DOMINION RESOURCES, INC.

EXECUTIVE STOCK PURCHASE TOOL KIT

 

 

 

 

 

Effective September 1, 2001

TABLE OF CONTENTS

 

1.     Purpose...........................................................................................................................

2.     Eligibility........................................................................................................................

3.     Participation....................................................................................................................

4.     Bonuses under the
Programs...........................................................................................

5.     Bonus Deferral
Program.................................................................................................

6.     Restricted Stock Exchange
Program..............................................................................

7.     Dominion Direct
Program...............................................................................................

8.     Loan Guarantee
Program................................................................................................

9.     Option Loan
Program......................................................................................................

10.    Provisions Applicable to All
Loans...............................................................................

11.    Effective Date of the Tool
Kit........................................................................................

12.    Termination, Modification,
Change...............................................................................

13.    Administration of the Tool
Kit.......................................................................................

14.    Notice.............................................................................................................................

15.    Definitions......................................................................................................................

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DOMINION RESOURCES, INC.

EXECUTIVE STOCK PURCHASE TOOL KIT

1. Purpose. The purpose of this Dominion Resources, Inc. Executive Stock
Purchase Tool Kit (the "Tool Kit") is to encourage and facilitate ownership of
Dominion Resources, Inc. (the "Company") common stock by the executives of the
Company and certain of its subsidiaries. The Tool Kit is established in
conjunction with the Dominion Resources, Inc. Incentive Compensation Plan and
the Dominion Resources, Inc. Executives' Deferred Compensation Plan. The Tool
Kit includes a number of programs that the employee can use to build his or her
ownership in Company Stock.

2. Eligibility. An employee of the Company or a Subsidiary who meets the
following criteria is eligible to participate in the Tool Kit:

(a) the employee is subject to the Company's Stock Ownership Guideline, and

(b) the employee is newly hired by the Company or a Subsidiary or the employee
has been promoted such that the employee has a higher Guideline Level than prior
to the promotion.

An employee's participation in the Tool Kit shall not obligate the Company or a
Subsidiary to pay any particular salary or to continue the employment of a
Participant. Additional qualifications may apply for each Program.

3. Participation.

(a) To become a Participant, an eligible employee must satisfy the requirements
to participate in the Program (or Programs) of his or her choice. The agreements
and other documents required under the Tool Kit shall be in such form and shall
be submitted at such times and to such individuals as specified by the
Administrator. No eligible employee is required to participate in the Tool Kit.
The Participant shall complete, sign and submit all agreements and other
documents as may be required by the Administrator relating to the desired
Program. Participants may participate only once in a Loan Program, unless their
Stock Ownership Guideline increases as a result of a promotion.

(b) Once a Participant has reached the Guideline Level, generally the
Participant must cease participation in any of the Programs. Under a Loan
Program, a Participant may acquire shares above the Guideline Level and continue
to participate in the Loan Program until the Loan is repaid in full.

4. Bonuses under the Programs. Except for the Option Loan Program, each of the
Programs provides for a bonus to be awarded to the Participant, subject to
certain limitations. All of the bonuses under the Programs cease when the
Participant has reached Guideline Level, except for the Loan Programs. Under the
Loan Guarantee Program, the bonus is available for a loan amount up to ten times
the Participant's base salary.

5. Bonus Deferral Program. Participants may acquire Company Stock through the
Bonus Deferral Program as described in this Section 5.

(a) Under the procedures of the Deferred Compensation Plan, a Participant may
elect to defer all or a portion of an annual cash incentive plan award into the
Deferred Compensation Plan. As a part of the deferral election, the Participant
shall designate the deferral as being subject to the Bonus Deferral Program. The
deferral election shall include a provision that the deferred amount shall be
invested in the Company Stock investment option under the Deferred Compensation
Plan. The Company Stock investment option will be subject to the terms of the
Deferred Compensation Plan and may include a deemed Company Stock investment.

(b) When the designated cash incentive plan award is contributed to the Deferred
Compensation Plan, the Company or a Subsidiary shall also contribute on behalf
of the Participant to the Deferred Compensation Plan an additional amount equal
to 5% of the deferred incentive plan award. The additional contribution shall be
invested in the Company Stock investment option.

(c) On behalf of the Participant, the Company or a Subsidiary shall pay the
Medicare taxes imposed on the Participant due to the additional contribution
under Section 5(b). The Company or a Subsidiary shall also pay the Applicable
Taxes payable by the Participant with respect to this payment of Medicare taxes
on behalf of the Participant.

6. Restricted Stock Exchange Program. Participants may acquire Company Stock
through the Restricted Stock Exchange Program as described in this Section 6.

(a) A Participant may elect to not receive all or a portion of an annual cash
incentive plan award and instead receive Restricted Stock under the Incentive
Compensation Plan in place of the designated cash award. The Administrator shall
determine which incentive plan awards may be designated under the Restricted
Stock Exchange Program.

On the date the designated incentive award would otherwise be received, the
Company shall issue Restricted Stock to the Participant under the Incentive
Compensation Plan in an amount equal to 110% of the designated incentive award.
The Restricted Stock will be valued based on the Fair Market Value of Company
Stock as determined under the Incentive Compensation Plan.

(b) The restrictions on the Restricted Stock will lapse and the Restricted Stock
will vest on the third anniversary of the date of grant of the Restricted Stock.
The restrictions shall also lapse on the earlier of the Participant's death,
retirement, or disability or upon a Change of Control.

7. Dominion Direct Program. Participants may acquire Company Stock through the
Dominion Direct Program as described in this Section 7.

(a) Under the procedures of Dominion Directsm, a Participant may elect to make
periodic, monthly or quarterly purchases of Company Stock. The Participant shall
complete any forms required to participate in Dominion Directsm and any
additional forms provided for purposes of participation in the Dominion Direct
Program.

(b) When Company Stock is purchased under Dominion Directsm, the Company or a
Subsidiary shall pay the Participant a cash bonus equal to 5% of the total
amount invested in Dominion Directsm under this Program.

(c) On behalf of the Participant, the Company or a Subsidiary shall pay the
Applicable Taxes imposed on the Participant due to the bonus payment under
Section 7(b). The Company or a Subsidiary shall also pay the Applicable Taxes
payable by the Participant with respect to the payment of these Applicable
Taxes.

8. Loan Guarantee Program. The Loan Guarantee Program allows a Participant to
acquire Company Stock through a loan that is guaranteed by the Company and for
which part of the interest may be subsidized by the Company. The Loan Guarantee
Program is described in this Section 8 with additional provisions in Section 10.
A Participant shall initiate participation in the Loan Guarantee Program under
the following procedures.

(a) To become a Participant in the Loan Guarantee Program, an eligible employee
must satisfy the following requirements:

(i) complete, sign and submit all agreements and other documents as may be
required by the Company and the Bank relating to the Loan Guarantee Program and
to a Loan, including but not limited to, a Reimbursement Agreement and a
Promissory Note; and

(ii) provide such financial information as the Company and the Bank may
reasonably request, including but not limited to, a financial statement.

(b) Participants may acquire Company Stock under the Loan Guarantee Program by
obtaining Loans from a Bank under the following procedures:

(i) Acquisitions of Company Stock for the Participant shall be achieved through
the purchase of Company Stock from the open market. Participants are not
required as a condition of participation in the Loan Guarantee Program to meet
their Guideline Levels.

(ii) Participants shall have full shareholders' rights with respect to the
Company Stock acquired with the Loan, including the right to vote the shares and
receive dividends.

(c) Participants shall receive a grant of Restricted Stock that equals 5% of the
Company Stock acquired by the Participant with the Loan (the "Bonus Shares").
Restrictions on Company Stock comprising the Bonus Shares shall terminate on the
day after the shares are granted. The Participant will be responsible for any
Applicable Taxes on the Bonus Shares.

(d) Loan proceeds shall be used exclusively to purchase Company Stock and, if so
elected by the Participant, to pay Applicable Taxes imposed on the Participant
as a result of the grant of the Bonus Shares under the Loan Guarantee Program.
The Loans under the Loan Guarantee Program also shall be subject to the
provisions of Section 10.

9. Option Loan Program. The Option Loan Program allows a Participant to acquire
Company Stock through the payment of the exercise price for options by use of a
loan that is guaranteed by the Company and for which part of the interest may be
subsidized by the Company. The Option Loan Program is described in this Section
9 with additional provisions in Section 10. A Participant shall initiate
participation in the Option Loan Program under the following procedures.

(a) To become a Participant in the Option Loan Program, an eligible employee
must satisfy the following requirements:

(i) complete any forms necessary to exercise an Option;

(ii) complete, sign and submit all agreements and other documents as may be
required by the Company and the Bank relating to the Option Loan Program and to
a Loan, including but not limited to, a Reimbursement Agreement and a Promissory
Note;

(iii) provide such financial information as the Company and the Bank may
reasonably request, including but not limited to, a financial statement; and

(iv) sign an agreement under which the Participant agrees not to sell or
otherwise dispose of the Company Stock acquired from the Option exercise until
the Loan is repaid.

(b) Participants may acquire Company Stock under the Option Loan Program by
obtaining Loans from a Bank under the following procedures:

(i) Acquisitions of Company Stock for the Participant shall be achieved through
the exercise of Options. Participants are not required as a condition of
participation in the Plan to meet their Guideline Levels.

(ii) Participants shall have full shareholders' rights with respect to the
Company Stock acquired with a Loan, including the right to vote the shares and
receive dividends.

(c) Loan proceeds shall be used exclusively to exercise Options and to pay any
taxes imposed on the Participant as a result of the exercise of the Options. The
Loans under the Option Loan Program shall be subject to the provisions of
Section 10.

10. Provisions Applicable to All Loans. The Loans under the Loan Guarantee
Program and the Option Loan Program shall be subject to the following
conditions.

(a) Program Terms.

(i) The maximum amount of Loans under the Plan for all Participants will be
Loans with an aggregate principal amount of $40,000,000.

(ii) A Participant may have only one Loan, which may be under either the Loan
Guarantee Program or the Option Loan Program. The maximum aggregate principal
amount of the outstanding Loan for a Participant shall be 10 times the
Participant's annual base salary as of the Date of Loan. The maximum aggregate
principal amount of a Loan for a Participant shall not be affected by any
subsequent change in the Participant's annual base salary.

(iii) The minimum amount of a Loan shall be $250,000.

(iv) For purposes of calculating Applicable Taxes in connection with a Loan, the
Company shall use the highest Federal and state income tax rates estimated to be
applicable to the Participant and the Medicare tax rate.

(b) Loan Terms.

(i) Loans shall be full recourse to the Participant and shall be secured as
determined by the Bank. The term of a Loan shall be no more than five (5) years
from the Date of Loan.

(ii) The Company shall guarantee repayment to the Bank of 100% of the principal
and interest owed by each Participant under a Loan; however, each Participant
shall be fully obligated to repay to the Bank all principal and interest on a
Loan when due and payable.

(iii) The Bank shall set the interest rate on a Loan. The Participant shall
remain fully obligated at all times under the Promissory Note to repay the
entire amount of interest on the Loan, however, the Company will pay to each
Participant a portion of the interest rate, subject to certain conditions of
this Plan. The Participant's rate of interest (the "Participant's Rate") will be
based on the expected dividend yield of the shares of Company Stock acquired by
the Participant under the Tool Kit, including the Bonus Shares. The Company
shall pay to each Participant the amount of interest on the Loan that is greater
than the Participant's Rate ("Company Subsidized Rate") subject to the further
conditions in the Plan. The Participant's Rate and Company Subsidized Rate shall
be established as of the Date of Loan and shall be fixed for the entire term of
the Loan. The rates shall not be affected by any change in dividends during the
term of the Loan.

(iv) The Company shall cease payment of the Company Subsidized Rate if the Loan
is pre-paid, if the Company guarantee ceases, or if the Participant sells or
otherwise disposes of the Company Stock acquired under a Loan Program.

(c) Loan Repayments

(i) A Participant may voluntarily prepay a Loan in the event of (A) death; (B)
retirement on or after the Participant's early retirement date or normal
retirement date as defined in the Dominion Resources, Inc. Retirement Plan; (C)
Hardship; (D) a Change of Control; or (E) upon approval of Dominion's Chief
Executive Officer or the Committee. In the event of prepayment under this
subsection 10(c)(i), the Participant shall pay any early payment fee which may
be imposed by the Bank. Notwithstanding the preceding sentence, a Participant
may prepay a Loan within 90 days following a Change of Control, in which case,
the Company shall pay any early payment fee which may be imposed by the Bank.

(ii) The Company guarantee shall cease and a Participant's Loan shall become due
and payable if (A) the Participant's employment is terminated due to a reduction
in force or any other event that occurs with respect to the Participant's
employer such that, after the event, the employer is no longer Dominion or a
Subsidiary; (B) the Participant voluntarily terminates employment with the
Company; (C) the Participant's employment is involuntarily terminated for a
reason other than that specified in (B); or (D) the Participant declares
bankruptcy. In the event of acceleration of a Loan under (B), (C) or (D), the
Participant shall pay any early payment fee which may be imposed by the Bank.
The Company shall pay any early payment fee imposed by the Bank in the event of
acceleration of a Loan under (A). The Committee or Dominion's Chief Executive
Officer may waive the requirement that a Loan becomes due and payable under this
subsection 10(c)(ii).

(iii) A Participant's Loan may become due and payable if a Borrower Event of
Repayment as defined in the Master Promissory Note occurs that is not a Program
Event of Default. In the event of acceleration of a Loan under this subsection
10(c)(iii), the Participant shall pay any early payment fee which may be imposed
by the Bank.

(iv) All Participants' Loans may become due and payable if a Program Event of
Default as defined in the Facility Agreement occurs. All Participants' Loans
will become due and payable in the event of the Company's Bankruptcy. In the
event of acceleration of a Loan under this subsection 10(c)(iv), the Company
shall pay any early payment fee which may be imposed by the Bank.

11. Effective Date of the Tool Kit. This Tool Kit shall be effective on
September 1, 2001.

12. Termination, Modification, Change. If not sooner terminated or extended by
the Committee or the Board, this Tool Kit shall terminate at the close of
business on August 31, 2011. The Committee or the Board may terminate the Tool
Kit or may amend the Tool Kit in such respects as it shall deem advisable. A
termination or amendment of the Tool Kit shall not, without the consent of the
Participant, adversely affect the Participant's rights under existing
participation in a Program.

13. Administration of the Tool Kit. The Administrator shall administer the Tool
Kit subject to the oversight of the Committee. The Administrator shall have the
authority to interpret the Tool Kit and its interpretations shall be binding on
all parties. The Committee may establish and revise from time to time rules and
regulations for the Tool Kit. The Committee may delegate any of its duties and
responsibilities under the Tool Kit to the Administrator. The laws of the
Commonwealth of Virginia shall govern the terms of this Tool Kit.

14. Notice. All notices and other communications required or permitted to be
given under this Tool Kit shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed first class, postage prepaid, as
follows (a) if to the Company - at its principal business address to the
attention of the Chief Financial Officer; (b) if to any Participant - at the
last address of the Participant known to the sender at the time the notice or
other communication is sent.

15. Definitions. As used in the Tool Kit, the following terms shall have the
meanings indicated:

(a) "Administrator" means the individual or committee authorized by the
Committee to administer the Tool Kit. Unless the Committee determines otherwise,
the Administrator shall be the Director-Executive Compensation.

(b) "Applicable Taxes" means the projected assumed federal, state and local
income taxes and Medicare taxes payable by a Participant due to the receipt of
compensation income under a Program.

(c) "Bank" means the financial institution making a Loan to the Participant.

(d) "Board" means the Board of Directors of Dominion Resources, Inc.

(e) "Change in Control" means the happening of any of the following events:

(i) any person, including a ''group'' as defined in Section 13(d)(3) of the Act
becomes the owner or beneficial owner of the Company's securities having 20% or
more of the combined voting power of the then outstanding Company's 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 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 the Company before such transactions cease to constitute a
majority of the Board, or any successor's board, within two years of the last of
such transactions.

(f) "Committee" means the Organization, Compensation and Nominating Committee of
the Board.

(g) "Company" means Dominion Resources, Inc.

(h) "Company Stock" means common stock of the Company. In the event of a change
in capital structure of the Company, the shares resulting from such a change
shall be deemed to be Company Stock within the meaning of the Tool Kit.

(i) "Date of Loan" means the date on which a Loan is disbursed and the Guarantee
of the Loan is issued.

(j) "Deferred Compensation Plan" means the Dominion Resources, Inc. Executives'
Deferred Compensation Plan.

(k) "Guideline" means the Company's stock ownership guideline for executives as
established from time to time.

(l) "Guideline Level" means the target amount of Company Stock that a
Participant is encouraged to own for purposes of the Guideline.

(m) "Hardship" means a substantial, unavoidable economic hardship incurred by
the Participant that cannot be met by other available resources of the
Participant or the disability of the Participant. The Committee will determine
whether a Hardship exists in its sole discretion.

(n) "Incentive Compensation Plan" means the Dominion Resources, Inc. Incentive
Compensation Plan.

(o) "Loan" means a loan from a Bank to a Participant to acquire Company Stock
under the Loan Guarantee Program or the Option Loan Program.

(p) "Loan Program" means either the Loan Guarantee Program or the Option Loan
Program.

(q) "Option" means a stock option to acquire Company Stock issued to a
Participant under the Incentive Compensation Plan or the Dominion Resources,
Inc. Leadership Stock Option Plan for Salaried Employees.

(r) "Participant" means any eligible employee who acquires Company Stock under
the Tool Kit.

(s) "Program" means one of the following programs:

(i) "Bonus Deferral Program" described in Section 5;

(ii) "Restricted Stock Exchange Program" described in Section 6;

(iii) "Dominion Direct Program" described in Section 7.

(iv) "Loan Guarantee Program" described in Sections 8 and 10; and

(v) "Option Loan Program" described in Sections 9 and 10.

(t) "Promissory Note" means a promissory note evidencing a Loan to a
Participant.

(u) "Reimbursement Agreement" means an agreement between the Participant and the
Company, in such form as the Administrator shall determine, under which the
Participant agrees to repay the Company in the event the Company is required to
repay the Bank under a Loan guarantee.

(v) "Restricted Stock" means the shares of Company Stock issued under Section 7
of the Incentive Compensation Plan.

(w) "Subsidiary" means another corporation in which the Company owns stock
possessing at least 50 percent of the combined voting power of all classes of
stock or which is in a chain of corporations with the Company in which stock
possessing at least 50% of the combined voting power of all classes of stock is
owned by one or more other corporations in the chain.

IN WITNESS WHEREOF, the Company has caused this Stock Purchase and Loan Tool Kit
to be executed as of this 13th day of September, 2001.

DOMINION RESOURCES, INC.

 

By_______________________________________

G. Scott Hetzer
                            Senior Vice President & Treasurer

EXHIBIT A

DOMINION RESOURCES, INC.

STOCK OWNERSHIP GUIDELINES

EXECUTIVE GROUP

 

 

Positions

Ownership Guideline
Number of Shares

Chief Executive Officer

145,000

Executive Vice President - Dominion
CEO - Designated Operating Companies

35,000

Senior Vice President-
Dominion & Designated Subsidiaries

20,000

Vice President - Dominion &
Designated Subsidiaries

10,000