase contracts with a
combined dependable summer capacity of 3,506 Mw. Of this amount, 3,244 Mw were
operational at the end of 1994 with the balance scheduled to come on-line
through 1997 (see NON-UTILITY GENERATION under FUTURE SOURCES OF POWER and Note
O to FINANCIAL STATEMENTS).
INTERCONNECTIONS
The Company maintains major interconnections with Carolina Power and Light
Company, AEP, APS and the utilities in the Pennsylvania-New Jersey-Maryland
Power Pool. Through this major transmission network, the Company has
arrangements with these utilities for coordinated planning, operation, emergency
assistance and exchanges of capacity and energy.
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<PAGE>
On March 23, 1990, the Company and Appalachian Power Company (Apco) (an
operating unit of AEP) announced an agreement to increase the ability to
exchange electricity between the two companies through the construction of major
transmission facilities. The proposed construction will consist of 212 miles of
new transmission lines and related substation improvements. The transmission
additions will include 116 miles of 765 Kv line to be constructed by Apco and
102 miles of 500 Kv line to be constructed by the Company. Completion of the
project, expected to be in service in the year 2000, will take three to four
years after all final regulatory approvals have been obtained. A Hearing
Examiner of the Virginia Commission has issued reports dated December 2, 1993
and January 24, 1994, recommending Commission approval of the Apco and Company
lines, respectively, and both applications are before the Commission for final
decision. About 79 miles of the Apco line would be located in West Virginia
where regulatory approval must also be obtained. The Company has stated that it
would not build its 500 Kv line unless Apco is authorized to build its 765 Kv
line and unless certain other regional transmission facilities are constructed
or the Company's contractual rights to use the regional transmission network are
amended.
FUTURE SOURCES OF POWER
The Company presently anticipates that system load growth will require
approximately 1,100 Mw of additional capacity during the 1990s. The Company has
and will pursue capacity acquisition plans to provide that capacity and maintain
a high degree of service reliability. This capacity may be built, owned and
operated by others and sold to the Company under a competitive bid process
pursuant to Commission rules or may be built by the Company if it determines it
can build capacity at a lower overall cost. The Company also pursues
conservation and demand-side management (see CONSERVATION AND LOAD MANAGEMENT
below and CAPITAL REQUIREMENTS under MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS).
In May 1990, the Company entered into an agreement with ODEC, under which
the Company purchased a 50 percent undivided ownership interest in a 782 Mw
coal-fired power station to be constructed near Clover, Virginia in Halifax
County. The Company will operate the Clover Power Station after it is completed.
The cost of the Company's 50 percent ownership interest is expected to be
approximately $533 million. The project is on schedule and the Company's share
of costs incurred through December 31, 1994 amounted to $449.8 million.
Construction on Unit 1 is presently 98% complete and construction on Unit 2 is
54% complete.
In Virginia Power's proceeding seeking approval of the Virginia Commission
for a 75 mile 500 Kv transmission line from the Clover Power Station to the
Carson Substation in Dinwiddie County, Virginia, the Commission approved the
line in its Order Granting Application on May 11, 1994. A protestant group has
appealed that Order to the Virginia Supreme Court. Initial briefs of all parties
have been filed. Oral argument is expected to be scheduled during the first
quarter of 1995 and a decision of the Court is likely before mid-1995.
The Company's continuing program to meet future capacity requirements is
summarized in the following table:
COMPANY OWNED GENERATION
<TABLE>
<CAPTION>
SUMMER
CAPABILITY EXPECTED
NAME OF UNITS MW IN-SERVICE DATE
<S> <C> <C>
Clover Power Station:
Unit 1 391* April 1995
Unit 2 391* April 1996
</TABLE>
* Includes the 50 percent undivided ownership interest of ODEC. See Note F to
FINANCIAL STATEMENTS.
8
<PAGE>
NON-UTILITY GENERATION
<TABLE>
<CAPTION>
NUMBER OF
PROJECTS MW
<S> <C> <C>
Projects Operational 65 3,244
Projects Financed 3 241
Unfinanced Projects 7 21
Total Contracts 75 3,506
</TABLE>
COMPETITION
Competition is playing an increasingly important role in the Company's
business both in terms of source of power supply available to the Company and
alternative choices for customers meeting their energy needs. Both forms of
competition have increased as a result of changing federal and state
governmental regulations, technological developments, rising costs of
constructing generating facilities and availability of alternative energy
sources. The creation of exempt wholesale generators by the Energy Act and their
existence in the market for electric sales may have an impact on the Company's
plans for the construction or purchase of electric capacity and energy. In
addition, the Energy Act gives FERC broad power to require utilities to provide
transmission access to others. Exempt wholesale generators and other power
suppliers may seek, and FERC may require, access to the transmission systems of
investor-owned utilities, including the Company's system.
Several of the Company's industrial customers are seeking means of reducing
their expenses for power through self-generation and other alternatives. The
Company is having discussions with these customers and has proposed a regulatory
initiative in Virginia that would enable it to provide on-site generation for
such customers (see VIRGINIA under RATES). The Company has undertaken
cost-cutting measures to maintain its position as a low-cost producer of
electricity and has pursued a strategic planning initiative, called Vision 2000,
to encourage innovative approaches to serving traditional markets and to prepare
appropriate methods by which to serve future markets. In furtherance of these
initiatives, the Company has established its nuclear and fossil and
hydroelectric operations as separate business units, has proposed innovative
pricing arrangements for incremental industrial loads in Virginia and North
Carolina, has executed long term contracts with key wholesale customers and
intends to provide an array of energy services to its customers.
Potential competition also exists for the Company's sales to its
cooperative and municipal customers. Virginia Power entered into discussions in
early 1993 with the City of Falls Church, Virginia, where it has approximately
4,100 customers, for the renewal of its franchise that expired on March 26,
1993. Before agreement on a new franchise, the City announced on October 12,
1994, that it would pursue the establishment of a municipal electric system or a
municipal purchasing agent and passed an ordinance purporting to extend the
Company's franchise until March 26, 1997. The City issued an "Informal Request
for Power Supply Proposal" to other electric suppliers on October 13, 1994 to
determine the interest in providing power to the City. On January 11, 1995, the
City sent to the Company a formal Request for Transmission Service pursuant to
Sections 211(a) and 213(a) of the Federal Power Act. The Company, consistent
with the State and Federal law, will still attempt to negotiate a new long term
franchise with the City while responding as required to the City's request for
transmission services.
See COMPETITION under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
CONSERVATION AND LOAD MANAGEMENT
The Company is committed to integrated resource planning and has developed
a detailed analysis procedure in which effective demand-side and supply-side
options are both considered in order to determine the least cost method to
satisfy the customers' needs. Demand-side programs are selected annually at
Virginia Power through an integrated resource planning process which directly
compares the stream of costs and benefits from supply-side and demand-side
options. This process ensures the ultimate selection of a demand-side package
which reduces the need for additional capacity while efficiently using the
Company's existing generation facilities.
ITEM 2. PROPERTIES
The Company owns its principal properties in fee (except as indicated
below), subject to defects and encumbrances that do not interfere materially
with their use. Substantially all of its property is subject to the lien of a
mortgage securing its First
9
<PAGE>
and Refunding Mortgage Bonds. Right-of-way grants from the apparent owners of
real estate have been obtained for most electric lines, but underlying titles
have not been examined except for transmission lines of 69 Kv or more. Where
rights of way have not been obtained, they could be acquired from private owners
by condemnation if necessary. Many electric lines are on publicly owned property
as to which permission for use is generally revocable. Portions of the Company's
transmission lines cross national parks and forests under permits entitling the
federal government to use, at specified charges, surplus capacity in the line if
any exists.
The Company leases certain buildings and equipment. See Note H to FINANCIAL
STATEMENTS.
See COMPANY GENERATING UNITS under SOURCES OF POWER under Item 1. BUSINESS.
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company may be in violation of or in default under
orders, statutes, rules or regulations relating to protection of the
environment, compliance plans imposed upon or agreed to by the Company or
permits issued by various local, state and federal agencies for the construction
or operation of facilities. There may be pending from time to time
administrative proceedings involving violations of state or federal
environmental regulations that the Company believes are not material with
respect to it and for which its aggregate liability for fines or penalties will
not exceed $100,000. There are no material agency enforcement actions or citizen
suits pending or, to the Company's present knowledge, threatened against the
Company.
Virginia Power is involved in an arbitration with Smith Cogeneration of
Virginia, Inc. (SCV) before the Virginia Commission concerning the terms of the
purchase of power from two 158 megawatt generating units to be developed by SCV.
The arbitrator has submitted his Report to the Commission recommending that the
parties enter into a contract containing terms that would require Virginia Power
to pay what it considers to be excessive amounts for the power to be purchased.
The parities have been given until March 31, 1995 to file comments on the
Arbitrator's Report.
Virginia Power and Doswell Limited Partnership (Doswell) have been unable
to agree on the calculation of a Fixed Fuel Transportation Charge to be paid to
Doswell under a purchased power contract. Doswell filed suit in the Circuit
Court of the City of Richmond alleging breach of contract and actual and
constructive fraud and seeking damages of not less than $75 million. The issues
of actual and constructive fraud were dismissed from the case, with prejudice,
leaving only the contract claim, which reduced alleged damages to approximately
$19 million. On March 2, 1995, the Court announced its verdict in favor of
Virginia Power.
On February 23, 1994, Virginia Power filed with the Virginia Commission a
Petition for Declaratory Judgment seeking a declaration that an arrangement
proposed by E.I. DuPont de Nemours & Company (DuPont) and LG&E Power, Inc.
(LG&E) for a partnership between those two companies to furnish energy services
to DuPont in Virginia Power's service territory is illegal under Virginia law.
DuPont filed a Motion to dismiss for lack of jurisdiction, to which Virginia
Power responded. Prior to any action by the Commission, DuPont and LG&E
announced that they had terminated their negotiations, and the Commission has
directed the parties to comment on whether the proceeding should be dismissed.
On January 13, 1995, Virginia Power filed its response stating that the case
should not be dismissed in the absence of a clear statement on the record by
both DuPont and LG&E that each has abandoned the power partnering concept in
Virginia Power's service territory. DuPont renewed its Motion to Dismiss and the
Commission entered its dismissal order on January 24, 1995.
A dispute over corporate governance issues between Dominion Resources and
Virginia Power arose in 1994. On June 17, 1994, Dominion Resources and Virginia
Power received an order from the Virginia Commission (the 1994 Order) that,
among other things, initiated an investigation into the affiliate relationships
and corporate governance issues between Dominion Resources and Virginia Power
(the First Proceeding). The text of the 1994 Order was set forth in the
Company's Current Report on Form 8-K of June 17, 1994. Between June and August
1994, Dominion Resources and Virginia Power made various filings with the
Commission, and the Commission issued several procedural orders, in connection
with the First Proceeding. A description of those filings and orders is set
forth in the Company's Quarterly Report on Form 10-Q for the period ending June
30, 1994.
On August 15, 1994, Dominion Resources, Virginia Power and their respective
directors entered into a Settlement Agreement resolving certain of the disputed
corporate governance issues. The terms of that settlement are summarized in the
Company's Current Report on Form 8-K of August 17, 1994. Pursuant to the
Settlement Agreement, Dominion Resources and Virginia Power filed a Joint Motion
to Dismiss certain of the corporate governance issues from the First Proceeding.
The Commission denied that Motion on August 24, 1994, continued the First
Proceeding, and instituted a new proceeding (the Second Proceeding) into the
holding company structure and the relationship between Dominion Resources and
Virginia
10
<PAGE>
Power. The Commission stated that the Second Proceeding would be an
"investigation directed not at averting a crisis or penalizing past conduct, but
toward protecting the public interest in the future." The Commission directed
its Staff to conduct an investigation and file an interim report on or before
December 1, 1994.
On December 1, 1994, the Staff of the Virginia Commission and its
consultants filed an Interim Report in the Second Proceeding. That Report is
included in the Company's Current Report on Form 8-K of December 5, 1994. The
Interim Report made numerous recommendations for Commission involvement in
matters of corporate governance, corporate structure, affiliate service
arrangements, and operating relationships between Dominion Resources and
Virginia Power, and suggested certain financial constraints on Dominion
Resources and new regulatory authority for the Commission. Many of these
suggestions were far-reaching. On December 21, 1994, Dominion Resources and
Virginia Power filed a Joint Response to the Interim Report, in which they
accepted some of the recommendations and urged that the corporate governance
structure established by the Settlement Agreement continue while they considered
the other recommendations in the course of a strategic planning effort by
Dominion Resources.
On January 23, 1995, the Staff of the Virginia Commission issued a report
in the Second Proceeding on its investigation of a coal transportation contract
between the Company and CSX Transportation. The Staff's report concluded that
Dominion Resources improperly pressured Virginia Power to renegotiate the
contract, and recommended that approximately $11 million ($8.3 million Virginia
jurisdictional) of the coal transportation costs incurred under the contract
from 1991 through May 31, 1994 be disallowed in determining Virginia Power's
rates. The Staff's report further recommended that any future transportation
costs that it identified as excess be disallowed over the remainder of the
contract, which expires on May 31, 2000.
The Company has recorded a regulatory liability of $10.5 million at
December 31, 1994. The Company currently estimates that the total amount called
into question by the Virginia Commission Staff report is a net present value of
$60 million ($100 million over the life of the contract). On February 1, 1995,
without admitting any imprudence, fault or liability, and believing that their
relationship with the Commission would be enhanced, Dominion Resources and the
Company filed a motion offering to refund to the Company's customers $8.3
million in settlement of these issues regarding transportation rates.
During the 1995 session of the Virginia General Assembly, the Virginia
Commission caused legislation to be introduced that addressed the Commission's
authority to intervene in disputes involving public utilities owned by separate
holding companies. That legislation was opposed by Dominion Resources. On
February 20, 1995, the proposed legislation was withdrawn and Dominion
Resources, Virginia Power and the Virginia Commission Staff consented to an
order that is included in Virginia Power's Current Report on Form 8-K of
February 21, 1995. Under this order, which will be effective until July 2, 1996,
Dominion Resources must obtain the Commission's approval before taking steps
such as removing Virginia Power's board members or officers or changing Virginia
Power's articles of incorporation or by-laws. Although the order imposes for a
period of time significant restrictions on the ability of Dominion Resources to
select the Board and management of its subsidiary, Dominion Resources and
Virginia Power agreed to the order in the interest of enhancing relations with
the Virginia Commission and achieving the purposes of the Settlement Agreement.
Disagreements between the companies have arisen from time to time since the
Settlement Agreement was executed. On February 28, 1995, upon recommendation of
a Joint Committee created under the Settlement Agreement, the Boards of Dominion
Resources and Virginia Power took further action to enhance cooperation between
the two companies and their relationship with the Virginia Commission. Among
other things, the Boards expanded the authority of the Joint Committee to act
for the Boards on issues presented to it by the chief executives of the
companies. Each Board directed corporate officials and employees of its company
to cooperate fully with the Joint Committee in resolution of issues acted on by
the Committee and to support actions taken by the Committee. In connection with
these initiatives, the chief executive officers of both companies made known
their intentions to retire in July 1996 and the Boards directed the development
of executive succession plans for each company. Also, the Dominion Resources
Board received the resignations of directors Bruce C. Gottwald and John W. Snow
and the Virginia Power Board received the resignations of directors William W.
Berry and Frank S. Royal, and both Boards voted to reduce their size by two
members.
At this time, Virginia Power is unable to predict the ultimate resolution
of these matters or their effect on the Company.
11
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
All of the Company's Common Stock is owned by Dominion Resources.
During 1994 and 1993, the Company paid quarterly cash dividends on its
Common Stock as follows:
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
<S> <C> <C> <C> <C>
(MILLIONS)
1994................................ $97.7 $98.2 $99.0 $100.6
1993................................ $93.3 $93.9 $94.5 $ 97.2
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
(MILLIONS, EXCEPT PERCENTAGES)
Operating revenues........................ $4,170.8 $4,187.3 $3,679.6 $3,688.1 $3,461.5
Operating income.......................... 731.4 813.4 761.6 816.8 805.8
Income before cumulative effect of a
change in accounting principle.......... 447.1 509.0 455.2 487.4 450.3
Cumulative effect of a change in
accounting principle.................... 14.3
Net income................................ 447.1 509.0 469.5 487.4 450.3
Balance available for Common Stock........ 404.9 466.9 423.8 435.9 392.2
Total assets.............................. 11,647.9 11,520.5 11,316.7 10,205.0 10,105.4
Total net utility plant................... 9,623.4 9,459.0 9,254.7 9,064.6 8,830.8
Long-term debt, noncurrent capital
lease obligations and preferred
stock subject to
mandatory redemption.................... 4,157.5 4,151.1 4,089.5 4,119.9 4,146.8
Utility plant expenditures
(including nuclear fuel)................ 660.9 712.8 716.5 727.8 803.4
Capitalization ratios (percent):
Debt.................................... 46.7 46.4 46.3 47.4 49.1
Preferred stock......................... 9.0 9.2 9.7 9.0 9.4
Common equity........................... 44.3 44.4 44.0 43.6 41.5
Embedded cost (percent):
Long-term debt.......................... 7.65 7.67 7.86 8.43 8.80
Preferred stock......................... 5.47 4.88 5.38 6.54 7.40
Weighted average........................ 7.29 7.18 7.42 8.11 8.57
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities has accounted for, on average, 74
percent of the Company's cash requirements over the past three years.
Net cash provided by operating activities decreased by $4.6 million in 1994
as compared to 1993, primarily as a result of a number of factors resulting from
normal operations, partially offset by a rate refund of $129.2 million in 1994.
12
<PAGE>
Net cash provided by operating activities decreased $152.1 million in 1993
as compared to 1992, primarily as a result of the rate refund of $188.9 million
in 1993 offset in part by the recovery of previously deferred capacity expenses.
Cash from (to) financing activities was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
(MILLIONS)
Common stock................................................ $ 75.0 $ 50.0 $ 75.0
Preferred stock............................................. 150.0 240.0
Mortgage bonds.............................................. 325.0 1,035.0 1,125.0
Medium-term notes........................................... 100.0 60.0
Pollution control securities................................ 39.0 56.0
Repayment of long-term debt and preferred stock............. (334.3) (1,072.1) (1,315.0)
Dividends................................................... (438.2) (421.1) (416.1)
Other....................................................... (50.8) (89.8) (154.3)
Total.................................................. $ (284.3) $ (348.0) $ (329.4)
</TABLE>
The Company sold $325.0 million of First and Refunding Mortgage Bonds in
1994. With a portion of the proceeds, the Company refinanced $119.0 million of
its higher-cost debt. The remainder of the proceeds was used to meet a portion
of the Company's capital requirements.
In 1994, the Company also issued $100 million of unsecured Medium-Term
Notes with annual interest rates ranging from 6.15% to 7.27%, the proceeds of
which were used to meet a portion of the Company's capital requirements. The
Company also issued $39 million of variable and fixed rate Pollution Control
Securities in 1994 to refinance $39 million of higher-cost Pollution Control
Securities.
In 1994, the Company issued to Dominion Resources $75 million of Common
Stock.
During the year, the Company retired $166.5 million of securities through
mandatory debt maturities and sinking fund requirements and repurchased $7.5
million of its debt securities and $2.3 million of preferred stock.
Proceeds from the sale of commercial paper are primarily used to finance
working capital for operations. Borrowings under the Company's commercial paper
program are limited to $200 million outstanding at any one time. At December 31,
1994, no amount was outstanding under this program.
Cash from (used in) investing activities was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
(MILLIONS)
Utility plant expenditures.................................. $ (580.9) $ (644.9) $ (662.2)
Nuclear fuel................................................ (80.0) (67.9) (54.3)
Nuclear decommissioning contributions....................... (24.5) (24.4) (24.3)
Pollution control project funds............................. 6.9 32.7 (55.3)
Sale of accounts receivable................................. (40.0)
Other....................................................... (8.3) (13.9) (5.5)
Total..................................................... $ (726.8) $ (718.4) $ (801.6)
</TABLE>
Investing activities in 1994 resulted in a net cash outflow of $726.8
million primarily due to $580.9 million of construction expenditures and $80
million of nuclear fuel expenditures. Of the construction expenditures,
approximately $67.3 million was spent on new generating facilities, $173.8
million on other production projects, and $291.3 million on transmission and
distribution projects.
CAPITAL REQUIREMENTS
The Company presently anticipates that kilowatt-hour sales will grow
approximately 2.1 percent a year through 2014. Capacity needed to support this
growth will be provided through a combination of Company-constructed generating
units, purchases from non-utility generators and other utility generators. Each
of these options plays an important role in the Company's overall plan to meet
capacity needs.
The Company's construction and nuclear fuel expenditures (excluding AFC),
during 1995, 1996 and 1997 are expected to aggregate $673.2 million, $600.3
million and $615.2 million, respectively. Construction continues on the 782 Mw
coal-
13
<PAGE>
fired power station near Clover, Virginia, of which the Company has a 50 percent
undivided ownership interest. The Company's share of the cost of the
construction is approximately $533.0 million of which $449.8 million had been
incurred as of December 31, 1994. The expected in-service dates for Clover Units
1 and 2 are April 1995 and April 1996, respectively. After 1996, no base load
generation is expected to be needed until the middle of the next decade. From
1999 until 2005, the Company will need to add only peaking units to meet
anticipated demand.
The Company will require $312.2 million to meet long-term debt maturities
in 1995. The Company presently estimates that, for 1995, 82 percent of its
construction expenditures, including nuclear fuel expenditures, will be met
through cash flow from operations and the balance, including other capital
requirements, will be obtained through a combination of sales of securities and
short-term borrowings.
RESULTS OF OPERATIONS
The following is a discussion of results of operations for the years ended
1994 as compared to 1993, and 1993 as compared to 1992.
1994 COMPARED TO 1993
OPERATING REVENUES changed principally due to the following:
<TABLE>
<CAPTION>
INCREASE
(DECREASE) FROM
PRIOR YEAR
1994 1993
<S> <C> <C>
(MILLIONS)
Kwh sales........................... $ 22.5 $ 333.5
Change in base rates................ (35.0) 230.7
Fuel cost recovery.................. (7.9) (55.2)
Other, net.......................... 3.9 (1.3)
Total............................. $(16.5) $ 507.7
</TABLE>
As detailed in the chart above, the decrease in revenues is primarily due
to a decrease in base revenues.
Base revenues were lower in 1994 primarily as a result of additional
revenue reserves established during the year.
During 1994, the Company had 46,741 new connections to its system compared
to 43,014 and 39,807 in 1993 and 1992, respectively.
Kilowatt-hour sales changed as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE) FROM
PRIOR YEAR
1994 1993
<S> <C> <C>
Residential......................... (1.0)% 9.3%
Commercial.......................... 0.8 4.7
Industrial.......................... 5.4 4.5
Public authorities.................. (0.3) 5.3
Total retail sales.................. 0.7 6.4
Resale.............................. 4.1 47.3
Total sales......................... 1.1 9.6
</TABLE>
The increase in kilowatt-hour sales in 1994 as compared to 1993 reflects
the extreme weather experienced in January 1994, partially offset by lower sales
during the second half of 1994, due to milder weather. The number of actual
cooling degree days in 1994 was 5.7 percent above the normal number of cooling
degree days and the number of actual heating degree days was 3.8 percent below
the number of normal heating degree days. The increase in kilowatt-hour sales in
1993 as compared to 1992 reflects the warmer than normal summer weather in 1993
as compared to the moderate weather in 1992. The number of actual cooling degree
days in 1993 was 10.0 percent above the number of normal cooling degree days and
the number of actual heating degree days was 1.2 percent above the number of
normal heating degree days.
The increase in sales for resale in 1993 as compared to 1992 was primarily
due to the sale of firm capacity and associated energy to ODEC. Under the terms
of the agreement signed November 26, 1991, the Company is committed to sell up
to 300 Mw of capacity to ODEC through the commercial operation date of Clover
Power Station.
14
<PAGE>
The average fuel cost of system energy output is shown below:
<TABLE>
<CAPTION>
MILLS PER KILOWATT-HOUR
1994 1993 1992
<S> <C> <C> <C>
Nuclear............................. 4.89 4.60 4.67
Coal................................ 14.61 14.69 14.87
Oil................................. 23.00 26.55 26.61
Purchased power, net................ 23.99 24.54 25.94
Other............................... 25.46 24.35 24.45
Average fuel cost................... 14.02 14.42 13.84
</TABLE>
System energy output is shown below:
<TABLE>
<CAPTION>
ESTIMATED ACTUAL
1995 1994 1993 1992
<S> <C> <C> <C> <C>
Nuclear(*).......................... 28% 34 % 31 % 35 %
Coal................................ 42 36 39 41
Oil................................. 1 3 3 2
Purchased power, net................ 26 23 23 19
Other............................... 3 4 4 3
100% 100 % 100 % 100 %
</TABLE>
(*) Excludes ODEC's 11.6 percent ownership interest in the North Anna Power
Station (see Note F to FINANCIAL STATEMENTS).
OPERATION EXPENSES-OTHER increased as compared to 1993 primarily as a
result of recognition of costs associated with the Early Retirement and
Voluntary Separation Programs offered by the Company in 1994.
INCOME TAXES-OPERATING decreased as compared to 1993 primarily as a result
of decreased pretax book income.
INTEREST CHARGES-OTHER decreased in 1994 primarily as a result of a
reduction of $10.6 million in the interest accrued for prior years on certain
tax obligations.
1993 COMPARED TO 1992
FUEL, NET increased as compared to 1992 as a result of higher sales in 1993
and a decrease in nuclear generation due to the scheduled outages in 1993. The
increased sales together with the reduced generation from the nuclear units
increased the use of purchased power and resulted in higher overall fuel costs.
PURCHASED POWER CAPACITY, NET resulted in an increase in 1993. In 1992, the
Company implemented deferral accounting for certain capacity expenses. The
increase in expense in 1993 primarily reflects the recovery of expenses deferred
in 1992.
OPERATION EXPENSES, OTHER increased as compared to 1992 primarily as a
result of the increased expenses associated with accrual of other postretirement
benefits due to the implementation of Statement of Financial Accounting
Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions" effective January 1, 1993.
INCOME TAXES-OPERATING increased as compared to 1992 primarily as a result
of increased pretax book income and an increase in the federal income tax rate
from 34 percent to 35 percent.
OTHER INCOME AND OTHER INTEREST CHARGES decreased as compared to 1992
primarily as a result of a reclassification of the imputed interest on the
nuclear decommissioning obligation which was previously included in Other
Interest Charges ($14.8 million) and is now included in OTHER INCOME, as
approved by FERC. This increase was offset in part by a $3.1 million decrease in
expenses associated with the sale of accounts receivable.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
In 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The Company
reported the implementation of the standard as a change in accounting principle
with the cumulative effect on prior years of $14.3 million reported in 1992
earnings. The adoption of SFAS No. 109
15
<PAGE>
in 1992 increased deferred income tax liabilities by $459 million and resulted
in the establishment of a net regulatory asset of $459 million. For additional
information, see Note A to FINANCIAL STATEMENTS.
FUTURE ISSUES
UTILITY RATE REGULATION
Regulatory policy continues to be of fundamental importance to the Company
and to its financial performance.
Recently and in the near-term future, the costs of purchased capacity
constitute the largest category of increased costs requiring rate relief. The
Virginia Commission has authorized rates providing for the current recovery of
the ongoing level of capacity payments. Moreover, the Virginia Commission has
established and reaffirmed deferral accounting that is intended to ensure dollar
for dollar recovery of reasonably incurred capacity costs.
For additional information on the current rate proceedings, see RATES under
Item 1. BUSINESS.
ENVIRONMENTAL MATTERS
The Company is subject to rising costs resulting from a steadily increasing
number of federal, state and local laws and regulations designed to protect
human health and the environment. These laws and regulations affect future
planning and existing operations. They can result in increased capital,
operating and other costs as a result of remediation, containment and monitoring
obligations of the Company. These costs have been historically recovered through
the ratemaking process; however, should material costs be incurred and not
recovered through rates, the Company's results of operations and financial
condition could be adversely impacted.
WATER QUALITY COMPLIANCE
On March 30, 1992, the Virginia Water Control Board adopted water quality
standards for toxic pollutants pursuant to the Clean Water Act. The standards
became effective on April 20, 1992 and will be applicable to the Company as
Virginia Pollution Discharge Elimination System Permits are reissued. The
Company is studying the potential impact of the standards and cannot presently
determine whether or to what extent changes to facilities or operating
procedures might ultimately be required but incremental compliance costs could
be significant.
ENVIRONMENTAL PROTECTION AND MONITORING EXPENDITURES
The Company incurred $67.3 million, $72.2 million and $65.2 million
(including depreciation) during 1994, 1993 and 1992, respectively, in connection
with the use of environmental protection facilities and expects these expenses
to be approximately $64.3 million in 1995. In addition, capital expenditures to
limit or monitor hazardous substances were $4.0 million, $3.6 million and $6.6
million for 1994, 1993 and 1992, respectively. The amount estimated for 1995 for
these expenditures is $33.1 million.
CLEAN AIR ACT COMPLIANCE
The Air Act, as amended in 1990, requires the Company to reduce its
emissions of sulfur dioxide and nitrogen oxides. Beginning in 1995, the sulfur
dioxide reduction program is based on the issuance of a limited number of sulfur
dioxide emission allowances, each of which may be used as a permit to emit one
ton of sulfur dioxide into the atmosphere or may be sold to someone else. The
program is administered by the EPA.
The Company is assessing the economic reasonableness of constructing two
additional scrubbers at its Mt. Storm Power Station or acquiring allowances as a
means of maintaining compliance with the Air Act's standards.
For additional information on the Clean Air Act, see REGULATION under Item
1. BUSINESS.
16
<PAGE>
ELECTROMAGNETIC FIELDS
The possibility that exposure to electromagnetic fields emanating from
power lines, household appliances and other electric sources may result in
adverse health effects has been a subject of increased public, governmental and
media attention. A considerable amount of scientific research has been conducted
on this topic without definitive results. Research is continuing to resolve
scientific uncertainties. It is too soon to tell what, if any, impact these
actions may have on the Company's financial condition.
NUCLEAR OPERATIONS
In 1994, the Company's four nuclear units operated at a combined capacity
factor of 86.7 percent, reflecting a record 31 day refueling outage at North
Anna Unit 1, a 63 day refueling/ten-year in-service inspection outage at Surry
Unit 1, and two scheduled steam generator chemical cleaning outages at Surry
Units 1 and 2, which took 27 and 21 days respectively. Nuclear refueling outages
typically occur every eighteen months and last approximately sixty days. The
Company's goal is to reduce refueling outages from an average of sixty days to
forty-eight days. When nuclear units are refueled, the Company replaces the
power from nuclear generation with other more expensive sources. A reduction in
the length of an outage should result in increased availability of low-cost
nuclear generation, thereby lowering expenses. Three refueling outages are
currently scheduled in 1995. The North Anna Unit 2 outage will include steam
generator replacement. The Surry Unit 2 outage will include a ten year
in-service inspection while the Surry Unit 1 outage will be for normal
refueling. See NUCLEAR OPERATIONS AND FUEL SUPPLY, Sources of Energy Used and
Fuel Costs under Item 1. BUSINESS.
Stress corrosion cracking has occurred in steam generators of a certain
design, including those at the Surry and North Anna Power Stations. The steam
generators at Surry Units 1 and 2 were replaced in 1981 and 1979, respectively.
The replacement of the North Anna Unit 1 steam generators was completed in 1993
at a cost of $106 million. Replacement of the North Anna Unit 2 steam generators
is scheduled for 1995 at a total estimated Company cost of $110 million. Costs
associated with the steam generator replacements at Surry are being recovered
through rates. Costs associated with the steam generator replacements at North
Anna Unit 1 and Unit 2 are expected to be recovered through rates.
The NRC has proposed revisions to the nuclear power plant license renewal
rules issued in 1991. The Company intends to work with industry groups on life
extension programs, and comment on the proposed rulemaking.
In addition to improving nuclear unit productivity and efficiency, the
Company has completed engineering analyses and evaluations to support uprating
the capability of the units. The plant modifications have been completed at the
North Anna facility, and the upgraded core improvement has resulted in a 4.2%
increase in the gross electrical output for each of the units. A similar project
has been initiated to uprate both Surry Units 1 and 2 in 1995. Analyses and
evaluations to support the uprate have been completed and a license amendment is
pending before the Nuclear Regulatory Commission.
For information on nuclear decommissioning, see Note C to FINANCIAL
STATEMENTS.
CONSERVATION AND LOAD MANAGEMENT
For information, see CONSERVATION AND LOAD MANAGEMENT under Item 1.
BUSINESS.
COMPETITION
The Company will continue to be affected by the developing competitive
market in wholesale power. Under the Energy Policy Act of 1992, any participant
in the wholesale market can obtain a FERC order to provide transmission
services, under certain conditions.
FERC has completed an industry-wide formal inquiry aimed at reforming the
pricing of transmission services. The Company was an active participant in that
inquiry. FERC is also encouraging the development of regional transmission
groups (RTGs) in which transmission-owning utilities and transmission users
would jointly plan facilities and administer the provision of transmission
services. It is too early to determine what effects reformed transmission
pricing and the development of RTGs could have on the Company.
At present, competition for retail customers is limited. It arises
primarily from the ability of certain business customers to relocate among
utility service territories, to substitute other energy sources for electric
power and to generate their own electricity. The Energy Policy Act bans federal
orders of transmission service to ultimate customers. Broader retail competition
that would allow customers to choose among electric suppliers has been the
subject of intense debate in federal and state
17
<PAGE>
forums. If such competition were to develop, it would have the potential to
shift costs among customer classes and to create significant transitional costs.
Certain state actions that affect retail competition may be preempted by federal
law.
Potential competition also exists for the Company's sales to its
cooperative and municipal customers. However, nearly all of this service is
under contracts with multi-year notice provisions. To date, the Company has not
experienced any material loss of load, revenues or net income due to competition
for its customers. The Company believes it has a strong capability to meet
future competition.
For additional information on competition, see COMPETITION under Item 1.
BUSINESS.
In accordance with SFAS No. 71, "Accounting for the Effects of Certain
Types of Regulation", the Company's financial statements reflect assets and
costs based on current cost-based ratemaking regulations. Continued accounting
under SFAS 71 requires that the following criteria be met:
a) A utility's rates for regulated services provided to its customers
are established by, or are subject to approval by, an independent
third-party regulator;
b) The regulated rates are designed to recover specific costs of
providing the regulated services or products; and
c) In view of the demand for the regulated services and the level of
competition, direct and indirect, it is reasonable to assume that rates set
at levels that will recover a utility's costs can be charged to and
collected from customers. This criterion requires consideration of
anticipated changes in levels of demand or competition during the recovery
period for any capitalized costs.
A utility's operations or portion of operations can cease to meet these
criteria for various reasons, including a change in the method of regulation or
a change in the competitive environment for regulated services. A utility whose
operations or portion of operations cease to meet these criteria should
discontinue application of SFAS 71 and write-off any regulatory assets and
liabilities for those operations that no longer meet the requirements of SFAS
71. The Company's operations currently satisfy the SFAS 71 criteria. However, if
events or circumstances should change so that those criteria are no longer
satisfied, Management believes that a material adverse effect on the Company's
results of operations and financial position may result.
COMMITMENTS AND CONTINGENCIES
A dispute over corporate governance issues between Dominion Resources and
Virginia Power arose in 1994. In connection with that dispute, the Virginia
Commission commenced proceedings investigating these and related issues. A
Settlement Agreement was entered into by the two Companies and their respective
Boards with respect to these matters in August 1994. The Settlement Agreement is
also described in Item 3. LEGAL PROCEEDINGS.
During the 1995 session of the Virginia General Assembly, the Virginia
Commission caused legislation to be introduced that addressed the Commission's
authority to intervene in disputes involving public utilities owned by separate
holding companies. That legislation was opposed by Dominion Resources. On
February 20, 1995, the proposed legislation was withdrawn and Dominion
Resources, Virginia Power and the Virginia Commission Staff consented to an
order that is included in Virginia Power's Current Report on Form 8-K of
February 21, 1995. Under this order, which will be effective until July 2, 1996,
Dominion Resources must obtain the Commission's approval before taking steps
such as removing Virginia Power's board members or officers or changing Virginia
Power's articles of incorporation or by-laws. Although the order imposes for a
period of time significant restrictions on the ability of Dominion Resources to
select the Board and management of its subsidiary, Dominion Resources and
Virginia Power agreed to the order in the interest of enhancing relations with
the Virginia Commission and achieving the purposes of the Settlement Agreement.
Disagreements between the companies have arisen from time to time since the
Settlement Agreement was executed. On February 28, 1995, upon recommendation of
a Joint Committee created under the Settlement Agreement, the Boards of Dominion
Resources and Virginia Power took further action to enhance cooperation between
the two companies and their relationship with the Virginia Commission. Among
other things, the Boards expanded the authority of the Joint Committee to act
for the Boards on issues presented to it by the chief executives of the
companies. Each Board directed corporate officials and employees of its company
to cooperate fully with the Joint Committee in resolution of issues acted on by
the Committee and to support actions taken by the Committee. In connection with
these initiatives, the chief executive officers of both companies made known
their intentions to retire in July 1996 and the Boards directed the development
of executive succession plans for each company. Also, the Dominion Resources
Board received the resignations of directors Bruce C. Gottwald and John W. Snow
and the Virginia Power Board received the resignations of directors William W.
Berry and Frank S. Royal, and both Boards voted to reduce their size by two
members.
At this time, Virginia Power is unable to predict the ultimate resolution
of these matters or their effect on the Company.
18
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
<TABLE>
<CAPTION>
PAGE
NO.
<S> <C>
Report of Management........................................................................................ 20
Report of Independent Auditors.............................................................................. 21
Statements of Income for the years ended December 31, 1994, 1993 and 1992................................... 22
Balance Sheets at December 31, 1994 and 1993................................................................ 23
Statements of Earnings Reinvested in Business for the years ended December 31, 1994, 1993 and 1992.......... 25
Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992............................... 26
Notes to Financial Statements............................................................................... 27
</TABLE>
19
<PAGE>
REPORT OF MANAGEMENT
The Company's management is responsible for all information and
representations contained in the Financial Statements and other sections of the
Company's annual report on Form 10-K. The Financial Statements, which include
amounts based on estimates and judgments of management, have been prepared in
conformity with generally accepted accounting principles. Other financial
information in the Form 10-K is consistent with that in the Financial
Statements.
Management maintains a system of internal accounting controls designed to
provide reasonable assurance, at a reasonable cost, that the Company's assets
are safeguarded against loss from unauthorized use or disposition and that
transactions are executed and recorded in accordance with established
procedures. Management recognizes the inherent limitations of any system of
internal accounting control and, therefore cannot provide absolute assurance
that the objectives of the established internal accounting controls will be met.
This system includes written policies, an organizational structure designed to
ensure appropriate segregation of responsibilities, careful selection and
training of qualified personnel and internal audits. Management believes that
during 1994 the system of internal control was adequate to accomplish the
intended objective.
The Financial Statements have been audited by Deloitte & Touche LLP,
independent auditors, whose designation was approved by the Board of Directors.
Their audits were conducted in accordance with generally accepted auditing
standards and included a review of the Company's accounting systems, procedures
and internal controls, and the performance of tests and other auditing
procedures sufficient to provide reasonable assurance that the Financial
Statements are not materially misleading and do not contain material errors.
The Audit Committee of the Board of Directors, composed entirely of
directors who are not officers or employees of the Company, meets periodically
with the independent auditors, the internal auditors and management to discuss
auditing, internal accounting control and financial reporting matters and to
ensure that each is properly discharging its responsibilities. Both the
independent auditors and the internal auditors periodically meet alone with the
Audit Committee and have free access to the Committee at any time.
Management recognizes its responsibility for fostering a strong ethical
climate so that the Company's affairs are conducted according to the highest
standards of personal and corporate conduct. This responsibility is
characterized and reflected in the Company's Code of Ethics, which is
distributed throughout the Company. The Code of Ethics addresses, among other
things, the importance of ensuring open communication within the Company;
potential conflicts of interest; compliance with all domestic and foreign laws,
including those relating to financial disclosure; the confidentiality of
proprietary information; and full disclosure of public information.
VIRGINIA ELECTRIC AND POWER COMPANY
<TABLE>
<S> <C>
J. T. Rhodes R. E. Rigsby
President and Senior Vice President-Finance
Chief Executive & Controller
Officer
</TABLE>
20
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of Virginia Electric and Power Company:
We have audited the accompanying balance sheets of Virginia Electric and
Power Company (a wholly-owned subsidiary of Dominion Resources, Inc.) as of
December 31, 1994 and 1993 and the related statements of income, earnings
reinvested in business, and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Virginia Electric and Power Company at
December 31, 1994 and 1993 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1994 in conformity
with generally accepted accounting principles.
The Company changed its methods of accounting for postretirement benefits
other than pensions in 1993 (see Note M) and for accounting for income taxes in
1992 (see Note B) in order to conform with recently issued accounting standards.
DELOITTE & TOUCHE LLP
Richmond, Virginia
February 6, 1995
21
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
(MILLIONS)
Operating revenues................................................ $4,170.8 $4,187.3 $3,679.6
Operating expenses:
Operation:
Fuel, net.................................................... 973.0 959.5 917.9
Purchased power capacity, net................................ 669.4 646.1 348.8
Other........................................................ 577.4 525.7 477.7
Maintenance..................................................... 263.2 279.5 280.6
Depreciation and amortization................................... 446.3 426.8 399.9
Amortization of terminated construction project costs........... 34.4 36.1 37.7
Taxes -- Income................................................. 223.0 253.5 222.2
-- Other.................................................. 252.7 246.7 233.2
Total...................................................... 3,439.4 3,373.9 2,918.0
Operating income.................................................. 731.4 813.4 761.6
Other income...................................................... 10.9 11.4 19.3
Income before interest charges.................................... 742.3 824.8 780.9
Interest charges:
Interest on long-term debt...................................... 291.9 300.2 300.9
Other........................................................... 7.5 19.1 29.5
Allowance for borrowed funds used during construction........... (4.2) (3.5) (4.7)
Total...................................................... 295.2 315.8 325.7
Income before cumulative effect of a change in accounting
principle....................................................... 447.1 509.0 455.2
Cumulative effect on prior years of changing method of accounting
for income taxes................................................ 14.3
Net income........................................................ 447.1 509.0 469.5
Preferred dividends............................................... 42.2 42.1 45.7
Balance available for Common Stock................................ $ 404.9 $ 466.9 $ 423.8
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
AT DECEMBER 31,
1994 1993
<S> <C> <C>
(MILLIONS OF DOLLARS)
UTILITY PLANT:
Plant (includes plant under construction of $828.2 in 1994 and $913.1 in
1993).................................................................... $13,896.6 $13,376.1
Less accumulated depreciation............................................... 4,426.9 4,065.9
9,469.7 9,310.2
Nuclear fuel (less accumulated amortization of $663.5 in 1994 and $665.3 in
1993).................................................................... 153.7 148.8
Total net utility plant................................................ 9,623.4 9,459.0
INVESTMENTS:
Nuclear decommissioning trust funds......................................... 260.9 226.4
Pollution control project funds............................................. 20.3 27.2
Other....................................................................... 21.1 21.5
Total net investments.................................................. 302.3 275.1
CURRENT ASSETS:
Cash and cash equivalents................................................... 28.8 21.6
Customer accounts receivable (less allowance for doubtful accounts of $1.7
in 1994 and 1993)........................................................ 202.7 202.9
Accrued unbilled revenues................................................... 97.4 105.7
Materials and supplies at average cost or less:
Plant and general........................................................ 186.7 182.0
Fossil fuel.............................................................. 122.9 121.0
Other....................................................................... 104.9 112.2
Total current assets................................................... 743.4 745.4
DEFERRED DEBITS AND OTHER ASSETS:
Regulatory assets........................................................... 871.0 930.5
Unamortized debt issuance costs............................................. 22.8 23.7
Other....................................................................... 85.0 86.8
Total deferred debits and other assets................................. 978.8 1,041.0
Total assets........................................................... $11,647.9 $11,520.5
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
AT DECEMBER 31,
1994 1993
<S> <C> <C>
(MILLIONS OF DOLLARS)
LONG-TERM DEBT................................................................ $ 3,910.4 $ 3,899.9
PREFERRED STOCK:
Preferred stock subject to mandatory redemption............................. 221.7 224.0
Preferred stock not subject to mandatory redemption......................... 594.0 594.0
COMMON STOCKHOLDER'S EQUITY:
Common Stock, no par, 300,000 shares authorized, 171,484 shares outstanding
at December 31, 1994 and 168,277 shares outstanding at December 31,
1993..................................................................... 2,737.4 2,662.4
Other paid-in capital....................................................... 20.4 20.3
Earnings reinvested in business............................................. 1,277.8 1,269.3
Total common stockholder's equity...................................... 4,035.6 3,952.0
CURRENT LIABILITIES:
Securities due within one year.............................................. 312.2 167.3
Short-term debt............................................................. 43.0
Accounts payable, trade..................................................... 318.3 297.2
Customer deposits........................................................... 55.0 53.9
Payrolls accrued............................................................ 59.5 68.3
Provision for rate refunds.................................................. 12.2 101.7
Interest accrued............................................................ 96.2 101.7
Other....................................................................... 95.7 86.0
Total current liabilities.............................................. 949.1 919.1
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes........................................... 1,466.7 1,449.7
Deferred investment tax credits............................................. 289.2 306.3
Deferred fuel expenses...................................................... 51.5 54.1
Other....................................................................... 129.7 121.4
Total deferred credits and other liabilities........................... 1,937.1 1,931.5
COMMITMENTS AND CONTINGENCIES (See Note O)
Total liabilities and shareholders' equity............................. $11,647.9 $11,520.5
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
STATEMENTS OF EARNINGS REINVESTED IN BUSINESS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
(MILLIONS)
Balance at beginning of year...................................... $1,269.3 $1,182.7 $1,132.9
Net income........................................................ 447.1 509.0 469.5
Total...................................................... 1,716.4 1,691.7 1,602.4
Cash dividends:
Preferred stock subject to mandatory redemption................. 14.4 17.2 22.4
Preferred stock not subject to mandatory redemption............. 28.3 25.0 23.9
Common Stock.................................................... 395.5 378.9 369.8
Total dividends............................................ 438.2 421.1 416.1
Other deductions, net............................................. 0.4 1.3 3.6
Balance at end of year............................................ $1,277.8 $1,269.3 $1,182.7
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
(MILLIONS)
Cash Flow From Operating Activities:
Net income............................................................... $ 447.1 $ 509.0 $ 469.5
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of change in method of accounting for income
taxes............................................................ (14.3)
Depreciation and amortization....................................... 558.3 546.6 547.9
Allowance for other funds used during construction.................. (6.4) (5.1) (4.8)
Deferred income taxes............................................... 56.7 (6.7) 105.1
Deferred investment tax credits..................................... (17.1) (19.2) (19.4)
Noncash return of terminated construction project costs-pretax...... (10.3) (11.9) (13.7)
Deferred fuel expenses, net......................................... (2.6) (36.1) 45.2
Deferred capacity expenses.......................................... 26.5 72.9 (102.7)
Changes in:
Accounts receivable.............................................. 36.5 (33.6) (34.1)
Accrued unbilled revenues........................................ 11.9 (6.3) 2.8
Materials and supplies........................................... (6.5) 27.5 (33.8)
Accounts payable, trade.......................................... 21.1 18.4 79.2
Accrued expenses................................................. (29.0) 28.2 (26.7)
Provision for rate refunds....................................... (89.5) (87.6) 161.9
Other............................................................... 21.6 26.8 12.9
Net Cash Flow From Operating Activities.................................... 1,018.3 1,022.9 1,175.0
Cash Flow From (To) Financing Activities:
Issuance of Common Stock................................................. 75.0 50.0 75.0
Issuance of preferred stock.............................................. 150.0 240.0
Issuance of long-term debt............................................... 464.0 1,035.0 1,241.0
Repayment of short-term debt............................................. (43.0) (6.5) (55.4)
Inter-company credit agreement........................................... (32.5)
Repayment of long-term debt and preferred stock.......................... (334.3) (1,072.1) (1,315.0)
Common Stock dividend payments........................................... (395.5) (378.9) (369.8)
Preferred stock dividend payments........................................ (42.7) (42.2) (46.3)
Other.................................................................... (7.8) (83.3) (66.4)
Net Cash Flow From (To) Financing Activities............................... (284.3) (348.0) (329.4)
Cash Flow From (Used In) Investing Activities:
Utility plant expenditures (excluding AFC-other funds)................... (580.9) (644.9) (662.2)
Nuclear fuel (excluding AFC-other funds)................................. (80.0) (68.1) (54.3)
Pollution control project funds.......................................... 6.9 32.7 (55.3)
Nuclear decommissioning contributions.................................... (24.5) (24.4) (24.3)
Sale of accounts receivable.............................................. (40.0)
Other.................................................................... (8.3) (13.7) (5.5)
Net Cash Flow From (Used In) Investing Activities.......................... (726.8) (718.4) (801.6)
Increase (Decrease) in cash and cash equivalents........................... 7.2 (43.5) 44.0
Cash and cash equivalents at beginning of year............................. 21.6 65.1 21.1
Cash and cash equivalents at end of year................................... $ 28.8 $ 21.6 $ 65.1
Cash paid during the year for:
Interest (reduced for the cost of borrowed funds capitalized as AFC)..... $ 302.9 $ 324.8 $ 325.3
Income taxes............................................................. 190.5 268.1 163.8
Non-cash transactions for financing and investing activities:
Assumption of obligations................................................ 26.3
Acquisition of utility property.......................................... 26.3
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
A. SIGNIFICANT ACCOUNTING POLICIES:
GENERAL
The Company's accounting practices are generally prescribed by the Uniform
System of Accounts promulgated by the regulatory commissions having jurisdiction
and are in accordance with generally accepted accounting principles applicable
to regulated enterprises.
The Company is a wholly-owned subsidiary of Dominion Resources, Inc., a
Virginia corporation.
REVENUES
Operating revenues are recorded on the basis of service rendered.
PROPERTY, PLANT AND EQUIPMENT
Utility plant is recorded at original cost which includes labor, materials,
services, AFC, where permitted by regulators, and other indirect costs. The cost
of maintenance and repairs is charged to the appropriate operating expense and
clearing accounts. The cost of additions and replacements is charged to the
appropriate utility plant account, except that the cost of minor additions and
replacements, as provided in the Uniform System of Accounts, is charged to
maintenance expense.
DEPRECIATION AND AMORTIZATION
Depreciation of utility plant (other than nuclear fuel) is computed on the
straight-line method based on projected useful service lives. The cost of
depreciable utility plant retired and the cost of removal, less salvage, are
charged to accumulated depreciation. The provision for depreciation is based on
weighted average depreciable plant using a rate of 3.2 percent for 1994, 1993
and 1992.
Operating expenses include amortization of nuclear fuel, which is provided
on a unit of production basis sufficient to fully amortize, over the estimated
service life, the cost of the fuel plus permanent storage and disposal costs.
FEDERAL INCOME TAXES
The Company adopted SFAS No. 109, "Accounting for Income Taxes" (SFAS No.
109) in 1992. This standard requires companies to measure and record deferred
tax assets and liabilities for all temporary differences. The regulatory
treatment of temporary differences can differ from the requirements of SFAS No.
109. Accordingly, the Company recognizes a regulatory asset if it is probable
that future revenues will be provided for the payment of those deferred tax
liabilities. Similarly, in the event a deferred tax liability is reduced to
reflect changes in tax rates, a regulatory liability is established if it is
probable that a future reduction in revenue will result. Prior to 1992, the
Company recorded deferred taxes for timing differences between book income and
taxable income to the extent such differences were permitted by regulatory
commissions for ratemaking purposes.
The Company files a consolidated federal income tax return with Dominion
Resources.
Accumulated investment tax credits are being amortized over the service
lives of the property giving rise to such credits.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
The applicable regulatory Uniform System of Accounts defines AFC as the
cost during the construction period of borrowed funds used for construction
purposes and a reasonable rate on other funds when so used.
The pretax AFC rates for 1994, 1993 and 1992 were 8.9, 9.4 and 10.3
percent, respectively. Approximately 83 percent of the Company's construction
work in progress is now included in rate base, and a cash return is collected
currently thereon.
DEFERRED CAPACITY AND FUEL EXPENSE
In 1992, the Company began to defer certain capacity expenses based on an
order of the Virginia Commission. Approximately 80 percent of capacity expenses
and 90 percent of fuel expenses are subject to deferral accounting. The
difference
27
<PAGE>
between reasonably incurred actual expenses and the level of expenses included
in current rates is deferred and matched against future revenues.
AMORTIZATION OF DEBT ISSUANCE COSTS
The Company defers and amortizes any expenses incurred in the issuance of
long-term debt, including premiums and discounts associated with such debt over
the lives of the respective issues. Any gains or losses resulting from the
refinancing of debt are also deferred and amortized over the lives of the new
issues of long-term debt as permitted by the appropriate regulatory
jurisdictions. Gains or losses resulting from the redemption of debt without
refinancing are amortized over the remaining lives of the redeemed issues.
CASH AND OTHER INVESTMENTS
Current banking arrangements generally do not require checks to be funded
until actually presented for payment. At December 31, 1994 and 1993, the
Company's accounts payable included the net effect of checks outstanding but not
yet presented for payment of $66.8 million and $72.5 million, respectively. For
purposes of the Statement of Cash Flows, the Company considers cash and cash
equivalents to include cash on hand and temporary investments purchased with an
initial maturity of three months or less.
RECLASSIFICATION
Certain amounts in the 1993 and 1992 financial statements have been
reclassified to conform to the 1994 presentation.
B. INCOME TAXES:
Details of income tax expense are as follows:
<TABLE>
<CAPTION>
YEARS
1994 1993 1992
<S> <C> <C> <C>
(MILLIONS)
Current expense:
Federal............................................................ $ 185.6 $ 283.0 $ 142.9
State.............................................................. 2.1 (0.3) 3.0
187.7 282.7 145.9
Deferred expense:
Plant related items................................................ 39.0 45.0 53.3
Deferred fuel and capacity......................................... (8.2) (12.9) 19.5
Debt issuance costs................................................ 3.7 8.3 15.4
Customer accounts reserve.......................................... 36.8 (34.9) 7.5
Terminated construction project costs.............................. (7.3) (7.7) (7.9)
Other.............................................................. (11.6) (7.8) 7.9
52.4 (10.0) 95.7
Net deferred investment tax credits-amortization..................... (17.1) (19.2) (19.4)
Income tax expense-operating income.................................. 223.0 253.5 222.2
Income tax expense associated with nonoperating income:
Current expense:
Federal............................................................ (1.7) (0.2) (6.1)
State.............................................................. 0.1
(1.7) (0.2) (6.0)
Deferred expense..................................................... 4.3 3.9 9.4
Income tax expense-nonoperating income............................... 2.6 3.7 3.4
Total income tax expense............................................. $ 225.6 $ 257.2 $ 225.6
</TABLE>
28
<PAGE>
Total federal income tax expense differs from the amount computed by
applying the statutory federal income tax rate to pretax income for the
following reasons:
<TABLE>
<CAPTION>
YEARS
1994 1993 1992
<S> <C> <C> <C>
(MILLIONS, EXCEPT
PERCENTAGES)
Federal income tax expense at statutory rate of 35% (34%
in 1992)............................................... $234.4 $266.5 $230.4
Increases (decreases) resulting from:
Utility plant differences.............................. (1.8) (6.2) 4.6
Ratable amortization of investment tax credits......... (17.1) (16.1) (15.2)
Terminated construction project costs.................. 5.0 5.2 5.0
Other, net............................................. 2.1 3.0 (2.2)
(11.8) (14.1) (7.8)
Total federal income tax expense......................... $222.6 $252.4 $222.6
Effective tax rate....................................... 33.2% 33.1% 32.8%
</TABLE>
In 1992, the Company adopted the provisions of SFAS No. 109. The Company
reported the implementation of the standard as a change in accounting principle
with the cumulative effect on prior years of $14.3 million reported in 1992
earnings. The adoption of SFAS No. 109 increased deferred income tax liabilities
by $459.0 million and resulted in the establishment of a net regulatory asset of
$459.0 million. For additional information see FEDERAL INCOME TAXES under Note A
to FINANCIAL STATEMENTS.
The Company's net accumulated deferred income taxes consist of the
following:
<TABLE>
<CAPTION>
YEARS
1994 1993
<S> <C> <C>
(MILLIONS)
Deferred income tax assets:
Investment tax credits................................................... $ 102.4 $ 108.5
Deferred income tax liabilities:
Plant-Method and basis differences....................................... 1,338.2 1,299.3
Terminated construction project costs.................................... 23.9 27.6
Income taxes recoverable through future rates............................ 172.9 176.3
Other.................................................................... 34.1 55.0
Total deferred income tax liabilities...................................... 1,569.1 1,558.2
Total net accumulated deferred income taxes................................ $1,466.7 $1,449.7
</TABLE>
C. NUCLEAR OPERATIONS:
DECOMMISSIONING
Nuclear plant decommissioning costs are accrued and recovered through rates
over the expected service lives of the Company's nuclear generating units. The
amounts collected from customers are being placed in trusts, which, with the
accumulated earnings thereon, will be utilized solely to fund future
decommissioning obligations.
Approximately every four years, site-specific studies are prepared to
determine the decommissioning cost estimate for the Company's four nuclear
units. The current cost estimate is based on the DECON method, which assumes the
decontamination or prompt removal of radioactive contaminants so that the
property may be released for unrestricted use shortly after cessation of
operations. The Company currently estimates that decommissioning will begin at
the expiration date of each unit's operating license, which will occur in 2012,
2013, 2018 and 2020 for the Surry Units 1 & 2 and North Anna Units 1 & 2,
respectively. Based on the Company's latest decommissioning study completed in
1994, total decommissioning costs, including reclamation costs, are estimated to
be $1.0 billion in 1994 dollars.
The accumulated provision for decommissioning of $260.9 million and $226.4
million is included in Utility Plant Accumulated Depreciation at December 31,
1994 and 1993, respectively. Provisions for decommissioning of $24.5 million,
$24.4 million and $24.3 million applicable to 1994, 1993 and 1992, respectively,
are included in Depreciation and Amortization Expense. The balance in the
Company's Nuclear Decommissioning trust funds was $260.9 million and $226.4
million at December 31, 1994 and 1993, respectively. The net unrealized loss of
$5.2 million at December 31, 1994 is included in the accumulated provision for
decommissioning.
29
<PAGE>
Earnings of the trust funds were $15.2 million, $16.3 million and $9.1
million for 1994, 1993 and 1992, respectively, and are included in Other Income
in the Company's Statements of Income. In 1994 and 1993, the accretion of the
accumulated provision for decommissioning, equal to the earnings of the trust
funds, was recorded in Other Income. See MISCELLANEOUS, NET under RESULTS OF
OPERATIONS, Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. Such amounts in 1992 were recorded in Interest
Charges, Other.
The Financial Accounting Standards Board (FASB) is reviewing the accounting
for nuclear plant decommissioning. If current electric utility industry
practices for such decommissioning are changed, annual provisions for
decommissioning could increase. FASB may ultimately determine that the estimated
cost of decommissioning should be reported as a liability rather than as
accumulated depreciation and that a substantial portion of the decommissioning
obligation should be recognized earlier in the operating life of the nuclear
plant.
INSURANCE
The Price-Anderson Act limits the public liability of an owner of a nuclear
power plant to $8.9 billion for a single nuclear incident. The Price-Anderson
Amendments Act of 1988 allows for an inflationary provision adjustment every
five years. The Company has purchased $200 million of coverage from the
commercial insurance pools with the remainder provided through a mandatory
industry risk sharing program. In the event of a nuclear incident at any
licensed nuclear reactor in the United States, the Company could be assessed up
to $81.7 million (including a 3 percent insurance premium tax for Virginia) for
each of its four licensed reactors not to exceed $10.3 million (including a 3
percent insurance premium tax for Virginia) per year per reactor. There is no
limit to the number of incidents for which this retrospective premium can be
assessed.
Nuclear liability coverage for claims made by nuclear workers first hired
on or after January 1, 1988, except those arising out of an extraordinary
nuclear occurrence, is provided under the Master Worker insurance program.
(Those first hired into the nuclear industry prior to January 1, 1988, are
covered by the policy discussed above.) The aggregate limit of coverage for the
industry is $400 million ($200 million policy limit with automatic
reinstatements of an additional $200 million). The Company's maximum
retrospective assessment is approximately $12.7 million (including a 3 percent
insurance premium tax for Virginia).
The Company's current level of property insurance coverage ($2.55 billion
for North Anna and $2.40 billion for Surry) exceeds the NRC's minimum
requirement for nuclear power plant licensees of $1.06 billion per reactor site
and includes coverage for premature decommissioning and functional total loss.
The NRC requires that the proceeds from this insurance be used first to return
the reactor to and maintain it in a safe and stable condition and second to
decontaminate the reactor and station site in accordance with a plan approved by
the NRC. The property insurance coverage provided to the Company is subject to
retrospective premium assessments, in any policy year in which losses exceed the
funds available to these insurance companies. The maximum assessment at the
first incident of the current policy period is $45.4 million and the maximum
assessment related to a second incident is an additional $15.1 million. Based on
the severity of the incident, the Board of Directors of the Company's nuclear
insurers has the discretion to lower the maximum retrospective premium
assessment or eliminate either or both completely. For any losses that exceed
the limits or for which insurance proceeds are not available because they must
first be used for stabilization and decontamination, the Company has the
financial responsibility for these losses.
The Company purchases insurance from Nuclear Electric Insurance Limited
(NEIL) to cover the cost of replacement power during the prolonged outage of a
nuclear unit due to direct physical damage of the unit. Under this program,
Virginia Power is subject to a retrospective premium assessment for any policy
year in which losses exceed funds available to NEIL. The current policy period's
maximum assessment is $9.2 million.
As part owner of the North Anna Power Station, ODEC is responsible for its
proportionate share (11.6 percent) of the insurance premiums applicable to that
station, including any retrospective premium assessments and any losses not
covered by insurance.
D. SALE OF RECEIVABLES:
The Company has an agreement to sell, with limited recourse, certain
accounts receivable including unbilled amounts, up to a maximum of $200 million.
Additional receivables are continually sold, at the Company's discretion, to
replace those collected up to the limit. At December 31, 1994 and 1993, $160
million and $200 million, respectively, of receivables had been sold and were
outstanding under this agreement. The limited recourse is provided by the
Company's assignment of an
30
<PAGE>
additional undivided interest in accounts receivable to cover any potential
losses to the purchaser due to uncollectible accounts. The Company has provided
for the estimated amount of such losses in its accounts.
E. UTILITY PLANT:
Utility plant at December 31, consisted of the following:
<TABLE>
<CAPTION>
YEAR
1994 1993
<S> <C> <C>
(MILLIONS)
Production.......................................................................................... $ 6,916.6 $ 6,659.0
Transmission........................................................................................ 1,301.2 1,248.4
Distribution........................................................................................ 3,989.8 3,761.0
Other............................................................................................... 860.8 794.6
13,068.4 12,463.0
Construction work in progress....................................................................... 828.2 913.1
Total........................................................................................ $13,896.6 $13.376.1
</TABLE>
F. JOINTLY OWNED PLANTS:
The following information relates to the Company's proportionate share of
jointly owned plants at December 31, 1994:
<TABLE>
<CAPTION>
NORTH
BATH COUNTY ANNA CLOVER
PUMPED STORAGE POWER POWER
STATION STATION STATION
<S> <C> <C> <C>
Ownership interest............................................. 60.0% 88.4% 50.0%
(MILLIONS)
Utility plant in service....................................... $1,078.3 $1,774.5
Accumulated depreciation....................................... 173.3 598.4
Nuclear fuel................................................... 409.8
Accumulated amortization of nuclear fuel....................... 382.0
Construction work in progress.................................. 0.6 163.6 $449.8
</TABLE>
The co-owners are obligated to pay their share of all future construction
expenditures and operating costs of the jointly owned facilities in the same
proportion as their respective ownership interest. The Company's share of
operating costs is classified in the appropriate operating expense (fuel,
maintenance, depreciation, taxes, etc.) in the Statements of Income.
G. REGULATORY ASSETS:
Certain expenses normally reflected in income are deferred on the balance
sheet as regulatory assets and are recognized in income as the related amounts
are included in rates and recovered from customers. The Company's regulatory
assets included the following:
<TABLE>
<CAPTION>
AT DECEMBER 31,
1994 1993
<S> <C> <C>
(MILLIONS)
Income taxes recoverable through future rates.............................................................. $488.2 $497.8
Cost of decommissioning DOE uranium enrichment facilities.................................................. 83.7 85.2
Deferred losses or gains on reacquired debt................................................................ 107.0 103.6
North Anna Unit 3 project termination costs................................................................ 128.5 153.3
Other...................................................................................................... 63.6 90.6
Total............................................................................................... $871.0 $930.5
</TABLE>
Income taxes recoverable through future rates represent principally the tax
effect of depreciation differences not normalized. These amounts are amortized
as the related temporary differences reverse.
31
<PAGE>
The costs of decommissioning the Department of Energy's (DOE) uranium
enrichment facilities have been deferred and represents the unamortized portion
of Virginia Power's required contributions to a fund for decommissioning and
decontaminating the DOE's uranium enrichment facilities. Virginia Power is
making such contributions over a fifteen-year period with escalation for
inflation. These costs are being recovered in fuel rates.
Deferred losses or gains on reacquired debt are deferred and amortized over
the lives of the new issues of long-term debt. Gains or losses resulting from
the redemption of debt without refinancing are amortized over the remaining
lives of the redeemed issues.
The construction of North Anna Unit 3 was terminated in November 1982. All
retail jurisdictions have permitted recovery of the incurred costs. The amounts
deferred are being amortized over a fifteen-year period for Virginia and FERC
jurisdictional customers.
H. LEASES:
Plant and property under capital leases included the following:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
(MILLIONS)
Office buildings (*)....................................................... $34.4 $35.7
Data processing equipment.................................................. 5.8 6.9
Total plant and property under capital leases....................... 40.2 42.6
Less accumulated amortization.............................................. 12.5 12.8
Net plant and property under capital leases................................ $27.7 $29.8
</TABLE>
(*) The Company leases its principal office building from its parent, Dominion
Resources. The capitalized cost of the property under that lease, net of
accumulated amortization, represented $25.0 million and $26.0 million at
December 31, 1994 and 1993, respectively. Rental payments for such lease were
$3.0 million for each of the three years ended December 31, 1994, 1993 and 1992.
The Company is responsible for expenses in connection with the leases noted
above, including maintenance.
Future minimum lease payments under noncancellable capital leases and for
operating leases that have initial or remaining lease terms in excess of one
year as of December 31, 1994, are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
<S> <C> <C>
(MILLIONS)
1995....................................................................... $ 4.4 $ 6.3
1996....................................................................... 3.8 5.6
1997....................................................................... 3.6 4.7
1998....................................................................... 3.2 3.0
1999....................................................................... 3.0 2.7
After 1999................................................................. 25.7 29.4
Total future minimum lease payments........................................ 43.7 $51.7
Less interest element included above....................................... 16.0
Present value of future minimum lease payments............................. $27.7
</TABLE>
Rents on leases, which have been charged to other operation expenses, were
$9.6 million, $11.2 million and $10.6 million for 1994, 1993 and 1992,
respectively.
32
<PAGE>
I. LONG-TERM DEBT:
Long-term debt included the following:
<TABLE>
<CAPTION>
AT DECEMBER 31,
1994 1993
<S> <C> <C>
(MILLIONS)
First and Refunding Mortgage Bonds (1):
1987 Series B, 9.375%, due 1994......................................................... $ 100.0
1992 Series A, 6.375%, due 1995......................................................... $ 180.0 180.0
Series T, 4.5%, due 1995................................................................ 56.6 56.6
Series U, 5.125%, due 1997.............................................................. 49.3 49.3
1992 Series B, 7.25%, due 1997.......................................................... 250.0 250.0
1988 Series A, 9.375%, due 1998......................................................... 150.0 150.0
1992 Series F, 6.25%, due 1998.......................................................... 75.0 75.0
1989 Series B, 8.875%, due 1999......................................................... 100.0 100.0
Various series, 5.875-8%, due 2000-2004................................................. 940.0 940.0
Various series, 6.75-7.625%, due 2005-2009.............................................. 215.0 234.5
Various series, 9.75%, due 2014-2019.................................................... 119.0
Various series, 5.45-8.75%, due 2020-2024............................................... 944.5 600.0
Total First and Refunding Mortgage Bonds........................................... 2,960.4 2,854.4
Other long-term debt:
Bank loans, notes and term loans:
Fixed interest rate, 6.15%-10.8%, due 1994-2003...................................... 798.2 770.8
Pollution control financings (2):
Fixed interest rate, 5.625%, due 2002................................................ 19.5
Money Market Municipals, due 2008-2027 (3)........................................... 488.6 444.6
Total other long-term debt......................................................... 1,286.8 1,234.9
4,247.2 4,089.3
Less amounts due within one year:
First and Refunding Mortgage Bonds...................................................... 236.6 100.0
Bank loans, notes and term loans........................................................ 75.6 65.0
Sinking fund obligations................................................................ 0.8
Total amount due within one year................................................... 312.2 165.8
Less unamortized discount, net of premium................................................. 24.6 23.6
Total long-term debt............................................................... $ 3,910.4 $ 3,899.9
</TABLE>
(1) Substantially all of the Company's property is subject to the lien of
its mortgage, securing its First and Refunding Mortgage Bonds.
(2) Certain pollution control facilities at the Company's generating
facilities have been pledged or conveyed to secure the financings.
(3) Interest rates vary based on short-term, tax-exempt market rates. The
weighted average daily interest rates were 2.96% and 2.53% for 1994 and 1993,
respectively. Pollution control bonds subject to remarketing within one year are
classified as long-term debt to the extent that the Company's intention to
maintain the debt is supported by long-term bank commitments.
Under the terms of an Inter-Company Credit Agreement, the Company may
borrow funds from Dominion Resources on a daily basis and repay all or part of
the loan at any time. Borrowings under the Agreement are limited to $300 million
outstanding at any one time, less amounts outstanding under the commercial paper
program. At December 31, 1994, there were no amounts outstanding under the
Agreement and no amounts were borrowed during 1994.
With a portion of the proceeds from the sale of $200 million First and
Refunding Mortgage Bonds of 1993, Series G, the Company in 1993 irrevocably
placed $138.2 million in a trust to defease $119.1 million 1990 Series A Bonds.
As a result, the
33
<PAGE>
1990 Series A Bonds were considered to be extinguished for financial reporting
purposes and were excluded from the balance sheet at December 31, 1994 and 1993.
The cost of $19.1 million was deferred and is being amortized over the life of
the new issue.
Maturities through 1999 are as follows (millions): 1995 -- $312.2;
1996 -- $259.6; 1997 -- $311.3; 1998 -- $293.5; and 1999 -- $261.0.
J. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION:
Preferred stock subject to mandatory redemption, $100 liquidation
preference, at December 31, 1994, was as follows:
<TABLE>
<CAPTION>
ANNUAL
ENTITLED PER SHARE UPON REDEMPTION SINKING FUND
ISSUED AND AND THEREAFTER TO REQUIREMENTS
OUTSTANDING AMOUNTS DECLINING AT $100 PER SHARE
DIVIDEND SHARES AMOUNT THROUGH IN STEPS TO SHARES
<S> <C> <C> <C> <C> <C>
$5.58............. 400,000 (a) (b)
6.35............. 1,400,000 (a) (c)
7.30............. 417,319 $105.84 4/14/95 $100.00 after 4/14/02 15,000(d)
Total...... 2,217,319
</TABLE>
(a) Shares are non-callable prior to redemption.
(b) All shares to be redeemed on 3/1/2000.
(c) All shares to be redeemed on 9/1/2000.
(d) The 1995 and a portion of the 1996 sinking fund requirements were satisfied
by the 1994 open market purchase.
Maturities are $0.7 million for 1996 and $1.5 million for each of the years
1997-1999.
During the years 1992 through 1994, the following shares were redeemed:
<TABLE>
<CAPTION>
YEAR DIVIDEND SHARES
<S> <C> <C>
1994......................................... $7.30 37,681
1993......................................... 7.30 30,000
1993......................................... 7.58 480,000
1993......................................... 7.325 400,419
1992......................................... 8.20 330,000
1992......................................... 8.40 512,000
1992......................................... 8.60 228,764
1992......................................... 8.625 203,500
1992......................................... 8.925 164,500
</TABLE>
The total number of authorized shares for all preferred stock is 10,000,000
shares. Upon involuntary liquidation, all presently outstanding preferred stock
is entitled to receive $100 per share plus accrued dividends. Dividends are
cumulative.
34
<PAGE>
K. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION:
Preferred stock not subject to mandatory redemption, $100 liquidation
preference, at December 31, 1994, was as follows:
<TABLE>
<CAPTION>
ENTITLED PER SHARE UPON LIQUIDATION
ISSUED AND AND THEREAFTER TO
OUTSTANDING AMOUNTS DECLINING
DIVIDEND SHARES AMOUNT THROUGH IN STEPS TO
<S> <C> <C> <C> <C>
$5.00............................................................ 106,677 $ 112.50
4.04............................................................ 12,926 102.27
4.20............................................................ 14,797 102.50
4.12............................................................ 32,534 103.73
4.80............................................................ 73,206 101.00
7.45............................................................ 400,000 101.00
7.20............................................................ 450,000 101.00
7.05............................................................ 500,000 105.00 7/31/03 $100.00 after 7/31/13
6.98............................................................ 600,000 105.00 8/31/03 $100.00 after 8/31/13
MMP 1/87 (*)..................................................... 500,000 100.00
MMP 6/87 (*)..................................................... 750,000 100.00
MMP 10/88 (*).................................................... 750,000 100.00
MMP 6/89 (*)..................................................... 750,000 100.00
MMP 9/92A (*).................................................... 500,000 100.00
MMP 9/92B (*).................................................... 500,000 100.00
Total............................................................ 5,940,140
</TABLE>
(*) Money Market Preferred (MMP) dividend rates are variable and are set
every 49 days via an auction process. The combined weighted average rates for
these series in 1994, 1993 and 1992, including fees for broker/dealer
agreements, were 3.75 percent, 3.01 percent and 3.43 percent, respectively.
In 1993, 350,000 and 500,000 shares of the $7.72 and the $7.72 (1972
Series) Dividend Preferred Stock, respectively, were redeemed.
L. COMMON STOCK:
During the years 1992 through 1994 the following changes in Common Stock
occurred:
<TABLE>
<CAPTION>
YEARS
1994 1993 1992
SHARES SHARES SHARES
OUTSTANDING AMOUNT OUTSTANDING AMOUNT OUTSTANDING AMOUNT
<S> <C> <C> <C> <C> <C> <C>
(MILLIONS, EXCEPT SHARES)
Balance at January 1............ 168,277 $ 2,662.4 166,109 $ 2,612.4 162,741 $ 2,549.1
Transfer from (to) Other Paid-in
Capital....................... (11.7)
Issuance to Dominion
Resources..................... 3,207 75.0 2,168 50.0 3,368 75.0
Balance at December 31.......... 171,484 $ 2,737.4 168,277 $ 2,662.4 166,109 $ 2,612.4
</TABLE>
M. RETIREMENT PLAN AND POSTRETIREMENT BENEFITS:
The Company participates in the Dominion Resources, Inc. Retirement Plan
(the Retirement Plan), a defined benefit pension plan. The Retirement Plan
covers virtually all employees of Dominion Resources and its subsidiaries,
including the Company. The benefits are based on years of service and average
base compensation over the consecutive 60-month period in which pay is highest.
Pension plan expenses were $19.3 million, $15.9 million and $13.1 million
for 1994, 1993 and 1992, respectively and the amounts funded were $42.7 million,
$16.0 million and $12.3 million in 1994, 1993 and 1992, respectively.
35
<PAGE>
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" effective January 1, 1993. This standard requires the accrual of the
cost of providing other postretirement benefits (OPEB), including medical and
life insurance coverage, during the active service of the employee. Prior to
1993, the Company recognized expense on a pay-as-you-go basis. The Company
recognized as expense $10.5 million for these benefits in 1992.
Under the terms of its benefit plans, the Company reserves the right to
change, modify or terminate the plans. From time to time in the past, benefits
have changed, and some of these changes have reduced benefits.
Net periodic postretirement benefit expense for 1994 and 1993 was as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
1994 1993
<S> <C> <C>
(MILLIONS)
Service cost............................................................ $11.0 $ 9.7
Interest cost........................................................... 21.6 20.6
Return on plan assets................................................... 0.9 (2.0)
Amortization of transition obligation................................... 12.1 12.0
Net amortization and deferral........................................... (4.1) 0.7
Net periodic postretirement benefit expense............................. $41.5 $41.0
</TABLE>
The following table sets forth the funded status of the plan:
<TABLE>
<CAPTION>
AT DECEMBER 31,
1994 1993
<S> <C> <C> <C> <C>
(MILLIONS)
Fair value of plan assets.................................................. $ 59.7 $ 28.4
Accumulated postretirement benefit obligation:
Retirees................................................................. $208.4 $142.4
Active plan participants................................................. 91.7 110.0
Accumulated postretirement benefit obligation......................... 300.1 252.4
Accumulated postretirement benefit obligation in excess of plan
assets.............................................................. (240.4) (224.0)
Unrecognized transition obligation......................................... 216.9 229.0
Unrecognized net experience (gain)/loss.................................... 16.6 (9.2)
Accrued postretirement benefit cost........................................ $ (6.9) $ (4.2)
</TABLE>
A one percent increase in the health care cost trend rate would result in
an increase of $4.8 million in the service and interest cost components and a
$26.9 million increase in the accumulated postretirement benefit obligation.
Significant assumptions used in determining the postretirement benefit
obligation were:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Discount rates.............................................................. 8.25% 7.75%
Assumed return on plan assets............................................... 9.0% 9.0%
Medical cost trend rate..................................................... 10% for 1st year 11% for 1st year
9% for 2nd year 10% for 2nd year
Scaling down to Scaling down to
4.75% beginning 4.75% beginning
in the year 2001 in the year 2001
</TABLE>
The Company is recovering these costs in rates on an accrual basis in all
material respects, in all jurisdictions. Current and future recoveries of OPEB
accruals are expected to collect sufficient amounts to provide for the unfunded
accumulated postretirement obligation over time. The funds being collected for
OPEB accruals in rates, in excess of OPEB benefits actually paid during the
year, are contributed to external benefit trusts under the Company's current
funding policy.
N. EARLY RETIREMENT AND VOLUNTARY SEPARATION PROGRAMS:
During the first quarter of 1994, the Company offered an early retirement
program to employees aged 50 or older and offered a voluntary separation program
to all regular full-time employees. The offers under the program expired
September 1,
36
<PAGE>
1994. Approximately 1,400 employees accepted offers under these programs. The
costs associated with these programs were $90.1 million. The Company capitalized
$25.9 million based upon prior regulatory precedent and expensed $64.2 million.
O. COMMITMENTS AND CONTINGENCIES:
The Company is involved in legal, tax and regulatory proceedings before
various courts, regulatory commissions and governmental agencies regarding
matters arising in the ordinary course of business, some of which involve
substantial amounts. Management is of the opinion that the final disposition of
these proceedings will not have a material adverse effect on the results of
operations or the financial position of the Company.
RATE MATTERS
For information on the principal rate proceedings in which the Company was
involved in 1994, see RATES under Item 1. BUSINESS.
For information on the effect of rate changes see Results of Operations
under Item 7. MANAGEMENT's DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RETROSPECTIVE PREMIUM ASSESSMENTS
Under several of the Company's nuclear insurance policies, the Company is
subject to retrospective premium assessments in any policy year in which losses
exceed the funds available to these insurance companies. For additional
information, see Note C to FINANCIAL STATEMENTS.
CONSTRUCTION PROGRAM
The Company has made substantial commitments in connection with its
construction program and nuclear fuel expenditures. Those expenditures are
estimated to total $673.2 million (excluding AFC) for 1995. Additional financing
is contemplated in connection with this program. For more information see
CAPITAL REQUIREMENTS under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
PURCHASED POWER CONTRACTS
Since 1984, the Company has entered into contracts for the long-term
purchases of capacity and energy from other utilities, qualifying facilities and
independent power producers. The Company has 75 non-utility purchase contracts
with a combined dependable summer capacity of 3,506 Mw. Of these, 65 projects
(aggregating 3,244 Mw) were operational as of the end of 1994 with the balance
to become operational at various dates before 1997.
The table below reflects the Company's minimum commitments as of December
31, 1994, for power purchases from utility and non-utility suppliers that are
currently operating or have obtained construction financing.
<TABLE>
<CAPTION>
COMMITMENT
YEAR CAPACITY OTHER
<S> <C> <C>
(MILLIONS)
1995......................................... $ 735.5 $ 198.6
1996......................................... 750.8 203.9
1997......................................... 796.9 210.5
1998......................................... 800.4 216.8
1999......................................... 803.5 217.9
Later years.................................. 12,186.3 2,839.0
Total...................................... $16,073.4 $ 3,886.7
Present value of the total................... $ 7,104.7 $ 1,602.4
</TABLE>
In addition to the minimum purchase commitments in the table above, under
some of these contracts the Company may purchase, at its option, additional
power as needed. Actual payments for purchased power (including economy,
emergency, limited term, short-term and long-term purchases) for the years 1994,
1993 and 1992 were $1,025.0 million, $958.0 million and $766.0 million,
respectively.
37
<PAGE>
FUEL PURCHASE COMMITMENTS
The Company's estimated fuel purchase commitments for the next five years
for system generation are as follows (millions): 1995 -- $351; 1996 -- $266;
1997 -- $153; 1998 -- $33; and 1999 -- $32.
SALE OF POWER
For information on the Company's commitment to sell power, see PURCHASES
AND SALES OF POWER under SOURCES OF ENERGY USED AND FUEL COSTS, Item 1.
BUSINESS.
ENVIRONMENTAL MATTERS
The Company is subject to rising costs resulting from a steadily increasing
number of federal, state and local laws and regulations designed to protect
human health and the environment. These laws and regulations affect future
planning and existing operations. These laws and regulations can result in
increased capital, operating and other costs as a result of remediation,
containment and monitoring obligations of the Company. These costs have been
historically recovered through the ratemaking process; however, should material
costs be incurred and not recovered through rates, the Company's results of
operations and financial condition could be adversely impacted.
For additional information on environmental matters, see FUTURE ISSUES
under Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
SITE REMEDIATION
The EPA has identified the Company and several other entities as
Potentially Responsible Parties (PRPs) at two Superfund sites located in
Kentucky and Pennsylvania. The estimated future remediation costs for the sites
are in the range of $46.5 million to $134.6 million. The Company's proportionate
share of the cost is expected to be in the range of $0.5 million to $6.7
million, based upon allocation formulas and the volume of waste shipped to the
sites. As of December 31, 1994, the Company had provided for $1.4 million to
meet its obligations at these two sites. Based on a financial assessment of the
PRPs involved at these sites, the Company has determined that it is probable
that the PRPs will fully pay the costs apportioned to them.
The Company and Dominion Resources along with Consolidated Natural Gas have
remedial action responsibilities remaining at two coal tar sites. The Company
provided a $2 million reserve to meet its estimated liability based on site
studies and investigations performed at these sites.
The Company generally seeks to recover its costs associated with
environmental remediation from third party insurers. At December 31, 1994 any
pending or possible claims were not recognized as an asset or offset against
recorded obligations of the Company.
WEST VIRGINIA AIR ACT
For information see REGULATION under Item 1. BUSINESS.
LEGAL PROCEEDINGS
For information on legal proceedings see Item 3. LEGAL PROCEEDINGS.
P. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The Company used available market information and appropriate valuation
methodologies to estimate the fair value of each class of financial instrument
for which it is practicable to estimate fair value. These estimates are not
necessarily indicative of the amounts the Company could realize in a market
exchange. In addition, the use of different market assumptions may have a
material effect on the estimated fair value amounts.
38
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
<S> <C> <C> <C> <C>
(MILLIONS)
Assets:
Cash and cash equivalents.................................... $ 28.8 $ 28.8 $ 21.6 $ 21.6
Nuclear decommissioning trust funds.......................... 260.9 260.9 226.4 243.8
Pollution control project funds.............................. 20.3 20.3 27.2 27.2
Liabilities and capitalization:
Short-term debt.............................................. 43.0 43.0
Long-term debt:
First and refunding mortgage bonds........................ 2,960.4 2,763.2 2,854.4 2,996.0
Medium-term notes......................................... 798.2 807.2 770.8 856.3
Pollution control bonds................................... 19.5 18.4
Money Market Municipal pollution control notes............ 488.6 488.6 444.6 444.6
Preferred stock subject to mandatory redemption.............. 221.7 201.2 225.5 251.8
</TABLE>
Cash and cash equivalents, pollution control project funds and short-term
debt: The carrying amount of these items approximates fair value because of
their short maturity.
Nuclear decommissioning trust funds: The fair value is based on available
market information and generally is the average of bid and asked price.
First and refunding mortgage bonds and pollution control bonds: Fair value
is based on market quotations.
Medium-term notes: These notes were valued by discounting the remaining
cash flows at a rate estimated for each issue. A yield curve rate was estimated
to relate Treasury Bond rates for specific issues to the corresponding
maturities.
Money market municipal pollution control notes: These notes have variable
interest rates which are set so that fair value approximates carrying value.
Preferred stock subject to mandatory redemption: The fair value is based on
market quotations or is estimated by discounting the dividend and principal
payments for a representative issue of each series over the average remaining
life of the series.
Q. QUARTERLY FINANCIAL DATA (UNAUDITED):
The following amounts reflect all adjustments, consisting of only normal
recurring accruals (except as discussed below), necessary in the opinion of the
management for a fair statement of the results for the interim periods.
<TABLE>
<CAPTION>
BALANCE AVAILABLE
OPERATING OPERATING NET FOR COMMON
QUARTER REVENUES INCOME INCOME STOCK
<S> <C> <C> <C> <C>
(MILLIONS)
1994
1st..................... $1,102.1 $ 207.1 $133.4 $ 123.4
2nd..................... 990.2 175.2 102.1 91.7
3rd..................... 1,151.2 241.0 165.9 155.2
4th..................... 927.3 108.1 45.7 34.6
1993
1st..................... $1,060.6 $ 194.4 $119.8 $ 108.8
2nd..................... 950.8 175.9 101.4 90.9
3rd..................... 1,212.1 271.7 193.9 183.3
4th..................... 963.8 171.4 93.9 83.9
</TABLE>
Results for interim periods may fluctuate as a result of weather
conditions, rate relief and other factors.
During the first quarter of 1994, the Company offered an early retirement
program to employees aged 50 or older and offered a voluntary separation program
to all regular full-time employees. The offers under the programs expired
September 1, 1994. Approximately 1,400 employees accepted offers under these
programs. The costs associated with these programs were $90.1 million. The
Company capitalized $25.9 million based upon prior regulatory precedent and
expensed $2.8 million, $10.4 million and $51 million during the second, third
and fourth quarters, respectively. The impact of the write-off was to reduce
Balance Available for Common Stock by $1.8 million, $6.7 million and $33.1
million for the second, third and fourth quarters, respectively.
39
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information concerning directors of Virginia Electric and Power Company
is as follows:
<TABLE>
<CAPTION>
YEAR FIRST
PRINCIPAL OCCUPATION FOR LAST 5 YEARS, ELECTED A
NAME AND AGE DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR
<S> <C> <C>
John B. Adams, Jr. (50) President and Chief Executive Officer of A. Smith Bowman 1987
Distillery, Inc., Fredericksburg, Virginia, a manufacturer
and bottler of alcohol beverages and Chairman of the Board
of Directors and a Director of Virginia Electric and Power
Company. He is a Director of Dominion Resources.
James T. Rhodes (53) President and Chief Executive Officer of Virginia Electric and 1989
Power Company. He is a Director of NationsBank of Virginia,
N.A.
Tyndall L. Baucom (53) President and Chief Operating Officer of Dominion Resources, 1994
Inc. (prior to August 16, 1994, Senior Vice President of
Dominion Resources). He is a Director of Dominion Resources.
William W. Berry (62) Retired Chairman of the Board of Directors of Virginia 1980
Electric and Power Company and Dominion Resources (from May
1, 1990 to December 30, 1992, Chairman of the Board of
Directors of Virginia Electric and Power Company and
Dominion Resources; prior to May 1, 1990, Chairman of the
Board of Directors of Virginia Electric and Power Company
and Dominion Resources and Chief Executive Officer of
Dominion Resources). He is a Director of Ethyl Corporation,
Scott & Stringfellow Financial, Inc. and Universal
Corporation.
James F. Betts (62) Management Consultant, Richmond, Virginia (from April 15, 1994 1978
to July 15, 1994, Vice Chairman of the Board of Directors of
Dominion Resources, Inc.; prior to April 15, 1994, Director
of Dominion Resources). He is a Director of Central Fidelity
Bank, Inc.
Benjamin J. Lambert, III (58) Optometrist, Richmond, Virginia. He is a Director of 1992
Consolidated Bank and Trust Company and Dominion Resources.
Richard L. Leatherwood (55) Retired, Baltimore, Maryland (prior to December 1, 1991, 1994
President and Chief Executive Officer, CSX Equipment, an
operating unit of CSX Transportation, Inc.). He is a
Director of Dominion Resources.
Harvey L. Lindsay, Jr. (65) Chairman and Chief Executive Officer of Harvey Lindsay 1986
Commercial Real Estate, Norfolk, Virginia, a commercial real
estate firm. He is a Director of Dominion Resources.
William T. Roos (67) Retired, Hampton, Virginia (prior to December 31, 1993, 1975
President of Penn Luggage, Inc., retail specialty stores).
He is a Director of Dominion Resources.
Frank S. Royal (55) Physician, Richmond, Virginia. He is a Director of 1994
Columbia/HCA Healthcare Corporation, Crestar Financial
Corporation, Chesapeake Corporation, CSX Corporation and
Dominion Resources.
</TABLE>
40
<PAGE>
<TABLE>
<S> <C> <C>
Richard L. Sharp (47) Chairman, President and Chief Executive Officer and a Director 1994
of Circuit City Stores, Inc., Richmond, Virginia, retail
consumer electronics and appliances stores. He is a Director
of S&K Famous Brands, Inc., Flextronics International, Ltd.
and Dominion Resources.
Robert H. Spilman (67) Chairman, President, Chief Executive Officer and a Director of 1994
Bassett Furniture Industries, Inc., Bassett, Virginia. He is
Chairman of the Board and a Director of Jefferson-Pilot
Corp., Greensboro, North Carolina. He is a Director of
NationsBank Corporation, TRINOVA Corporation, The Pittston
Company and Dominion Resources.
William G. Thomas (55) President of Hazel & Thomas, Alexandria, Virginia, a law firm. 1987
</TABLE>
Each Director holds office until the next Annual Meeting of Shareholders or
until his successor is duly elected.
41
<PAGE>
(b) Information concerning the executive officers of Virginia Electric and
Power Company is as follows:
<TABLE>
<CAPTION>
NAME AND AGE BUSINESS EXPERIENCE PAST FIVE YEARS
<S> <C>
James T. Rhodes (53) President and Chief Executive Officer.
John A. Ahladas (52) Senior Vice President-Corporate Services.
Larry W. Ellis (54) Senior Vice President-Power Operations and Planning.
Robert F. Hill (59) Senior Vice President-Commercial Operations.
James P. O'Hanlon (51) Senior Vice President-Nuclear, June 1, 1994 to date; Vice President-Nuclear Operations,
January 1, 1992 to June 1, 1994; Vice President-Nuclear Services prior to January 1,
1992.
Robert E. Rigsby (45) Senior Vice President-Finance and Controller, January 1, 1995 to date; Vice
President-Human Resources, October 1, 1991 to January 1, 1995; Vice President-
Information Systems prior to October 1, 1991.
Charles A. Brown (52) Vice President-Central Division, September 1, 1992 to date; Vice President-Procurement
prior to September 1, 1992.
William R. Cartwright (52) Vice President-Fossil and Hydro.
Thomas L. Caviness, Jr. (49) Vice President-Eastern Division.
J. Kennerly Davis, Jr. (49) Vice President, Treasurer and Corporate Secretary, October 1, 1994 to date; Vice
President and Corporate Secretary of Dominion Resources prior to October 1, 1994.
James T. Earwood, Jr. (51) Vice President-Division Services.
Larry M. Girvin (51) Vice President-Human Resources, January 1, 1995 to date; Vice President-Nuclear Services,
September 1, 1992 to January 1, 1995; Vice President-Central Division, January 1, 1991
to September 1, 1992; District Manager Richmond, prior to January 1, 1991.
E. Wayne Harrell (48) Vice President-Nuclear Engineering Services, September 1, 1992 to date; Vice
President-Nuclear Services, January 1, 1992 to September 1, 1992; Vice President-
Nuclear Operations, prior to January 1, 1992.
Thomas A. Hyman, Jr. (43) Vice President-Southern Division, June 1, 1994 to date; Station Manager-Bremo Power
Station, September 1, 1992 to June 1, 1994; Assistant Controller Financial Services,
March 1, 1990 to September 1, 1992; District Manager-Roanoke prior to March 1, 1990.
Michael R. Kansler (40) Vice President-Nuclear Services, January 1, 1995 to date; Manager-Nuclear Operations
Support, September 1, 1994 to January 1, 1995; Station Manager-Surry Nuclear Power
Station prior to September 1, 1994.
F. Kenneth Moore (53) Vice President-Procurement, September 1, 1992 to date; Vice President-Nuclear Engineering
Services prior to September 1, 1992.
Thomas J. O'Neil (52) Vice President-Energy Efficiency, September 1, 1992 to date; Vice President-Regulation,
prior to September 1, 1992.
Edgar M. Roach, Jr. (46) Vice President-Regulation and General Counsel, January 1, 1995 to date; Vice
President-Regulation, February 1, 1994 to January 1, 1995; Partner in the law firm of
Hunton & Williams, Raleigh, North Carolina prior to February 1, 1994.
Johnny V. Shenal (49) Vice President-Northern and Western Divisions, June 1, 1994 to date; Vice President-
Western Division, prior to June 1, 1994.
Eva S. Teig (50) Vice President-Public Affairs, September 7, 1990 to date; Vice President-Government
Affairs, prior to September 7, 1990.
Robert F. Saunders (51) Vice President-Nuclear Operations, June 1, 1994 to date; Assistant Vice President-Nuclear
Operations, November 1, 1990 to June 1, 1994; Manager, Nuclear Licensing and Programs,
prior to November 1, 1990.
</TABLE>
There is no family relationship between any of the persons named in
response to Item 10.
42
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Table below includes compensation paid by the Company for
services rendered in 1994, 1993 and 1992 for the Chief Executive Officer and the
four other most highly compensated executive officers (as of December 31, 1994)
as determined by total salary and incentive payments for 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION ALL
ANNUAL COMPENSATION LTIP OTHER
NAME & PRINCIPAL POSITION YEAR SALARY INCENTIVES(1) PAYOUTS COMPENSATION
<S> <C> <C> <C> <C> <C>
($) ($) ($) ($)
James T. Rhodes 1994 $384,575 $ 193,830 $ 69,709 $ 14,558(8)
President & CEO 1993 $356,000 $ 202,202 $ 97,657(2) $ 17,133(3)
1992 $340,000 $ 188,752 $ 52,833(4) $ 16,924(5)
John A. Ahladas 1994 $192,385 $ 86,100 $ 29,096 $ 4,500(6)
Senior Vice President- 1993 $183,150 $ 90,954 $ 44,677 $ 5,495
Corporate Services 1992 $176,525 $ 72,474 $ 24,334 $ 5,296
Robert F. Hill 1994 $219,526 $ 74,550 $ 29,096 $ 4,500(6)
Senior Vice President- 1993 $210,350 $ 85,086 $ 44,677 $ 6,311(6)
Commercial Operations 1992 $204,900 $ 71,703 $ 24,334 $ 6,147(6)
Larry W. Ellis 1994 $181,160 $ 82,950 $ 29,096 $ 4,500(6)
Senior Vice President- 1993 $174,000 $ 81,174 $ 44,667 $ 5,220
Power Operations and Planning 1992 $168,750 $ 70,161 $ 24,334 $ 5,063
Bill D. Johnson (7) 1994 $213,860 $ 86,100 $ 29,096 $161,360(9)
Senior Vice President 1993 $204,875 $ 90,954 $ 44,677 $ 6,146(6)
and Controller 1992 $199,250 $ 72,474 $ 25,167 $ 5,978(6)
</TABLE>
(1) The Company does not maintain "bonus" plans which are used by some
companies to supplement salaries based on the success of the company without
regard to individual performance. However, the Company has in place various
incentive plans that compensate officers and employees for achieving
pre-determined specified performance goals.
(2) Includes 1,118 shares of Restricted Stock and $51,540 in cash awarded
on February 18, 1994 at the end of a three-year performance period. Dividends
are paid on Restricted Stock. Restrictions on the shares of stock will lapse six
months from the date of grant. As of December 31, 1993 no shares of Restricted
Stock were held.
(3) Company match on savings plan contribution ($7,075) and insurance
premium to Directors Charitable Contribution Program ($10,058).
(4) Includes 788 shares of Restricted Stock and $20,254 in cash awarded on
February 19, 1993 at the end of a three-year performance period. Dividends are
paid on Restricted Stock. Restrictions on the shares of stock lapsed six months
from the date of grant.
(5) Company match on savings plan contribution ($6,866) and insurance
premium for Directors Charitable Contribution Program ($10,058).
(6) Company match on savings plan contribution.
(7) Retired December 31, 1994.
(8) Company match on savings plan contribution ($4,500) and insurance
premium to Directors Charitable Contribution Program ($10,058).
(9) Company match on savings plan contribution ($4,500) retirement payment
as provided by Company's Early Retirement and Voluntary Separation Program
($112,000) and payment at retirement for accrued vacation ($44,860).
43
<PAGE>
LONG-TERM INCENTIVE COMPENSATION
Long-term incentive awards made during 1994 are shown in the following
table.
LONG-TERM INCENTIVE PLANS -- AWARDS IN THE LAST FISCAL YEAR
1994-1996 PERFORMANCE ACHIEVEMENT PLAN
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS
NUMBER OF OTHER PERIOD UNDER NON-STOCK PRICE BASED PLANS
SHARES, UNITS UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME OR OTHER RIGHTS(1) OR PAYOUT (#) (#) (#)
<S> <C> <C> <C> <C> <C>
James T. Rhodes 3,449 3 years 1 (2) 3,449(2) 5,174 (2)
John A. Ahladas 1,185 3 years 1 (2) 1,185(2) 1,778 (2)
Robert F. Hill 1,185 3 years 1 (2) 1,185(2) 1,778 (2)
Larry W. Ellis 1,185 3 years 1 (2) 1,185(2) 1,778 (2)
Bill D. Johnson 1,185 3 years 1 (2) 1,185(2) 1,778 (2)
</TABLE>
(1) Performance shares representing Dominion Resources Common Stock to be
awarded at the end of Performance period.
(2) Except for James T. Rhodes, payout of awards are tied to achieving
levels of Virginia Power's return on equity (ROE) (50%) and meeting a cost per
kilowatt-hour goal (50%). The threshold award will be earned if 81% of the ROE
goal or 75% of the costs per kilowatt-hour goal is achieved. The target awards
will be earned if the goals are fully achieved. The maximum award will be earned
at 110% or more of the ROE goal and 112% of the cost goal. Targets and goals for
James T. Rhodes were approved by the Dominion Resources Organization and
Compensation Committee under the Dominion Resources Long-Term Incentive Plan.
The award for James T. Rhodes will be paid out in shares of restricted
stock based on the achievement of three specified goals over a three-year
performance period (1994-1996), weighted as follows: a total return to Dominion
Resources Shareholders superior to that of the S&P Utility Index (50%), utility
return on equity equal to the average ROE achieved by a group of comparable
utilities (25%), and restraint of utility costs to a growth rate less than that
of the Consumer Price Index (25%).
The target number of shares will be earned if all goals are fully achieved.
The threshold amount will be earned if at least 71% of the total return goal,
81% of the ROE goal, and 75% of the cost control goal are achieved. The maximum
amount will be earned if at least 114% of the total return goal, 110% of the ROE
goal, and 112% of the cost control goal are achieved.
RETIREMENT PLANS
The table below sets forth the estimated annual straight life benefit that
would be paid following retirement under the Dominion Resources, Inc. Retirement
Plan's (the Retirement Plan) benefit formula.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS PAYABLE UPON
RETIREMENT
CREDITED YEARS OF SERVICE
FINAL AVERAGE EARNINGS 15 20 25 30
<S> <C> <C> <C> <C>
15$0,000 $ 41,134 $ 54,845 $ 68,556 $ 82,267
175,000 48,709 64,945 81,181 97,417
200,000 56,284 75,045 93,806 112,567
225,000 63,859 85,145 106,431 127,717
250,000 71,434 95,245 119,056 142,867
300,000 86,584 115,445 144,306 173,167
350,000 101,734 135,645 169,556 203,467
400,000 116,884 155,845 194,806 233,767
450,000 132,034 176,045 220,056 264,067
500,000 147,184 192,245 245,306 294,367
550,000 162,334 216,445 270,556 324,667
600,000 177,484 236,645 295,806 354,967
650,000 192,634 256,845 321,056 385,267
</TABLE>
Benefits under the Retirement Plan are based on (i) average base
compensation over the consecutive 60-month period in which pay is highest, (ii)
years of credited service, (iii) age at retirement, and (iv) the offset of
Social Security Benefits.
44
<PAGE>
Certain officers have entered into retirement agreements that give
additional credited years of service for retirement and retirement life
insurance purposes, contingent upon the officer reaching a specified age and
remaining in the employ of the Company.
For purposes of the above table, based on 1994 compensation, credited years
of service (including any additional years earned in connection with the
retirement agreements) for each of the individuals named in the cash
compensation table would be as follows:
James T. Rhodes: 23; John A. Ahladas: 29; Robert F. Hill: 30; Larry W.
Ellis: 30 and Bill D. Johnson: 30.
The Internal Revenue Code limits the annual retirement benefit that may be
paid from a qualified retirement plan and the amount of compensation that may be
recognized by the Retirement Plan. To the extent that benefits determined under
the Retirement Plan's benefit formula exceed the limitations imposed by the
Internal Revenue Code, they will be paid under the Dominion Resources, Inc.
Benefit Restoration Plan.
The Company also provides an Executive Supplemental Retirement Plan (the
Supplemental Plan) to its elected officers designated to participate by the
Board of Directors. The Supplemental Plan provides an annual retirement benefit
equal to 25 percent of a participant's final compensation (base pay plus annual
incentive plan payments). The normal form of benefit is payable in equal monthly
installments for 120 months to a participant with 60 months of service, who (i)
retires at or after age 55 from the employ of the Company, (ii) has become
permanently disabled, or (iii) dies. If a participant dies while employed, the
normal form of benefit will be paid to a designated beneficiary. If a
participant dies while retired, but before receiving all benefit payments, the
remaining installments will be paid to a designated beneficiary. In order to be
entitled to benefits under the Supplemental Plan, an employee must be employed
as an elected officer of the Company until death, disability or retirement.
Based on 1994 compensation, the estimated annual retirement benefit for
each of the executive officers under the Supplemental Plan would be as follows:
James T. Rhodes: $160,290; John A. Ahladas: $72,500; Robert F. Hill: $79,025;
Larry W. Ellis: $69,650; and Bill D. Johnson: $77,650.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (the Agreements) with
its key management executives, including James T. Rhodes, John A. Ahladas,
Robert F. Hill, Larry W. Ellis and Bill D. Johnson. Each Agreement has a
three-year term and thereafter is automatically extended on its anniversary date
for an additional year unless notified that the Agreement will not be extended
by the Company. If, following a change in control (as defined in the Agreements)
of Dominion Resources or the Company, an executive's employment is terminated by
the Company without cause, or voluntarily by the executive within sixty days
after a material reduction in the executive's compensation, benefits or
responsibilities, the Company will be obligated to pay to the executive
continued compensation equaling the average base salary and cash incentive
bonuses for the thirty-six full month period of employment preceding the change
in control or employment termination. In addition, the terminated executive will
continue to be entitled to any benefits due under any stock or benefit plans.
The Agreements do not alter the compensation and benefits available to an
executive whose employment with the Company continues for the full term of the
executive's Agreement. The amount of benefits provided under each executive's
Agreement will be reduced by any compensation earned by the executive from
comparable employment by another employer during the thirty-six months following
termination of employment with the Company. An executive shall not be entitled
to the above benefits in the event termination is for cause.
James T. Rhodes has an employment agreement with Virginia Power, for a
three-year period ending April 21, 1997. During the term of the agreement, if
James T. Rhodes' employment as an officer of Virginia Power is terminated for
any reason other than cause, James T. Rhodes will receive the amount that he
would have otherwise received in base salary and incentive compensation. He will
also receive a benefit equal to his then annual base salary or, at his election,
the retirement and other benefits that he would have received as a participant
in Virginia Power's 1994 early retirement program. Virginia Power's 1994 early
retirement program provided five additional years of service and age credit for
purposes of retirement benefits, a severance benefit equal to six months'
salary, and continuation of certain benefits for a period of time. If James T.
Rhodes remains in the employ of Virginia Power through April 21, 1997, he will
receive a benefit when he later retires or otherwise terminates employment equal
to his then annual base salary or, at his election, the retirement and other
benefits that he would have received as a participant in Virginia Power's 1994
early retirement program. The payments under this agreement are provided in
addition to any payments under James T. Rhodes' employment continuity agreement.
Other officers (including Messrs. Ahladas, Hill, Ellis and Johnson) have similar
agreements for a period ending June 21, 1997. In addition to the foregoing
agreement, the Settlement Agreement dated as of August 15, 1994, among Dominion
Resources, Virginia Power and the members of their Boards of Directors, provides
that Virginia Power will make available to James T. Rhodes Virginia Power's 1994
Early Retirement Program for the three-year period beginning on August 24, 1994.
Messrs.
45
<PAGE>
Hill and Johnson had available to them agreements which provided for the Early
Retirement Program if they continued employment to December 31, 1994.
COMPENSATION OF DIRECTORS
The non-employee members of the Board receive an annual retainer of $19,000
and a fee of $900 for each Board or committee meeting attended. Committee
chairmen receive an additional annual retainer of $3,000. These Directors may
elect to defer their annual retainer and/or their meeting fees under the
Deferred Compensation Plan until they retire from the Board or otherwise direct.
The deferred fees are credited, for bookkeeping purposes, with earnings and
losses as if they were invested in either an interest bearing account or
Dominion Resources Common Stock, depending on the Director's election.
In addition, the Company makes payments to non-employee Directors or their
designated beneficiaries upon those Directors' retirement, death or disability.
Payments to a retired Director, including one who becomes disabled after
retirement, are made for a period of four years, or for a period of years equal
to the Director's service on the Board of the Company or one of its
subsidiaries, whichever is longer. If a non-employee Director becomes disabled
prior to retirement, these payments are made for four years. Each year, these
payments equal the annual retainer in effect at the time the payments begin.
Upon the death of a non-employee Director, the unpaid portion of these payments,
up to a maximum of four times the annual amount due, is paid in a lump sum to
the Director's designated beneficiary.
DIRECTORS CHARITABLE CONTRIBUTION PROGRAM
Dominion Resources administers a Directors' Charitable Contribution Program
(the Program) for all its subsidiaries, including the Company, as part of its
overall program of charitable giving. Beginning at the death of a Director a
donation in an aggregate amount of $50,000 per year for 10 years will be made to
one or more qualifying charitable organizations recommended by the individual
Director. Life insurance policies have been purchased on the lives of the
Directors in connection with the Program. These policies are owned by Dominion
Resources, which is also the beneficiary. The Directors derive no financial or
tax benefits from the Program.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth as of January 31, 1995, except as noted, the
number of shares of Common Stock of Dominion Resources owned by Directors and
four other more highly compensated executive officers of Virginia Electric and
Power Company.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK DEFERRED COMPENSATION
NAME BENEFICIALLY OWNED PLAN ACCOUNT (A)
<S> <C> <C>
James T. Rhodes.............................. 8,970
John A. Ahladas.............................. 4,025
Robert F. Hill............................... 4,664
Larry W. Ellis............................... 9,684
Bill D. Johnson.............................. 10,754
John B. Adams, Jr............................ 3,111
Tyndall L. Baucom............................ 5,965
William W. Berry............................. 11,806
James F. Betts............................... 7,603
Benjamin J. Lambert, III..................... 0 402
Richard L. Leatherwood....................... 1,000 1,727
Harvey L. Lindsay, Jr........................ 400
William T. Roos.............................. 10,957(b) 2,542
Frank S. Royal............................... 0 500
Richard L. Sharp............................. 1,000
Robert H. Spilman............................ 1,017
William G. Thomas............................ 0 2,857
</TABLE>
(a) Represents shares the Directors have accumulated under the Deferred
Compensation Plan.
(b) Members of Mr. Roos' family are beneficiaries of trusts that own 3,818
shares of Common Stock for which he disclaims beneficial ownership.
All Directors and executive officers as a group (34 persons) beneficially
own, in the aggregate, 171,218 shares of Common Stock of Dominion Resources
which includes 3,585 shares represented by options awarded and exercisable under
Dominion Resources' Long-Term Incentive Plan. Beneficial ownership of 3,818
shares of the total are disclaimed. No shares of the Company's Preferred Stock
are owned by the Directors or executive officers as a group.
46
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1994, in connection with the Settlement Agreement that is
summarized in the Company's Current Report on Form 8-K of August 17, 1994,
Dominion Resources and Virginia Power paid $77,646 and $76,530, respectively, to
a law firm that represented the following persons in connection with the
corporate governance dispute that led to the execution of the Settlement
Agreement: William W. Berry, James F. Betts, Bruce C. Gottwald, T. Justin Moore,
Jr. and James T. Rhodes. Messrs. Berry and Betts and Dr. Rhodes were directors
of Virginia Power at the time the legal expenses were incurred, and all of these
persons were directors of Dominion Resources at that time. Dr. Rhodes is also
President and Chief Executive Officer of Virginia Power.
47
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Form 10-K:
1. FINANCIAL STATEMENTS
See Index on page 19.
2. EXHIBITS
<TABLE>
<S> <C>
3(i) -- Restated Articles of Incorporation, as amended, as in effect on September 12, 1994 (Exhibit 3(i),
Form 8-K, dated October 19, 1994, File No. 1-2255, incorporated by reference).
3(ii) -- Bylaws, as amended, as in effect on December 31, 1994 (filed herewith).
4(i) -- See Exhibit 3(i) above.
4(ii) -- Indenture of Mortgage of the Company, dated November 1, 1935, as supplemented and modified by fifty-eight
Supplemental Indentures (Exhibit 4(ii), Form 10-K for the fiscal year ended December 31, 1985, File No.
1-2255, incorporated by reference); Fifty-Ninth Supplemental Indenture (Exhibit 4(ii), Form 10-Q for the
quarter ended March 31, 1986, File No. 1-2255, incorporated by reference); Sixtieth Supplemental Indenture
(Exhibit 4(ii), Form 10-Q for the quarter ended September 30, 1986, File
No. 1-2255, incorporated by reference); Sixty-First Supplemental Indenture (Exhibit 4(ii), Form 10-Q for
the quarter ended June 30, 1987, File No. 1-2255, incorporated by reference); Sixty-Second Supplemental
Indenture (Exhibit 4(ii), Form 8-K, dated November 3, 1987, File No. 1-2255, incorporated by reference);
Sixty-Third Supplemental Indenture (Exhibit 4(i), Form 8-K, dated June 8, 1988, File No. 1-2255,
incorporated by reference); Sixty-Fourth Supplemental Indenture (Exhibit 4(i), Form 8-K, dated February 8,
1989, File No. 1-2255, incorporated by reference); Sixty-Fifth Supplemental Indenture (Exhibit 4(i), Form
8-K, dated June 22, 1989, File No. 1-2255, incorporated by reference); Sixty-Sixth Supplemental Indenture,
(Exhibit 4(i), Form 8-K, dated February 27, 1990, File No. 1-2255, incorporated by reference);
Sixty-Seventh Supplemental Indenture (Exhibit 4(i), Form 8-K, dated April 2, 1991, File No. 1-2255,
incorporated by reference); Sixty-Eighth Supplemental Indenture, (Exhibit 4(i)), Sixty-Ninth Supplemental
Indenture, (Exhibit 4(ii)) and Seventieth Supplemental Indenture, (Exhibit 4(iii), Form 8-K, dated
February 25, 1992, File No. 1-2255, incorporated by reference); Seventy-First Supplemental Indenture
(Exhibit 4(i)) and Seventy-Second Supplemental Indenture, (Exhibit 4(ii), Form 8-K, dated July 7, 1992,
File No. 1-2255, incorporated by reference); Seventy-Third Supplemental Indenture, (Exhibit 4(i), Form
8-K, dated August 6, 1992, File No. 1-2255, incorporated by reference); Seventy-Fourth Supplemental
Indenture (Exhibit 4(i), Form 8-K, dated February 10, 1993, File No. 1-2255, incorporated by reference);
Seventy-Fifth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated April 6, 1993, File No. 1-2255,
incorporated by reference); Seventy-Sixth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated April 21,
1993, File No. 1-2255, incorporated by reference); Seventy-Seventh Supplemental Indenture, (Exhibit 4(i),
Form 8-K, dated June 8, 1993, File No. 1-2255, incorporated by reference); Seventy-Eighth Supplemental
Indenture, (Exhibit 4(i), Form 8-K, dated August 10, 1993, File No. 1-2255, incorporated by reference);
Seventy-Ninth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated August 10, 1993, File No. 1-2255,
incorporated by reference); Eightieth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated October 12,
1993, File No. 1-2255, incorporated by reference); Eighty-First Supplemental Indenture, (Exhibit 4(iii),
Form 10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by reference);
Eighty-Second Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated January 18, 1994, File No. 1-2255,
incorporated by reference) and Eighty-Third Supplemental Indenture (Exhibit 4(i), Form 8-K, dated October
19, 1994, File No. 1-2255, incorporated by reference).
4(iii) -- Indenture, dated April 1, 1985, between Virginia Electric and Power Company and Crestar Bank (formerly
United Virginia Bank) (Exhibit 4(iv), Form 10-K for the fiscal year ended December 31, 1993, File No.
1-2255, incorporated by reference).
4(iv) -- Indenture, dated as of June 1, 1986, between Virginia Electric and Power Company and Chemical Bank
(Exhibit 4(v), Form 10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by
reference).
4(v) -- Indenture, dated April 1, 1988, between Virginia Electric and Power Company and Chemical Bank, as
supplemented and modified by a First Supplemental Indenture, dated August 1, 1989, (Exhibit 4(vi), Form
10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by reference).
48
4(vi) -- Virginia Electric and Power Company agrees to furnish to the Commission upon request any other instrument
with respect to long-term debt as to which the total amount of securities authorized thereunder does not
exceed 10 percent of Virginia Electric and Power Company's total assets.
10(i) -- Operating Agreement, dated June 17, 1981, between Virginia Electric and Power Company and Monongahela
Power Company, the Potomac Edison Company, West Penn Power Company, and Allegheny Generating Company
(Exhibit 10(vi), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by
reference).
10(ii) -- Purchase, Construction and Ownership Agreement, dated as of December 28, 1982 but amended and restated on
October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric Cooperative
(Exhibit 10(viii), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by
reference).
10(iii) -- Interconnection and Operating Agreement, dated as of December 28, 1982 as amended and restated on October
17, 1983, between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit
10(ix), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by
reference).
10(iv) -- Nuclear Fuel Agreement, dated as of December 28, 1982 as amended and restated on October 17, 1983, between
Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(x), Form 10-K for
the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by reference).
10(v) -- Inter-Company Credit Agreement, dated July 1, 1986, as amended and restated December 31, 1992 between
Dominion Resources and Virginia Electric and Power Company (Exhibit 10(v), Form 10-K for the fiscal year
ended December 3, 1993, File No. 1-2255, incorporated by reference).
10(vi) -- Credit Agreement, dated December 1, 1985, between Virginia Electric and Power Company and Old Dominion
Electric Cooperative (Exhibit 10(xix), Form 10-K for the fiscal year ended December 31, 1985, File No.
1-8489, incorporated by reference).
10(vii) -- Agreement for Northern Virginia Services, dated as of November 1, 1985, between Potomac Electric Power
Company and Virginia Electric and Power Company (Exhibit 10(xxi), Form 10-K for the fiscal year ended
December 31, 1985, File No. 1-8489, incorporated by reference).
10(viii) -- Purchase, Construction and Ownership Agreement, dated May 31, 1990, between Virginia Electric and Power
Company and Old Dominion Electric Cooperative (Exhibit 10(xi), Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-2255, incorporated by reference).
10(ix) -- Operating Agreement, dated May 31, 1990, between Virginia Electric and Power Company and Old Dominion
Electric Cooperative (Exhibit 10(xii), Form 10-K for the fiscal year ended December 31, 1990, File No.
1-2255, incorporated by reference).
10(x) -- Coal-Fired Unit Turnkey Contract (Volume 1), dated April 6, 1989, and the Unit 2 Amendment (Volume 1),
dated May 31, 1990 between Virginia Electric and Power Company and Old Dominion Electric Cooperative,
Westinghouse, Black & Veatch, Combustion Engineering and H. B. Zachry (Volumes 2-11 contain technical
specifications) (Exhibit 10(xiii), Form 10-K for the fiscal year ended December 31, 1990, File No. 1-2255,
incorporated by reference).
10(xi) -- Receivables Purchase Agreement, dated as of December 11, 1991, between Virginia Electric and Power Company
and Dynamic Funding Corporation (Exhibit 10(xv), Form 10-K for the fiscal year ended December 31, 1991,
File No. 1-2255, incorporated by reference).
10(xxi)* -- Description of arrangements with certain officers regarding additional credited years of service for
retirement purposes (Exhibit 10(xii), Form 10-K for the fiscal year ended December 31, 1992, File No.
1-2255, incorporated by reference).
10(xxii)* -- Dominion Resources, Inc. Directors' Deferred Compensation Plan, effective July 1, 1986 (filed herewith).
10(xxiii)* -- Dominion Resources, Inc. Performance Achievement Plan, effective January 1, 1986, as amended and restated
effective February 19, 1988 (filed herewith).
10(xxiv)* -- Dominion Resources, Inc. Executive Supplemental Retirement Plan, effective January 1, 1981 as amended and
restated effective October 22, 1988 and as amended and restated June 15, 1990 (filed herewith).
10(xxv)* -- Dominion Resources, Inc.'s Cash Incentive Plan as adopted December 20, 1991 (filed herewith).
10(xxvi)* -- Dominion Resources, Inc. Long-Term Incentive Plan, effective April 17, 1987 (filed herewith).
10(xxvii)* -- Employment Continuity Agreement for James T. Rhodes of Virginia Power (filed herewith).
10(xxviii)* -- Dominion Resources, Inc. Retirement Benefit Funding Plan, effective June 29, 1990 (filed herewith).
10(xxix)* -- Dominion Resources, Inc. Retirement Benefit Restoration Plan as adopted effective January 1, 1991 (filed
herewith).
10(xxx)* -- Dominion Resources, Inc. Executives' Deferred Compensation Plan, effective January 1, 1994 (filed
herewith).
49
10(xxxi)* -- Employment Agreement dated June 30, 1994 between Virginia Power and James T. Rhodes (filed herewith).
10(xxxii)* -- Employment Agreement dated June 23, 1994 between Virginia Power and B.D. Johnson (filed herewith).
10(xxxiii)* -- Employment Agreement dated June 23, 1994 between Virginia Power and R.F. Hill (filed herewith).
10(xxxiv)* -- Employment Agreement dated June 23, 1994 between Virginia Power and L.W. Ellis (filed herewith).
10(xxxv)* -- Employment Agreement dated June 23, 1994 between Virginia Power and J.A. Ahladas (filed herewith).
23(i) -- Consent of Hunton & Williams (filed herewith).
23(ii) -- Consent of Jackson & Kelly (filed herewith).
23(iii) -- Consent of Deloitte & Touche LLP (filed herewith).
27 -- Financial Data Schedule (filed herewith).
</TABLE>
*Indicates management contract or compensatory plan or arrangement
(b) Reports of Form 8-K
Virginia Power filed a report on Form 8-K, dated December 5, 1994,
reporting the release by the Staff of the Virginia State Corporation Commission
(the Staff) of a report filed December 1, 1994 entitled "Staff Investigation of
Corporate Relationships, Affiliate Arrangements, and Financial and
Diversification Issues of Dominion Resources, Inc. and Virginia Power."
Virginia Power filed a report on Form 8-K dated February 21, 1995,
reporting the entry of a Consent Order by the Virginia State Corporation
Commission (the Commission) on the joint motion of Dominion Resources, Virginia
Power and the Staff and the withdrawal by Delegate Clinton Miller of certain
legislation introduced by Delegate Miller in the 1995 Virginia General Assembly
at the request of the Commission.
50
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
VIRGINIA ELECTRIC AND POWER COMPANY
Date: March 8, 1995
By JOHN B. ADAMS, JR.
(JOHN B. ADAMS, JR., CHAIRMAN OF THE
BOARD OF DIRECTORS)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on March 8, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
JOHN B. ADAMS, JR. Chairman of the Board of Directors and
Director
JOHN B. ADAMS, JR.
TYNDALL L. BAUCOM Director
TYNDALL L. BAUCOM
Director
WILLIAM W. BERRY
JAMES F. BETTS Director
JAMES F. BETTS
Director
BENJAMIN J. LAMBERT, III
RICHARD L. LEATHERWOOD Director
RICHARD L. LEATHERWOOD
HARVEY L. LINDSAY, JR. Director
HARVEY L. LINDSAY, JR.
J. T. RHODES President (Chief Executive
Officer) and Director
J. T. RHODES
WILLIAM T. ROOS Director
WILLIAM T. ROOS
FRANK S. ROYAL Director
FRANK S. ROYAL
Director
RICHARD L. SHARP
51
ROBERT H. SPILMAN Director
ROBERT H. SPILMAN
WILLIAM G. THOMAS Director
WILLIAM G. THOMAS
R. E. RIGSBY Senior Vice President-Finance and
Controller (Principal Accounting Officer
R. E. RIGSBY and Chief Financial Officer)
</TABLE>
52
BYLAWS
OF
VIRGINIA ELECTRIC AND POWER COMPANY
As amended and in effect on December 31, 1994
<PAGE>
TABLE OF CONTENTS
Article Page
I Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
II Shareholders' Meetings . . . . . . . . . . . . . . . . . . . . .1
III Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . .1
IV Special Meetings . . . . . . . . . . . . . . . . . . . . . . . .1
V Notice of Shareholders' Meetings and Voting
Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
VI Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . .3
VII Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
VIII Proxy and Voting . . . . . . . . . . . . . . . . . . . . . . . .4
IX Board of Directors . . . . . . . . . . . . . . . . . . . . . . .4
X Powers of Directors. . . . . . . . . . . . . . . . . . . . . . .4
XI Executive and Other Committees . . . . . . . . . . . . . . . . .5
XII Meetings of Directors and Quorum . . . . . . . . . . . . . . . .5
XIII Action Without a Meeting . . . . . . . . . . . . . . . . . . . .7
XIV Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
XV Eligibility of Officers. . . . . . . . . . . . . . . . . . . . .7
XVI Chairman of the Board of Directors and
President. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
XVII Vice Presidents. . . . . . . . . . . . . . . . . . . . . . . . .8
XVIII Corporate Secretary. . . . . . . . . . . . . . . . . . . . . . .9
XIX Treasurer. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
XX Controller . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XXI Resignations and Removals. . . . . . . . . . . . . . . . . . . 10
XXII Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XXIII Certificates for Shares. . . . . . . . . . . . . . . . . . . . 11
XXIV Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . 11
XXV Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . 12
XXVI Voting of Shares Held. . . . . . . . . . . . . . . . . . . . . 12
XXVII Bonds, Debentures and Notes Issued Under an
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
XXVIII Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 13
XXIX Emergency Bylaws . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
BYLAWS
OF
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLE I.
Name.
The name of the Corporation is Virginia Electric and Power Company.
ARTICLE II.
Shareholders' Meetings.
All meetings of the Shareholders shall be held at such place, within or
without of the Commonwealth, as provided in the notice of the meeting given
pursuant to Article V. If the Chairman of the Board of Directors determines
that the holding of any meeting at the place named in the notice might be
hazardous, he may cause it to be held at some other place deemed by him
suitable and convenient, upon arranging notice to Shareholders who attend at
the first place and reasonable opportunity for them to proceed to the new
place.
ARTICLE III.
Annual Meeting.
The Annual Meeting of the Shareholders shall be held on the third Friday
in April in each year if not a legal holiday, and if a legal holiday then on
the next succeeding Friday not a legal holiday. In the event that such Annual
Meeting is omitted by oversight or otherwise on the date herein provided for,
the Board of Directors shall cause a meeting in lieu thereof to be held as
soon thereafter as conveniently may be, and any business transacted or
elections held at such meeting shall be as valid as if transacted or held at
the Annual Meeting. Such subsequent meeting shall be called in the same
manner as provided for Special Shareholders' Meetings.
ARTICLE IV.
Special Meetings.
Special Meetings of the Shareholders shall be held whenever called by the
Chairman of the Board of Directors, the President, or a majority of the
Directors or in accordance with the provisions of Article III of the Articles
of Incorporation. Special Meetings of the Shareholders shall also be held
following the accrual or termination of voting rights of the Preferred Stock,
whenever requested to be called in the manner provided in Article III of the
Articles of Incorporation.
ARTICLE V.
Notice of Shareholders' Meetings and Voting Lists.
Written notice stating the place, day and hour of each Shareholders'
Meeting and the purpose or purposes for which the meeting is called shall be
given not less than 10 nor more than 60 days before the date of the meeting,
or such longer period as is specified below, by, or at the direction of, the
Board of Directors or its Chairman, the President or any Vice President or the
Corporate Secretary or any Assistant Corporate Secretary, by hand or by mail,
to each Shareholder of record entitled to vote at the meeting, at his or her
registered address and the person giving such notice shall make affidavit in
relation thereto. Such notice shall be deemed to be given when deposited in
the United States mails addressed to the Shareholder at his address as it
appears on the stock transfer books, with postage thereon prepaid or when hand
delivered at said address.
Notice of a Shareholders' Meeting to act on an amendment of the Articles
of Incorporation, on a plan of merger or share exchange, on a proposed
dissolution of the Corporation or on a proposed sale, lease or exchange, or
other disposition, of all, or substantially all, of the property of the
Corporation otherwise than in the usual and regular course of business, shall
be given in the manner provided above, not less than 25 nor more than 60 days
before the date of the meeting. Any notice of a Shareholders' Meeting to act
on an amendment of the Articles of Incorporation, a plan of merger or share
exchange or a proposed sale, lease or exchange, or other disposition of all,
or substantially all, of the property of the Corporation otherwise than in the
usual and regular course of business shall be accompanied by a copy of the
proposed amendment, plan of merger or exchange or agreement effecting the
disposition of assets.
Any meeting at which all Shareholders having voting power in respect of
the business to be transacted thereat are present, either in person or by
proxy, or of which those not present waive notice in writing, whether before
or after the meeting, shall be a legal meeting for the transaction of business
notwithstanding that notice has not been given as hereinbefore provided.
The officer or agent having charge of the share transfer books of the
Corporation shall make, at least 10 days before each meeting of Shareholders,
a complete list of the Shareholders entitled to vote at such meeting or any
adjournment thereof, with the address of and number of shares held by each.
The list shall be arranged by voting group and within each voting group by
class or series of shares. Such list, for a period of 10 days prior to such
meeting, shall be kept on file at the principal office of the Corporation.
Any person who shall have been a Shareholder of record for at least 6 months
immediately preceding his demand or who shall be the holder of record of at
least 5% of all the outstanding shares of the Corporation, upon demand stating
with reasonable particularity the purpose thereof, shall have the right to
inspect such list, in person, for any proper purpose if such list is directly
connected with such purpose, during usual business hours within the period of
10 days prior to the meeting. Such list shall also be produced at the time
and place of the meeting and shall be subject to the inspection of any
Shareholder during the whole time of the meeting for the purposes thereof.
ARTICLE VI.
Waiver of Notice.
Notice of any Shareholders' Meeting may be waived by any Shareholder,
whether before or after the date of the meeting. Such waiver of notice shall
be in writing, signed by the Shareholder and delivered to the Corporate
Secretary. Any Shareholder who attends a meeting shall be deemed to have
waived objection to lack of notice or defective notice of the meeting, unless
the Shareholder at the beginning of the meeting objects to holding the meeting
or transacting business at the meeting and shall be deemed to have waived
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
Shareholder objects to considering the matter when it is presented.
ARTICLE VII.
Quorum.
At any meeting of the Shareholders, a majority in number of votes of all
the shares issued and outstanding having voting power in respect of the
business to be transacted thereat, represented by such Shareholders of record
in person or by proxy, shall constitute a quorum, but a lesser interest may
adjourn any meeting from time to time and the meeting may be held as adjourned
without further notice. When a quorum is present at any meeting, a majority
vote represented thereat shall decide any question brought before such
meeting, unless the question is one upon which by express provision of law or
of the Articles of Incorporation or of these Bylaws a larger or different vote
is required, in which case such express provision shall govern and control the
decision of such question. The provisions of this Article are, however,
subject to the provisions of Article III of the Articles of Incorporation.
ARTICLE VIII.
Proxy and Voting.
Shareholders of record entitled to vote may vote at any meeting held, in
person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney-in-fact, which shall be filed with the Corporate Secretary
of the meeting before being voted. A proxy shall designate only one person as
proxy, except that proxies executed pursuant to a general solicitation of
proxies may designate one or more persons as proxies. Proxies shall entitle
the holders thereof to vote at any adjournment of the meeting, but shall not
be valid after the final adjournment thereof. No proxy shall be valid after
11 months from its date unless the appointment form expressly provides for a
longer period of validity. Shareholders entitled to vote may also be
represented by an agent personally present, duly designated by power of
attorney, with or without power of substitution, and such power of attorney
shall be produced at the meeting on request. Each holder of record of stock
of any class shall, as to all matters in respect of which stock of any class
has voting power, be entitled to one vote for each share of stock of such
class standing in his name on the books.
ARTICLE IX.
Board of Directors.
A Board of Directors shall be chosen by ballot at the Annual Meeting of
the Shareholders or at any meeting held in lieu thereof as herein before
provided in Article III. The number of Directors may be fixed from time to
time by resolution of the Board of Directors but shall not be less than six
nor more than thirteen. Except as otherwise provided in Article XXI hereof,
each Director shall serve until the next Annual Meeting of Shareholders and
until his successor is duly elected and qualified or until the number of
Directors is decreased. The foregoing provisions are, however, subject to
Article III of the Articles of Incorporation, if and whenever the same may
become applicable by the accrual of voting rights to the Preferred Stock.
ARTICLE X.
Powers of Directors.
All corporate powers shall be exercised by or under the authority of, and
the business and affairs of the Corporation shall be managed under the
direction of, the Board of Directors, subject to any limitation set forth in
the Articles of Incorporation and so far as this delegation of authority is
not inconsistent with the laws of the Commonwealth of Virginia, with the
Articles of Incorporation or with these Bylaws.
ARTICLE XI.
Executive and Other Committees.
The Board of Directors, by resolution passed by a majority of the whole
Board, may designate two or more of its number to constitute an Executive
Committee. If a quorum is present, the Committee may act upon the affirmative
vote of a majority of the Committee members present. When the Board of
Directors is not in session, the Executive Committee shall have and may
exercise all of the authority of the Board of Directors except that the
Executive Committee shall not (i) approve or recommend to Shareholders action
that Virginia law requires to be approved by Shareholders; (ii) fill vacancies
on the Board of Directors or any of its Committees or elect officers; (iii)
Amend Articles of Incorporation other than as permitted by statute; (iv)
adopt, amend or repeal these Bylaws; (v) approve a plan of merger not
requiring Shareholder approval; (vi) authorize or approve a distribution,
except according to a general formula or method prescribed by the Board of
Directors; or (vii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, except that the Board of
Directors may authorize the Executive Committee to do so within limits
specifically prescribed by the Board of Directors. If the Executive Committee
is created for any designated purpose, its authority shall be limited to such
purpose. The Executive Committee shall report its action to the Board of
Directors. Regular and special meetings of the Executive Committee may be
called and held subject to the same requirements with respect to time, place
and notice as are specified in these Bylaws for regular and special meetings
of the Board of Directors. Members of the Executive Committee shall receive
such compensation for attendance at meetings as may be fixed by the Board of
Directors.
The Board of Directors, by resolution passed by a majority of the whole
board, may designate four of its number to constitute a Nominating Committee
to nominate future members of the Board of Directors. Such Nominating
Committee shall act to ensure that a majority of the membership of the boards
of directors of the Corporation and Dominion Resources, Inc. will be comprised
of directors of bothe corporations.
The Board of Directors likewise may appoint from their number other
Committees from time to time, the number composing such Committees and the
power conferred upon the same to be subject to the foregoing exceptions for an
Executive Committee but otherwise as determined by vote of the Board of
Directors.
ARTICLE XII.
Meetings of Directors and Quorum.
Regular Meetings of the Board of Directors may be held at such places
within or without the Commonwealth of Virginia and at such times as the Board
by vote may determine from time to time, and if so determined no notice
thereof need be given. Special Meetings of the Board of Directors may be held
at any time or place either within or without the Commonwealth of Virginia,
whenever called by the Chairman of the Board of Directors, the President, any
Vice President, the Corporate Secretary, or three or more Directors, notice
thereof being given to each Director by the Corporate Secretary or an
Assistant Corporate Secretary, the Directors or the officer calling the
meeting, or at any time without formal notice provided all the Directors are
present or those not present waive notice thereof. Notice of Special
Meetings, stating the time and place thereof, shall be given by mailing the
same to each Director at his residence or business address at least two days
before the meeting, or by delivering the same to him personally or telephoning
the same to him at his residence or business address at least one day before
the meeting, unless, in case of exigency, the Chairmanof the Board of
Directors or the President shall prescribe a shorter notice to be given
personally or by telephoning each Director at his residence or business
address.
A written waiver of notice signed by the Director entitled to such
notice, whether before or after the date of the meeting, shall be equivalent
to the giving of such notice. A Director who attends or participates in a
meeting shall be deemed to have waived timely and proper notice of the meeting
unless the Director, at the beginning of the meeting or promptly upon his
arrival, objects to holding the meeting or transacting business at the meeting
and does not thereafter vote for or assent to action taken at the meeting.
A majority of the number of Directors fixed at the time in accordance
with the Bylaws shall constitute a quorum for the transaction of business, but
a lesser number may adjourn any meeting from time to time, and the meeting may
be held without further notice. The foregoing provision is, however, subject
to Article III of the Articles of Incorporation. When a quorum is present at
any meeting, a majority of the members present thereat shall decide any
question brought before such meeting, except as otherwise provided by law, by
the Articles of Incorporation or by these Bylaws.
ARTICLE XIII.
Action Without a Meeting.
Any action required to be taken at a meeting of the Directors, or any
action which may be taken at a meeting of the Directors or of a Committee, may
be taken without a meeting if a consent in writing (which may be in any number
of counterparts), setting forth the action so to be taken, shall be signed by
all of the Directors, or all of the members of the Committee, as the case may
be, either before or after such action is taken. Such consent shall have the
same force and effect as a unanimous vote.
ARTICLE XIV.
Officers.
The officers of the Corporation shall be a President, one or more Vice
Presidents, a Corporate Secretary, a Treasurer and a Controller. The Chairman
of the Board of Directors and the Vice Chairman shall also be an officer
unless they are not a full-time employee of the Corporation. The officers,
the Chairman of the Board of Directors and the Vice Chairman of the Board of
Directors shall be elected or appointed by the Board of Directors after each
election of Directors by the Shareholders, and a meeting of the Board of
Directors may be held without notice for the purpose of electing officers
following the Annual Meeting of the Shareholders.
The Board of Directors, in its discretion, may appoint one or more
Assistant Corporate Secretaries, one or more Assistant Treasurers, one or more
Assistant Controllers, and such other officers or agents as it may deem
advisable, and prescribe their duties.
ARTICLE XV.
Eligibility of Officers.
The Chairman of the Board of Directors, the Vice Chairman of the Board of
Directors and the President shall be Directors. Any person may hold more than
one office provided, however, that neither the Corporate Secretary, the
Treasurer nor the Controller shall at the same time hold the office of
Chairman of the Board of Directors or President.
ARTICLE XVI.
Chairman of the Board of Directors and President.
The Chairman of the Board of Directors shall preside at the meetings of
the Board of Directors. He may call meetings of the Board of Directors and of
any Committee thereof whenever he deems it necessary. He shall call to order,
and act as chairman of, all meetings of the Shareholders and prescribe rules
of procedure therefor. He shall perform the duties commonly incident to his
office and such other duties as the Board of Directors shall designate from
time to time.
The Board of Directors may designate the Chief Executive Officer of the
Corporation.
In the absence of the Chairman of the Board of Directors, the Vice
Chairman of the Board of Directors shall perform his duties. The Vice
Chairman of the Board of Directors shall perform the duties commonly incident
to his office and such other duties as the Board of Directors shall designate
from time to time. In the absence of the Vice Chairman of the Board of
Directors, the President shall perform his duties. The President shall
perform the duties commonly incident to his office and such other duties as
the Board of Directors shall designate from time to time. The Chief Executive
Officer, the President and each Vice President shall have authority to sign
deeds and contracts and to delegate such authority in such manner as may be
approved by the Chief Executive Officer or the President.
ARTICLE XVII.
Vice Presidents.
Except as otherwise provided by the Board of Directors, each Vice
President shall have the power to sign all certificates of stock, bonds, deeds
and contracts. Each Vice President shall perform such other duties and have
such other powers as the Board of Directors shall designate from time to time.
In the event of the absence or disability of the President, the duties and
powers of the President shall be performed and exercised by the Vice President
designated to so act by the line of succession provided by the Board of
Directors, or if not so provided by the Board of Directors, in accordance with
the following order of priority: (a) The Executive Vice Presidents in order of
their seniority of first election to such office, or if two or more shall have
been first elected to such office on the same day, in order of their seniority
in age; (b) The Senior Vice Presidents in order of their seniority of first
election to such office, or if two or more shall have been first elected to
such office on the same day, in order of their seniority in age; (c) All other
Vice Presidents at the principal office of the Corporation in the order of
their seniority of first election to such office or if two or more shall have
been first elected to such office on the same day, the order of their
seniority in age; and (d) Any other persons that are designated on a list that
shall have been approved by the Board of Directors, such persons to be taken
in such order of priority and subject to such conditions as may be provided in
the resolution approving the list.
ARTICLE XVIII.
Corporate Secretary.
The Corporate Secretary shall keep accurate minutes of all meetings of
the Shareholders, the Board of Directors and the Executive Committee, shall
perform the duties commonly incident to his office, and shall perform such
other duties and have such other powers as the Board of Directors shall
designate from time to time. The Corporate Secretary shall have power,
together with the President or a Vice President, to sign certificates for
shares of stock. In his absence an Assistant Corporate Secretary shall
perform his duties.
ARTICLE XIX.
Treasurer.
The Treasurer, subject to the order of the Board of Directors, shall have
the care and custody of the money, funds and securities of the Corporation and
shall have and exercise under the supervision of the Board of Directors, all
the powers and duties commonly incident to his office. He shall deposit all
funds of the Corporation in such bank or banks, trust company or trust
companies or with such firm or firms doing a banking business, as the
Directors shall designate. He may endorse for deposit or collection all
checks, notes, et cetera, payable to the Corporation or to its order, may
accept drafts on behalf of the Corporation, and, together with the President
or a Vice President, may sign certificates for shares of stock.
All checks, drafts, notes and other obligations for the payment of money
except bonds, debentures and notes issued under an Indenture shall be signed
either manually or, if and to the extent authorized by the Board of Directors,
through facsimile, by the Treasurer or an Assistant Treasurer or such other
officer or agent as the Board of Directors shall authorize. Checks for the
total amount of any payroll may be drawn in accordance with the foregoing
provisions and deposited in a special fund. Checks upon this fund may be
drawn by such person as the Treasurer shall designate.
ARTICLE XX.
Controller.
The Controller shall keep accurate books of account of the Corporation's
transactions and shall perform such other duties and have such other powers as
the Board of Directors shall designate from time to time.
ARTICLE XXI.
Resignation and Removals.
Any Director may resign at any time by giving written notice to the Board
of Directors, to the Chairman of the Board of Directors, to the President or
to the Corporate Secretary, and any member of any Committee may resign by
giving written notice either as aforesaid or to the Committee of which he is a
member or the chairman thereof. Any officer may resign at any time by
delivering notice to the Corporation. Any such resignation shall take effect
at the time specified therein or, if the time be not specified, upon receipt
thereof; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
The Shareholders, at any meeting called for the purpose, by vote of a
majority of the stock having voting power issued and outstanding, may remove
any Director from office with or without cause and elect his successor; but
this provision is subject to Article III of the Articles of Incorporation, if
and whenever the same may become applicable by the accrual of voting rights to
the Preferred Stock. The Board of Directors, by vote of a majority of the
entire Board, may remove any officer, agent or member of any Committees
elected or appointed by them, with or without cause, from office.
ARTICLE XXII.
Vacancies.
If the office of any officer or agent, one or more, becomes vacant by
reason of death, disability, resignation, removal, disqualification or
otherwise, the Directors at the time in office, may, by a majority vote at a
meeting at which a quorum is present, choose a successor or successors who
shall hold office for the unexpired term or until his successor is duly
elected and qualified or his position is eliminated.
ARTICLE XXIII.
Certificates for Shares.
Every Shareholder shall be entitled to a certificate or certificates for
shares of record owned by him in such form as may be prescribed by the Board
of Directors,duly numbered and setting forth the number and kind of shares to
which such Shareholder is entitled. Such certificates shall be signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer
or the Corporate Secretary or an Assistant Corporate Secretary. The Board of
Directors may also appoint one or more Transfer Agents and/or Registrars for
its stock of any class or classes and may require stock certificates to be
countersigned and/or registered by one or more of such Transfer Agents and/or
Registrars. If certificates for shares are signed by a Transfer Agent or by a
Registrar, the signatures thereon of the President or a Vice President and the
Treasurer or an Assistant Treasurer or the Corporate Secretary or an Assistant
Corporate Secretary may be facsimiles, engraved or printed. Any provisions of
these Bylaws with reference to the signing of stock certificates shall
include, in cases above permitted, such facsimiles. In case any officer or
officers who shall have signed, or whose facsimile signature or signatures
shall have been used on, any such certificate or certificates shall cease to
be such officer or officers of the Corporation, whether because of death,
resignation or otherwise, before such certificate or certificates shall have
been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be such officer or
officers of the Corporation.
Notwithstanding the foregoing, the Board of Directors may authorize the issue
of some or all of the shares of any or all of its classes or series without
certificates. Within a reasonable time after the issue or transfer of shares
without certificates, the Corporation shall send the Shareholder a written
statement of the information required on certificates by the Virginia Stock
Corporation Act or other applicable law.
ARTICLE XXIV.
Transfer of Shares.
Shares may be transferred by delivery of the certificate accompanied
either by an assignment in writing on the back of the certificate or by a
written power of attorney to sell, assign and transfer the same on the books
of the Corporation, signed by the person appearing by the certificate to be
the owner of the shares represented thereby, and shall be transferable on the
books of the Corporation upon surrender thereof so assigned or endorsed. The
person registered on the books of the Corporation as the owner of any shares
shall be entitled exclusively as the owner of such shares to receive dividends
and to vote in respect thereof. It shall be the duty of every Shareholder to
notify the Corporation of his address.
ARTICLE XXV.
Record Date.
For the purpose of determining the Shareholders entitled to notice of or
to vote at any meeting of Shareholders, or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a
determination of Shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of Shareholders, provided that such date shall not in any case
be more than 70 days prior to the date on which the particular action,
requiring such determination of Shareholders, is to be taken. If no record
date shall be fixed for the determination of Shareholders entitled to notice
of or to vote at a meeting of Shareholders, or for the determination of the
Shareholders entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of Shareholders in such cases.
A determination of Shareholders entitled to notice of or to vote at a
Shareholders' meeting is effective for any adjournment of the meeting unless
the Board of Directors fixes a new record date, which it shall do if the
meeting is adjourned to a date more than 120 days after the date fixed for the
original meeting.
ARTICLE XXVI.
Voting of Shares Held.
Unless the Board of Directors shall otherwise provide, the Chairman of
the Board of Directors, the President any Vice President, or the Corporate
Secretary may from time to time appoint one or more attorneys-in-fact or
agents of the Corporation, in the name and on behalf of the Corporation, to
cast the votes that the Corporation may be entitled to cast as a shareholder
or otherwise in any other corporation, any of whose stock or securities of
which may be held by the Corporation, at meetings of the holders of any such
other corporations, or to consent in writing to any action by any such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause
to be executed on behalf of the Corporation such written proxies, consents,
waivers or other instruments as he may deem necessary or proper in the
premises; or either the Chairman of the Board of Directors, the President or
the Corporate Secretary may himself attend any meeting of the shareholders of
any such other corporation and there at vote or exercise any or all other
powers of the Corporation as the shareholder of such other corporation.
ARTICLE XXVII.
Bonds, Debentures and Notes Issued Under an Indenture.
All bonds, debentures and notes issued under an Indenture shall be signed
by the President or any Vice President or such other officer or agent as the
Board of Directors shall authorize and by the Corporate Secretary or any
Assistant Corporate Secretary or by the Treasurer or any Assistant Treasurer
or such other officer or agent as the Board of Directors shall authorize.
The signature of any authorized officer of the Corporation on bonds and
debentures authenticated by a corporate trustee may be made manually or by
facsimile.
ARTICLE XXVIII.
Amendments.
All Bylaws shall be subject to alteration or repeal, and new Bylaws may
be made by the affirmative vote of a majority of the Directors. The
Shareholders entitled to vote, however, shall have the power to rescind,
amend, alter or repeal the Bylaws and to enact Bylaws which, if expressly so
provided, may not be amended, altered or repealed by the Board of Directors.
ARTICLE XXIX.
Emergency Bylaws.
The Emergency Bylaws provided in this Article XXIX shall be operative
during any emergency notwithstanding any different provision in the preceding
Articles of the Bylaws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act. An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled because of
some catastrophic event. To the extent not inconsistent with these Emergency
Bylaws, the Bylaws provided in the preceding Articles shall remain in effect
during such emergency and upon the termination of such emergency the Emergency
Bylaws shall cease to be operative unless and until another such emergency
shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer of
the Corporation or by any Director. Notice shall be given by the person
calling the meeting. The notice shall specify the place of the meeting, which
shall be the principal office of the Corporation at the time if feasible, but
otherwise shall be any other place specified in the notice. The notice shall
also specify the time of the meeting. Notice may be given only to such of the
Directors as it may be feasible to reach at the time and by such means as may
be feasible at the time, including publication or radio. If given by mail,
messenger or telephone, the notice shall be addressed to the Director's
address or such other place as the person giving the notice shall deem most
suitable. Notice shall be similarly given, to the extent feasible, to the
other persons referred to in (b) below. Notice shall be given at least two
days before the meeting if feasible in the judgment of the person giving the
notice, but otherwise shall be given any time before the meeting as the person
giving the notice shall deem necessary.
(b) At any meeting of the Board of Directors, a quorum shall consist of a
majority of the number of Directors fixed at the time by Article IX of the
Bylaws. If the Directors present at any particular meeting shall be fewer
than the number required for such quorum, other persons present, as determined
by the following provisions and in the following order of priority, up to the
number necessary to make up such quorum, shall be deemed Directors for such
particular meeting:
(i) The Executive Vice Presidents;
(ii) The Senior Vice Presidents in the order of their seniority of
first election to such office, or if two or more shall have been
first elected to such office on the same day, in the order of their
seniority in age;
(iii) All other Vice Presidents at the principal office of the
Corporation in the order of their seniority of first election to
such office, or if two or more shall have been first elected to such
office on the same day, in the order of their seniority in age; and
(iv) Any other persons that are designated on a list that shall
have been approved by the Board of Directors before the emergency,
such persons to be taken in such order of priority and subject to
such conditions as may be provided in the resolution approving the
list.
(c) The Board of Directors, during as well as before any such emergency,
may provide, and from time to time modify, lines of succession in the event
that during such an emergency any or all officers or agents of the Corporation
for any reason shall be rendered incapable of discharging their duties.
(d) The Board of Directors, before and during any such emergency, may,
effective in the emergency, change the principal office or designate several
alternative principal offices or regional offices, or authorize the officers
so to do.
No officer, Director or employee shall be liable for any action taken in
good faith in accordance with these Emergency Bylaws.
These Emergency Bylaws shall be subject to repeal or change by further
action of the Board of Directors or by action of the Shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal
or change. Any such amendment of these Emergency Bylaws may make any further
or different provision that may be practical and necessary for the
circumstances of the emergency.
Exhibit 10(xxii)
DOMINION RESOURCES, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
As Amended and Restated
Effective July 1, 1986
For the Directors of:
Dominion Resources, Inc.
Virginia Electric and Power Company
Virginia Natural Gas, Inc.
<PAGE>
TABLE OF CONTENTS
Section Page
1. Purpose 1
2. Definitions 1
3. Participation 3
4. Deferral Election 3
5. Effect of No Election 5
6. Deferred Cash Benefits 5
7. Deferred Stock Benefits 6
8. Distributions 7
9. Hardship Distributions 9
10. Company's Obligation 9
11. Control by Participant 10
12. Claims Against Participant's Deferred Benefits 10
13. Amendment or Termination 10
14. Notices 11
15. Waiver 11
16. Construction 12
17. Corporate and Committee Actions and Responsibilities 12
<PAGE>
1. PURPOSE. The Dominion Resources, Inc. Directors' Deferred Compensation Plan
(the "Plan"), is intended to constitute a deferred compensation plan for
corporate directors' fees in accordance with Revenue Ruling 71-419, 1971-2
C.B. 220.
2. DEFINITIONS. The following definitions apply to this Plan and to the
Deferral Election Forms.
(a) Beneficiary or Beneficiaries means a person or persons or other entity
designated on a Beneficiary Designation Form by a Participant as
allowed in subsection 8(c) of this Plan to receive Deferred Benefit
payments. If there is no valid designation by the Participant, or if
the designated Beneficiary or Beneficiaries fail to survive the
Participant or otherwise fail to take the Benefit, the Participant's
Beneficiary is the first of the following who survives the Participant:
a Participant's spouse (the person legally married to the Participant
when the Participant dies); the Participant's children in equal shares;
the Participant's other surviving issue, per stirpes; the Participant's
parents; and the Participant's estate.
(b) Beneficiary Designation Form means a form acceptable to the Chairman of
the Committee or his designee used by a Participant according to this
Plan to name his Beneficiary or Beneficiaries who will receive all
Deferred Benefit payments under this Plan if he dies.
(c) Board means the board of directors of the Company, according to law and
to each entity's governing documents.
(d) Committee means the Organization and Compensation Committee of Dominion
Resources, Inc.
(e) Company means Dominion Resources, Inc.; Virginia Electric and Power
Company; and any of their affiliates that with approval of the board
of directors of Dominion Resources, Inc. adopt or have adopted this
Plan; any successor business by merger, purchase, or otherwise that
maintains the Plan; or any predecessor business or employer that has
maintained the Plan.
(f) Compensation means a Member's Meeting Fees and Retainer Fees for the
Deferral Year.
(g) Deferral Election Form means a document governed by the provisions of
section 4 of this Plan, including the portion that is the Distribution
Election Form and the related Beneficiary Designation Form that applies
to all of that Participant's Deferred Benefits under the Plan.
(h) Deferral Year means a calendar year for which a Member has an
operative Deferral Election Form.
(i) Deferred Benefit means either a Deferred Cash Benefit or a Deferred
Stock Benefit under the Plan for a Member who has submitted an
operative Deferral Election Form pursuant to section 4 of this Plan.
(j) Deferred Cash Account means that bookkeeping record established for
each Participant who elects a Deferred Cash Benefit under this Plan.
A Deferred Cash Account is established only for purposes of measuring
a Deferred Cash Benefit and not to segregate assets or to identify
assets that may or must be used to satisfy a Deferred Cash Benefit.
A Deferred Cash Account will be credited with the Participant's
Compensation deferred as a Deferred Cash Benefit according to a
Deferral Election Form and according to section 6 of this Plan. A
Deferred Cash Account will be credited periodically with amounts
based upon interest rates established by the Committee under sub-
section 6(b) of this Plan.
(k) Deferred Cash Benefit means the Deferred Benefit elected by a
Participant under section 4 that results in payments governed by
sections 6 and 8.
(l) Deferred Stock Account means that bookkeeping record established for
each Participant who elects a Deferred Stock Benefit under this Plan.
A Deferred Stock Account is established only for purposes of measuring
a Deferred Stock Benefit and not to segregate assets or to identify
assets that may or must be used to satisfy a Deferred Stock Benefit.
A Deferred Stock Account will be credited with the Participant's
Compensation deferred as a Deferred Stock Benefit according to a
Deferral Election Form and according to section 7 of this Plan. A
Deferred Stock Account will be credited periodically with amounts
determined by the Committee under subsection 7(b) of this Plan.
(m) Deferred Stock Benefit means the Deferred Benefit elected by a
Participant under section 4 that results in payments governed by
sections 7 and 8.
(n) Directors means those duly named members of the Board.
(o) Distribution Election Form means that part of a Deferral Election Form
used by a Participant according to this Plan to establish the duration
of deferral and the frequency of payments of a Deferred Benefit. If a
Deferred Benefit has no Distribution Election Form that is operative
according to section 4, distribution of that Deferred Benefit is
governed by section 8.
(p) Dominion means Dominion Resources, Inc.
(q) Election Date means the date established by this Plan as the date
before which a Member must submit a valid Deferral Election Form
to the Committee. For each Deferral Year, the Election Date is
December 31 of the preceding calendar year. However, for an
individual who becomes a Member during a Deferral Year, the Election
Date is the thirtieth day following the date that he becomes a
Member. Despite the two preceding sentences, the Committee may set
an earlier date as the Election Date for any Deferral Year.
(r) Meeting Fees means the portion of a Director's Compensation that is
based upon his attendance at Board meetings and meetings of the
Company's committees, according to the Company's established rules
and procedures for compensating Directors.
(s) Member means a Director of a Company who is eligible to participate
in this Plan according to criteria which may from time to time be
adopted by that Company.
(t) Participant, with respect to any Deferral Year, means a Member whose
Deferral Election Form is operative for that Deferral Year according
to section 4 of this Plan.
(u) Plan means the Dominion Resources, Inc. Directors' Deferred
Compensation Plan.
(v) Retainer Fee means that portion of a Director's Compensation that is
fixed and paid without regard to his attendance at meetings.
(w) Terminate, Terminating, or Termination, with respect to a Participant,
mean cessation of his relationship with the Company as a Director
whether by death, disability or severance for any other reason. Unless
the Committee determines otherwise in its sole discretion, Terminate,
Terminating, or Termination do not include situations where the
Participant continues to be employed by a Company or a Director on
the board of a Company.
3. PARTICIPATION. A Member becomes a Participant for any Deferral Year by
filing a valid Deferral Election Form according to section 4 on or before
the Election Date for that Deferral Year, but only if his Deferral Election
Form is operative according to section 4.
4. DEFERRAL ELECTION. A deferral election is valid when a Deferral Election
Form is completed, signed by the electing Member, and received by the
Committee Chairman. Deferral elections are governed by the provisions of
this section.
(a) A Participant may elect a Deferred Benefit for any Deferral Year if
he is a Member at the beginning of that Deferral Year or becomes a
Member during that Deferral Year.
(b) Before each Deferral Year's Election Date, each Member will be
provided with Deferral Election Forms and a Beneficiary Designation
Form. Under one or both Deferral Election Forms for a single Deferral
Year, a Member may elect on or before the Election Date to defer the
receipt of his entire Retainer Fee or all of his Meeting Fees or all
of his Compensation for the Deferral Year. Each Distribution Election
Form must provide for the deferral of its covered Deferred Benefit
at least until after the Member is 65 or until he Terminates, if that
is before he is 65.
(c) A Member may complete a Deferral Election Form for either a Deferred
Cash Benefit or a Deferred Stock Benefit for his Retainer Fee and a
different Deferral Election Form for his Meeting Fees, or he may
complete a single Deferral Election Form for his entire Compensation.
A Member may not divide his Retainer Fee between Deferral Election
Forms, and he may not divide his Meeting Fees between Deferral
Election Forms.
(d) A Deferral Election Form that covers a Member's Meeting Fees must
cover his entire Meeting Fees for the Deferral Year. A Deferral
Election Form that covers a Member's Retainer Fee must cover his entire
Retainer Fee for the Deferral Year. If a Participant is a Director
for more than one Company, his Deferral Election Form shall apply
to all his Meeting Fees, Retainer Fees, or Compensation (which ever
is indicated by the Participant on the Deferral Election Form) payable
to him as a Member; provided that the Participant may, with the
permission of the Committee, complete a separate Deferral Election
Form covering such fees payable to him as a Member from each such
Company.
(e) Except as provided in this subsection and in the situation described
in Plan subsection 13(b), a Participant may not elect to convert a
Deferred Cash Benefit to a Deferred Stock Benefit or to convert a
Deferred Stock Benefit to a Deferred Cash Benefit. If a Participant's
election of a Deferred Stock Benefit is subject to the contingency
described in Plan subsection 13(b), the Participant may file a
Deferred Cash Benefit/Deferred Stock Benefit Election Form for the
affected Deferral Year (or part thereof) on or before the designated
Election Date and elect to convert a Deferred Cash Benefit into a
Deferred Stock Benefit as of the effective date of the Plan
provisions relating to Deferred Stock Benefits, determined under
section 13(b).
(f) Each Distribution Election Form is part of the Deferral Election Form on
which it appears or to which it states that it is related. The Committee
may allow a Participant to file one Distribution Election Form for all
of his Deferred Cash Benefits and one for all of his Deferred Stock
Benefits. The provisions of subsection 2(o) apply to any Deferred
Benefit under this Plan if there is no operative Distribution Election
Form for that Deferred Benefit.
(g) If it does so before the last business day of the Deferral Year, the
Committee may reject any Deferral Election Form or any Distribution
Election Form or both, and the Committee is not required to state a
reason for any rejection. The Committee may modify any Distribution
Election Form at any time to the extent necessary to comply with
any federal securities laws or regulations. However, the Committee's
rejection of any Deferral Election Form or any Distribution Election
Form or the Committee's modification of any Distribution Election Form
must be based upon action taken without regard to any vote of the
Member whose Deferral Election Form or Distribution Election Form is
under consideration, and the Committee's rejections must be made on
a uniform basis with respect to similarly situated Members. If the
Committee rejects a Deferral Election Form, the Member must be paid
the amounts he would then have been entitled to receive if he had not
submitted the rejected Deferral Election Form.
(h) A Member may not revoke a Deferral Election Form or a Distribution
Election Form after the Deferral Year begins. Any revocation before
the beginning of the Deferral Year is the same as a failure to submit
a Deferral Election Form or a Distribution Election Form. Any writing
signed by a Member expressing an intention to revoke his Deferral
Election Form or a related Distribution Election Form and delivered
to a member of the Committee before the close of business on the
relevant Election Date is a revocation.
5. EFFECT OF NO ELECTION. A Member who has not submitted a valid Deferral
Election Form to the Committee on or before the relevant Election Date
may not defer his Compensation for the Deferral Year under this Plan.
The Deferred Benefit of a Member who submits a valid Deferral Election
Form but fails to submit a valid Distribution Election Form for that
Deferred Benefit before the relevant Election Date or who otherwise has
no valid Distribution Election Form for that Deferred Benefit is governed
by section 2(o).
6. DEFERRED CASH BENEFITS.
(a) Deferred Cash Benefits will be set up in a Deferred Cash Account for
each Participant and credited with interest at rates determined by
the Committee. Deferred Cash Benefits are credited to the applicable
Participant's Deferred Cash Account as of the day they would have been
paid but for the deferral. Interest is credited on the first day of
each month based on the Deferred Cash Account balance at the end of
the preceding day.
(b) Interest will be credited to Deferred Cash Accounts based on average
three-month United States Treasury Bill rates (equivalent yield, not
discount yield) as published by the Federal Reserve Board. The
applicable rate for each month will be determined on the last business
day of the previous month. Those interest rates will apply
prospectively for all current and future Deferred Cash Account balances
until the basis on which interest is determined is changed by the
Committee. Interest credits are accrued monthly on accumulated
Deferred Cash Accounts. Interest is accrued through the end of the
month preceding the month of distribution of a Deferred Cash Benefit.
(c) If a Participant elects under section 4(e) to convert a Deferred Cash
Benefit into a Deferred Stock Benefit, the Participant's Deferred
Cash Account will be converted to a Deferred Stock Account governed by
section 7 as of the date the Plan's provisions relating to Deferred
Stock Benefits become effective for purposes of the Participant's
election.
7. DEFERRED STOCK BENEFITS. Subject to section 13(b), electing Participants'
Deferred Stock Benefits are governed by this section.
(a) Deferred Stock Benefits will be set up in a Deferred Stock Account
for each electing Participant and credited with earnings at rates
determined by the Committee. A Deferred Stock Benefit attributable
to a Retainer Fee is credited to the Participant's Deferred Stock
Account on the last day of each calendar quarter of the Deferral
Year. A Deferred Stock Benefit attributable to a Meeting Fee is
credited to the Participant's Deferred Stock Account on the last
day of the month in which a meeting occurs.
(b) Rates established by the Committee as the basis for additional credits
to Deferred Stock Accounts will be variable rates equal to the value
of dividends paid on Dominion common stock when the additional credit
is made. The value of a Deferred Stock Account at any relevant time
equals the value of the shares of Dominion common stock as if the
Compensation deferred by the Participant under the Plan and any
additional credits under this subsection had been used to purchase
Dominion common stock on the date those amounts were credited to the
Deferred Stock Account. Additional credits are credited on the last
day of each calendar quarter on accumulated Deferred Stock Accounts.
Additional credits are accrued through the end of the year preceding
the year of distribution of a Deferred Stock Benefit.
(c) If a trust is established under Plan sections 10(b) and 13(c), an
electing Participant may instruct the trustee under the governing trust
agreement how to vote shares of Dominion common stock allocated to that
Participant's separate account under the trust according to this
subsection and provisions of the governing trust agreement. Before each
annual or special meeting of the Dominion shareholders, the trustee
under the governing trust agreement must furnish each Participant with a
copy of the proxy solicitation and other relevant material for the
meeting as furnished to the trustee by Dominion, and a form addressed to
the trustee requesting the Participant's confidential instructions on
how to vote shares of Dominion common stock allocated to his account as
of the valuation date established under the governing trust agreement
preceding the record date. Upon receipt of those instructions, the
trustee under the governing trust agreement must vote such stock as
instructed.
8. DISTRIBUTIONS.
(a) According to a Participant's Distribution Election Form, but
subject to Plan section 4(g), a Deferred Cash Benefit must be
distributed in cash. According to a Participant's Distribution
Election Form, but subject to Plan section 4(g), a Deferred Stock
Benefit must be distributed in shares of Dominion common stock
equal in value to the value of the Participant's Deferred Stock
Account on the last day of the month preceding the month of
distribution. However, cash must be paid in lieu of fractional
shares of Dominion common stock otherwise distributable. According
to the procedures of Plan section 4(g), the Committee may modify
any Participant's Distribution Election Form to prevent any
distribution of Dominion common stock to pay a Deferred Stock
Benefit if the total number of shares of such stock distributed
under this Plan after such distribution would exceed 100,000 shares
times the number of Participants in the Plan on the relevant date.
(b) Except for distributions triggered by a Participant's disability,
Deferred Benefits will be paid in a lump sum unless the
Participant's Distribution Election Form specifies installment
payments over 10 years. For a Deferred Cash Benefit payable in
installments, interest credits under section 6(b) continue to
accrue on the unpaid balance of a Deferred Cash Account. For a
Deferred Stock Benefit payable in installments, additional credits
under section 7(b) do not accrue on the unpaid balance of a
Deferred Stock Account after the year preceding the year in which
payments begin. Instead, any additional credits that would have
been credited to a Deferred Stock Account are payable to the
applicable Participant in cash on the date that would otherwise
have been credited.
If a Participant Terminates as a result of his disability, Deferred
Benefits will be paid to such Participant in installment payments over
a period of 10 years commencing on the date his disability is
certified by the Committee unless the Committee, in its sole
discretion, approves a longer or shorter payment period. If, after his
Termination as a result of disability, such Participant recovers
before the balance of his Deferred Cash and Deferred Stock Accounts
under the Plan are exhausted, his distributions will be discontinued
and any remaining Deferred Benefits under the Plan will be governed by
the provisions of this section and his Distribution Election Forms.
Unless otherwise specified in a Participant's Distribution Election
Form, any lumpsum payment will be paid or installment payments will
begin to be paid on the February 15 of the year after the Participant's
sixty-fifth birthday or on the February 15 of the year after the
Participant's Termination, if earlier. For distributions that would
automatically be caused under the preceding sentence by a Participant's
Termination (other than by death or disability) or for distributions
that would otherwise automatically begin because a Participant reaches
age 65, the Participant may elect on his Distribution Election Form that
payments are to begin:
(i) on the February 15 following his Termination, without regard
to his age; or
(ii) on the February 15 following his Termination and his
attainment of a specified age; or
(iii) even if the Participant does not Terminate, on the February 15
following a specified age.
For purposes of these distribution election alternatives, the specified
age must be not less than the Participant's age two years from the
Election Date pertaining to the applicable Deferral Year and not
greater than the age at which there are no earnings limitations in
order to receive full social security benefits (currently age 70).
(c) Deferred Benefits may not be assigned by a Participant or Beneficiary.
A Participant may use only one Beneficiary Designation Form to
designate one or more Beneficiaries for all of his Deferred Benefits
under the Plan; such designations are revocable. Each Beneficiary
will receive his portion of the Participant's Deferred Cash Account
and Deferred Stock Account on February 15 of the year following the
Participant's death unless the Beneficiary's request for accelerated
payment is approved at the Committee's discretion under section 9 or
unless the Beneficiary's request for a different distribution schedule
is received before distributions begin and is approved at the
Committee's discretion. The Committee may insist that multiple
Beneficiaries agree upon a single distribution method.
(d) Any Dominion common stock distributed pursuant to the Plan shall have
been acquired by an "agent independent of the issuer" (i.e., the
Company) within the meaning of 17 CFR section 240.10b-18, as such
regulation is in effect on April 19, 1985. Such acquisitions may be
effected in all cases on the open market or, in the event that the
Company makes available newly issued common stock, directly from the
Company, provided that such common stock has been registered with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, or any successor thereto at the time such purchase is made or
an exemption from such registration requirement is, in the opinion of
counsel to the Company, available.
9. HARDSHIP DISTRIBUTIONS.
(a) At its sole discretion and at the request of a Participant before or
after the Participant's Termination, or at the request of any of the
Participant's Beneficiaries after the Participant's death, the
Committee may accelerate and pay all or part of any amount
attributable to a Participant's Deferred Benefits under this Plan.
Accelerated distributions may be allowed only in the event of a
financial emergency beyond the Participant's or Beneficiary's control
and only if disallowance of a distribution would create a severe
hardship for the Participant or Beneficiary. An accelerated
distribution must be limited to the amount determined by the Committee
to be necessary to satisfy the financial emergency.
(b) For purposes of an accelerated distribution of a Deferred Stock
Benefit under this section, the Deferred Stock Benefit's value is
determined by the value of the Deferred Stock Account at the time
of the distribution.
(c) Only cash distributions are permitted under this section. Distributions
under this section must first be made from the Participant's
Deferred Cash Account before accelerating the distribution of any
amount attributable to a Deferred Stock Benefit.
(d) A distribution under this section is in lieu of that portion of the
Deferred Benefit that would have been paid otherwise. A Deferred
Cash Benefit is adjusted for a distribution under this section by
reducing the Participant's Deferred Cash Account balance by the amount
of the distribution. A Deferred Stock Benefit is adjusted for a
distribution under this section by reducing the value of the
Participant's Deferred Stock Account by the amount of the distribution.
10. COMPANY'S OBLIGATION.
(a) The Plan is unfunded. A Deferred Benefit is at all times a mere
contractual obligation of the Company. A Participant and his
Beneficiaries have no right, title, or interest in the Deferred
Benefits or any claim against them. Except according to sections
10(b) and 13(c), the Company will not segregate any funds or assets
for Deferred Benefits nor issue any notes or security for the payment
of any Deferred Benefit.
(b) Subject to section 13(c), the Company may establish a grantor trust and
transfer to that trust shares of Dominion common stock or other assets.
Trust assets must be invested primarily in Dominion common stock for
the purpose of measuring the value of Deferred Stock Accounts under
the Plan to be distributed as Deferred Stock Benefits in the form of
Dominion common stock, plus cash in lieu of fractional shares. The
governing trust agreement must require a separate account to be
established for each electing Participant. The governing trust
agreement must also require that all Company assets held in trust
remain at all times subject to the Company's judgment creditors.
11. CONTROL BY PARTICIPANT. A Participant has no control over Deferred
Benefits except according to his Deferral Election Forms, his Distribution
Election Forms, and his Beneficiary Designation Form.
12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS. A Deferred Cash Account
and Deferred Stock Account relating to a Participant under this Plan are
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to do so is
void. A Deferred Benefit is not subject to attachment or legal process
for a Participant's debts or other obligations. Nothing contained in this
Plan gives any Participant any interest, lien, or claim against any
specific asset of the Company. A Participant or his Beneficiary has no
rights other than as a general creditor.
13. AMENDMENT OR TERMINATION. Except as otherwise provided in this section,
this Plan may be altered, amended, suspended, or terminated at any time as
to Dominion, Virginia Electric and Power Company, or any Company that has
adopted the Plan (pursuant to Plan section 2(e)) by that entity's board.
(a) The Plan shall be operated according to its terms (as amended
periodically) and as directed by the Committee until it is effective.
Once the Plan is effective, the board of Dominion, Virginia Electric
and Power Company, or any Company that has adopted the Plan (pursuant
to Plan section 2(e)) may alter, amend, suspend, or terminate this
Plan at any time as it relates to its directors. However, except
for a termination of the Plan caused by the determination of the
applicable board that the laws upon which the Plan is based have
changed in a manner that negates the Plan's objectives, that board
may not alter, amend, suspend, or terminate this Plan without the
majority consent of all Directors who are Participants if that action
would result either in a distribution of all Deferred Benefits in
any manner other than as provided in this Plan or that would result
in immediate taxation of Deferred Benefits to Participants.
Notwithstanding the preceding sentence, if any amendment to the Plan,
subsequent to the date the Plan became effective, adversely affects
Deferred Benefits elected hereunder, after the effective date of any
such amendment, and the Internal Revenue Service declines to rule
favorably on any such amendment or to rule favorably only if the
applicable board makes amendments to the Plan not acceptable to such
board, the board of each Company, in its sole discretion, may
accelerate the distribution of part or all amounts attributable to
affected Deferred Benefits due its Members hereunder.
(b) This subsection applies if shareholder approval is required for any
or all elections by a Company's participating Directors of Deferred
Stock Benefits under the Plan. Despite section 13(a), section 10(b)
and all provisions of this Plan relating to Deferred Stock Benefits
as to a designated Participant are effective only on the first day
of the month following the month in which (i) a sufficient majority
of the appropriate entity's shareholders, determined under applicable
federal and state laws, approves those Plan provisions as to that
designated Participant; or (ii) counsel selected by the Company
determines that such approval is unnecessary.
(c) The Company may only contribute to a trustee under a trust agreement by
transferring cash or assets with a fair-market value equal to the value
(determined at the nearest month end) of the related Deferred Stock
Accounts if the trust agreement contains provisions sufficient (in the
opinion of either the Internal Revenue Service or counsel selected by
the Company) to allow the Participants to defer income taxation on
their Deferred Stock Benefits until they are distributed according to
this Plan and provisions sufficient (in the opinion of counsel
selected by the Company) to exempt the Plan and the trust from sections
10(b) and 16(b) of the Securities Exchange Act of 1934 and applicable
rules and regulations. If the Internal Revenue Service refuses to give
the required opinion on such a trust, and if counsel selected by the
Company is of the opinion that no such trust can be created, Plan
section 10(b) and all provisions of this Plan relating to Deferred
Stock Benefits will not become effective.
14. NOTICES. Notices and elections under this Plan must be in writing. A notice
or election is deemed delivered if it is delivered personally or if it is
mailed by registered or certified mail to the person at his last known
business address.
15. WAIVER. The waiver of a breach of any provision in this Plan does not
operate as and may not be construed as a waiver of any later breach.
16. CONSTRUCTION. This Plan is created, adopted, and maintained according to
the laws of Virginia (except its choice-of-law rules). It is governed
by those laws in all respects. Headings and captions are only for
convenience; they do not have substantive meaning. If a provision of this
Plan is not valid or not enforceable, that fact in no way affects the
validity or enforceability of any other provision. Use of the one gender
includes all, and the singular and plural include each other.
17. CORPORATE AND COMMITTEE ACTIONS AND RESPONSIBILITIES. Each Company shall be
solely responsible for the Plan as it relates to its directors. The
Committee has delegated, to the Vice-President--Human Resources and the
Manager of Corporate Compensation Services, certain administrative
determinations under the Plan that do not affect individuals' participation
or awards.
Exhibit 10(xxii)
DOMINION RESOURCES, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
As Amended and Restated
Effective July 1, 1986
For the Directors of:
Dominion Resources, Inc.
Virginia Electric and Power Company
Virginia Natural Gas, Inc.
<PAGE>
TABLE OF CONTENTS
Section Page
1. Purpose 1
2. Definitions 1
3. Participation 3
4. Deferral Election 3
5. Effect of No Election 5
6. Deferred Cash Benefits 5
7. Deferred Stock Benefits 6
8. Distributions 7
9. Hardship Distributions 9
10. Company's Obligation 9
11. Control by Participant 10
12. Claims Against Participant's Deferred Benefits 10
13. Amendment or Termination 10
14. Notices 11
15. Waiver 11
16. Construction 12
17. Corporate and Committee Actions and Responsibilities 12
<PAGE>
1. PURPOSE. The Dominion Resources, Inc. Directors' Deferred Compensation Plan
(the "Plan"), is intended to constitute a deferred compensation plan for
corporate directors' fees in accordance with Revenue Ruling 71-419, 1971-2
C.B. 220.
2. DEFINITIONS. The following definitions apply to this Plan and to the
Deferral Election Forms.
(a) Beneficiary or Beneficiaries means a person or persons or other entity
designated on a Beneficiary Designation Form by a Participant as
allowed in subsection 8(c) of this Plan to receive Deferred Benefit
payments. If there is no valid designation by the Participant, or if
the designated Beneficiary or Beneficiaries fail to survive the
Participant or otherwise fail to take the Benefit, the Participant's
Beneficiary is the first of the following who survives the Participant:
a Participant's spouse (the person legally married to the Participant
when the Participant dies); the Participant's children in equal shares;
the Participant's other surviving issue, per stirpes; the Participant's
parents; and the Participant's estate.
(b) Beneficiary Designation Form means a form acceptable to the Chairman of
the Committee or his designee used by a Participant according to this
Plan to name his Beneficiary or Beneficiaries who will receive all
Deferred Benefit payments under this Plan if he dies.
(c) Board means the board of directors of the Company, according to law and
to each entity's governing documents.
(d) Committee means the Organization and Compensation Committee of Dominion
Resources, Inc.
(e) Company means Dominion Resources, Inc.; Virginia Electric and Power
Company; and any of their affiliates that with approval of the board
of directors of Dominion Resources, Inc. adopt or have adopted this
Plan; any successor business by merger, purchase, or otherwise that
maintains the Plan; or any predecessor business or employer that has
maintained the Plan.
(f) Compensation means a Member's Meeting Fees and Retainer Fees for the
Deferral Year.
(g) Deferral Election Form means a document governed by the provisions of
section 4 of this Plan, including the portion that is the Distribution
Election Form and the related Beneficiary Designation Form that applies
to all of that Participant's Deferred Benefits under the Plan.
(h) Deferral Year means a calendar year for which a Member has an
operative Deferral Election Form.
(i) Deferred Benefit means either a Deferred Cash Benefit or a Deferred
Stock Benefit under the Plan for a Member who has submitted an
operative Deferral Election Form pursuant to section 4 of this Plan.
(j) Deferred Cash Account means that bookkeeping record established for
each Participant who elects a Deferred Cash Benefit under this Plan.
A Deferred Cash Account is established only for purposes of measuring
a Deferred Cash Benefit and not to segregate assets or to identify
assets that may or must be used to satisfy a Deferred Cash Benefit.
A Deferred Cash Account will be credited with the Participant's
Compensation deferred as a Deferred Cash Benefit according to a
Deferral Election Form and according to section 6 of this Plan. A
Deferred Cash Account will be credited periodically with amounts
based upon interest rates established by the Committee under sub-
section 6(b) of this Plan.
(k) Deferred Cash Benefit means the Deferred Benefit elected by a
Participant under section 4 that results in payments governed by
sections 6 and 8.
(l) Deferred Stock Account means that bookkeeping record established for
each Participant who elects a Deferred Stock Benefit under this Plan.
A Deferred Stock Account is established only for purposes of measuring
a Deferred Stock Benefit and not to segregate assets or to identify
assets that may or must be used to satisfy a Deferred Stock Benefit.
A Deferred Stock Account will be credited with the Participant's
Compensation deferred as a Deferred Stock Benefit according to a
Deferral Election Form and according to section 7 of this Plan. A
Deferred Stock Account will be credited periodically with amounts
determined by the Committee under subsection 7(b) of this Plan.
(m) Deferred Stock Benefit means the Deferred Benefit elected by a
Participant under section 4 that results in payments governed by
sections 7 and 8.
(n) Directors means those duly named members of the Board.
(o) Distribution Election Form means that part of a Deferral Election Form
used by a Participant according to this Plan to establish the duration
of deferral and the frequency of payments of a Deferred Benefit. If a
Deferred Benefit has no Distribution Election Form that is operative
according to section 4, distribution of that Deferred Benefit is
governed by section 8.
(p) Dominion means Dominion Resources, Inc.
(q) Election Date means the date established by this Plan as the date
before which a Member must submit a valid Deferral Election Form
to the Committee. For each Deferral Year, the Election Date is
December 31 of the preceding calendar year. However, for an
individual who becomes a Member during a Deferral Year, the Election
Date is the thirtieth day following the date that he becomes a
Member. Despite the two preceding sentences, the Committee may set
an earlier date as the Election Date for any Deferral Year.
(r) Meeting Fees means the portion of a Director's Compensation that is
based upon his attendance at Board meetings and meetings of the
Company's committees, according to the Company's established rules
and procedures for compensating Directors.
(s) Member means a Director of a Company who is eligible to participate
in this Plan according to criteria which may from time to time be
adopted by that Company.
(t) Participant, with respect to any Deferral Year, means a Member whose
Deferral Election Form is operative for that Deferral Year according
to section 4 of this Plan.
(u) Plan means the Dominion Resources, Inc. Directors' Deferred
Compensation Plan.
(v) Retainer Fee means that portion of a Director's Compensation that is
fixed and paid without regard to his attendance at meetings.
(w) Terminate, Terminating, or Termination, with respect to a Participant,
mean cessation of his relationship with the Company as a Director
whether by death, disability or severance for any other reason. Unless
the Committee determines otherwise in its sole discretion, Terminate,
Terminating, or Termination do not include situations where the
Participant continues to be employed by a Company or a Director on
the board of a Company.
3. PARTICIPATION. A Member becomes a Participant for any Deferral Year by
filing a valid Deferral Election Form according to section 4 on or before
the Election Date for that Deferral Year, but only if his Deferral Election
Form is operative according to section 4.
4. DEFERRAL ELECTION. A deferral election is valid when a Deferral Election
Form is completed, signed by the electing Member, and received by the
Committee Chairman. Deferral elections are governed by the provisions of
this section.
(a) A Participant may elect a Deferred Benefit for any Deferral Year if
he is a Member at the beginning of that Deferral Year or becomes a
Member during that Deferral Year.
(b) Before each Deferral Year's Election Date, each Member will be
provided with Deferral Election Forms and a Beneficiary Designation
Form. Under one or both Deferral Election Forms for a single Deferral
Year, a Member may elect on or before the Election Date to defer the
receipt of his entire Retainer Fee or all of his Meeting Fees or all
of his Compensation for the Deferral Year. Each Distribution Election
Form must provide for the deferral of its covered Deferred Benefit
at least until after the Member is 65 or until he Terminates, if that
is before he is 65.
(c) A Member may complete a Deferral Election Form for either a Deferred
Cash Benefit or a Deferred Stock Benefit for his Retainer Fee and a
different Deferral Election Form for his Meeting Fees, or he may
complete a single Deferral Election Form for his entire Compensation.
A Member may not divide his Retainer Fee between Deferral Election
Forms, and he may not divide his Meeting Fees between Deferral
Election Forms.
(d) A Deferral Election Form that covers a Member's Meeting Fees must
cover his entire Meeting Fees for the Deferral Year. A Deferral
Election Form that covers a Member's Retainer Fee must cover his entire
Retainer Fee for the Deferral Year. If a Participant is a Director
for more than one Company, his Deferral Election Form shall apply
to all his Meeting Fees, Retainer Fees, or Compensation (which ever
is indicated by the Participant on the Deferral Election Form) payable
to him as a Member; provided that the Participant may, with the
permission of the Committee, complete a separate Deferral Election
Form covering such fees payable to him as a Member from each such
Company.
(e) Except as provided in this subsection and in the situation described
in Plan subsection 13(b), a Participant may not elect to convert a
Deferred Cash Benefit to a Deferred Stock Benefit or to convert a
Deferred Stock Benefit to a Deferred Cash Benefit. If a Participant's
election of a Deferred Stock Benefit is subject to the contingency
described in Plan subsection 13(b), the Participant may file a
Deferred Cash Benefit/Deferred Stock Benefit Election Form for the
affected Deferral Year (or part thereof) on or before the designated
Election Date and elect to convert a Deferred Cash Benefit into a
Deferred Stock Benefit as of the effective date of the Plan
provisions relating to Deferred Stock Benefits, determined under
section 13(b).
(f) Each Distribution Election Form is part of the Deferral Election Form on
which it appears or to which it states that it is related. The Committee
may allow a Participant to file one Distribution Election Form for all
of his Deferred Cash Benefits and one for all of his Deferred Stock
Benefits. The provisions of subsection 2(o) apply to any Deferred
Benefit under this Plan if there is no operative Distribution Election
Form for that Deferred Benefit.
(g) If it does so before the last business day of the Deferral Year, the
Committee may reject any Deferral Election Form or any Distribution
Election Form or both, and the Committee is not required to state a
reason for any rejection. The Committee may modify any Distribution
Election Form at any time to the extent necessary to comply with
any federal securities laws or regulations. However, the Committee's
rejection of any Deferral Election Form or any Distribution Election
Form or the Committee's modification of any Distribution Election Form
must be based upon action taken without regard to any vote of the
Member whose Deferral Election Form or Distribution Election Form is
under consideration, and the Committee's rejections must be made on
a uniform basis with respect to similarly situated Members. If the
Committee rejects a Deferral Election Form, the Member must be paid
the amounts he would then have been entitled to receive if he had not
submitted the rejected Deferral Election Form.
(h) A Member may not revoke a Deferral Election Form or a Distribution
Election Form after the Deferral Year begins. Any revocation before
the beginning of the Deferral Year is the same as a failure to submit
a Deferral Election Form or a Distribution Election Form. Any writing
signed by a Member expressing an intention to revoke his Deferral
Election Form or a related Distribution Election Form and delivered
to a member of the Committee before the close of business on the
relevant Election Date is a revocation.
5. EFFECT OF NO ELECTION. A Member who has not submitted a valid Deferral
Election Form to the Committee on or before the relevant Election Date
may not defer his Compensation for the Deferral Year under this Plan.
The Deferred Benefit of a Member who submits a valid Deferral Election
Form but fails to submit a valid Distribution Election Form for that
Deferred Benefit before the relevant Election Date or who otherwise has
no valid Distribution Election Form for that Deferred Benefit is governed
by section 2(o).
6. DEFERRED CASH BENEFITS.
(a) Deferred Cash Benefits will be set up in a Deferred Cash Account for
each Participant and credited with interest at rates determined by
the Committee. Deferred Cash Benefits are credited to the applicable
Participant's Deferred Cash Account as of the day they would have been
paid but for the deferral. Interest is credited on the first day of
each month based on the Deferred Cash Account balance at the end of
the preceding day.
(b) Interest will be credited to Deferred Cash Accounts based on average
three-month United States Treasury Bill rates (equivalent yield, not
discount yield) as published by the Federal Reserve Board. The
applicable rate for each month will be determined on the last business
day of the previous month. Those interest rates will apply
prospectively for all current and future Deferred Cash Account balances
until the basis on which interest is determined is changed by the
Committee. Interest credits are accrued monthly on accumulated
Deferred Cash Accounts. Interest is accrued through the end of the
month preceding the month of distribution of a Deferred Cash Benefit.
(c) If a Participant elects under section 4(e) to convert a Deferred Cash
Benefit into a Deferred Stock Benefit, the Participant's Deferred
Cash Account will be converted to a Deferred Stock Account governed by
section 7 as of the date the Plan's provisions relating to Deferred
Stock Benefits become effective for purposes of the Participant's
election.
7. DEFERRED STOCK BENEFITS. Subject to section 13(b), electing Participants'
Deferred Stock Benefits are governed by this section.
(a) Deferred Stock Benefits will be set up in a Deferred Stock Account
for each electing Participant and credited with earnings at rates
determined by the Committee. A Deferred Stock Benefit attributable
to a Retainer Fee is credited to the Participant's Deferred Stock
Account on the last day of each calendar quarter of the Deferral
Year. A Deferred Stock Benefit attributable to a Meeting Fee is
credited to the Participant's Deferred Stock Account on the last
day of the month in which a meeting occurs.
(b) Rates established by the Committee as the basis for additional credits
to Deferred Stock Accounts will be variable rates equal to the value
of dividends paid on Dominion common stock when the additional credit
is made. The value of a Deferred Stock Account at any relevant time
equals the value of the shares of Dominion common stock as if the
Compensation deferred by the Participant under the Plan and any
additional credits under this subsection had been used to purchase
Dominion common stock on the date those amounts were credited to the
Deferred Stock Account. Additional credits are credited on the last
day of each calendar quarter on accumulated Deferred Stock Accounts.
Additional credits are accrued through the end of the year preceding
the year of distribution of a Deferred Stock Benefit.
(c) If a trust is established under Plan sections 10(b) and 13(c), an
electing Participant may instruct the trustee under the governing trust
agreement how to vote shares of Dominion common stock allocated to that
Participant's separate account under the trust according to this
subsection and provisions of the governing trust agreement. Before each
annual or special meeting of the Dominion shareholders, the trustee
under the governing trust agreement must furnish each Participant with a
copy of the proxy solicitation and other relevant material for the
meeting as furnished to the trustee by Dominion, and a form addressed to
the trustee requesting the Participant's confidential instructions on
how to vote shares of Dominion common stock allocated to his account as
of the valuation date established under the governing trust agreement
preceding the record date. Upon receipt of those instructions, the
trustee under the governing trust agreement must vote such stock as
instructed.
8. DISTRIBUTIONS.
(a) According to a Participant's Distribution Election Form, but
subject to Plan section 4(g), a Deferred Cash Benefit must be
distributed in cash. According to a Participant's Distribution
Election Form, but subject to Plan section 4(g), a Deferred Stock
Benefit must be distributed in shares of Dominion common stock
equal in value to the value of the Participant's Deferred Stock
Account on the last day of the month preceding the month of
distribution. However, cash must be paid in lieu of fractional
shares of Dominion common stock otherwise distributable. According
to the procedures of Plan section 4(g), the Committee may modify
any Participant's Distribution Election Form to prevent any
distribution of Dominion common stock to pay a Deferred Stock
Benefit if the total number of shares of such stock distributed
under this Plan after such distribution would exceed 100,000 shares
times the number of Participants in the Plan on the relevant date.
(b) Except for distributions triggered by a Participant's disability,
Deferred Benefits will be paid in a lump sum unless the
Participant's Distribution Election Form specifies installment
payments over 10 years. For a Deferred Cash Benefit payable in
installments, interest credits under section 6(b) continue to
accrue on the unpaid balance of a Deferred Cash Account. For a
Deferred Stock Benefit payable in installments, additional credits
under section 7(b) do not accrue on the unpaid balance of a
Deferred Stock Account after the year preceding the year in which
payments begin. Instead, any additional credits that would have
been credited to a Deferred Stock Account are payable to the
applicable Participant in cash on the date that would otherwise
have been credited.
If a Participant Terminates as a result of his disability, Deferred
Benefits will be paid to such Participant in installment payments over
a period of 10 years commencing on the date his disability is
certified by the Committee unless the Committee, in its sole
discretion, approves a longer or shorter payment period. If, after his
Termination as a result of disability, such Participant recovers
before the balance of his Deferred Cash and Deferred Stock Accounts
under the Plan are exhausted, his distributions will be discontinued
and any remaining Deferred Benefits under the Plan will be governed by
the provisions of this section and his Distribution Election Forms.
Unless otherwise specified in a Participant's Distribution Election
Form, any lumpsum payment will be paid or installment payments will
begin to be paid on the February 15 of the year after the Participant's
sixty-fifth birthday or on the February 15 of the year after the
Participant's Termination, if earlier. For distributions that would
automatically be caused under the preceding sentence by a Participant's
Termination (other than by death or disability) or for distributions
that would otherwise automatically begin because a Participant reaches
age 65, the Participant may elect on his Distribution Election Form that
payments are to begin:
(i) on the February 15 following his Termination, without regard
to his age; or
(ii) on the February 15 following his Termination and his
attainment of a specified age; or
(iii) even if the Participant does not Terminate, on the February 15
following a specified age.
For purposes of these distribution election alternatives, the specified
age must be not less than the Participant's age two years from the
Election Date pertaining to the applicable Deferral Year and not
greater than the age at which there are no earnings limitations in
order to receive full social security benefits (currently age 70).
(c) Deferred Benefits may not be assigned by a Participant or Beneficiary.
A Participant may use only one Beneficiary Designation Form to
designate one or more Beneficiaries for all of his Deferred Benefits
under the Plan; such designations are revocable. Each Beneficiary
will receive his portion of the Participant's Deferred Cash Account
and Deferred Stock Account on February 15 of the year following the
Participant's death unless the Beneficiary's request for accelerated
payment is approved at the Committee's discretion under section 9 or
unless the Beneficiary's request for a different distribution schedule
is received before distributions begin and is approved at the
Committee's discretion. The Committee may insist that multiple
Beneficiaries agree upon a single distribution method.
(d) Any Dominion common stock distributed pursuant to the Plan shall have
been acquired by an "agent independent of the issuer" (i.e., the
Company) within the meaning of 17 CFR section 240.10b-18, as such
regulation is in effect on April 19, 1985. Such acquisitions may be
effected in all cases on the open market or, in the event that the
Company makes available newly issued common stock, directly from the
Company, provided that such common stock has been registered with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, or any successor thereto at the time such purchase is made or
an exemption from such registration requirement is, in the opinion of
counsel to the Company, available.
9. HARDSHIP DISTRIBUTIONS.
(a) At its sole discretion and at the request of a Participant before or
after the Participant's Termination, or at the request of any of the
Participant's Beneficiaries after the Participant's death, the
Committee may accelerate and pay all or part of any amount
attributable to a Participant's Deferred Benefits under this Plan.
Accelerated distributions may be allowed only in the event of a
financial emergency beyond the Participant's or Beneficiary's control
and only if disallowance of a distribution would create a severe
hardship for the Participant or Beneficiary. An accelerated
distribution must be limited to the amount determined by the Committee
to be necessary to satisfy the financial emergency.
(b) For purposes of an accelerated distribution of a Deferred Stock
Benefit under this section, the Deferred Stock Benefit's value is
determined by the value of the Deferred Stock Account at the time
of the distribution.
(c) Only cash distributions are permitted under this section. Distributions
under this section must first be made from the Participant's
Deferred Cash Account before accelerating the distribution of any
amount attributable to a Deferred Stock Benefit.
(d) A distribution under this section is in lieu of that portion of the
Deferred Benefit that would have been paid otherwise. A Deferred
Cash Benefit is adjusted for a distribution under this section by
reducing the Participant's Deferred Cash Account balance by the amount
of the distribution. A Deferred Stock Benefit is adjusted for a
distribution under this section by reducing the value of the
Participant's Deferred Stock Account by the amount of the distribution.
10. COMPANY'S OBLIGATION.
(a) The Plan is unfunded. A Deferred Benefit is at all times a mere
contractual obligation of the Company. A Participant and his
Beneficiaries have no right, title, or interest in the Deferred
Benefits or any claim against them. Except according to sections
10(b) and 13(c), the Company will not segregate any funds or assets
for Deferred Benefits nor issue any notes or security for the payment
of any Deferred Benefit.
(b) Subject to section 13(c), the Company may establish a grantor trust and
transfer to that trust shares of Dominion common stock or other assets.
Trust assets must be invested primarily in Dominion common stock for
the purpose of measuring the value of Deferred Stock Accounts under
the Plan to be distributed as Deferred Stock Benefits in the form of
Dominion common stock, plus cash in lieu of fractional shares. The
governing trust agreement must require a separate account to be
established for each electing Participant. The governing trust
agreement must also require that all Company assets held in trust
remain at all times subject to the Company's judgment creditors.
11. CONTROL BY PARTICIPANT. A Participant has no control over Deferred
Benefits except according to his Deferral Election Forms, his Distribution
Election Forms, and his Beneficiary Designation Form.
12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS. A Deferred Cash Account
and Deferred Stock Account relating to a Participant under this Plan are
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to do so is
void. A Deferred Benefit is not subject to attachment or legal process
for a Participant's debts or other obligations. Nothing contained in this
Plan gives any Participant any interest, lien, or claim against any
specific asset of the Company. A Participant or his Beneficiary has no
rights other than as a general creditor.
13. AMENDMENT OR TERMINATION. Except as otherwise provided in this section,
this Plan may be altered, amended, suspended, or terminated at any time as
to Dominion, Virginia Electric and Power Company, or any Company that has
adopted the Plan (pursuant to Plan section 2(e)) by that entity's board.
(a) The Plan shall be operated according to its terms (as amended
periodically) and as directed by the Committee until it is effective.
Once the Plan is effective, the board of Dominion, Virginia Electric
and Power Company, or any Company that has adopted the Plan (pursuant
to Plan section 2(e)) may alter, amend, suspend, or terminate this
Plan at any time as it relates to its directors. However, except
for a termination of the Plan caused by the determination of the
applicable board that the laws upon which the Plan is based have
changed in a manner that negates the Plan's objectives, that board
may not alter, amend, suspend, or terminate this Plan without the
majority consent of all Directors who are Participants if that action
would result either in a distribution of all Deferred Benefits in
any manner other than as provided in this Plan or that would result
in immediate taxation of Deferred Benefits to Participants.
Notwithstanding the preceding sentence, if any amendment to the Plan,
subsequent to the date the Plan became effective, adversely affects
Deferred Benefits elected hereunder, after the effective date of any
such amendment, and the Internal Revenue Service declines to rule
favorably on any such amendment or to rule favorably only if the
applicable board makes amendments to the Plan not acceptable to such
board, the board of each Company, in its sole discretion, may
accelerate the distribution of part or all amounts attributable to
affected Deferred Benefits due its Members hereunder.
(b) This subsection applies if shareholder approval is required for any
or all elections by a Company's participating Directors of Deferred
Stock Benefits under the Plan. Despite section 13(a), section 10(b)
and all provisions of this Plan relating to Deferred Stock Benefits
as to a designated Participant are effective only on the first day
of the month following the month in which (i) a sufficient majority
of the appropriate entity's shareholders, determined under applicable
federal and state laws, approves those Plan provisions as to that
designated Participant; or (ii) counsel selected by the Company
determines that such approval is unnecessary.
(c) The Company may only contribute to a trustee under a trust agreement by
transferring cash or assets with a fair-market value equal to the value
(determined at the nearest month end) of the related Deferred Stock
Accounts if the trust agreement contains provisions sufficient (in the
opinion of either the Internal Revenue Service or counsel selected by
the Company) to allow the Participants to defer income taxation on
their Deferred Stock Benefits until they are distributed according to
this Plan and provisions sufficient (in the opinion of counsel
selected by the Company) to exempt the Plan and the trust from sections
10(b) and 16(b) of the Securities Exchange Act of 1934 and applicable
rules and regulations. If the Internal Revenue Service refuses to give
the required opinion on such a trust, and if counsel selected by the
Company is of the opinion that no such trust can be created, Plan
section 10(b) and all provisions of this Plan relating to Deferred
Stock Benefits will not become effective.
14. NOTICES. Notices and elections under this Plan must be in writing. A notice
or election is deemed delivered if it is delivered personally or if it is
mailed by registered or certified mail to the person at his last known
business address.
15. WAIVER. The waiver of a breach of any provision in this Plan does not
operate as and may not be construed as a waiver of any later breach.
16. CONSTRUCTION. This Plan is created, adopted, and maintained according to
the laws of Virginia (except its choice-of-law rules). It is governed
by those laws in all respects. Headings and captions are only for
convenience; they do not have substantive meaning. If a provision of this
Plan is not valid or not enforceable, that fact in no way affects the
validity or enforceability of any other provision. Use of the one gender
includes all, and the singular and plural include each other.
17. CORPORATE AND COMMITTEE ACTIONS AND RESPONSIBILITIES. Each Company shall be
solely responsible for the Plan as it relates to its directors. The
Committee has delegated, to the Vice-President--Human Resources and the
Manager of Corporate Compensation Services, certain administrative
determinations under the Plan that do not affect individuals' participation
or awards.
Exhibit 10(xxiv)
DOMINION RESOURCES, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
As Amended and Restated
June 15, 1990
<PAGE>
DOMINION RESOURCES, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
PURPOSE
The Board of Directors of Virginia Electric and Power Company
determined that adoption of the Executive Supplemental Retirement Plan
would assist it in attracting and retaining those employees whose judgment,
abilities and experience will contribute to its continued progress. On May
19, 1983, Virginia Electric and Power Company became a wholly-owned subsidiary
of Dominion Resources, Inc. The Plan was amended to reflect the reorganization
of Virginia Electric and Power Company and the Plan was adopted by Dominion
Resources, Inc. The Plan was amended further, effective as of October 21,
1983, to require sixty (60) months of service to be eligible for retirement
benefits and to assure Participants who have attained age fifty-five (55) and
who have sixty (60) months of service with the Company, or who die or
become Totally and Permanently Disabled of their benefits, so long as they
remain elected officers at the time of their separation from service.
ARTICLE I
DEFINITIONS
As defined herein, the following phrases or terms shall have the
indicated meanings:
1.1. "Affiliate" means 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 Dominion Resources, Inc. is a member
according to Code section 414(b); (ii) an unincorporated trade or business
that is under common control with Dominion Resources, Inc., as determined
according to Code section 414(c); or (iii) a member of an affiliated
service group of which Dominion Resources, Inc. is a member according to
Code section 414(m).
1.2. "Beneficiary" means the person, persons, entity, entities or the estate
of a Participant which, in accordance with the provisions of Article V, is
entitled to receive benefits, if any, upon the Participant's death.
1.3. "Change in Control" means the occurrence of any of the following events:
(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 Dominion Resources, Inc. securities having 20% or more of the combined
voting power of the then outstanding Dominion Resources, Inc. securities
that may be cast for the election of Dominion Resources, Inc.'s directors (other
than as a result of an issuance of securities initiated by Dominion Resources,
Inc., or open market purchases approved by Dominion Resources, Inc.'s
Board of Directors, as long as the majority of Dominion Resources, Inc.'s
Board of Directors approving the purchases is also 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
Dominion Resources, Inc. before such transactions cease to constitute a
majority of Dominion Resources, Inc.'s Board of Directors, or any successor's
board, within two years of the last of such transactions; or (iii) with respect
to a particular Participant, an event occurs with respect to the Company
that employs that Participant such that, after the event, the employing Company
is no longer an Affiliate of Dominion Resources, Inc.
1.4. "Committee" means the Administrative Benefit Committee appointed
to manage and administer the Plan in accordance with the provisions
of Article X hereof.
1.5. "Company" means Dominion Resources, Inc., its predecessor, a subsidiary
or an Affiliate of either.
1.6. "Control Change Date" means the date on which a Change in Control event
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.
1.7. "ESRP Account" means the ESRP Account established under the Funding
Plan on behalf of a Participant who also participates in the Funding Plan.
1.8. "Final Compensation", with respect to a Participant, means, as of any
date, the sum of (i) the Participant's annual base salary, (ii) the
Participant's annual retainer fee and meeting fees (for Board
or any Board committee meetings), and (iii) the Participant's Incentive
Compensation Amount. For purposes of this section, all
components of Final Compensation are calculated without regard to any elections
by the Participant to defer any amount that otherwise would have been paid
to the Participant for the relevant period.
1.9. "Funding Plan" means the Dominion Resources, Inc. Retirement Benefit
Funding Plan.
1.10. "Incentive Compensation Amount", with respect to a Participant, is an
amount based on the Participant's incentive compensation award on account
of participation in the Dominion Resources, Inc., Management Incentive
Plan (the "MIP"), the Dominion Resources, Inc., Short-Term Incentive
Plan (the "STIP"), or both.
(a) For an MIP award, a Participant's Incentive Compensation Amount is
eighty percent (80%) of the Participant's most recently approved MIP "Target
Award". For purposes of the preceding sentence, a Participant's MIP award is
determined without regard to any election to defer the receipt of that award.
(b) For an STIP award, a Participant's Incentive Compensation Amount
is of the Participant's most recently approved STIP "Target Award". For
purposes of the preceding sentence, a Participant's STIP award is determined
without regard to any election to defer the receipt of that award.
(c) If a Participant participates in both the MIP and the STIP, the
Participant's Incentive Compensation Amount is the greater of the amounts
determined under the preceding Subsection (a) or (b).
1.11. "Participant" means an elected officer of Dominion Resources Inc.,
Virginia Electric and Power Company, Dominion Resource Services, Inc. and
such other subsidiaries or affiliates of Dominion Resources, Inc. that
are designated by the Board of Directors of Dominion Resources, Inc.
An individual shall remain a Participant only so long as the individual
remains an elected officer of one or more of such designated entities.
1.12. "Plan" means the Dominion Resources, Inc. Executive Supplemental
Retirement Plan.
1.13. "Retirement" and "Retire" mean severance from employment with the
Company at or after the attainment of fifty-five (55) years of age and the
completion of sixty (60) months of service with the Company; except as
provided in Article VI of the Plan.
1.14. "Totally and Permanently Disabled" means a condition, determined
on the basis of medical evidence satisfactory to a physician designated
by the Committee, rendering a Participant, due to bodily injury or disease,
unable to perform services as follows: (i) during the first
two years of such disability (measured from the commencement of such
disability rather than the commencement of benefit payments) such
Participant is unable to perform any and every duty pertaining to his
employment with the Company; and (ii) thereafter, such Participant is unable
to engage in any occupation or perform any work for compensation
or profit for which he is or may become reasonably fitted by education,
training or experience. In no event shall such condition be deemed to exist
during any period that the Participant is not under the regular care
and attendance of a legally qualified physician during any period that
he engages in any occupation or performs any work for compensation or
profit.
ARTICLE II
PARTICIPATION
All elected officers of Dominion Resources, Inc., Virginia Electric and
Power Company, Dominion Resource Services, Inc. and such other subsidiaries and
Affiliates of Dominion Resources, Inc. as may be designated by the Board of
Directors of Dominion Resources, Inc. on, and subsequent to, January 1, 1981,
will become Participants in the Plan. An individual shall remain a Participant
only so long as the individual remains an elected officer of one or more of such
designated entities. The Board may change its designation of any such subsidiary
or Affiliate at any time.
ARTICLE III
BENEFITS
Except as provided in Article IV and subject to the limitations
set forth in Articles VII and VIII, the benefits of a Participant
and his Beneficiary shall be as follows:
3.1. (a) If a Participant continues in the employ of the Company or an
Affiliate beyond age fifty-five (55) and after completing sixty (60) months
of service, upon Retirement he shall be entitled to an annual Retirement
benefit equal to twenty-five percent (25%) of his Final Compensation,
payable in equal monthly installments for a period of one hundred
twenty (120) months.
(b) In the event a Participant becomes Totally and Permanently Disabled
prior to Retirement, regardless of his age or months of service, he shall
be entitled to receive a benefit equal to the amount described in Subsection
3.1(a).
(c) If a Participant dies prior to the commencement of his Retirement
benefit, regardless of his age or months of service, his Beneficiary will
receive a benefit equal to the amount described in Subsection 3.1(a). If
a Participant dies after Retirement or disability benefits have commenced
under Subsection (a) or (b) but before he has received one
hundred twenty (120) payments, the remainder of such payments will be made
monthly to the Participant's Beneficiary in accordance with Article V.
3.2. In lieu of the benefits described in Subsections 3.1(a) and 3.1(b), a
Participant may elect to receive an actuarial equivalent of said benefit over a
period certain. The Participant must make the election under this Subsection
prior to the commencement of the receipt of benefits. A Participant who
participates in the Funding Plan may not make an election under this Subsection
unless he elects to have his Funding Plan benefit paid in the same manner as his
election under this Subsection. A Participant may not elect to receive an
actuarial equivalent which is payable over a period of time which is less than
ten (10) years or greater than sixteen (16) years. The actuarial equivalent of
the benefit provided under the Subsection 3.1(a) or 3.1(b) shall be computed
using an interest rate equal to the yield of that certain nondiscount, noncall
U.S. Treasury obligations which on the date benefits are to commence have a
maturity date closest to the date such payments are scheduled to cease. In the
event a Participant makes the election provided for in this Section and if the
Participant dies prior to receiving the total actuarial equivalent of the
benefits described in Subsection 3.1(a) or 3.1(b), the balance of such actuarial
equivalent shall be paid monthly to the Participant's Beneficiary in accordance
with Article V.
3.3. A Beneficiary receiving benefits described in Section 3.1 or Section
3.2 may designate a beneficiary who will be entitled to receive the
remaining benefits due the Beneficiary after his death; provided, however,
that if the Beneficiary is entitled to receive any benefits under the
Funding Plan, the beneficiary designated by the Beneficiary must be the same
person or entity appointed by the Beneficiary under the Funding Plan.
Such designation shall be in accordance with Article V of the Plan.
3.4. Payment of the benefits described in Sections 3.1 and 3.2 shall commence
on the first day of the month next following the Retirement or death
of the Participant, whichever is applicable; provided, however, that
payment of the benefit described in Subsection 3.1(d) shall commence on
the first day of the month next following the Committee's determination
of the Participant's Total and Permanent Disability.
ARTICLE IV
COORDINATION OF BENEFITS
The amount payable in any month to a Participant, a Beneficiary, or
the beneficiary of a Beneficiary under the Plan shall be reduced, but not
below zero, by the sum of (i) and, to the extent applicable, (ii)
below where:
(i) is the amount payable for the month in question from the
Participant's ESRP Account in the Funding Plan; and
(ii) is the sum of the amounts previously paid to the Participant
from his ESRP Account pursuant to Section 6.01 of the Funding
Plan multiplied by a fraction. The numerator of the fraction is
one (1) and the denominator of the fraction is the number of months
for which benefits are payable under the Plan. If a Participant
receives a distribution under Section 6.01 of the Funding Plan
after a benefit becomes payable under the Plan, the amount
described in this item (ii) with respect to subsequent payments
under the Plan shall include the product of the amount of each
such distribution multiplied by a fraction. The numerator of
that fraction is one (1) and the denominator is the number
of months for which a benefit under the Plan remains payable.
Item (ii) shall not apply (and the amount payable under the Plan shall
not be reduced on account of the amounts described in item (ii) above),
to the extent that the application of item (ii) would result in the payment
of an after-tax benefit under the Plan and the ESRP Account of the Funding
Plan that is less than the benefit otherwise payable
under Article III on an after-tax basis. In determining the amount payable
under the Plan and from the ESRP Account of the Funding Plan on an
after-tax basis, the Committee shall follow the policy or guidelines
adopted by the appropriate Organization and Compensation Committee for purposes
of section 6.01 of the Funding Plan and, in the absence of such
policy or guidelines, the Committee shall make its determination
using the maximum rates of federal, state, and local income taxes that
are applicable to the Participant, Beneficiary, or beneficiary of a
Beneficiary.
ARTICLE V
DESIGNATION OF BENEFICIARY
5.1. (a) The Beneficiary of a Participant who participates in the Funding
Plan shall be the person or entity that is entitled to receive the benefit,
if any, payable under the Funding Plan following the Participant's
death.
(b) A Participant who is not a participant in the Funding Plan
may designate a Beneficiary to receive benefits due under the Plan, if any,
upon the Participant's death. Designation of a Beneficiary may be made by
execution of the form attached hereto as Exhibit I which must be witnessed
by the Director-Employee Benefits of Virginia Electric and Power Company
(or his successor) or his designee. A Participant may also designate
his Beneficiary on a form which differs from Exhibit I and such
designation shall be effective upon its execution in accordance with
the preceding sentence. In the absence of an effective Beneficiary
designation, a Participant's surviving spouse, if any, his children,
if any, per stirpes, and if none, the Participant's estate, will be
the Beneficiary.
5.2. A Participant may change a prior Beneficiary designation under Subsection
5.1(b) by a subsequent execution of a Beneficiary designation form.
The change in Beneficiary will be effective if, and at such time
as, it is witnessed by the Director-Employee Benefits of Virginia Electric
and Power Company (or his successor) or his designee.
5.3. A beneficiary designation or a change in beneficiary designation
by a Beneficiary pursuant to Section 3.3 shall be governed by Sections
5.1 and 5.2 as if "Beneficiary" was substituted for "Participant" and
"beneficiary" was substituted for "Beneficiary" therein.
ARTICLE VI
GUARANTEES
Dominion Resources, Inc. has only a contractual
obligation to make payments of the benefits described in Article III.
All benefits are to be satisfied solely out of the general corporate
assets of Dominion Resources, Inc. which shall remain subject to the claims
of its creditors. No assets of Dominion Resources, Inc. will be segregated
or committed to the satisfaction of its obligations to any Participant
or Beneficiary under this Plan. If Dominion Resources, Inc., in its
sole discretion, elects to purchase life insurance on the life of a
Participant in connection with the Plan, the Participant must submit
to a physical examination, if required by the insurer, and otherwise
cooperate in the issuance of such policy or his rights under the Plan
will be forfeited.
ARTICLE VII
TERMINATION OF EMPLOYMENT
7.1. The Plan does not in any way limit the right of the Company at any
time and for any reason to terminate the Participant's employment or
such Participant's status as an officer of the Company. In no event
shall the Plan, by its terms or by implication, constitute an employment
contract of any nature whatsoever between the Company and a Participant.
7.2. A Participant who is removed or not reelected as an officer or
whose employment with the Company is terminated either with or without
cause, for reasons other than death, Retirement or Total and Permanent
Disability shall immediately cease to be a Participant under this Plan
and shall forfeit all rights under this Plan. Further, in no event shall
an individual who was a Participant but is not an officer of a designated
employer at the time of such individual's death, Retirement or Total and
Permanent Disability, be entitled to any benefit under the Plan. A
Participant on authorized leave of absence from the Company shall not
be deemed to have terminated employment for the duration of such leave
of absence.
7.3. Notwithstanding any contrary Plan provision, in the event the employment of
a Participant who is in the employ of a Company on a Control Change Date
relating to that Company is terminated (for reasons other than death Retirement,
Total and Permanent Disability, or as a result of acts of theft, embezzlement,
fraud, or moral turpitude) before the end of the period commencing on the
Control Change Date and ending on the earlier of the third anniversary of such
date or the Participant's attainment of age fifty-five (55) and completion of
sixty (60) months of service and whether or not he is an elected officer of the
Company at such time, he shall be fully vested in a benefit payable at age
fifty-five (55) based on his Final Compensation as of his date of termination
and assuming he had attained age fifty-five (55) and completed sixty (60) months
of service as of the date his employment is terminated. During this same period,
a participant who voluntarily terminates employment within sixty (60) days after
(i) he does not receive salary increases, bonuses, and incentive awards
comparable to the increases, bonuses and awards that he received in prior years
or that other executives in comparable positions receive in the current year; or
(ii) his compensation or employment-related benefits are reduced; or (iii) his
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 the Company employing Participant or required by
applicable federal or state law) or within sixty days after the last in a series
of such events will be deemed to have terminated under circumstances requiring
full vesting under this Section 7.3.
ARTICLE VIII
TERMINATION, AMENDMENT OR MODIFICATION OF PLAN
8.1. Except as otherwise specifically provided, Dominion Resources, Inc.
reserves the right to terminate, amend or modify this Plan, wholly
or partially, at any time and from time to time. Such right to
terminate, amend or modify the Plan shall be exercised for Dominion
Resources, Inc. by its Board of Directors. Notwithstanding the
preceding, with respect to an affected Participant, the Plan and Section
7.3 may not be amended, modified or terminated after a Control
Change Date before the end of the period specified in that section
unless the affected Participant agrees to such amendment, modification
or termination in writing.
8.2. Section 8.1 notwithstanding, no action to terminate the Plan shall be
taken except upon written notice to each Participant to be affected
thereby, which notice shall be given not less than thirty (30) days
prior to such action.
8.3. Any notice which shall be or may be given under the Plan shall be in
writing and shall be mailed by United States mail, postage prepaid. If notice is
to be given to Dominion Resources, Inc., such notice shall be addressed to it at
Post Office Box 26532, Richmond, Virginia 23261; addressed to the attention of
the Corporate Secretary. If notice is to be given to a Participant, such notice
shall be addressed to the Participant's last known address.
8.4. The rights of Dominion Resources, Inc. set forth in Section 8.1 are subject
to the condition that its Board of Directors shall take no action to terminate
the Plan or decrease the benefit that would become payable or is payable, as the
case may be, with respect to a Participant who has attained age fifty-five (55)
and completed sixty (60) months of service with the Company, so long as such
individual remains an elected officer of a designated employer or a Participant
or Beneficiary following the date such Participant or Beneficiary commences
receiving benefits described in Article III.
8.5. Except as provided in Sections 7.3, 8.1, and 8.4, upon the termination of
this Plan by the Board of Directors, the Plan shall no longer be of any further
force or effect, and neither Dominion Resources, Inc. nor the Participant shall
have any further obligation or right under this Plan. Likewise, the rights of
any individual who was a Participant and who is removed or not reelected as an
officer of a designated employer shall cease upon such action.
ARTICLE IX
OTHER BENEFITS AND AGREEMENTS
Except as provided in Article IV, the benefits provided for a
Participant and his Beneficiary under the Plan are in addition to any other
benefits available to such Participant under any other plan or program
of the Company for its employees, and, except as may otherwise
be expressly provided for, the Plan shall supplement and shall not
supersede, modify or amend any other plan or program of the Company
in which a Participant is participating.
ARTICLE X
RESTRICTIONS ON TRANSFER OF BENEFITS
No right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge, and any
attempt to do so shall be void. No right or benefit hereunder shall in any
manner be liable for or subject to the debts, contracts, liabilities, or
torts of the person entitled to such benefit. If any Participant or
Beneficiary under the Plan should become bankrupt or attempt
to anticipate, alienate, sell, assign, pledge, encumber
or charge any right to a benefit hereunder, then such right or
benefit, in the discretion of the Committee, shall cease and terminate,
and, in such event, the Committee may hold or apply the same or any
part thereof for the benefit of such Participant or Beneficiary,
his or her spouse, children, or other dependents, or any of them,
in such manner and in such portion as the Committee may deem proper.
ARTICLE XI
ADMINISTRATION OF THE PLAN
11.1. The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee may adopt such rules and regulations
as may be necessary to carry out the purposes hereof. The Committee's
interpretation and construction of any provision of the Plan shall
be final and conclusive.
11.2. Dominion Resources, Inc. shall indemnify and save harmless each
member of the Committee against any and all expenses and
liabilities arising out of his membership on the Committee, excepting
only expenses and liabilities arising out of his own willful misconduct.
Expenses against which a member of the Committee shall be indemnified
hereunder shall include without limitation, the amount of any
settlement or judgment, costs, counsel fees, and related charges
reasonably incurred in connection with a claim asserted, or a proceeding
brought or settlement thereof. The foregoing right of indemnification
shall be in addition to any other rights to which any such member may
be entitled
11.3. In addition to the powers hereinabove specified, the Committee
shall have the power to compute and certify the amount and kind
of benefits from time to time payable to Participants and their
Beneficiaries under the Plan, to authorize all disbursements
for such purposes, and to determine whether a Participant is
entitled to the benefit provided in Subsection 3.1(b).
11.4. To enable the Committee to perform its functions, the
Company shall supply full and timely information to the Committee
on all matters relating to the compensation of all Participants,
their retirement, death or other cause for termination of
employment, and such other pertinent facts as the Committee
may require.
ARTICLE XII
MISCELLANEOUS
12.1. The Plan shall be binding upon Dominion Resources, Inc. and its
successors and assigns; subject to the powers set forth
in Article VIII, and upon a Participant, his Beneficiary, and either
of their assigns, heirs, executors and administrators.
12.2. To the extent not preempted by federal law, the Plan shall be
governed and construed under the laws of the Commonwealth of
Virginia as in effect at the time of their adoption and execution,
respectively.
12.3. Masculine pronouns wherever used shall include feminine pronouns
and the use of the singular shall include the plural.
<PAGE>
EXHIBIT I
DOMINION RESOURCES, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
DESIGNATION OF BENEFICIARY
I hereby designate _______________________ as the primary Beneficiary
of any benefits which become payable under the Dominion Resources, Inc.
Executive Supplemental Retirement Plan as a result of my death.
If the person named above predeceases me (or, if a trust, such
trust is not in existence at the time of my death), I designate
________________ as the contingent Beneficiary of any benefits which
become payable under such Plan as a result of my death.
If a designated Beneficiary should survive me but die (or, if a trust,
terminate) before all benefits have been paid to the Beneficiary, the
remainder of the payments shall be made as the Beneficiary may designate or,
absent a properly executed Beneficiary designation, to the Beneficiary's
estate or, if a trust, to the Beneficiaries in distribution of the trust.
This designation revokes and rescinds any prior Beneficiary
designation made by me.
Dated this ______ day of ____________, 19__.
____________________________
Witness:
_____________________________
<PAGE>
DOMINION RESOURCES, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
RESOLVED, that the Dominion Resources, Inc. Executive Supplemental
Retirement Plan, as amended and restated effective June 15, 1990, is further
amended, effective June 19, 1992, in the following respects:
FIRST: By adding a new Section 1.3 to read as follows:
"Cash Incentive Plan" means the Dominion Resources, Inc.
Cash Incentive Plan as in effect from time to time and any
successor thereto.
SECOND: By redesignating current Sections 1.3 through 1.6 as
Sections 1.4 through 1.7, respectively.
THIRD: By adding a new Section 1.8 to read as follows:
"DRI Participant" means a Participant who is an elected
officer of the Company, Dominion Capital, Inc., Dominion
Energy, Inc., Dominion Lands, Inc. and any other corporation
(i) in which the Company owns stock possessing at least
50 percent of the combined voting power of all classes
of stock and (ii) which is not subject to regulation
as a public service corporation by the State Corporation
Commission of Virginia.
FOURTH: By redesignating current Sections 1.7 through 1.10 as Sections
1.9 through 1.12, respectively.
FIFTH: By amending current Section 1.10 (redesignated as Section 1.12)
to read as follows:
"Incentive Compensation Amount" means the amount that may be
paid under the Success Sharing Plan or the Cash Incentive
Plan and that the O&C Committee (at the time each year that
the goals and other criteria for such plans are established),
determines should be taken into account under the Plan. If
a Participant participates in both the Success Sharing Plan
and the Cash Incentive Plan during a year, his "Incentive
Compensation Amount" is the greater of the amounts designated
by the O&C Committee under the two plans for that year.
SIXTH: By adding a new Section 1.13 to read as follows:
"O&C Committee" means (i) the Organization and Compensation
Committee of the Company with respect to DRI Participants
and (ii) the Organization and Compensation Committee of
Virginia Electric and Power Company with respect to
Virginia Power Participants.
SEVENTH: By redesignating current Sections 1.11 through 1.13
as Sections 1.14 through 1.17, respectively.
EIGHTH: By adding a new Section 1.18 to read as follows:
"Success Sharing Plan" means the Success Sharing Plan of
Virginia Electric and Power Company as in effect from
time to time and any successor thereto.
NINTH: By redesignating current Section 1.14 as Section 1.19.
TENTH: By adding a new Section 1.20 to read as follows:
"Virginia Power Participant" means a Participant
who is an elected officer of Virginia Electric and Power
Company.
Exhibit 10(xxv)
DOMINION RESOURCES, INC.
CASH INCENTIVE PLAN
Article I
DEFINITIONS
1.01. Affiliate means any "subsidiary corporation" or "parent corporation"
(within the meaning of Section 424 of the Internal Revenue Code of 1986, as
amended) of the Company.
1.02. Board means the Board of Directors of the Company.
1.03. Bonus Award means a bonus awarded under this Plan and which, subject to
such terms and conditions as may be prescribed by the Committee, entitles the
recipient to receive a cash payment from the Company.
1.04. Committee means the Organization and Compensation Committee of the Board.
1.05. Company means Dominion Resources, Inc.
1.06. Plan means this Dominion Resources, Inc. Cash Incentive Plan.
Article II
PURPOSES
This Plan is intended to provide incentive and reward to employees who
contribute to the success of the Company and its Affiliates by their invention,
ability, industry, loyalty or exceptional service. It is further intended that
this Plan assist the Company and its Affiliates in recruiting employees who will
contribute to its success in the manner described in the preceding sentence.
Article III
ADMINISTRATION
This Plan shall be administered by the Committee. The Committee shall
have full authority and discretion with respect to the determination of, and the
terms and conditions of, each Bonus Award consistent with the terms of the Plan.
The Committee shall have full authority to interpret all provisions of the Plan;
to adopt, amend, and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations necessary or
advisable for the administration of the Plan. The express grant in the Plan of
any specific power to the committee shall not be construed as limiting any power
or authority of the Committee. Any decision made, or action taken by the
Committee in or in connection with the administration of the Plan shall be final
and conclusive. No member of the Committee shall be liable for any act done in
good faith with respect to the Plan. All expenses of administering the Plan
shall be borne by the Company.
Article IV
ELIGIBILITY
Each employee of the Company or of any Affiliate shall be eligible for
consideration for a Bonus Award under such rules as may be established by the
Committee. Membership on the Board or on a committee of the Board shall not by
itself render a person eligible for a Bonus Award. Membership on the Committee
shall render a person ineligible for a Bonus Award.
Article V
BONUS AWARDS
5.01. Awards. The Committee shall designate employees to whom Bonus Awards are
made. Recommendations for Bonus Awards may be made to the Committee by the
person discharging the duties of chief executive officer of the Company under
such procedure as may from time to time be established by the Committee. All
Bonus Awards shall be finally determined exclusively by the Committee under the
procedures established by the Committee.
A Bonus Award may specify that the recipient shall, upon satisfaction of
any requirements or conditions established by the Committee, receive an amount
of cash. Alternatively, a Bonus Award may state that the recipient shall, upon
satisfaction of any requirements or conditions established by the Committee,
receive an amount of cash, the amount of which is determined in a manner
prescribed by the Committee.
5.02. Terms and Conditions. The Committee, at the time a Bonus Award is
made, shall specify the terms and conditions which govern the award. Such terms
and conditions may include, by way of example and not of limitation,
requirements that the recipient complete a specified period of employment with
the Company or an Affiliate or that the Company, an Affiliate, or the recipient
attain stated objectives or goals as a prerequisite to payment under a Bonus
Award. The Committee, at the time a Bonus Award is made, shall also specify when
amounts shall be payable under the Bonus Award.
Article VI
GENERAL PROVISIONS
6.01. Effect on Employment. Neither the adoption of this Plan, its operation,
nor any documents describing or referring to this Plan (or any part thereof)
shall confer upon any employee any right to continue in the employ of the
Company or in any way affect any right and power of the Company or an Affiliate
to terminate the employment of any employee at any time without assigning a
reason therefor.
6.02. Unfunded Plan. This Plan, insofar as it provides for Bonus Awards,
shall be unfunded, and the Company shall not be required to segregate any assets
that may at any time be represented by Bonus Awards under the Plan. Any
liability of the Company to any person with respect to any Bonus Awards under
this Plan shall be based solely upon any contractual obligations which may be
created pursuant to this Plan. No such obligation of the Company shall be deemed
to be secured by any pledge of, or other encumbrance on, any property of the
Company.
6.03. Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
Article VII
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment shall, without an employee's consent, adversely
affect any rights of such employee under any Bonus Award outstanding at the time
such amendment is made.
Article VIII
EFFECTIVE DATE AND DURATION OF PLAN
Bonus Awards may be made under this Plan upon its adoption by the Board.
Bonus Awards may be made from time to time or at such times thereafter until the
Plan is terminated by the Board. Bonus Awards made before the termination of the
Plan shall remain valid in accordance with their terms.
Exhibit 10(xxvi)
DOMINION RESOURCES, INC.
LONG-TERM INCENTIVE PLAN
ARTICLE I
DEFINITIONS
1.01 Affiliate means any entity that is (I) a member of a controlled
group of corporations as defined in code section 1563(a), 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 (iii) a member of an affiliated service
group of which the Company is a member according to Code section 414(m).
1.02 Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of an Option or Restricted Stock award granted to such
Participant.
1.03 Board means the Board of Directors of the Company.
1.04 Code means the Internal Revenue Code of 1986 and any amendments
thereto.
1.05 Committee means the Organization and Compensation Committee of the
Board.
1.06 Common Stock means the Common Stock of the Company.
1.07 Company means Dominion Resources, Inc.
1.08 Fair Market Value means, on any given date, the closing price of a
share of Common Stock as reported on the New York Stock Exchange composite
tape on such day or, if the Common Stock was not traded on the New York
Stock Exchange on such day, then on the next preceding day that the Common
Stock was traded on such exchange, all as reported by such source as the
Committee may elect.
1.09 Option means a stock option that entitles the holder to purchase from
the Company a stated number of shares of Common Stock at the price set forth in
an Agreement.
1.10 Participant means an employee of the Company or of an Affiliate,
including an employee who is a member of the Board, who satisfies the
requirements of Article IV and is selected by the Committee to receive an
Option, a Restricted Stock award, or both.
1.11 Plan means the Dominion Resources, Inc. Long-Term Incentive Plan.
1.12 Restricted Stock means shares of Common Stock awarded to a
Participant under Article IX. Shares of Common Stock shall cease to be
Restricted Stock when, in accordance with the terms of the applicable
agreement, they become transferable and free of substantial risks of
forfeiture.
ARTICLE II
PURPOSES
The Plan is intended to foster and promote the long-term growth and
financial success of the Company and its Affiliates by assisting the Company
in recruiting and retaining key employees with ability and initiative by
enabling employees who contribute significantly to the Company or an
Affiliate to participate in its future success and to associate their interests
with those of the Company. The proceeds received by the Company from the
sale of Common Stock pursuant to this Plan shall be used for general corporate
purposes.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
authority to grant Options and award Restricted Stock upon such terms (not
inconsistent with the provisions of this Plan) as the Committee may consider
appropriate. Such terms may include conditions (in addition to those contained
in this Plan) on the exercisability of all or any part of an Option or on the
transferability or forfeitability of Restricted Stock. In addition, the
Committee shall have complete authority to interpret all provisions of this
plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules
and regulations pertaining to the administration of the Plan; and to make all
other determinations necessary or advisable for the administration of this
Plan. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee.
Any decision made, or action taken, by the Committee or in connection with the
administration of this Plan shall be final and conclusive. No member of the
Committee shall be liable for any act done in good faith with respect to this
Plan or any Agreement, Option, or Restricted Stock award. All expenses of
administering this Plan shall be borne by the Company.
ARTICLE IV
ELIGIBILITY
4.01 General. Any employee of the Company or of any Affiliate (including
any corporation that becomes an Affiliate after the adoption of this Plan) who,
in the judgment of the Committee, has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Company
or an Affiliate may receive one or more Options, Restricted Stock awards, or
both. Directors of the Company who are employees are eligible to participate in
this Plan. A person who is a member of the Committee may not be granted Options
and may not be awarded shares of Restricted Stock under this Plan while he is
a member of the Committee.
4.02 Grants. The Committee will designate individuals to whom Options and
Restricted Stock awards are to be granted and will specify the number of shares
of Common Stock subject to each grant. All Options and Restricted Stock awards
granted under this Plan shall be evidenced by Agreements which shall be
subject to applicable provisions of this Plan and to such other provisions as
the Committee may adopt.
ARTICLE V
SHARES SUBJECT TO PLAN
Upon the exercise of any Option or the award of Restricted Stock, the
Company may deliver to the Participant authorized but unissued Common Stock.
The maximum aggregate number of shares of Common Stock that may be issued
pursuant to the exercise of Options and the award of Restricted Stock under
this Plan is 2,500,000, subject to adjustment as provided in Article XI. If
an Option is terminated, in whole or in part, for any reason other than its
exercise, the number of shares of Common Stock allocated to the Option or
portion thereof may be reallocated to other Options and Restricted Stock
awards to be granted under this Plan. Any shares of Restricted Stock that
are forfeited may be reallocated to other Options or Restricted Stock awards
to be granted under this Plan.
ARTICLE VI
OPTION PRICE
The price per share of Common Stock purchased on the exercise of an
Option shall be determined by the Committee on the date of grant.
ARTICLE VII
EXERCISE OF OPTIONS
7.01 Maximum Option Period. No Option shall be exercisable after the
expiration of ten years from the date the Option was granted. The Committee,
at the time of grant, may direct that an Option be exercisable for a period
less than such maximum period.
7.02 Nontransferability. Any Option granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom the Option is granted, the
Option may be exercised only by the Participant. No right or interest of a
Participant in any Option shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
7.03 Employee Status. In the event that the terms of any Option provide
that it may be exercised only during employment or within a specified period
of time after termination of employment, the Committee may decide in each
case to what extent leaves of absence for governmental or military service,
illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment.
ARTICLE VIII
METHOD OF EXERCISE OF OPTIONS
8.01 Exercise. Subject to the provisions of Articles VII and XII, an
Option may be exercised in whole at any time or in part from time to time
at such times and in compliance with such requirements as the Committee shall
determine. An Option granted under this Plan may be exercised with respect
to any number of whole shares less than the full number for which the Option
could be exercised. Such partial exercise of an Option shall not affect the
right to exercise the Option from time to time in accordance with this Plan
with respect to remaining shares subject to the Option.
8.02 Payment. Unless otherwise provided by the Agreement, payment of
the Option price shall be made in cash or a cash equivalent acceptable to the
Committee. If the Agreement provides, payment of all or part of the Option
price may be made by surrendering shares of Common Stock to the Company. If
Common Stock is used to pay all or part of the Option price, the shares
surrendered must have a Fair Market Value (determined as of the day preceding
the date of exercise) that is not less than such price or part thereof.
8.03 Shareholder Rights. No Participant shall, as a result of receiving
any Option, have any rights as a shareholder until the date he exercises such
Option.
ARTICLE IX
RESTRICTED STOCK
9.01 Award. In accordance with the provisions of Article IV, the
Committee will designate individuals to whom an award of Restricted Stock
is to be made and will specify the number of shares of Common Stock covered
by the award.
9.02 Vesting. The Committee, on the date of the award, may prescribe
that the Participant's rights in the Restricted Stock shall be forfeitable
or otherwise restricted for a period of time set forth in the Agreement. By
way of example and not limitation, the restrictions may postpone
transferability of the shares or may provide that the shares will be forfeited
if the Participant separates from the service of the Company and its
Affiliates before the expiration of a stated term.
9.03 Shareholder Rights. Prior to their forfeiture in accordance with
the terms of the Agreement and while the shares are Restricted Stock, a
Participant will have all rights of a shareholder with respect to Restricted
Stock, including the right to receive dividends and vote the shares; provided,
however, that (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of Restricted Stock, (ii) Dominion
Resources, Inc. shall retain custody of the certificates evidencing shares of
Restricted Stock, and (iii) the Participant will deliver to Dominion Resources,
Inc. a stock power, endorsed in blank, with respect to each award of Restricted
Stock. The limitations set forth in the preceding sentence shall not apply
after the shares cease to be Restricted Stock.
ARTICLE X
CHANGE IN CONTROL
10.01 Options. Each Option that is outstanding on a Change in Control
Date shall be exercisable in whole or in part on that date and thereafter
during the remainder of the option period stated in the Agreement. In lieu of
exercising an Option, a Participant may elect, by written notice to the
Company within sixty days after the Change in Control Date, to receive, in
exchange for the cancellation of the Option or any portion thereof, a cash
payment equal to the difference between the Fair Market Value of the number
of shares for which the Option is cancelled and the aggregate option price
of those shares.
10.02 Restricted Stock. A Participant's interest in Restricted Stock shall
be nonforfeitable and transferable as of a Change in Control Date. A
Participant may elect, by written notice to the Company within sixty days after
the Change in Control Date, to receive, in exchange for shares that were
Restricted Stock immediately before the Change in Control, a cash payment
equal to the Fair Market Value of the shares surrendered.
10.03 Change in Control. 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); or (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) with respect to a Participant employed by an
Affiliate, and event occurs with respect to the employer such that, after the
event, the employer is no longer an Affiliate and the Participant is no longer
employed by the Company or an Affiliate. 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.
ARTICLE XI
ADJUSTMENT UPON CHANGE IN COMMON STOCK
Should the Company effect one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares or other similar changes in
capitalization, then the maximum number of shares as to which Options and
Restricted Stock awards may be granted under this Plan shall be proportionately
adjusted and the terms of Options and Restricted Stock awards shall be adjusted
as the Committee shall determine to be equitably required. Any determination
made under this Article XI by the Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property or for
labor or services, either upon direct sales or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
Options or Restricted Stock awards.
ARTICLE XII
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable
federal and state laws and regulations (including, without limitation,
withholding tax requirements) and the rules of all domestic stock exchanges
on which the Company's share may be listed. The Company shall have the right
to rely on an option of its counsel as to such compliance. Any share
certificate issued to evidence Common Stock for which an Option is exercised
or Restricted Stock awarded may bear such legends and statements as the
Committee may deem advisable to assure compliance with federal and state laws
and regulations. No Option shall be exercisable, no Common Stock shall be
issued, no certificate for shares shall be delivered, and no payment shall be
made under this Plan until the Company has obtained such consent or approval
as the Committee may deem advisable from regulatory bodies having jurisdiction
over such matters.
ARTICLE XIII
GENERAL PROVISIONS
13.01 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any
part thereof) shall confer upon any employee any right to continue in the
employ of the Company or an Affiliate or in any way affect any right and power
of the Company or an Affiliate to terminate the employment of any employee
at any time with or without assigning a reason therefor.
13.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall
be unfunded, and neither the Company nor any Affiliate shall be required to
segregate any assets that may at any time be represented by grants under this
Plan. Any liability of the company or an Affiliate to any person with respect
to any grant under this Plan shall be based solely upon any contractual
obligations that may be created pursuant to this Plan. No such obligation of
the Company or an Affiliate shall be deemed to be secured by any pledge of,
or other encumbrance on, any property of the Company or an Affiliate.
13.03 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision law.
ARTICLE XIV
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval
is obtained if the amendment (i) materially increases the aggregate number
of shares that may be issued pursuant to Options and Restricted Stock awards,
(ii) materially increases the benefits accruing to Participants under the Plan,
or (iii) materially changes the class of employees eligible to become
Participants. No amendment shall, without a Participant's consent, adversely
affect any rights of such Participant under any Option or Restricted Stock
award outstanding at the time such amendment is made.
ARTICLE XV
DURATION OF PLAN
No Option or Restricted Stock award may be granted under this Plan
after January 15, 1997. Options and Restricted Stock awards granted before that
date shall remain valid in accordance with their terms.
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
<PAGE>
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
Exhibit 10(xxviii)
DOMINION RESOURCES, INC.
RETIREMENT BENEFIT FUNDING PLAN
Effective June 29, 1990
<PAGE>
TABLE OF CONTENTS
Article Page
INTRODUCTION
ARTICLE I DEFINITIONS
1.01. Account................................................ 1
1.02. Administrative Benefit Committee....................... 1
1.03. Administrative and Investment Benefit Committee........ 1
1.04. Affiliate.............................................. 1
1.05. Alternate Payee........................................ 1
1.06. Beneficiary............................................ 1
1.07. Code................................................... 2
1.08. DRI.................................................... 2
1.09. DRI Board.............................................. 2
1.10. DRI Committee.......................................... 2
1.11. DRI Participant........................................ 2
1.12. Employer............................................... 2
1.13. ERISA.................................................. 2
1.14. Investment Manager..................................... 2
1.15. Nonregulated Subsidiary................................ 2
1.16. Participant............................................ 3
1.17. Plan................................................... 3
1.18. Plan Administrator..................................... 3
1.19. Plan Year.............................................. 3
1.20. Qualified Domestic Relations Order..................... 3
1.21. Special Trust.......................................... 3
1.22. Trust.................................................. 3
1.23. Trustee................................................ 3
1.24. Trust Fund............................................. 3
1.25. Valuation Date......................................... 3
1.26. Virginia Power......................................... 3
1.27. Virginia Power Board................................... 3
1.28. Virginia Power Committee............................... 3
1.29. Virginia Power Participant............................. 3
ARTICLE II PARTICIPATION.................................... 4
ARTICLE III CONTRIBUTIONS
3.01. Employer Contributions................................. 4
3.02. Transfer Contributions................................. 4
3.03. General Provisions on Contributions.................... 5
ARTICLE IV ALLOCATIONS
4.01. Participants' Accounts................................. 5
4.02. Allocation of Contributions and Transfers.............. 6
4.03. Schedule of Contributions.............................. 6
4.04. Other Allocations...................................... 6
4.05. Subaccount Recordkeeping............................... 7
ARTICLE V VESTING........................................... 7
ARTICLE VI DISTRIBUTIONS
6.01. Periodic Distributions................................. 7
6.02. Separation from Service................................ 8
6.03. Participants in Pay Status............................. 10
6.04. Death Benefits......................................... 10
ARTICLE VII APPOINTMENTS AND ALLOCATION OF
FIDUCIARY RESPONSIBILITY
7.01. Sponsor, Named Fiduciary............................... 11
7.02. Accountant............................................. 11
7.03. Insurer................................................ 11
7.04. Investment Manager..................................... 12
7.05. Trustee................................................ 12
7.06. Allocation of Responsibility........................... 12
7.07. General................................................ 13
7.08. Fiduciary Discretion................................... 13
ARTICLE VIII COMMITTEES
8.01. General................................................ 13
8.02. Members................................................ 14
8.03. Voting................................................. 14
8.04. Delegation of Responsibilities......................... 14
8.05. Duties................................................. 15
8.06. Action Affecting Committee Member...................... 15
8.07. Agents................................................. 15
8.08. Officers............................................... 15
8.09. Rules.................................................. 16
ARTICLE IX ADMINISTRATION OF THE PLAN
9.01. Duties of Participants and Beneficiaries............... 16
9.02. General................................................ 16
9.03. Disclosure............................................. 17
9.04. Annual Accountings..................................... 17
9.05. Expenses - Compensation................................ 18
9.06. Directions to Trustee, Insurers and Investment
Managers............................................ 18
9.07. Claims Procedure....................................... 19
ARTICLE X OBLIGATIONS OF EMPLOYER
10.01. No Contract or Inducement.............................. 20
10.02. No Right to Employment................................. 20
10.03. Obligation for Benefits................................ 20
ARTICLE XI AMENDMENT AND TERMINATION OF PLAN
11.01. Amendment of the Plan.................................. 21
11.02. Termination of the Plan................................ 21
ARTICLE XII GENERAL PROVISIONS
12.01. Interpretation......................................... 21
12.02. Merger, Consolidation and Transfers of Assets
or Liabilities...................................... 22
12.03. Limitation on Assignment............................... 22
12.04. Discharge of Liability................................. 22
12.05. Payments to Minors and Incompetents.................... 23
12.06. Unclaimed Benefits..................................... 23
12.07. Headings and Subheadings............................... 23
12.08. Use of Masculine and Feminine, Singular and Plural..... 23
12.09. Governing Law.......................................... 23
12.10. Errors and Omissions................................... 23
EXECUTION..................................................... 24
<PAGE>
INTRODUCTION
Dominion Resources, Inc. and its Affiliates have made various benefit
promises and commitments to certain of their current and former elected
officers. The Board of Directors of Dominion Resources, Inc. and the Board
of Directors of Virginia Electric and Power Company determined that the
adoption of the Dominion Resources, Inc. Retirement Benefit Funding Plan, which
is designed to permit the funding of certain benefits promised to Participants,
would assist them in attracting and retaining those employees whose judgment,
abilities, and experience will contribute to the continued success of Dominion
Resources, Inc. and its Affiliates.
The Plan is intended to be an employee pension benefit plan within the
meaning of Section 3(2) of ERISA. The Trust that has been established in
conjunction with the Plan is intended to be a "grantor trust" under Code
sections 671 through 679 such that the income of the Trust Fund will be
includible in income by the Employers. The Plan and Trust shall be administered
and interpreted in accordance with these intentions.
<PAGE>
ARTICLE I
DEFINITIONS
1.01. Account means the separate account that is established for each
Participant. A Participant's Account is comprised of three subaccounts: the
ESRP Account, the Benefit Restoration Account, and the Credited Service
Account.
1.02. Administrative Benefit Committee means the committee comprised of the
individuals appointed by the Administrative and Investment Benefit Committee
in accordance with Section 8.01.
1.03. Administrative and Investment Benefit Committee means the committee
comprised of the individuals appointed by the Virginia Power Board in
accordance with Section 8.01.
1.04. Affiliate means an employer, whether or not incorporated, which with
Virginia Power is treated as a single employer under section 414(b), 414(c),
414(m) or 414(n) of the Code as determined before the application of the
provisions of section 414(r) of the Code.
1.05. Alternate Payee means a Participant's spouse, former spouse, child or
other dependent who is recognized in a Qualified Domestic Relations Order as
having, or who is assigned, a right to receive all or a portion of the
benefit payable to a Participant under the Plan.
1.06. Beneficiary means an individual or entity that is entitled to receive
any benefits that may be payable under the Plan on or after a Participant's
death. The Participant's Beneficiary shall be determined in accordance with
the following subsections.
(a) The Beneficiary shall be the Participant's surviving spouse unless
such spouse has consented in writing to the Participant's designation of a
different Beneficiary. The surviving spouse's consent must be in writing, must
acknowledge the effect of the Participant's election, and must be witnessed
by a Plan representative or notary public. With the consent of the surviving
spouse, the provisions of subsection (b) are effective for that Participant.
The provisions of subsection (b) also shall be effective with respect to a
Participant if the Plan Administrator is satisfied that the consent of the
surviving spouse cannot be obtained because the Participant has no spouse,
because the spouse cannot be located, or because of such other circumstances
as applicable regulations may provide.
(b) Except as provided in subsections (a) and (c), the Beneficiary shall
be the individual or entity designated by the Participant. In the absence of an
effective designation and if subsections (a) and (c) are not applicable, the
Beneficiary shall be the surviving spouse, if any, the Participant's children,
per stirpes, and if none, the Participant's estate.
(c) To the extent provided in a Qualified Domestic Relations Order, the
Beneficiary shall be the Alternate Payee recognized by the order as having a
right to receive all or a portion of the benefits payable under the Plan
on behalf of the Participant following the Participant's death.
1.07. Code means the Internal Revenue Code of 1986, as amended.
1.08. DRI means Dominion Resources, Inc.
1.09. DRI Board means the Board of Directors of DRI.
1.10. DRI Committee means the Organization and Compensation Committee of the
DRI Board.
1.11. DRI Participant means an individual who is or was an elected officer of
DRI or a Nonregulated Subsidiary and who has been designated to participate in
the Plan in accordance with Article II.
1.12. Employer means Virginia Power and each Affiliate that, with the approval
of the Virginia Power Board, has elected to contribute to the Plan on behalf
of one or more employees.
1.13. ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
1.14. Investment Manager means a fiduciary who satisfies the requirements
of ERISA section 3(38) and who is appointed by the Administrative Benefits
Committee to manage, acquire, or dispose of Trust Fund assets.
1.15. Nonregulated Subsidiary means Dominion Capital, Inc., Dominion Energy,
Inc., Dominion Lands, Inc. or another corporation (i) in which DRI owns stock
possessing at least 50 percent of the combined voting power of all classes
of stock and (ii) which is not subject to regulation as a public service
corporation by the State Corporation Commission of Virginia.
1.16. Participant means an individual who satisfies the requirements of
Article II and includes the DRI Participants and the Virginia Power
Participants.
1.17. Plan means the Dominion Resources, Inc. Retirement Benefit Funding Plan.
1.18. Plan Administrator means Virginia Power.
1.19. Plan Year means the calendar year.
1.20. Qualified Domestic Relations Order means a judgment, decree, order,
or approval of a property settlement that satisfies the requirements of
ERISA section 206(d)(3)(B).
1.21. Special Trust means the Dominion Resources, Inc. Special Trust Agreement
between DRI and Mellon Bank, N.A. and effective as of December 1, 1986.
1.22. Trust means the entity created pursuant to the agreement between
Virginia Power and the Trustee relating to the Plan.
1.23. Trustee means Mellon Bank, N.A.
1.24. Trust Fund means the assets of the Plan that are held in the Trust.
1.25. Valuation Date means the last business day of each calendar quarter.
1.26. Virginia Power means Virginia Electric and Power Company.
1.27. Virginia Power Board means the Board of Directors of Virginia Power.
1.28. Virginia Power Committee means the Organization and Compensation
Committee of the Virginia Power Board.
1.29. Virginia Power Participant means an individual who is or was an
elected officer of Virginia Power and who has been designated to participate
in the Plan in accordance with Article II.
ARTICLE II
PARTICIPATION
An individual who is or was an elected officer of Virginia Power and
who is designated by the Virginia Power Board to participate in the Plan shall
be a Participant. An individual who is or was an elected officer of DRI or
a Nonregulated Subsidiary and who is designated by the DRI Board to participate
in the Plan shall be a Participant. The Plan Administrator shall notify each
individual upon his qualification to become a Participant in the Plan.
Participation in the Plan ceases when a Participant's entire Account in the
Plan has been distributed.
ARTICLE III
CONTRIBUTIONS
3.01. Employer Contributions.
In each Plan Year, each Employer shall contribute to the Trust Fund the
amount, if any, that the Employer determines in its discretion to be its
contribution for the Plan Year. An Employer's contribution shall be made only
from its current or accumulated profits, as determined on the basis of its
financial statements and in accordance with its standard and customary
accounting practices for financial reporting. If an Employer is prevented from
making a contribution for any Plan Year because it lacks sufficient current
or accumulated profits, that Employer's contribution may be made, but is not
required to be made, by one or more other Employers. Notwithstanding the
foregoing, all Employer contributions on behalf of Virginia Power Participants
are subject to the approval of the Virginia Power Board and all contributions
on behalf of DRI Participants are subject to the approval of the DRI Board.
3.02. Transfer Contributions.
In lieu of or in addition to a contribution pursuant to Section 3.01, an
Employer may direct that an amount be transferred to the Trust from the Special
Trust. All such transfers on behalf of Virginia Power Participants shall be
subject to the approval of the Virginia Power Board and all such transfers on
behalf of DRI Participants shall be subject to the approval of the DRI Board.
In addition, all such transfers shall be in accordance with the terms of the
Special Trust.
3.03. General Provisions on Contributions.
(a) The Trustee is not required to collect Employer contributions or
transfer contributions pursuant to Section 3.02 and is reponsible only for
assets received in its capacity as Trustee. Subject to the approval of the
Virginia Power Committee (with respect to Virginia Power Participants) or the
DRI Committee (in the case of DRI Participants), an Employer may cause each
Plan Year's Employer contributions or transfers pursuant to Section 3.02
to be paid to the Trust in installments and on the dates that it selects.
(b) Unless allocated as of an earlier date, any contributions made to the
Plan by an Employer or transferred pursuant to Section 3.02 after the first day
of a Plan Year may be held by the Trustee and invested as a segregated account,
commingled with the Trust Fund, and allocated to Participants' Accounts as of
the last day of the Plan Year. The Trustee shall maintain such records as may be
necessary to assure that such contributions and amounts attributable to such
contributions are allocated to the proper Participants' Accounts as otherwise
provided by the Plan.
ARTICLE IV
ALLOCATIONS
4.01. Participants' Accounts.
The Plan Administrator shall cause an Account to be established and
maintained in the name of each Participant. Each Participant's Account
shall be comprised of three subaccounts: an ESRP Account, a Benefit
Restoration Account, and a Credited Service Account. Each Participant's
Account shall be credited with the Participant's share of amounts contributed
or transferred to the Trust pursuant to Article III, as well as a proportionate
share of the net earnings, gains, or losses of the Trust Fund and any
distributions from the Account.
4.02. Allocation of Contributions and Transfers.
Amounts contributed or transferred to the Trust pursuant to Article III,
if any, shall be allocated among Participants' Accounts as of the date
specified by the Virginia Power Committee (in the case of Virginia Power
Participants) or the DRI Committee (in the case of DRI Participants) or, if no
date is specified, the last day of the Plan Year.
4.03. Schedule of Contributions.
At least annually, the Plan Administrator shall furnish the Trustee a
schedule showing as to each Participant the amount, if any, of contributions
or transfers pursuant to Article III to be allocated to each Participant's
Account. The Plan Administrator also shall provide to the Trustee a schedule
showing the amount of any such contribution or transfer that is to be
allocated to the ESRP Account, the Benefit Restoration Account, and the
Credited Service Account of each Participant.
4.04. Other Allocations.
(a) As of each Valuation Date, before crediting any amounts allocated
to a Participant's Account under Section 4.02, the Trustee shall revalue the
net assets of the Trust Fund at their then current market value to reflect
any increase or decrease in the value of the investments of the Trust Fund
as of that date as compared with the total value of the Trust Fund on the
last preceding Valuation Date.
(b) As of each Valuation Date, after revaluing the assets of the Trust
Fund as provided in subsection (a) and before crediting any amounts allocated
to a Participant's Account under Section 4.02, the Trustee shall apportion
among the separate Accounts of all Participants the net income or loss earned
by the Trust Fund during the period following the preceding Valuation Date.
Such income or loss shall be apportioned on the basis of the Account balances
of the Participants as of the beginning of such Plan Year.
(c) If any interim contributions or transfers have been held in a
segregated account as provided in Section 3.03(b), any income attributable
to such contributions shall be allocated to the appropriate Account of each
Participant to whom such contributions or transfers are allocated.
4.05. Subaccount Recordkeeping.
Allocations to a Participant's Account pursuant to Sections 4.02 and 4.04
shall be further allocated between each Participant's ESRP Account, Benefit
Restoration Account, and Credited Service Account. The further allocation
of amounts allocated pursuant to Section 4.02 shall be made on the basis of
the Employer's direction, as approved by the Virginia Power Committee (in the
case of Virginia Power Participants) or the DRI Committee (in the case of DRI
Participants), and as reflected in the schedule described in Section 4.03.
The further allocation of amounts allocated pursuant to Section 4.04 shall
be made on the basis of the relative value of the Participant's ESRP Account,
the Benefit Restoration Account, and the Credited Service Account as of the
immediately preceding Valuation Date.
ARTICLE V
VESTING
Each Participant shall at all times have a fully vested and nonforfeitable
interest in his Account.
ARTICLE VI
DISTRIBUTIONS
6.01. Periodic Distributions.
As soon as practicable after an amount is allocated to a Participant's
Account under Section 4.02, but in any event before the April 15 of the Plan
Year following the Plan Year in which the allocation was made, a distribution
shall be made from the Account of each Participant as provided in the following
sentences. The amount to be distributed shall be the amount that the Virginia
Power Committee (in the case of Virginia Power Participants) or the DRI
Committee (in the case of DRI Participants) determines is required by the
Participant to satisfy the federal, state, and local income tax liability
attributable to the allocation. The amount distributed pursuant to this Section
shall be charged to the Participant's ESRP Account, Benefit Restoration
Account, and Credited Service Account in proportion to the contributions or
transfers allocated to such subaccounts for the Plan Year.
6.02. Separation from Service.
(a) A Participant who separates from the service of Virginia Power and
its Affiliates after June , 1990, shall be entitled to the benefits that
may be provided by his Account balance as of the Valuation Date coincident
with or immediately preceding such date, plus any amounts that are
subsequently allocated to his Account pursuant to Article IV. Benefits shall
be distributed to the Participant in accordance with the following
subsection (b) or (c).
(b) The value of the Participant's Account, as of the applicable Valuation
Date, may be segregated and, by way of example and not of limitation, may
be invested in a savings account, money market fund, or other interest-
bearing investment medium. The Plan Administrator shall determine the
projected Trust Fund earnings allocable to the Participant's Account (based
on the value of the Account as of the applicable Valuation Date) during the
period beginning with the Participant's separation from service and ending
one hundred and twenty months thereafter. The amount payable to the Participant
each month shall be the amount that, based on the Plan Administrator's
determination of projected earnings, will provide one hundred twenty
substantially equal payments to the Participant. Notwithstanding the
foregoing, the amount distributable from the Participant's ESRP Account shall
not be greater than the amount required to fully satisfy the obligation of
Virginia Power and DRI to the Participant under the Dominion Resources, Inc.
Executive Supplemental Retirement Plan and the amount distributable from the
Participant's Credited Service Account shall not be greater than the
amount required to fully satisfy the obligation of Virginia Power and DRI
to the Participant under any contractual agreement related to the Participant's
years of credited service for employee benefit plan purposes. The payments
to the Participant shall end when the entire value of his Account has
been distributed and the final payment to the Participant shall equal
his remaining balance in his Account. Distributions under this Section
6.02(b) shall begin with the first day of the month next following the day
that the Participant separates from the service of Virginia Power and its
Affiliates.
(c) In lieu of the benefit described in subsection (b), and with the
consent of the Administrative Benefit Committee, a Participant may elect to
receive his benefit under the Plan during a period that is more than ten years
but less than the lesser of (i) sixteen years or (ii) the remaining period of
the Participant's life expectancy. A Participant's election under this
subsection must provide for benefit payments under the Plan on the same basis
as his benefit payments under the Dominion Resources, Inc. Executive
Supplemental Retirement Plan. If a Participant makes the election described
in this subsection, the value of the Participant's Account, as of the
applicable Valuation Date, may be segregated and, by way of example and not
of limitation, may be invested in a savings account, money market fund, or
other interest-bearing investment medium. If a Participant makes the election
described in this subsection, the Plan Administrator shall determine the
projected Trust Fund earnings allocable to the Participant's Account (based
on the value of the Account as of the applicable Valuation Date) during the
period beginning with the Participant's separation from service and ending
with the last month of the distribution period selected by the Participant.
The amount payable to the Participant each month shall be the amount that,
based on the Plan Administrator's determination of projected earnings, will
provide substantially equal payments to the Participant during the
distribution period selected by the Participant. Notwithstanding the foregoing,
the amount distributable from the Participant's ESRP Account shall not be
greater than the amount required to fully satisfy the obligation of Virginia
Power and DRI to the Participant under the Dominion Resources, Inc.
Supplemental Retirement Plan and the amount distributable from the
Participant's Credited Service Account shall not be greater than the amount
required to fully satisfy the obligation of Virginia Power and DRI to the
Participant under any contractual agreement related to the Participant's years
of credited service for employee benefit plan purposes. The payments to the
Participant shall end when the entire value of his Account has been distributed
and the final payment to the Participant shall equal his remaining balance in
his Account. Distributions under this subsection shall begin with the first
day of the month next following the day that the Participant separates from the
service of Virginia Power and its Affiliates. An election under this
subsection shall be made in writing and delivered to the Plan Administrator,
and shall take effect as of the date that benefits are to commence being paid
to the Participant. An election may be altered, amended, or revoked by the
Participant prior to the date on which the first benefit payment is
scheduled to be paid. After the date that the first benefit payment is
scheduled to be paid, no further elections or adjustments will be permitted.
6.03. Participants in Pay Status.
A Participant who separated from the service of Virginia Power and its
Affiliates on or before June __, 1990, shall be entitled to receive his benefits
as provided in the following sentences. The value of the Account of a
Participant described in the preceding sentence may be segregated and, by way of
example and not of limitation, may be invested in a savings account, money
market fund, or other interest-bearing investment medium. The Plan Administrator
shall determine the projected Trust Fund earnings allocable to the Participant's
Account (based on the value of the Account as of the applicable Valuation Date)
during the period beginning with the Participant's selection as a Participant
and ending with the last month for which a benefit is payable to the Participant
under the Dominion Resources, Inc. Executive Supplement Retirement Plan. The
amount payable to the Participant each month shall be the amount that, based on
the Plan Administrator's determination of projected earnings, will provide equal
monthly payments to the Participant during the period described in the preceding
sentence. Notwithstanding the foregoing, the amount distributable from the
Participant's ESRP Account shall not be greater than the amount required to
fully satisfy the obligation of Virginia Power and DRI to the Participant under
the Dominion Resources, Inc. Executive Supplemental Retirement Plan and the
amount distributable from the Participant's Credited Service Account shall not
be greater than the amount required to fully satisfy the obligation of Virginia
Power and DRI to the Participant under any contractual agreement related to the
Participant's years of credited service for employee benefit plan purposes. The
payments to the Participant shall end when the entire value of his Account has
been distributed and the final payment to the Participant shall equal his
remaining balance in his Account. The payments under this Section shall begin on
the first day of the month next following the day that the Participant is
selected to participate in the Plan.
6.04. Death Benefits.
(a) If a Participant dies after the commencement of benefit payments
under Section 6.02 or 6.03 but before he has received his entire interest in his
Account, the remainder of the Participant's interest in his Account shall be
paid to the Participant's Beneficiary in the same manner that the Participant
was receiving benefits before his death.
(b) If a Participant dies before the commencement of benefit payments
under Section 6.02 or 6.03, the value of his Account shall be paid to his
Beneficiary in the manner described in Section 6.02(b) or 6.03, as applicable.
(c) A Beneficiary who is receiving benefits under this Section may
designate a beneficiary who will be entitled to receive any benefits that remain
to be paid to the Beneficiary after the Beneficiary's death. Such designation
shall be made in the same manner as the Participant's designation of a
Beneficiary.
ARTICLE VII
APPOINTMENTS AND ALLOCATION
OF FIDUCIARY RESPONSIBILITY
7.01. Sponsor, Named Fiduciary.
Virginia Power is hereby designated and appointed the sponsor and named
fiduciary of the Plan.
7.02. Accountant.
To the extent required by law, the Administrative Benefit Committee shall
designate as accountant for the Plan a person recognized by the Secretary of
Labor as an independent qualified public accountant or a firm which maintains on
its staff at least one such person. Such entity shall be engaged by the
Administrator to perform (to the extent required by law) in accordance with
generally accepted accounting principles the examination of the financial
statements and other books and records of the Plan that are necessary to enable
it to form and render an opinion as to whether the financial statements and
schedules required by law to be included in the annual report of the Plan are
presented fairly and in conformity with generally accepted accounting principles
applied on a basis consistent with that of the preceding year and to render such
other opinions and perform such other services with regard to the Plan as may be
necessary or desirable.
7.03. Insurer.
The Administrative Benefit Committee may designate one or more insurance
companies licensed to do business in Virginia to invest or insure part or all of
the assets of the Plan.
7.04. Investment Manager.
The Administrative Benefit Committee, acting as a named fiduciary for
this purpose, may appoint an Investment Manager to manage all or a designated
part of the assets of the Trust Fund. An Investment Manager shall have complete
control and authority over all matters concerning the investment of assets under
its direction and control, including brokerage transactions. When an Investment
Manager has been appointed and has accepted its fiduciary responsibility to the
Plan in writing, the Trustee shall be under no obligation to invest the portion
of the Trust Fund under the control of the Investment Manager and shall not
incur any liability with respect to that portion of the Trust Fund unless it
shall knowingly participate in or knowingly conceal another party's breach of
its fiduciary responsibilities with respect to that portion of the Trust Fund.
Nothing herein, however, shall relieve the Trustee of responsibility for its
acts or omissions as Trustee.
7.05. Trustee.
The Virginia Power Board must appoint a Trustee. A Trustee may resign at
any time upon 60 days' written notice to Virginia Power or such other period as
may be agreed upon in writing by Virginia Power and the Trustee. The Virginia
Power Board may remove a Trustee at any time upon like notice to the Trustee. In
either event, the Virginia Power Board may appoint a successor Trustee or
Trustees. Any successor Trustee shall become vested with all the estate, rights,
powers, discretion and duties of a Trustee hereunder.
7.06. Allocation of Responsibility.
The Virginia Power Board, through this document, has delegated certain
fiduciary responsibilities to various committees. The Virginia Power Board (or
any committee to which it has delegated a function hereunder) shall have the
power to further allocate fiduciary responsibilities among other fiduciaries and
to designate fiduciaries and nonfiduciaries to carry out other responsibilities
in order to provide for the orderly operation and administration of the Plan.
Any allocation, delegation, or other assignment of duties with regard to the
Plan shall continue until it is revoked, modified, or altered. To the extent
allowed by law, each fiduciary's responsibility is limited to the duties
allocated or assigned to the fiduciary. Fiduciaries serving under the Plan may
serve in more than one fiduciary capacity.
7.07. General.
A person or entity serving in a fiduciary capacity to the Plan may employ
one or more persons to render advice as to his or its responsibilities
hereunder. Any person serving under the Plan without compensation may, with the
approval of the Virginia Power Committee, have his reasonable expenses incurred
in serving hereunder reimbursed from the Fund.
7.08. Fiduciary Discretion.
In discharging the duties assigned to it under the Plan, each fiduciary
has the discretion to interpret the Plan; adopt, amend, and rescind rules and
regulations pertaining to his or its duties under the Plan; and to make all
other determinations necessary or advisable for the discharge of his or its
duties under the Plan. Each fiduciaries' discretionary authority is absolute and
exclusive if exercised in a uniform and nondiscriminatory manner with respect to
all similarly situated individuals. The express grant in the Plan of any
specific power to a fiduciary with respect to any duty assigned to him or it
under the Plan must not be construed as limiting any power or authority of the
fiduciary to discharge him or its duties.
ARTICLE VIII
COMMITTEES
8.01. General.
One or more committees may be established to carry out various functions
relating to the Plan. The committees currently constituted, how they are
appointed and their specific responsibilities are as follows:
(a) Virginia Power Committee. The Virginia Power Committee is a committee
of and appointed by the Virginia Power Board. It is responsible for recommending
to the Virginia Power Board: contributions or transfers pursuant to Article III
on behalf of Virginia Power Participants, allocations to Virginia Power
Participants' Accounts; and amendments to the Plan or the Trust. The Virginia
Power Committee is also responsible for establishing a funding policy for the
Plan with respect to Virginia Power Participants.
(b) DRI Committee. The DRI Committee is a committee of and appointed by
the DRI Board. It is responsible for recommending to the DRI Board:
contributions or transfers pursuant to Article III on behalf of DRI Participants
and allocations to DRI Participants' Accounts. The DRI Committee is also
responsible for establishing a funding policy for the Plan with respect to DRI
Participants.
(c) Administrative and Investment Benefit Committee. The Administrative
and Investment Benefit Committee is appointed by the Virginia Power Board. This
committee is responsible for establishing an investment policy for the Plan.
This committee also appoints the Administrative Benefit Committee.
(d) Administrative Benefit Committee. This committee is responsible for:
selecting an accountant and Investment Managers; communicating the Plan's
investment policy (established by the Administrative and Investment Benefit
Committee) to the Trustee and any Investment Manager; the review of the Trust
Fund's investment performance; assuring that established investment policies are
carried out; supervising administration; determining benefits; and maintaining
records.
8.02. Members.
Each committee shall consist of not less than 3 nor more than 7 persons.
Any member of a committee may be removed at any time and for any reason by the
entity which appointed him. Any member of a committee may resign at any time
by giving notice to the appointing entity.
8.03. Voting.
Except as otherwise specifically provided herein, all acts and decisions
of a committee shall be on the concurrence of a majority of the members. Any
decision of a committee shall be evidenced in writing.
8.04. Delegation of Responsibilities.
Each committee may delegate to any of its members or to the secretary
of the committee authority to sign any documents on its behalf, or to perform
solely ministerial acts, but such person shall not exercise any discretion
over matters delegated to him without obtaining the concurrence of a majority
of the members. If at any time there is less than 3 members of a committee,
the remaining members shall have authority to act as a committee. All acts and
determinations of a committee shall be duly recorded by the secretary thereof
and all such records, together with such other documents as may be necessary,
shall be preserved by the secretary.
8.05. Duties.
Each committee shall have control of the duties set out in Section 8.01
or specifically allocated to it under Article VII or which are delegated to it
by the Virginia Power Board or the DRI Board, as applicable, and shall have all
necessary powers to carry out its duties. Any delegation of authority by the
Virginia Power Board or the DRI Board to a committee shall be made in writing
and specify the nature and scope of such delegation. In exercising its duties
hereunder, each committee shall at all times act in a uniform, equitable and
nondiscriminatory manner. Notwithstanding its powers granted hereunder, no
committee shall have the power to modify any provision of the Plan in any way.
8.06. Action Affecting Committee Member.
A member of a committee who is also a Participant shall abstain from any
action which directly affects him as a Participant and which does not also
similarly affect all similarly situated Participants. In the event of an
abstention, such matter shall be decided by the remaining members of the
committee. Nothing herein shall prevent any member of a committee who is also
a Participant or Beneficiary from receiving any benefit to which he may be
entitled, so long as the benefit is computed and paid on a basis that is
consistently applied to all other Participants and Beneficiaries.
8.07. Agents.
Each committee may engage agents to assist it in its duties, and may
consult with counsel, who may be counsel for Virginia Power, with respect to
the meaning or construction of this document and its obligations hereunder,
or with respect to any action, proceeding, or question of law related thereto.
8.08. Officers.
Each committee shall choose a chairman from its members and may appoint
a secretary, who is not required to be a member of the committee, to keep such
records of the acts of the committee as may be necessary. The secretary may
perform any and all purely ministerial acts which may be delegated to him by
the committee.
8.09. Rules.
Each committee may formulate any rules and regulations not inconsistent
with the purposes and provisions of the Plan as it may deem necessary to enable
it to carry out its duties hereunder.
ARTICLE IX
ADMINISTRATION OF THE PLAN
9.01. Duties of Participants and Beneficiaries.
Each Participant and Beneficiary shall furnish to the Administrator any
information or proof requested of him and reasonably required to administer the
Plan.
9.02. General.
(a) The Plan Administrator, or such persons as it may designate, shall
be responsible for the operation and administration of the Plan, except to the
extent its duties are allocated to or assumed by other persons or entities
hereunder.
(b) The Administrative Benefit Committee shall establish rules and
procedures to be followed by the Participants and Beneficiaries in filing
applications for benefits and for furnishing and verifying proofs necessary
to establish any matters required in order to establish their rights to
benefits under the terms of the Plan.
(c) The Plan Administrator shall supply such full and timely information
on all matters relating to the Plan as (1) the Trustee, (2) the accountant,
(3) any insurance company and (4) any Investment Manager may require for the
effective discharge of their respective duties and responsibilities.
(d) It shall be the duty of the Plan Administrator to handle the
day-to-day operations of the Plan, including distributing booklets, notices
and other information regarding the Plan; maintaining Beneficiary designation
forms; explaining the optional form of benefit payout which, with the consent
of the Administrative Benefit Committee, may be elected by a Participant under
the Plan; and communicating all other matters relating to participation and
entitlement to benefits to (1) the Trustee and (2) the accountant as may be
necessary to enable them to discharge their duties and responsibilities. The
Plan Administrator shall carry out these duties in a uniform, equitable and
nondiscriminatory manner with regard to all Participants and Beneficiaries
under similar circumstances.
9.03. Disclosure.
(a) The Plan Administrator shall see that descriptions of the Plan are
prepared as necessary for filing with the Department of Labor and shall make
available to Participants and Beneficiaries receiving benefits under the Plan
a summary of the Plan at such place and at such times as may be required by
federal statutes and regulations issued thereunder.
(b) The Plan Administrator shall arrange for the preparation and filing
of such annual reports, including financial statements of the Plan's assets
and liabilities, schedules, receipts and disbursements and changes in financial
position in such form, at such place and at such times as may be required by
federal statutes and regulations. The Plan Administrator shall furnish annually
as required by law to all Participants and Beneficiaries receiving benefits
under the Plan a copy of a summary of the financial statement of the Plan's
assets and liabilities and schedules of receipts and disbursements and such
other material as is necessary to fairly summarize the latest annual report
at such times as may be required by federal statutes and regulations.
(c) The Plan Administrator shall make available copies of the Plan,
copies of any contracts relating to the Plan, descriptions of the Plan, and
annual reports at its principal office for examination by any Participant and
any Beneficiary receiving benefits under the Plan.
(d) Upon written request of any Participant or any Beneficiary receiving
benefits under the Plan, the Plan Administrator shall furnish him a copy of the
latest updated summary plan description, plan description, latest annual report
and a copy of the Plan. The Plan Administrator may make a reasonable charge
for the costs of furnishing such copies.
9.04. Annual Accountings.
To the extent required by law, the Plan Administrator shall engage, on
behalf of all Participants, the independent qualified public accountant
selected by the Administrative Benefit Committee, to certify and render an
opinion that the financial statements and schedules prepared in conjunction
with the Plan are presented fairly and are in conformity with generally
accepted accounting principles consistently applied; provided, however, that
where assets are held under a contract with an insurance company or in trust
by a bank supervised and subject to periodic examination by a state or federal
agency and such insurance company or bank prepares statements concerning such
assets and certifies that such statements are accurate and the statements
are made a part of the annual report, the accountant may rely on such
statements as accurate.
9.05. Expenses - Compensation.
As permitted by ERISA, the reasonable expenses incurred in the
administration of the Plan may be paid by the Trustee or an insurance company
out of the Trust Fund. By way of example and not of limitation, the following
expenses may be paid out of the Trust Fund: the compensation of the Trustee
and any Investment Manager, fees for actuarial and accounting services, and
financial statement preparation and benefit processing fees. Any expenses that
are paid out of the Trust Fund shall be charged to the Account of each
Participant in the same proportion that the value of each Account bears to the
total value of the Trust Fund. To the extent that such expenses are not paid
by the Trustee or an insurance company, they shall be paid by Virginia Power
(to the extent that the expenses are attributable or allocable to Virginia
Power Participants) and DRI (to the extent that the expenses are attributable
or allocable to DRI Participants). Notwithstanding the foregoing, no employee
of Virginia Power or an Affiliate shall be entitled to compensation from
the Trust Fund for services rendered to the Plan.
9.06. Directions to Trustee, Insurers and Investment Managers.
All directions from Virginia Power or a committee to the Trustee, an
insurer or an Investment Manager shall be in writing from the chief executive
officer, the secretary or chairman of a committee, or such person or persons
as such individuals may designate in writing. Any Trustee, insurer or
Investment Manager may rely on directions from such persons and shall act in
accordance therewith, unless it knows or should know that the directions
constitute a breach of such person's or its own obligations under the Plan.
9.07. Claims Procedure.
(a) All claims for benefits under the Plan shall be submitted to the
Administrative Benefit Committee, who shall have the initial responsibility
for determining the eligibility of any Participant or Beneficiary for benefits.
All claims for benefits shall be made in writing and shall set forth the facts
which such Participant or Beneficiary believes to be sufficient to entitle
him to the benefit claimed.
If a claim for benefits is denied in whole or in part, the
Administrative Benefit Committee shall give the claimant written notice of
the decision within 90 days of the date the claim was submitted. Such
written notice shall set forth in a manner calculated to be understood by
the claimant (1) the specific reason or reasons for the denial; (2) specific
reference to pertinent Plan provisions on which the denial is based; (3) a
description of any additional material or information necessary for the
claimant to perfect the claim, along with an explanation of why such material
or information is necessary; and (4) appropriate information about the steps
to be taken if the claimant wishes to submit the claim for review of the
denial. If special circumstances require an extension of time for processing
the initial claim, a written notice of the extension and the reason therefor
shall be furnished to the claimant before the end of the initial ninety-day
period. In no event shall such extension exceed 90 days.
(b) If the initial claim for benefits is denied in whole or in part,
or if the claimant has had no response to such claim within 90 days of its
submission (in which case the claim for benefits shall be deemed to be
denied), the claimant or his duly authorized respresentative, at the claimant's
sole expense, may appeal the denial to the Virginia Power Committee (if the
claim is related to the participation of a Virginia Power Participant) or the
DRI Committee (if the claim is related to the participation of a DRI
Participant). Notice of the appeal must be received by the appropriate
committee within 60 days of receipt of written notice of the denial of the
claim or 60 days from the date such claim is deemed to be denied. In pursuing
his appeal, the claimant or his duly authorized represetative:
(1) may request in writing that the Committee review the denial;
(2) may review pertinent documents; and
(3) may submit issues and comments in writing.
The decision on review shall be made within 60 days of receipt of the
request for review, unless special circumstances require an extension of time
for processing, in which case a decision shall be rendered as soon as possible,
but not later than 120 days after receipt of the request for review. If such
an extension of time is required, written notice of the extension shall be
furnished to the claimant before the end of the original 60-day period. The
decision on review shall be made in writing, shall be written in a manner
calculated to be understood by the claimant, and shall include specific
references to the provisions of the Plan on which the denial is based. If the
decision on review is not furnished within the time specified above, the
claim shall be deemed denied on review.
ARTICLE X
OBLIGATIONS OF EMPLOYER
10.01. No Contract or Inducement.
The Plan shall not be deemed to be a contract between Virginia Power
or any Affiliate and any Participant or Beneficiary or to be a consideration
or an inducement for the employment of any Participant.
10.02. No Right to Employment.
Nothing contained in this Plan shall be deemed to give any Participant
the right to be retained in employment by Virginia Power or any Affiliate
or to interfere with the right of Virginia Power or any Affiliate to discharge,
layoff, or suspend any Participant at any time without regard to the effect
which such discharge, layoff, or suspension shall have upon his rights or the
rights of any Beneficiary under this Plan.
10.03. Obligation for Benefits.
The Trust Fund shall be the sole source of benefits under this Plan,
and each Participant and Beneficiary shall be entitled to look only to the
Trust Fund for payment of benefits. Neither Virginia Power nor any Affiliate
shall have any liability to make or continue from its own funds the payment
of any benefit under the Plan.
ARTICLE XI
AMENDMENT AND TERMINATION OF PLAN
11.01. Amendment of the Plan.
Virginia Power shall have the right by action of the Virginia Power
Board to modify, alter or amend the Plan in whole or in part; provided that
the duties, powers and liabilities of a Trustee, insurance company or
Investment Manager shall not be increased without its written consent; and
provided further that any such action shall not, in any way, affect adversely
the rights of Participants with respect to amounts credited to their Accounts
as of the date the Plan is amended. No amendment, modification or alteration
shall have the effect of revesting in Virginia Power or any Affiliate any part
of the principal or income of the Trust Fund. Notwithstanding the above,
nothing herein shall prevent the Virginia Power Board from modifying or
eliminating any form of benefit, subsidy, or payment option to the extent
allowed by law so long as the benefit provided as a result of such amendment
or alteration is an actuarial equivalent of the benefit otherwise payable to
the Participant or Beneficiary determined as of the effective date of such
amendment or alteration.
11.02. Termination of the Plan.
While Virginia Power expects to continue the Plan indefinitely, the
continuance of the Plan is not assumed as a contractual obligation. Virginia
Power reserves the right to discontinue its contributions and to terminate
the Plan at any time by action of the Virginia Power Board. In the event of
a termination of the Plan, no further contributions may be made to the Plan.
ARTICLE XII
GENERAL PROVISIONS
12.01. Interpretation.
This Plan has been created for the exclusive purpose of providing
benefits to Participants and their Beneficiaries and defraying reasonable
expenses of administering the Plan. The Plan shall be interpreted in a manner
consistent with applicable provisions of ERISA and as in effect from time to
time. Under no circumstances shall any funds contributed or transferred to this
Plan, any assets attributable to this Plan or income relating to such assets,
revert to Virginia Power or any Affiliate, nor shall any such funds, assets
or income ever be used or diverted to purposes other than the exclusive
benefit of the Participants and their Beneficiaries.
12.02. Merger, Consolidation and Transfers of Assets or Liabilities.
No merger or consolidation with, or transfer of assets or liabilities
to this Plan or from this Plan to any other plan shall be made, unless each
Participant would receive immediately after such event a benefit which is
equal to or greater than the benefit he would have been entitled to receive
under the Plan immediately before such event had the Plan terminated at that
time.
12.03. Limitation on Assignment.
Except as allowed by ERISA section 206 with respect to Qualified
Domestic Relations Orders, Plan benefits may not be anticipated, assigned
(either at law or in equity), alienated, or be subject to attachment,
garnishment, levy, execution, or other legal or equitable process. If a
Participant dies before the date that a Qualified Domestic Relations Order
directs that payments begin to an Alternate Payee, the Alternate Payee shall be
entitled to a payment from the Plan only if the Qualified Domestic Relations
Order requires the payment of such benefits. The Plan Administrator shall
establish reasonable written procedures for determining the qualified status of
a domestic relations order and for administering distributions to an Alternate
Payee. The Plan Administrator must promptly notify the Participant and each
Alternate Payee of the receipt of a domestic relations order and of the
procedures for determining its qualified status.
12.04. Discharge of Liability.
Any payment to a person or entity entitled to payment under the Plan,
or to the representative of such person or entity, shall be, to the extent
of the payment, in full satisfaction of all claims under the Plan against
the Trustee, the Plan Administrator, and the Employers. As a prerequisite
to the receipt of any such payment, the Trustee, the Plan Administrator, and
any Employer may require that such person execute a receipt and release in
such form as shall be determined by the Trustee, Plan Administrator, or an
Employer, as the case may be.
12.05. Payments to Minors and Incompetents.
If any Plan benefit is payable to a Participant or Beneficiary who is
a minor or who, in the opinion of the Plan Administrator, is not legally
capable of giving valid receipt and discharge for such payments, that payment
may be made for the benefit of the Participant or Beneficiary to such person
as the Plan Administrator, in its discretion, designates. Such payments, to the
extent made, shall be deemed a complete discharge of any liability for such
payment under the Plan, and the Trustee may make the payment without obligation
to require bond or to see to the further application of the payments.
12.06. Unclaimed Benefits.
If the Trustee cannot make payments of any amount to a Participant
or Beneficiary within seven years after the amount becomes payable because
the person's identity or whereabouts cannot be determined by the end of the
seven year period, all amounts that would have been payable to that
Participant or Beneficiary must be segregated and dealt with by the Trustee
in accordance with the applicable state law pertaining to abandoned intangible
personal property held in a fiduciary capacity.
12.07. Headings and Subheadings.
The headings and subheadings in this Plan have been inserted for
convenience of reference only and are to be ignored in any construction of the
provisions hereof.
12.08. Use of Masculine and Feminine, Singular and Plural.
In the construction of the Plan, the masculine shall include the
feminine and the singular the plural in all cases where such meanings are
indicated by the context.
12.09. Governing Law.
Except as otherwise may be required by the controlling law of the
United States, the Plan shall be construed, administered, and enforced in
accordance with the laws of the Commonwealth of Virginia.
12.10. Errors and Omissions.
It shall be the responsibility of those individuals and entities
charged with the administration of the Plan to see that it is administered
in accordance with its terms so long as it is not in conflict with ERISA. If
an innocent error or omission is discovered in the Plan's operation or
administration which is not correctable under normal administrative procedures,
and the Plan Administrator determines that it would cost more to correct the
error than is warranted, and if the Plan Administrator determines that the
error did not cause an excise tax problem, then the Plan Administrator may
authorize any equitable adjustment it deems necessary or desirable to correct
the error or omission, including but not limited to the authorization (with
the approval of the Virginia Power Board or the DRI Board, as appropriate), of
additional Employer contributions designed, in a manner consistent with the
goodwill intended to be engendered by the Plan, to put Participants or their
Beneficiaries in the same relative position they would have been in but for
such error or omission. Any contribution made pursuant to this section is
an additional discretionary contribution.
EXECUTION
IN WITNESS WHEREOF, this instrument has been executed this 7 day of
July, 1990.
VIRGINIA ELECTRIC AND POWER COMPANY
By
Exhibit 10(xxix)
DOMINION RESOURCES, INC.
RETIREMENT BENEFIT RESTORATION PLAN
As adopted Effective
January 1, 1991
<PAGE>
DOMINION RESOURCES, INC.
RETIREMENT BENEFIT RESTORATION PLAN
PURPOSE
The Board of Directors of Dominion Resources, Inc. determined
that the adoption of the Retirement Benefit Restoration Plan will assist
it in attracting and retaining those employees whose judgment, abilities
and experience will contribute to its continued progress. The Plan is
intended to be a plan that is unfunded and maintained primarily for the
purpose of providing deferred compensation for a "select group of
management or highly compensated employees" (as such phrase is used in
the Employee Retirement Income Security Act of 1974). The Plan must be
administered and construed in a manner that is consistent with that
intent.
ARTICLE I
Definitions
As defined herein, the following phrases or terms shall have
the indicated meanings:
1.1. "Administrator" means the Administrative Benefit Committee appointed
to manage and administer the Plan in accordance with the provisions of
Article X.
1.2. "Affiliate" means 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 Dominion Resources, Inc. is a member according to
Code section 414(b); (ii) an unincorporated trade or business that is under
common control with Dominion Resources, Inc., as determined according to Code
section 414(c); or (iii) a member of an affiliated service group of which
Dominion Resources, Inc. is a member according to Code section 414(m).
1.3. "Beneficiary" means the person, persons, entity, entities or the
estate of a Participant which, in accordance with the provisions of the
Retirement Plan, is entitled to receive a benefit under the Retirement
Plan on account of the Participant's death.
1.4. "Benefit Restoration Account" means the Benefit Restoration
Account established under the Funding Plan on behalf of a Participant
who also participates in the Funding Plan.
1.5. "Change in Control" means the occurrence of any of the following
events: (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 Dominion Resources, Inc. securities having 20% or
more of the combined voting power of the then outstanding Dominion
Resources, Inc. securities that may be cast for the election of Dominion
Resources, Inc.'s directors (other than as a result of an issuance of
securities initiated by Dominion Resources, Inc., or open market
purchases approved by Dominion Resources, Inc.'s Board of Directors, as
long as the majority of Dominion Resources, Inc.'s Board of Directors
approving the purchases is also 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 Dominion
Resources, Inc. before such transactions cease to constitute a majority
of Dominion Resources, Inc.'s Board of Directors, or any successor's
board, within two years of the last of such transactions; or (iii) with
respect to a particular Participant, an event occurs with respect to the
Company that employs that Participant such that, after the event, the
employing Company is no longer an Affiliate of Dominion Resources, Inc.
1.6. "Code" means the Internal Revenue Code of 1986, as amended.
1.7. "Committee" means (i) the Organization and Compensation Committee
of the Board of Directors of Dominion Resources, Inc. with respect to an
Eligible Employee who is employed by Dominion Resources, Inc., Dominion
Capital, Inc., Dominion Lands, Inc. or Dominion Energy, Inc. and (ii)
the Organization and Compensation Committee of the Board of Directors of
Virginia Electric and Power Company with respect to an Eligible Employee
who is employed by Virginia Electric and Power Company.
1.8. "Company" means Dominion Resources, Inc., its predecessor, a
subsidiary or an Affiliate or either.
1.9. "Control Change Date" means the date on which a Change in Control
event 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.
1.10. "Eligible Employee" means an individual (i) who is employed by
Dominion Resources, Inc. or an Affiliate, (ii) who is a member of management
or a highly compensated employee, and (iii) whose Retirement Plan benefit
is reduced or limited by Code section 401(a)(17), Code section 415,
or both.
1.11. "Funding Plan" means the Dominion Resources, Inc. Retirement
Benefit Funding Plan.
1.12. "Participant" means an Eligible Employee who is designated
by the Committee. An individual shall remain a Participant only
so long as the individual remains an Eligible Employee and his
designation as a Participant has not been revoked or rescinded.
1.13. "Plan" means the Dominion Resources, Inc. Retirement Benefit
Restoration Plan.
1.14. "Retirement" and "Retire" mean severance from employment with
the Company on or after attaining a vested or nonforfeitable interest
in the portion of his Retirement Plan benefit attributable to Company
contributions; except as provided in Article VI of the Plan.
1.15. "Retirement Plan" means the Dominion Resources, Inc. Retirement
Plan.
1.16. "Totally and Permanently Disabled" means a condition, determined
on the basis of medical evidence satisfactory to a physician designated
by the Administrator, rendering a Participant, due to bodily injury
or disease, unable to perform services as follows: (i) during the first
two years of such disability (measured from the commencement of such
disability rather than the commencement of benefit payments) such
Participant is unable to perform any and every duty pertaining to his
employment with the Company; and (ii) thereafter, such Participant
is unable to engage in any occupation or perform any work for compensation
or profit for which he is or may become reasonably fitted by education,
training or experience. In no event shall such condition be deemed to
exist during any period that the Participant is not under the regular
care and attendance of a legally qualified physician during any period
that he engages in any occupation or performs any work for compensation
or profit.
ARTICLE II
PARTICIPATION
An Eligible Employee who is designated to participate in the Plan
by the Committee shall become a Participant in the Plan as of the date
specified by the Committee. A Participant shall continue to participate
in the Plan until such date as the Committee may declare that he is no
longer a Participant or until the date that he is no longer an Eligible
Employee.
ARTICLE III
BENEFITS
Except as provided in Article IV and subject to the limitations
set forth in Articles VI and VII, the benefits of a Participant and his
Beneficiary shall be as follows:
3.1. Upon Retirement a Participant shall be entitled to a monthly Retirement
benefit equal to the difference between (a) and (b) below where:
(a) = the monthly benefit that would have been payable to the
Participant under the Retirement Plan but for the application
of the limits set forth in Sections 401(a)(17) and 415 of
the Code; and
(b) = the monthly benefit that the Participant is entitled to receive
under the Retirement Plan.
The payment of the benefit under this Section 3.1 shall begin as of the same
date that the Participant's retirement benefit under the Retirement Plan is
scheduled to commence. The benefit payable under this Section 3.1 also
shall be determined as of the date that the Participant's retirement
benefit under the Retirement Plan is scheduled to commence. The benefit
payable under this Section 3.1 shall be computed and paid in the same form
as the Participant's retirement benefit under the Retirement Plan; provided,
however, that upon the Participant's death no further benefit shall be
payable under this Plan except as provided in Section 3.3.
3.2. If a Participant becomes Totally and Permanently Disabled prior
to his Retirement and during his employment with the Company or
an Affiliate, he shall be entitled to receive a benefit calculated
and paid in the manner set forth in Section 3.1.
3.3. If a Beneficiary is entitled to a Retirement Plan benefit on
account of the Participant's death (regardless of whether the
Participant's death occurs before Retirement or the commencement of his
Retirement Plan benefit), the Beneficiary shall be entitled
to a monthly benefit under this Plan equal to the difference
between (a) and (b) where:
(a) = the monthly benefit that would have been payable
to the Beneficiary but for the application of Sections
401(a)(17) and 415 of the Code in the calculation of the
Participant's accrued benefit under the Retirement Plan; and
(b) = the monthly benefit that the Beneficiary is entitled
to receive under the Retirement Plan.
The payment of the benefit under this Section 3.3 shall begin as of the
same date that the Beneficiary's benefit under the Retirement Plan is
scheduled to commence. The amount payable under this Section 3.3 also
shall be determined as of the date that the Beneficiary's benefit
under the Retirement Plan is scheduled to commence. The benefit payable
under this Section 3.3 shall be computed and paid in the same form as the
benefit payable to the Beneficiary under the Retirement Plan.
ARTICLE IV
COORDINATION OF BENEFITS
The amount payable in any month to a Participant and a Beneficiary
under the Plan shall be reduced, but not below zero, by the sum of (a) and,
to the extent applicable, (b) below where:
(a) = the amount payable for the month in question from the
Participant's Benefit Restoration Account; and
(b) = the sum of the amounts previously paid to the Participant
from his Benefit Funding Account pursuant to Section 6.01 of
the Funding Plan multiplied by a fraction. The numerator of
the fraction is one (1) and the denominator of the fraction
is the number of months for which benefits are payable
from the Benefit Restoration Account. If a Participant
receives a distribution from his Benefit Restoration
Account under Section 6.01 of the Funding Plan after
a benefit becomes payable under the Plan, the amount
described in this item (b) with respect to subsequent
payments under the Plan shall include the product
of the amount of each such distribution multiplied
by a fraction. The numerator of that fraction is one
(1) and the denominator is the number of months for which
a benefit from the Benefit Restoration Account remains
payable.
Item (b) shall not apply (and the amount payable under the Plan shall not
be reduced on account of the amounts described in item (b) above), to the
extent that the application of item (b) would result in the payment of
an after-tax benefit under the Plan and the Benefit Restoration Account
of the Funding Plan that is less than the benefit otherwise payable
under Article III on an after-tax basis. In determining the amount payable
under the Plan and from the Benefit Restoration Account on an after-tax
basis, the Administrator shall follow the policy or guidelines
adopted for purposes of Section 6.01 of the Funding Plan and,
in the absence of such policy or guidelines, shall make
its determination using the maximum rates of federal, state and local
income taxes that are applicable to the Participant or
Beneficiary.
ARTICLE V
GUARANTEES
Dominion Resources, Inc. has only a contractual obligation to
make payments of the benefits described in Article III. All benefits
are to be satisfied solely out of the general corporate assets of
Dominion Resources, Inc. which shall remain subject to the claims
of its creditors. No assets of Dominion Resources, Inc. will be
segregated or committed to the satisfaction of its obligations
to any Participant or Beneficiary under the Plan. If Dominion
Resources, Inc., in its sole discretion, elects to purchase
life insurance on the life of a Participant in connection with
the Plan, the Participant must submit to a physical
examination, if required by the insurer, and otherwise cooperate in
the issuance of such policy or his rights under the Plan will be forfeited.
Article VI
TERMINATION OF EMPLOYMENT
6.1. The Plan does not in any way limit the right of the Company at any
time and for any reason to terminate the Participant's employment or such
Participant's status as an Eligible Employee. In no event shall the Plan,
by its terms or by implication, constitute an employment contract of any
nature whatsoever between the Company and a Participant.
6.2. A Participant who ceases to be an Eligible Employee
or whose employment with the Company is terminated either with or without
cause, for reasons other than death, Retirement or Total and Permanent
Disability shall immediately cease to be a Participant under this
Plan and shall forfeit all rights under this Plan. Further, in no
event shall an individual who was a Participant but is not a Participant
at the time of such individual's death, Retirement or Total and
Permanent Disability, be entitled to any benefit under the Plan.
A Participant on authorized leave of absence from the Company shall
not be deemed to have terminated employment or lost his status as an
Eligible Employee for the duration of such leave of absence.
6.3. Notwithstanding any contrary Plan provision, in the event the
employment of a Participant who is in the employ of a Company on
a Control Change Date relating to that Company is terminated (for
reasons other than death, Retirement, Total and Permanent Disability,
or as a result of acts of theft, embezzlement, fraud, or moral turpitude)
before the end of the period commencing on the Control Change Date and
ending on the third anniversary of such date, and whether or not he is a
Participant at such time, he shall be fully vested in a benefit payable
under Article III as of the date his employment is terminated. During
this same period, a Participant who voluntarily terminates employment
within sixty (60) days after (i) he does not receive
salary increases, bonuses, and incentive awards comparable to the increases,
bonuses, and awards that he received in prior years or that other executives
in comparable positions receive in the current year; or (ii) his
compensation or employment-related benefits are reduced; or (iii) his
status, titles(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 the Company employing
Participant or required by applicable federal or state law) or
within sixty days after the last in a series of such events will be
deemed to have terminated under circumstances requiring full vesting
under this Section 6.3.
6.4. A Participant who ceases to be an employee of the Company and who
is subsequently reemployed by the Company shall not accrue any additional
benefits on account of such later service for periods in which he is not
a Participant.
ARTICLE VII
TERMINATION, AMENDMENT OR MODIFICATION OF PLAN
7.1. Except as otherwise specifically provided, Dominion Resources, Inc.
reserves the right to terminate, amend or modify this Plan, wholly or
partially, at any time and from time to time. Such right to terminate,
amend or modify the Plan shall be exercised for Dominion Resources, Inc.
by its Board of Directors. Notwithstanding the preceding,
with respect to an affected Participant, the Plan and Section 6.3 may
not be amended, modified or terminated after a Control Change Date
before the end of the period specified in that section unless the affected
Participant agrees to such amendment, modification or termination in writing.
7.2. Section 7.1 notwithstanding, no action to terminate the Plan shall
be taken except upon written notice to each Participant to be affected thereby,
which notice shall be given not less than thirty (30) days prior to such
action.
7.3. Any notice which shall be or may be given under the Plan shall be in
writing and shall be mailed by United States mail, postage prepaid. If
notice is to be given to Dominion Resources, Inc., such notice shall be
addressed to it at Post Office Box 26532, Richmond, Virginia 23261; addressed
to the attention of the Corporate Secretary. If notice is to be given
to a Participant, such notice shall be addressed to the Participant's last
known address.
7.4. The rights of Dominion Resources, Inc. set forth in Section 7.1
are subject to the condition that its Board of Directors shall take no
action to terminate the Plan or decrease the benefit that would become
payable or is payable, as the case may be, with respect to a Participant
who has earned a vested or nonforfeitable interest in the portion of his
Retirement Plan benefit attributable to Company contributions.
7.5. Except as provided in Sections 6.3, 7.1, and 7.4, upon the
termination of this Plan by the Board of Directors, the Plan shall no
longer be of any further force or effect, and neither Dominion
Resources, Inc. nor any Participant shall have any further obligation or
right under this Plan. Likewise, the rights of any individual who was a
Participant and whose designation as a Participant is revoked or
rescinded by the Committee shall cease upon such action.
ARTICLE VIII
OTHER BENEFITS AND AGREEMENTS
Except as provided in Article IV, the benefits provided for
a Participant and his Beneficiary under the Plan are in addition to any
other benefits available to such Participant under any other plan or
program of the Company for its employees, and, except as may otherwise
be expressly provided for, the Plan shall supplement and shall not
supersede, modify or amend any other plan or program of the Company
in which a Participant is participating.
ARTICLE IX
RESTRICTIONS ON TRANSFER OF BENEFITS
No right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge, and any
attempt to do so shall be void. No right or benefit hereunder shall
in any manner be liable for or subject to the debts, contracts, liabilities,
or torts of the person entitled to such benefit. If any Participant or
Beneficiary under the Plan should become bankrupt or attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge any right to a benefit
hereunder, then such right or benefit, in the discretion of the Committee,
shall cease and terminate, and, in such event, the Committee may hold
or apply the same or any part thereof for the benefit of such Participant
or Beneficiary, his or her spouse, children, or other dependents, or any
of them, in such manner and in such portion as the Committee may deem
proper.
ARTICLE X
ADMINISTRATION OF THE PLAN
10.1. The Plan shall be administered by the Administrator. Subject to
the provisions of the Plan, the Administrator may adopt such rules and
regulations as may be necessary to carry out the purposes hereof. The
Administrator's interpretation and construction of any provision
of the Plan shall be final and conclusive.
10.2. Dominion Resources, Inc. shall indemnify and save harmless each
member of the Committee and the Administrator against any and all
expenses and liabilities arising out of his membership on the Committee
or the Administrator, excepting only expenses and liabilities arising
out of his own willful misconduct. Expenses against which a member
of the Committee or the Administrator shall be indemnified hereunder
shall include without limitation, the amount of any settlement or
judgment, costs, counsel fees, and related charges reasonably incurred
in connection with a claim asserted, or a proceeding brought or settlement
thereof. The foregoing right of indemnification shall be in addition
to any other rights to which any such member may be entitled.
10.3. In addition to the powers hereinabove specified, the Administrator
shall have the power to compute and certify the amount and kind of benefits
from time to time payable to Participants and their Beneficiaries under
the Plan, to authorize all disbursements for such purposes, and to determine
whether a Participant is entitled to a benefit under Section 3.2.
10.4. To enable the Administrator to perform his functions, the Company
shall supply full and timely information to the Administrator on all
matters relating to the compensation of all Participants, their retirement,
death or other cause for termination of employment, and such other
pertinent facts as the Committee may require.
ARTICLE XI
MISCELLANEOUS
11.1 The Plan shall be binding upon Dominion Resources, Inc. and its
successors and assigns; subject to the powers set forth in Article VII,
and upon a Participant, his Beneficiary, and either of their assigns,
heirs, executors and administrators.
11.2. To the extent not preempted by federal law, the Plan shall be
governed and construed under the laws of the Commonwealth of Virginia
as in effect at the time of their adoption and execution, respectively.
11.3. Masculine pronouns wherever used shall include feminine pronouns
and the use of the singular shall include the plural.
Exhibit 10(xxx)
DOMINION RESOURCES, INC
EXECUTIVES' DEFERRED COMPENSATION PLAN
Effective January 1, 1994
For the Executives of:
Dominion Resources, Inc.
Virginia Electric and Power Company
<PAGE>
TABLE OF CONTENTS
Section Page
1. DEFINITIONS..........................................................1
2. PURPOSE..............................................................3
3. PARTICIPATION........................................................3
4. DEFERRAL ELECTION....................................................3
5. EFFECT OF NO ELECTION................................................4
6. DEFERRED CASH BENEFITS...............................................4
7. DEFERRED STOCK BENEFITS..............................................5
8. DISTRIBUTIONS........................................................5
9. HARDSHIP DISTRIBUTIONS...............................................7
10. COMPANY'S OBLIGATION.................................................7
11. CONTROL BY PARTICIPANT...............................................8
12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS.......................8
13. AMENDMENT OR TERMINATION.............................................8
14. NOTICES..............................................................8
15. WAIVER...............................................................8
16. CONSTRUCTION.........................................................8
<PAGE>
1. DEFINITIONS. The following definitions apply to this Plan and to the
Deferral Election Forms.
(a) BENEFICIARY or BENEFICIARIES means a person or persons or other
entity that a Participant designates on a Beneficiary
Designation Form to receive Deferred Benefit payments pursuant
to Plan Section 8(c). If a Participant does not execute a valid
Beneficiary Designation Form, or if the designated Beneficiary
or Beneficiaries fail to survive the Participant or otherwise
fail to take the Deferred Benefit, the Participant's Beneficiary of
Beneficiaries shall be the first of the following persons who
survive the Participant: a Participant's spouse (the person
legally married to the Participant when the Participant dies);
the Participant's children in equal shares and the Participant's
estate.
(b) BENEFICIARY DESIGNATION FORM means the form that a Participant uses
to name his Beneficiary or Beneficiaries.
(c) COMPANY means Dominion Resources, Inc., Virginia Electric and Power
Company, and any of their affiliates that, with approval of the
DRI Board of Directors, adopt or have adopted this Plan; any
successor business by merger, purchase, or otherwise that maintains
the Plan.
(d) COMPENSATION means a Participant's base salary, cash incentive
pay and other cash compensation from the Company.
(e) DEFERRAL ELECTION FORM means the form that a Participant uses to elect
to receive a Deferred Benefit pursuant to Plan Section 4. A
Participant's Distribution Election Form and Beneficiary Designation
Form are part of the Participant's Deferral Election Form.
(f) DEFERRAL YEAR means a calendar year for which an Executive's
Compensation is reduced pursuant to a valid Deferral Election
Form.
(g) DEFERRED BENEFIT means either a Deferred Cash Benefit or a
Deferred Stock Benefit available to an Executive who has
executed a valid Deferral Election Form.
(h) DEFERRED CASH ACCOUNT means a bookkeeping record established for
each Participant who elects to receive a Deferred Cash Benefit. A
Deferred Cash Account shall be established only for purposes
of measuring a Deferred Cash Benefit and not to segregate
assets or to identify assets that may be used to satisfy
a Deferred Cash Benefit. A Deferred Cash Account shall be
credited with that amount of a Participant's Compensation
deferred as a Deferred Cash Benefit according to a Participant's
Deferral Election Form. A Deferred Cash Account also shall
be credited periodically with interest under Plan Section
6(b).
(i) DEFERRED CASH BENEFIT means the Deferred Benefit elected
by a Participant that results in payments governed by Plan
Sections 6 and 8.
(j) DEFERRED STOCK ACCOUNT means a bookkeeping record established
for each Participant who elects to receive a Deferred
Stock Benefit. A Deferred Stock Account shall be established
only for purposes of measuring a Deferred Stock Benefit
and not to segregate assets or to identify assets that may
be used to satisfy a Deferred Stock Benefit. A Deferred Stock
Account shall be credited with that amount of a Participant's
Compensation deferred as a Deferred Stock Benefit according
to a Deferral Election Form. A Deferred Stock Account also shall
be credited periodically with dividends under Plan Section 7(b).
(k) DEFERRED STOCK BENEFIT means the Deferred Benefit elected by a
Participant that results in payments governed by Plan Sections 7 and 8.
(l) DISTRIBUTION ELECTION FORM means that part of a Deferral Election
Form which a Participant uses to establish the duration of
the deferral of Compensation and the frequency of payments of
a Deferred Benefit. If a Participant does not execute a valid
Distribution Election Form, the distribution of a Deferred Benefit
shall be governed by Plan Section 8.
(m) DRI means Dominion Resources, Inc.
(n) DRI COMMITTEE means the Organization and Compensation Committee of
DRI's Board.
(o) ELECTION DATE means the date by which an Executive must submit
a valid Deferral Election Form. For each Deferral Year, the Election
Date shall be the preceding December 31. However, if an individual
becomes an Executive during a Deferral Year, his Election Date shall
be a date that is within thirty days after such individual
becomes an Executive. Notwithstanding the preceding sentences,
the Committee may set an earlier Election Date for any Deferral
Year.
(p) EXECUTIVE means an individual who is employed by the Company and
who is a "highly-compensated employee" or a member of a "select
group of management" as those terms are used under Title I of the
Employee Retirement Income Security Act of 1974, as amended and
who the DRI Committee (in the case of an individual who is
employed by DRI or one of its nonutility subsidiaries) or the
Virginia Power Committee (in the case of an individual employed
by Virginia Power), designates as being eligible to participate
in this Plan.
(q) PARTICIPANT, with respect to any Deferral Year, means an Executive
who has executed a valid Deferral Election Form for that Deferral
Year.
(r) PLAN means the Dominion Resources, Inc. Executives' Deferred
Compensation Plan.
(s) TERMINATE, TERMINATING, or TERMINATION, with respect to a Participant,
mean the cessation of his employment with the Company on account
of death, disability, severance or any other reason.
(t) VIRGINIA POWER means Virginia Electric and Power Company.
(u) Virginia Power Committee means the Organization and Compensation
Committee of Virginia Power's Board of Directors.
2. PURPOSE. The Plan is intended to permit Executives to defer all or a
portion of their Compensation.
3. PARTICIPATION. The DRI Committee shall select the DRI Executives who are
eligible to participate in the Plan. The Virginia Power Committee shall
select the Virginia Power Executives who are eligible to participate in the
Plan. An Executive becomes a Participant for any Deferral Year by filing a
valid Deferral Election Form according to Plan Section 4 on or before the
Election Date for that Deferral Year.
4. DEFERRAL ELECTION. A deferral election shall be valid when the Deferral
Election Form is completed, signed by the electing Executive, and received by
DRI's Corporate Secretary on or before the Election Date for that Deferral
Year. The following provisions apply to deferral elections.
(a) A Participant may elect a Deferred Benefit for any Deferral Year if
he is an Executive at the beginning of that Deferral Year or becomes
an Executive during that Deferral Year.
(b) Before each Deferral Year's Election Date, each Executive shall be
provided with a Deferral Election Form. Using the Deferral Election
Form, an Executive may elect on or before the Election Date to defer
the receipt of all or part of his Compensation for the Deferral Year.
An Executive may not defer more than $1,000,000 of Compensation for
any Deferral Year.
(c) An Executive must complete a Deferral Election Form for either a
Deferred Cash Benefit or a Deferred Stock Benefit for all amounts
deferred from his Compensation. The Compensation deferred under
a Deferral Election Form shall be allocated among a Deferred
Cash Benefit and a Deferred Stock Benefit in 10% multiples.
(d) A Distribution Election Form shall constitute part of a Deferral
Election Form. The Committee may allow a Participant to file one
Distribution Election Form for all of his Deferred Cash Benefits
and one for all of his Deferred Stock Benefits.
(e) If he does so before the last business day of the Deferral Year,
DRI's Corporate Secretary may reject any Deferral Election Form
or any Distribution Election Form or both that does not conform
to the provisions of the Plan. DRI's Corporate Secretary
may modify any Distribution Election Form at any time to the
extent necessary to comply with any federal securities laws
or regulations. DRI's Corporate Secretary's rejection or modification
must be made on a uniform basis with respect to similarly-situated
Executives. If DRI's Corporate Secretary rejects a Deferral Election
Form, the Executive shall be paid the amounts he would have been
entitled to receive if the Executive had not submitted the rejected
Deferral Election Form.
(f) An Executive may not revoke a Deferral Election Form or a
Distribution Election Form after the Deferral Year begins. Any
revocation before the beginning of the Deferral Year has the
same effect as a failure to submit a Deferral Election Form or a
Distribution Election Form. Any writing signed by an Executive
expressing an intention to revoke his Deferral Election Form and
delivered to DRI's Corporate Secretary before the close of
business on the relevant Election Date shall be a revocation.
5. EFFECT OF NO ELECTION. An Executive who has not submitted a valid Deferral
Election Form to DRI's Corporate Secretary on or before the relevant Election
Date may not defer any part of his Compensation for the Deferral Year. The
Deferred Benefit of an Executive who submits a valid Deferral Election Form
but fails to submit a valid Distribution Election Form (either as to the form
or commencement of payment) before the relevant Election Date shall be
distributed in a lump sum on the February 15 following his Termination.
6. DEFERRED CASH BENEFITS.
(a) Deferred Cash Benefits shall be credited to a Deferred Cash
Account as of the last day of the month in which the deferred
Compensation would have been paid and shall be credited with
interest on the first day of each month thereafter at rates set
by the DRI Committee. Interest shall accrue monthly on the
balance in a Deferred Cash Account on the last day of each
month, until the end of the month prior to the month of
distribution.
(b) Unless the DRI Committee changes the basis on which interest shall be
determined, interest credited to a Deferred Cash Account shall be based
on the average three-month United States Treasury Bill Rates Auction
Average (Investment), as published by the Federal Reserve Board for
the month immediately preceding the day the interest is credited.
7. DEFERRED STOCK BENEFITS. The following provisions apply to a Deferred
Stock Benefit.
(a) Deferred Stock Benefits shall be credited to a Deferred Stock
Account as of the first day of the month following the month in
which the Compensation would have been paid. A Deferred Stock
Account shall be credited with the number of whole and
fractional shares of DRI common stock that a Participant could
have purchased with amounts deferred from his Compensation based
on the closing price of DRI common stock on the New York Stock
Exchange on the last trading day of the month in which the
deferred Compensation would have been paid. The value of a
Deferred Stock Account on any date shall be the value of the DRI
common stock (whole and fractional shares) credited to the
account based on the immediately preceding closing price of DRI
common stock on the New York Stock Exchange.
(b) A Deferred Stock Account also shall be credited with dividends
on the last day of each calendar quarter. A Deferred Stock
Account shall be credited with the number of whole and
fractional shares of DRI common stock that a Participant could
have purchased with such dividends based on the closing price of
the DRI common stock on the day before such dividends are
credited to the account.
8. DISTRIBUTIONS.
(a) All Deferred Cash Benefits and all Deferred Stock Benefits, less
withholding for applicable income and employment taxes, shall be
paid in cash on the date specified in the Participant's
Distribution Election Form (but subject to Plan Section 4(f)).
A Deferred Stock Benefit shall be distributed in cash equal to the
value of the Participant's Deferred Stock Account on the last day
of the month preceding the month of distribution. Except in the
event of Termination, a Participant may only receive a distribution
on a date which is at least six months after the date on which
his most recent Deferral Election Form is valid.
(b) Except for distributions triggered by a Participant's disability,
Deferred Benefits shall be paid in a lump sum unless the Participant's
Distribution Election Form specifies annual installment payments
over a period of up to ten years. Installment payments will be
made in approximately equal amounts during each year of the
installment period. For a Deferred Cash Benefit payable in
installments, interest under Plan Section 6(b) shall continue
to accrue on the unpaid balance of a Deferred Cash Account. For
a Deferred Stock Benefit payable in installments, the unpaid
balance of a Deferred Stock Account shall accrue dividends under
Plan Section 7(b).
If a Participant Terminates as a result of his disability, begins to
receive Deferred Benefits and thereafter recovers before the balance of
his Deferred Cash Account and Deferred Stock Account are exhausted,
distributions shall cease and any remaining Deferred Benefits under the
Plan shall be governed by this Plan Section 8 and his Distribution
Election Form.
Unless otherwise specified in a Participant's Distribution Election
Form, any lump sum payment shall be paid or installment payments shall
begin on February 15 of the year after the Participant's Termination.
For distributions that would automatically begin because of a
Participant's Termination (other than by death), the Participant may
elect on his Distribution Election Form to begin payments (i) on the
February 15 following his Termination, without regard to his age; or
(ii) on the February 15 following his Termination and his attainment of
a specified age; or (iii) even if the Participant does not Terminate, on
the February 15 following a specified age. However, except in the event
of payments on account of Termination, no Participant may elect to
receive payments sooner than six months after the date on which his most
recent Deferral Election Form is valid.
(c) Notwithstanding any other provision of this Plan or a Participant's
Distribution Election Form, the DRI Committee (in the case of an
individual employed by DRI or one of its nonutility subsidiaries)
or the Virginia Power Committee (in the case of an individual employed
by Virginia Power) in its sole discretion may postpone the distribution
of all or part of a Deferred Benefit to the extent that the payment
would not be deductible under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the Code) or any successor thereto. A
Deferred Benefit distribution that is postponed pursuant to the
preceding sentence shall be paid as soon as it is possible to
do so within the deduction limitations of Section 162(m) of the Code.
(d) A Participant or Beneficiary may not assign Deferred Benefits. A
Participant may use only one Beneficiary Designation Form
to designate one or more Beneficiaries for all of his Deferred
Benefits under the Plan. Such designations are revocable. Each
Beneficiary shall receive his portion of the Participant's
Deferred Cash Account and Deferred Stock Account on February 15
of the year following the Participant's death. However, the DRI
Committee (in the case of an individual who is employed by DRI or
one of its nonutility subsidiaries) or the Virginia Power
Committee (in the case of an individual employed by Virginia
Power), at its discretion, may approve a Beneficiary's request
for accelerated payment under Plan Section 9. The DRI Committee
(in the case of an individual who is employed by DRI or one of
its nonutility subsidiaries) or the Virginia Power Committee
(in the case of an individual employed by Virginia Power) may insist
that multiple Beneficiaries agree upon a single distribution
method.
9. HARDSHIP DISTRIBUTIONS.
(a) At its sole discretion and at the request of a Participant
before or after his Termination, or at the request of any of the
Participant's Beneficiaries after the Participant's death, the
DRI Committee (in the case of an individual who is employed by
DRI or one of its nonutility subsidiaries) or the Virginia Power
Committee (in the case of an individual employed by Virginia
Power) may accelerate and pay all or part of any amount
attributable to a Participant's Deferred Benefits. The DRI
Committee (in the case of an individual who is employed by DRI
or one of its nonutility subsidiaries) or the Virginia Power
Committee (in the case of an individual employed by Virginia
Power) may accelerate distributions only in the event of a
financial emergency beyond the Participant's or Beneficiary's
control and only if disallowance of a distribution request would
create a severe hardship for the Participant or Beneficiary. An
accelerated distribution under this Plan Section 9 shall be
limited to the amount necessary to satisfy the financial
emergency.
(b) For purposes of an accelerated distribution of a Deferred Stock
Benefit, the Deferred Stock Benefit's value shall be determined
by the value of the Deferred Stock Account on the last day of the
month prior to the month of distribution.
(c) Distributions under this section shall be made in cash, shall
first be made from the Participant's Deferred Stock Account
before accelerating the distribution of any amount attributable
to a Deferred Cash Benefit, and shall be limited to amounts
attributable to Compensation deferred under a Deferral Election
Form that was effective at least six months before the distribution.
(d) A distribution under this section shall be in lieu of that portion
of a Participant's Deferred Benefit that would have been paid
otherwise. A Deferred Cash Benefit shall be adjusted by reducing
the Participant's Deferred Cash Account balance by the amount of the
distribution. A Deferred Stock Benefit shall be adjusted by
reducing the value of the Participant's Deferred Stock Account
by the amount of the distribution.
10. COMPANY'S OBLIGATION. The Plan shall be unfunded. The Company shall not be
required to segregate any assets that at any time may represent a Deferred
Benefit. Any liability of the Company to a Participant or Beneficiary under
this Plan shall be based solely on any contractual obligations that may be
created pursuant to this Plan. No such obligation of the Company shall be
deemed to be secured by any pledge of, or other encumbrance on, any property
of the Company.
11. CONTROL BY PARTICIPANT. A Participant shall have no control over Deferred
Benefits except according to his Deferral Election Forms, his Distribution
Election Forms and his Beneficiary Designation Form.
12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS. A Deferred Cash Account and
Deferred Stock Account shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and
any attempt to do so shall be void. A Deferred Benefit shall not be subject
to attachment or legal process for a Participant's debts or other
obligations. Nothing contained in this Plan shall give any Participant
any interest, lien, or claim against any specific asset of the Company. A
Participant or his Beneficiary shall have no rights other than as a general
creditor of the Company.
13. AMENDMENT OR TERMINATION. Except as otherwise provided, this Plan may be
altered, amended, suspended, or terminated at any time by DRI's Board of
Directors. DRI's Board of Directors may not alter, amend, suspend, or
terminate this Plan as to any Participant without the consent of that
Participant if such action would result either in (i) a distribution of the
Participant's Deferred Benefit in any manner not provided in the Plan
or (ii) immediate taxation of a Deferred Benefit to a Participant.
Notwithstanding the preceding sentence, if any amendment to the Plan after
the Plan's effective date adversely affects a Deferred Benefit and the
Internal Revenue Service declines to rule favorably on the amendment, DRI's
Board of Directors, in its sole discretion, may accelerate the distribution
of any amounts attributable to an affected Deferred Benefit.
14. NOTICES. All notices or election required under the Plan must be in writing.
A notice or election shall be deemed delivered if it is delivered personally
or sent registered or certified mail to the person at his last known
business address.
15. WAIVER. The waiver of a breach of any provision in this Plan does not
operate as and may not be construed as a waiver of any later breach.
16. CONSTRUCTION. This Plan shall be adopted and maintained according to the
laws of the Commonwealth of Virginia (except its choice-of-laws rules).
Headings and captions are only for convenience; they do not have
substantive meaning. If a provision of this Plan is not valid or
enforceable, the validity or enforceability or any other provision shall not
be affected. Use of one gender includes all, and the singular and plural
include each other.
Exhibit 10(xxxi)
June 30, 1994
Dr. J. T. Rhodes
President & CEO
Virginia Power
Dear Jim:
As you know, the Board of Directors of Virginia Electric and Power
Company (the Company) voted on June 3, 1994, to ratify the letter agreement
you and james F. Betts reached in April regarding your employment with the
Company. paragraphs (1), (2) and (3) below memorialize those modifications to
the terms of your employment with the Company.
Additionally, the Special Committee of the Board of Directors on June
29, 1994, approved certain additional terms for your continued employment with
the Company. Set forth in paragraphs (4) and (5) below are those additional
provisions, which are comparable to those the Special Committee determined to
be appropriate for all other officers of the Company.
(1) You will report to James F. Betts in his capacity as
Vice-Chairman of Dominion Resources, Inc. (DRI).
(2) The DRI and Virginia Power Boards will give serious consideration
to electing you Chairman of the Virginia Power Board in October.
(3) You have agreed to remain at Virginia Power as President and
Chief executive Officer for at least three years (until April 21, 1997).
However, if Tom Capps does not retire at age 60 or by the end of 1995, you
will be free to retire at any time after April 21, 1996. In either event, you
will be able to retire with benefits at least equal to those that were
available to you under the 1994 Early Retirement Program>
(4) Should you be terminated prior to April 21, 1997, for any reason
other than cause (after a good faith determination by the Board of Directors
of Virginia Power), then the Company will pay to you the amount (as detailed
in Attachment A) that you would have otherwise received in base salary and
incentive compensation through April 21, 1997, as if you had remained employed
until that date. In the event of your termination without cause, the Company
will also pay to you a special severance benefit equal to (i) your then annual
base salary, or at your election (ii) the retirement and other severance
benefits you would have been eligible to receive as a participant in the 1994
Early Retirement Program.
(5) if you continue in the employment of the Company until April 21,
1997, you shall be entitled to receive on the date you retire or leave the
employment of the Company for any reason after April 21, 1997, a special
severance benefit equal to (i) your then annual base salary, or at your option
(ii) the retirement and other severance benefits you would have been eligible
to receive as a participant in the 1994 Early Retirement program. This special
severance benefit shall be paid in addition to and shall not diminish any
rights that you may be entitled to receive under the benefit plans of Dominion
Resources, Inc. or the Company.
Please acknowledge by signing a copy of this letter and returning it
to me. We will then make this document a part of your permanent file.
If you have any questions, please let me know.
Sincerely,
/s/John B. Adams, Jr.
John B. Adams, Jr.
Chairman, O&C Committee
Virginia Power Board of
Directors
Attachment
Acknowledged:
/s/ J. T. Rhodes
J. T. Rhodes
Date:
6/30/94
(signed fax 6/30/94)
<PAGE>
ATTACHMENT A
If you are terminated for any reason other than for cause, the company will
pay you the following:
1. Base salary which you would have earned from the date of termination
until April 21, 1997. This number will be computed by dividing the annual base
salary at time of termination by 12 and multiplying by the number of whole or
partial months between the date of termination and April 21, 1997. The base
salary used in this calculation shall not be less than your highest base salary
on or after April 21, 1994.
2. Potential annual incentive award from date of termination until April
21, 1997. This number will be computed by dividing the Success Sharing target
award in effect for you at time of termination by 12 and multiplying by the
number of whole or partial months between the end of the most recently completed
plan year and April 21, 1997. Payment of this amount shall cancel your rights to
any other Success Sharing payments for the same time period. The target award
used in this calculation shall not be less than the highest target award in
effect for you on or after April 21, 1994.
3. Potential long term incentive award until April 21, 1997. The total
number of hypothetical shares (at 100% goal accomplishment) of Dominion
Resources, Inc. stock granted in all cycles of the Performance Achievement Plan
which were active on the date of termination will be multiplied by the closing
price of the stock on the day of termination. This amount will be paid to you in
dollars. Payment of this amount will cancel your rights to any additional
payments in cash or stock from these active cycles.
Exhibit 10(xxxii)
June 23, 1994
Mr. B.D. Johnson
Senior Vice President
Controller, Treasurer & Secretary
Dear Bill:
A Special Committee of the Board of Directors of Virginia Electric and
Power Company (the Company) was established on Monday, June 20, to act on behalf
of the Board in matters relating to the recent Order of the State Corporation
Commission calling for an investigation of the relationship between Dominion
Resources, Inc. and the Company. One of the matters that the Special Committee
addressed was the importance of preserving the stability and continuity of the
senior management personnel of the Company.
The Board wants the officers of the Company to remain in place and to carry
out their assigned jobs to the best of their abilities. To that end, the Special
Committee has approved a resolution intended to promote your continuing
employment relationship with the Company. The resolution provides that, if at
any time prior to June 21, 1997, your employment as an officer of the Company
should be terminated for any reason other than cause (after a good faith
determination by the President of the Company or the Board of Directors that
such cause exists), then the Company will pay to you the amount (as detailed in
Attachment A) that you would have otherwise received in base salary and
incentive compensation through June 21, 1997, as if you had remained employed
until that date. In addition, the Company will pay to you a special severance
benefit equal to (i) your then annual base salary, or at your election (ii) the
retirement or other severance benefits that you would have been eligible to
receive as a participant in the 1994 Early Retirement Program.
If you continue as an employee of the Company until June 21, 1997, you
shall be entitled to receive on the date you retire or leave the employment of
the Company for any reason after June 21, 1997, a special severance benefit
equal to (i) your then annual base salary, or at your election (ii) the
retirement and other severance benefits that you would have been eligible to
receive as a participant in the 1994 Early Retirement Program. This special
severance benefit shall be paid in addition to and shall not diminish any rights
that you may have based on your individual employment agreement or any other
benefits that you may be entitled to receive under the benefit plans of Dominion
Resources, Inc. or the Company.
Please acknowledge by signing a copy of this letter and returning it to me.
We will then make this document a part of your permanent file.
If you have any questions, please let me know.
Sincerely,
/s/ J. T. Rhodes
J. T. Rhodes
Attachment
Acknowledged:
/s/ B. D. Johnson
Date: 6/23/94
<PAGE>
ATTACHMENT A
If you are terminated for any reason other than for cause, the company will
pay you the following:
1. Base salary which you would have earned from the date of termination
until June 21, 1997. This number will be computed by dividing the annual base
salary at time of termination by 12 and multiplying by the number of whole or
partial months between the date of termination and June 21, 1997. The base
salary used in this calculation shall not be less than your highest base salary
on or after June 21, 1994.
2. Potential annual incentive award from date of termination until June
21, 1997. This number will be computed by dividing the Success Sharing target
award in effect for you at time of termination by 12 and multiplying by the
number of whole or partial months between the end of the most recently completed
plan year and June 21, 1997. Payment of this amount shall cancel your rights to
any other Success Sharing payments for the same time period. The target award
used in this calculation shall not be less than the highest target award in
effect for you on or after June 21, 1994.
3. Potential long term incentive award until June 21, 1997. The total
number of hypothetical shares (at 100% goal accomplishment) of Dominion
Resources, Inc. stock granted in all cycles of the Performance Achievement Plan
which were active on the date of termination will be multiplied by the closing
price of the stock on the day of termination. This amount will be paid to you in
dollars. Payment of this amount will cancel your rights to any additional
payments in cash or stock from these active cycles.
<PAGE>
Exhibit 10(xxxiii)
June 23, 1994
Mr. R.F. Hill
Senior Vice President
Commercial Operations
Dear Bob:
A Special Committee of the Board of Directors of Virginia Electric and
Power Company (the Company) was established on Monday, June 20, to act on behalf
of the Board in matters relating to the recent Order of the State Corporation
Commission calling for an investigation of the relationship between Dominion
Resources, Inc. and the Company. One of the matters that the Special Committee
addressed was the importance of preserving the stability and continuity of the
senior management personnel of the Company.
The Board wants the officers of the Company to remain in place and to carry
out their assigned jobs to the best of their abilities. To that end, the Special
Committee has approved a resolution intended to promote your continuing
employment relationship with the Company. The resolution provides that, if at
any time prior to June 21, 1997, your employment as an officer of the Company
should be terminated for any reason other than cause (after a good faith
determination by the President of the Company or the Board of Directors that
such cause exists), then the Company will pay to you the amount (as detailed in
Attachment A) that you would have otherwise received in base salary and
incentive compensation through June 21, 1997, as if you had remained employed
until that date. In addition, the Company will pay to you a special severance
benefit equal to (i) your then annual base salary, or at your election (ii) the
retirement or other severance benefits that you would have been eligible to
receive as a participant in the 1994 Early Retirement Program.
If you continue as an employee of the Company until June 21, 1997, you
shall be entitled to receive on the date you retire or leave the employment of
the Company for any reason after June 21, 1997, a special severance benefit
equal to (i) your then annual base salary, or at your election (ii) the
retirement and other severance benefits that you would have been eligible to
receive as a participant in the 1994 Early Retirement Program. This special
severance benefit shall be paid in addition to and shall not diminish any rights
that you may have based on your individual employment agreement or any other
benefits that you may be entitled to receive under the benefit plans of Dominion
Resources, Inc. or the Company.
Please acknowledge by signing a copy of this letter and returning it to me.
We will then make this document a part of your permanent file.
If you have any questions, please let me know.
Sincerely,
/s/ J. T. Rhodes
J. T. Rhodes
Attachment
Acknowledged:
/s/ Robert F. Hill
Date: 6/23/94
<PAGE>
ATTACHMENT A
If you are terminated for any reason other than for cause, the company will
pay you the following:
1. Base salary which you would have earned from the date of termination
until June 21, 1997. This number will be computed by dividing the annual base
salary at time of termination by 12 and multiplying by the number of whole or
partial months between the date of termination and June 21, 1997. The base
salary used in this calculation shall not be less than your highest base salary
on or after June 21, 1994.
2. Potential annual incentive award from date of termination until June
21, 1997. This number will be computed by dividing the Success Sharing target
award in effect for you at time of termination by 12 and multiplying by the
number of whole or partial months between the end of the most recently completed
plan year and June 21, 1997. Payment of this amount shall cancel your rights to
any other Success Sharing payments for the same time period. The target award
used in this calculation shall not be less than the highest target award in
effect for you on or after June 21, 1994.
3. Potential long term incentive award until June 21, 1997. The total
number of hypothetical shares (at 100% goal accomplishment) of Dominion
Resources, Inc. stock granted in all cycles of the Performance Achievement Plan
which were active on the date of termination will be multiplied by the closing
price of the stock on the day of termination. This amount will be paid to you in
dollars. Payment of this amount will cancel your rights to any additional
payments in cash or stock from these active cycles.
Exhibit 10(xxxiv)
June 23, 1994
Mr. L.W. Ellis
Senior Vice President
Power Operations & Planning
Dear Larry:
A Special Committee of the Board of Directors of Virginia Electric and
Power Company (the Company) was established on Monday, June 20, to act on behalf
of the Board in matters relating to the recent Order of the State Corporation
Commission calling for an investigation of the relationship between Dominion
Resources, Inc. and the Company. One of the matters that the Special Committee
addressed was the importance of preserving the stability and continuity of the
senior management personnel of the Company.
The Board wants the officers of the Company to remain in place and to carry
out their assigned jobs to the best of their abilities. To that end, the Special
Committee has approved a resolution intended to promote your continuing
employment relationship with the Company. The resolution provides that, if at
any time prior to June 21, 1997, your employment as an officer of the Company
should be terminated for any reason other than cause (after a good faith
determination by the President of the Company or the Board of Directors that
such cause exists), then the Company will pay to you the amount (as detailed in
Attachment A) that you would have otherwise received in base salary and
incentive compensation through June 21, 1997, as if you had remained employed
until that date. In addition, the Company will pay to you a special severance
benefit equal to (i) your then annual base salary, or at your election (ii) the
retirement or other severance benefits that you would have been eligible to
receive as a participant in the 1994 Early Retirement Program.
If you continue as an employee of the Company until June 21, 1997, you
shall be entitled to receive on the date you retire or leave the employment of
the Company for any reason after June 21, 1997, a special severance benefit
equal to (i) your then annual base salary, or at your election (ii) the
retirement and other severance benefits that you would have been eligible to
receive as a participant in the 1994 Early Retirement Program. This special
severance benefit shall be paid in addition to and shall not diminish any rights
that you may have based on your individual employment agreement or any other
benefits that you may be entitled to receive under the benefit plans of Dominion
Resources, Inc. or the Company.
Please acknowledge by signing a copy of this letter and returning it to me.
We will then make this document a part of your permanent file.
If you have any questions, please let me know.
Sincerely,
/s/ J. T. Rhodes
J. T. Rhodes
Attachment
Acknowledged:
/s/ L. W. Ellis
Date: 6/23/94
<PAGE>
ATTACHMENT A
If you are terminated for any reason other than for cause, the company will
pay you the following:
1. Base salary which you would have earned from the date of termination
until June 21, 1997. This number will be computed by dividing the annual base
salary at time of termination by 12 and multiplying by the number of whole or
partial months between the date of termination and June 21, 1997. The base
salary used in this calculation shall not be less than your highest base salary
on or after June 21, 1994.
2. Potential annual incentive award from date of termination until June
21, 1997. This number will be computed by dividing the Success Sharing target
award in effect for you at time of termination by 12 and multiplying by the
number of whole or partial months between the end of the most recently completed
plan year and June 21, 1997. Payment of this amount shall cancel your rights to
any other Success Sharing payments for the same time period. The target award
used in this calculation shall not be less than the highest target award in
effect for you on or after June 21, 1994.
3. Potential long term incentive award until June 21, 1997. The total
number of hypothetical shares (at 100% goal accomplishment) of Dominion
Resources, Inc. stock granted in all cycles of the Performance Achievement Plan
which were active on the date of termination will be multiplied by the closing
price of the stock on the day of termination. This amount will be paid to you in
dollars. Payment of this amount will cancel your rights to any additional
payments in cash or stock from these active cycles.
Exhibit 10(xxxv)
June 23, 1994
Mr. J.A. Ahladas
Senior Vice President
Corporate Services
Dear John:
A Special Committee of the Board of Directors of Virginia Electric and
Power Company (the Company) was established on Monday, June 20, to act on behalf
of the Board in matters relating to the recent Order of the State Corporation
Commission calling for an investigation of the relationship between Dominion
Resources, Inc. and the Company. One of the matters that the Special Committee
addressed was the importance of preserving the stability and continuity of the
senior management personnel of the Company.
The Board wants the officers of the Company to remain in place and to carry
out their assigned jobs to the best of their abilities. To that end, the Special
Committee has approved a resolution intended to promote your continuing
employment relationship with the Company. The resolution provides that, if at
any time prior to June 21, 1997, your employment as an officer of the Company
should be terminated for any reason other than cause (after a good faith
determination by the President of the Company or the Board of Directors that
such cause exists), then the Company will pay to you the amount (as detailed in
Attachment A) that you would have otherwise received in base salary and
incentive compensation through June 21, 1997, as if you had remained employed
until that date. In addition, the Company will pay to you a special severance
benefit equal to (i) your then annual base salary, or at your election (ii) the
retirement or other severance benefits that you would have been eligible to
receive as a participant in the 1994 Early Retirement Program.
If you continue as an employee of the Company until June 21, 1997, you
shall be entitled to receive on the date you retire or leave the employment of
the Company for any reason after June 21, 1997, a special severance benefit
equal to (i) your then annual base salary, or at your election (ii) the
retirement and other severance benefits that you would have been eligible to
receive as a participant in the 1994 Early Retirement Program. This special
severance benefit shall be paid in addition to and shall not diminish any rights
that you may have based on your individual employment agreement or any other
benefits that you may be entitled to receive under the benefit plans of Dominion
Resources, Inc. or the Company.
Please acknowledge by signing a copy of this letter and returning it to me.
We will then make this document a part of your permanent file.
If you have any questions, please let me know.
Sincerely,
/s/ J. T. Rhodes
J. T. Rhodes
Attachment
Acknowledged:
/s/ John Ahladas
Date: 6/23/94
<PAGE>
ATTACHMENT A
If you are terminated for any reason other than for cause, the company will
pay you the following:
1. Base salary which you would have earned from the date of termination
until June 21, 1997. This number will be computed by dividing the annual base
salary at time of termination by 12 and multiplying by the number of whole or
partial months between the date of termination and June 21, 1997. The base
salary used in this calculation shall not be less than your highest base salary
on or after June 21, 1994.
2. Potential annual incentive award from date of termination until June
21, 1997. This number will be computed by dividing the Success Sharing target
award in effect for you at time of termination by 12 and multiplying by the
number of whole or partial months between the end of the most recently completed
plan year and June 21, 1997. Payment of this amount shall cancel your rights to
any other Success Sharing payments for the same time period. The target award
used in this calculation shall not be less than the highest target award in
effect for you on or after June 21, 1994.
3. Potential long term incentive award until June 21, 1997. The total
number of hypothetical shares (at 100% goal accomplishment) of Dominion
Resources, Inc. stock granted in all cycles of the Performance Achievement Plan
which were active on the date of termination will be multiplied by the closing
price of the stock on the day of termination. This amount will be paid to you in
dollars. Payment of this amount will cancel your rights to any additional
payments in cash or stock from these active cycles.
EXHIBIT 23(i)
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Telephone (804) 788-8200
Facsimile (804) 788-8218
March 8, 1995
Virginia Electric and Power Company
Richmond, Virginia 23261
Virginia Electric and Power Company
Form 10-K
Gentlemen:
We consent to the incorporation by reference into the registration
statements of Virginia Electric and Power Company on Form S-3 (File No.
33-44437, File No. 33-50423, and File No. 33-50425) of the statements,
included in this Annual Report on Form 10-K, made in regard to our firm that
relate to franchises, title to properties, limitations upon the issuance of
bonds and preferred stock, rate, environmental and other regulatory matters,
and litigation.
Sincerely yours,
HUNTON & WILLIAMS
EXHIBIT 23(ii)
Jackson & Kelly
Attorneys at Law
1600 Laidley Tower
P. O. Box 553
Charleston, West Virginia 25322
Telephone 304-340-1000 Telecopier 304-340-1130
March 8, 1995
Virginia Electric and Power Company
Richmond, Virginia 23261
Re: Virginia Electric and Power Company
Form 10-K
Gentlemen:
We consent to the incorporation by reference into the registration
statements of Virginia Electric and Power Company on Form S-3 (File No.
33-44437; File No. 33-50423; and File No. 33-50425) of the statements,
included in this Annual Report on Form 10-K, made in regard to our firm that
are governed by the laws of West Virginia and that relate to franchises, title
to properties, limitations upon the issuance of bonds and preferred stock,
rate, and other regulatory matters, and litigation.
Sincerely yours,
JACKSON & KELLY
EXHIBIT 23(iii)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statements File No.
33-50425, File No. 33-50423 and File No. 33-44437 of Virginia Electric and Power
Company on Forms S-3 of our report dated February 6, 1995, appearing in the
Annual Report on Form 10-K of Virginia Electric and Power Company for the year
ended December 31, 1994.
DELOITTE & TOUCHE LLP
Richmond, Virginia
March 8, 1995
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