Exhibit 10.3

 

PERSONAL AND CONFIDENTIAL

 

M E M O R A N D U M

 

TO: James P. O'Hanlon                                       November 5, 2002

FROM: Anne M. Grier                                               Richmond, VA

 

Terms of Retirement

 

This memorandum sets forth the terms and conditions of your retirement.

Effective December 1, 2002 you will resign from all positions you hold as an
officer or board member of Dominion Resources or its affiliates and subsidiaries
(collectively referred to as the "Company"), except for your position as
Executive Vice President of Dominion Resources Services, Inc. You will resign
from that position effective February 1, 2003 and your employment with the
Company will then terminate and you will be considered retired.

The additional consideration described below will not be provided until a
properly executed General Release becomes effective and enforceable. The release
will become effective and enforceable seven days following your execution of the
General Release.

 

Stock Options:
You have outstanding 280,000 non-qualified stock options granted on May 17,
1999. These options are fully vested and exercisable. As additional
consideration, these options will remain exercisable to their expiration date of
May 17, 2009. You have 350,000 stock options granted on July 1, 2001. These
options will become fully vested and exercisable as of the date of your
retirement, and as additional consideration, will remain exercisable until the
following expiration dates:

Percentage

Expiration Date

33-1/3% January 1, 2008

33-1/3% January 1, 2009

33-1/3% January 1, 2010

Retirement Benefit Restoration Plan:
You will receive a benefit under the Company's Retirement Benefit Restoration
Plan. As additional consideration, your benefit has been calculated using an age
of 60 and 30 years of credited service. If you elect a lump sum payment, or a
lump sum deferral to the Executive Deferred Compensation Plan or the Dominion
Security Option Plan (the "Deferral Plans"), this benefit will be paid, subject
to approval by the Administrative Benefits Committee, within 30 days of the date
of your retirement. Please see Attachment A for an explanation of this benefit
and the associated election forms.
Executive Supplemental Retirement Plan:
Under the terms of the letter agreement dated September 18, 1997, you are
entitled to a lifetime benefit under the Executive Supplemental Retirement Plan
if your employment continues to age 60. As additional consideration, the age
requirement for this benefit is being waived and you will receive a lifetime
ESRP benefit as of your retirement date. If you elect a lump sum payment or a
lump sum deferral to the Deferral Plans, this benefit will be paid or deferred,
subject to approval by the Administrative Benefits Committee, within 30 days of
the date of your retirement. Please see Attachment B for an explanation of this
benefit and the associated election forms.
Financial Planning Services:
You will receive Company-paid financial planning services for the years 2003 and
2004 up to a maximum of $8,500 per year.
COBRA Benefits (Dental & Vision):
Under the terms of the Consolidated Omnibus Budget Reconciliation Act (COBRA),
you are eligible for continued coverage under the Company's dental and vision
benefit plans for 18 months or, if earlier, until you are covered by another
group plan. After your retirement, you will automatically receive information
containing the specifics of this program, along with the proper forms in order
to elect continuation of coverage. Once you receive this material, it is very
important that you read this information and respond within the stated
guidelines, because there is only a limited amount of time to elect coverage
under the COBRA provisions. If you do not receive this material by mid-February,
please contact the Executive Compensation group. As an additional benefit, if
you elect this coverage, the Company will pay the monthly premiums for these
benefits during this 18 month period. See Attachment C.
Stock Purchase and Loan Program:
You have an outstanding loan balance of $3,849,942.84 under the Company's
Executive Stock Purchase and Loan Program. You may continue to participate in
the Program after your retirement, and you will continue to receive the
Company's interest rate subsidy for as long as you continue to hold the shares
purchased with the loan. If you wish to cease your participation, the Company
will pay for the prepayment fees and the $500 administration fee, plus as
additional consideration, provide you with a gross-up amount to cover any
related income taxes on the fees. Please see Attachment D for a detailed
explanation if you wish to cease your participation.

 

Other Employment Benefits

Restricted Stock: You have 8,333 shares of restricted stock that will vest at
the date of your retirement. The value of the shares on the vesting date
(February 1, 2003) will be taxable income to you at that time. Applicable
withholding taxes are due and payable immediately. Please see Attachment E for
your choices with regard to the satisfaction of the withholding taxes and the
disposition of the shares. Profit Sharing Award: The 2002 Profit Sharing Plan
award will be paid at the same time as other executives and it will be based on
Company performance. In addition, within 30 days of your retirement date, you
will be paid an amount equal to 1/12 of your 2003 Profit Sharing target award.
Unused Vacation: You will receive a payment in the amount for each day of unused
2002 and 2003 vacation plus one personal day for 2003. Qualified Retirement
Plan: You are eligible to receive a monthly benefit under the Dominion Resources
Retirement Plan based upon your actual age at retirement (59.5 years of age),
years of service to retirement date (13.0833 years of service), salary (highest
60 consecutive months during the most recent 120 months), and estimated Social
Security benefits. You may elect to receive your monthly benefit in the form of
either a straight life annuity, a joint & 50% survivor annuity, a joint & 100%
survivor annuity, or a Social Security leveling annuity. You do not have to
begin your annuity at your retirement date; you may wait until a future date to
begin receiving your monthly payments. The longer you wait before beginning your
annuity, the larger the monthly benefit amount will be. The Retirement Income
Election Form is included as part of Attachment F for use in making your
elections. Retiree Medical Plan: You are entitled to medical coverage under the
terms of the company's retiree medical plan as in effect from time to time,
based on retirement in 2003 and a credited retirement age of 60 with 30 years of
credited service. Please see Attachment G for details about the current terms of
the Company's retiree medical plan and the election forms. Qualified Salaried
Savings Plan: Since you deferred a portion of your salary to the Savings Plan,
you have an account balance available to you at retirement. This balance will
include your contributions to the plan, Company matching contributions, and
earnings and/or losses associated with the investment elections you selected.
After your retirement, no further contributions (either employee or employer
contributions) can be made to your account. Your account will continue to earn
investment income based upon your investment elections.

You have several options concerning your existing account balance. The Internal
Revenue Service does not allow you to make withdrawals (other than a rollover to
an IRA or other tax-qualified plan) from a qualified savings plan without
penalty until you reach age 59 1/2, or in certain situations age 55. Any
withdrawal, whether now or at a future date, will be subject to income taxes in
the year of distribution. Please see Attachment H, titled Participant Options at
Termination, Retirement or Disability relating to the Dominion Salaried Savings
Plan. To discuss your options further, or to make a retirement distribution
election, please contact Dreyfus Retirement Services at 1-877-706-7283.

Retiree Life Insurance:
The Company will provide you with retiree life insurance coverage equal to 75%
of your final annual base salary. This life insurance coverage will be provided
through a combination of group term and whole life insurance policies. The
Company will make the premium payments related to the whole life insurance on an
annual basis for seven years, after which time the policy will be fully paid-up.
These annual premium payments will be taxable income to you, and will be
reflected on a W-2 statement that will be issued by the Company to you each
year.
Company Car:
You may elect to receive your current Company car as a gift at retirement. The
value of the car will be taxable income to you. In lieu of the gift of the car,
the Company will make a lump sum cash payment to you in an amount equal of the
value of the car, less applicable withholding taxes. Please see Attachment I to
make your election.
Executive Deferred Compensation Plan (DCP):
You currently have a balance in your Executive Deferred Compensation Plan
account. You will also have

the opportunity to defer any lump sum payments for which you may qualify under
the ESRP and Benefit Restoration Plans.

Previously, you elected to receive a distribution from your account in the form
of an annuity with five (5) annual installments. With an effective retirement
date of February 1, 2003, your first installment is currently scheduled to begin
in February 2004. If you elect to defer your ESRP and/or Benefit Restoration
Plan lump sum payments into the DCP, you may complete a revised Distribution
Election Form (enclosed - Attachment J) that will apply to the entire balance in
your deferral account. If you do not submit a change on this form, your previous
election will apply to your entire account balance. After retirement and subject
to approval of the Administrative Benefits Committee, you may change your
distribution schedule one time.

Dominion Security Option Plan (DSOP):
In addition to continuing your participation in the DCP, you have a one-time
opportunity to transfer part or all of your DCP account balance into the DSOP
(See Attachment K). You are eligible to receive the Company's lost matching
contribution to the Savings Plan due to the Internal Revenue Code Section
401(a)(17) limit for the plan year. A calculation will be done in January 2003
to determine the amount, if any, that you may receive under the terms of the
plan. Moreover, you may elect to defer your ESRP and BRP lump sum payments into
the DSOP (see Attachment K).

 

GENERAL RELEASE OF CLAIMS

By signing and returning one copy of this memorandum, you agree that the
payments and benefits described in this memorandum constitute a full settlement
of the Company's obligations to you under any agreements relating to your
employment. You also agree to sign and return along with this memorandum the
General Release (Attachment L), and you acknowledge that you have received
additional consideration as described in this memorandum in exchange for signing
the General Release.

Please also return all completed forms within the enclosed envelope.

Please feel free to call me if you have any questions about this memorandum or
your retirement.

Thank you.

Sincerely,

/s/ Anne M. Grier

Anne M. Grier

Director-Executive Compensation

 

Agreed:

        /s/ James P. O'Hanlon             

James P. O'Hanlon

      11/6/02                                     

Date

 

c: Personnel File

 

 

 

 

 

 

 

 

Attachment L

AGREEMENT AND GENERAL RELEASE

This Agreement and General Release ("General Release") is given by James P.
O'Hanlon (the "Employee") to Dominion Resources, Inc., its subsidiaries,
affiliates, directors, officers, and employees (collectively referred to as
"Dominion"), in exchange for good and valuable consideration, the payment of
which is acknowledged by the Employee.

General Release.

Employee forever waives and releases any and all claims he has or may have
against Dominion of any kind or nature whatsoever arising from facts,
assertions, circumstances, omissions or matters occurring on or before the date
hereof, including all claims arising from or relating in any way to the
Employee's employment with Dominion or the conclusion of that employment
(whether such claims are presently known or are hereafter discovered). This
release includes, but is not limited to, a release of any claims in tort or
contract, including claims for wrongful discharge, breach of the May 26, 1989
letter agreement between the Employee and Virginia Power; the December 14, 1990
Agreement between Employee and Virginia Electric & Power Company and/or the
September 18, 1997 letter agreement between the Employee and Dominion Resources,
Inc. or any other agreement, contract, practice or policy. In addition to any
other claims, the Employee specifically waives, releases, and covenants not to
sue or to file any charges or administrative actions with respect to any and all
claims against Dominion, or under Title VII of the Civil Rights Act, the
Virginia Human Rights Act, the Age Discrimination in Employment Act, the Fair
Labor Standards Act, the Americans with Disability Act, the Family and Medical
Leave Act, or any other federal, state, or local law governing employment of
benefits. The Employee understands and agrees that by signing this General
Release, he is forever barred from making any such claims against Dominion.

This General Release contains a release of all claims under the Age
Discrimination in Employment Act ("ADEA") and, therefore, pursuant to the
requirements of the ADEA, the Employee acknowledges that he has been advised
that this release includes, but is not limited to, all claims under the ADEA
arising up to and including the date of execution of this release; to consult
with an attorney and or other advisor of his choosing concerning his rights and
obligations under this release; to fully consider this release before executing
it and that he has been offered ample time and opportunity, in excess of 21
days, to do so; and that this release shall become effective and enforceable 7
days following execution of this General Release by the Employee, during which
7-day period the Employee may revoke his acceptance of this General Release by
delivering written notice to Anne M. Grier at Dominion Resources Services, Inc.
at

120 Tredegar Street, Richmond, Virginia 23219.

 

2. Confidentiality.

Employee agrees to keep confidential and not disclose or make use of any
Confidential Information received during or as a result of his prior services to
the Company, except as permitted in writing by the Chief Financial Officer of
Dominion Resources, Inc. or as ordered by a court of competent jurisdiction. For
purposes of this Agreement and General Release, Confidential Information is
information about the Company or its affiliates which might reasonably be
considered to be (i) confidential, (ii) adverse to the interest of the Company
or its affiliates, (iii) information concerning the Company's business, business
or strategic plans, or business practices that others in its industry do not
generally know, or (iv) a trade secret.

 

3. Miscellaneous.

To the extent not governed by federal law, this General Release will be
construed in accordance with the laws of the Commonwealth of Virginia, without
reference to its conflict of laws rules. No provision of this General Release
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and the writing is signed by the Employee and
Dominion. A waiver of any breach of or compliance with any provision or
condition of this General Release is not a waiver of similar or dissimilar
provisions or conditions.

 

 

WITNESS THE FOLLOWING SIGNATURE:

 

           /s/James P. O'Hanlon                

James P. O'Hanlon                      

 

 

 

STATE OF                     Virginia                          )

CITY/COUNTY OF           Richmond                          )

 

I, a Notary Public in and for the above jurisdiction, hereby certify that the

above named individual, personally known to me, appeared before me this
      6th     day of            November             , 2002, and executed the
foregoing General Release.

                         /s/ Bettw W. Moore               

Notary Public                     

(Seal)                              

 

My commission expires: January 31, 2004