Exhibit 10.10

 

DOMINION RESOURCES, INC.

 

EXECUTIVE STOCK PURCHASE AND LOAN PLAN

 

PHASE II

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

    

Page

--------------------------------------------------------------------------------

Purpose

  

1

Definitions

  

1

Eligibility

  

3

Participation

  

3

Plan Pool

  

4

Stock Purchases

  

4

Restricted Stock Match

  

5

Amounts of Loans

  

5

Loan Terms

  

6

Repayment of Loans

  

7

Effective Date of the Plan

  

8

Termination, Modification, Change

  

8

Administration of the Plan

  

8

Notice

  

8

 

i

--------------------------------------------------------------------------------

 

DOMINION RESOURCES, INC.

 

EXECUTIVE STOCK PURCHASE AND LOAN PLAN

 

1.        Purpose. The purpose of this Dominion Resources, Inc. Executive Stock
Purchase and Loan Plan, Phase II (the “Plan”) is to encourage and facilitate
ownership of Dominion’s common stock by the executives of Dominion and certain
of its subsidiaries.

 

2.        Definitions. As used in the Plan, the following terms shall have the
meanings indicated:

 

  (a)   “Applicable Taxes” means the projected assumed federal, state and local
income taxes and FICA taxes payable by Participants due to the receipt of the
Restricted Stock Match.

 

  (b)   “Average Cost” means the average cost to the Plan of all shares of
Company Stock in the Plan Pool, including the purchase price of the Company
Stock, any brokerage fees or other costs of acquisition, and the costs
associated with any forward purchase contract for the acquisition of Company
Stock. Average Cost may be reduced by dividends issued for the first calendar
quarter of 2000 on shares of Company Stock in the Plan Pool, and interest earned
on the dividends.

 

  (c)   “Bank” means Bank One, NA.

 

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

 

  (e)   “Broker” means a registered broker-dealer selected by Dominion.

 

  (f)   “Change of 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
Act becomes the owner or beneficial owner of Dominion securities having 20% or
more of the combined voting power of the then outstanding Dominion securities
that may be cast for the election of Dominion’s directors (other than as a
result of an issuance of securities initiated by Dominion, or open market
purchases approved by the Dominion Board, as long as the majority of the
Dominion Board approving the purchases is also 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

 

1

--------------------------------------------------------------------------------

           transactions, the persons who were directors of Dominion before such
transactions cease to constitute a majority of the Dominion Board, or any
successor’s board of directors, within two years of the last of such
transactions.

 

  (g)   “Committee” means the Organization, Compensation and Nominating
Committee of the Board.

 

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

 

  (i)   “Date of Loan” means the date as of which a Loan is disbursed and the
Master Promissory Note evidencing the Loan is issued.

 

  (j)   “Dominion” means Dominion Resources, Inc.

 

  (k)   “Enrollment Agreement” means an agreement between a Participant and
Dominion under which the Participant agrees to obtain a Loan to acquire Company
Stock under the Plan.

 

  (l)   “Financial Institution” means a bank or other financial institution
which makes a Loan to a Participant under the Plan.

 

  (m)   “Facility Agreement” means The Facility and Guaranty Agreement among
Dominion Resources, Inc., Bank One, NA as agent and the Financial Institutions
Signatory Thereto.

 

  (n)   “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.

 

  (o)   “Incentive Plan” means the Dominion Resources, Inc. Incentive
Compensation Plan

 

  (p)   “Individual Holdings” means the amount of Company Stock held by the
Participant for purposes of the Ownership Guidelines reduced by any Company
Stock held by the Participant in a Dominion-sponsored tax qualified retirement
plan.

 

  (q)   “Individual Target” means the target amount of Company Stock that a
Participant is encouraged to own for purposes of the Ownership Guidelines based
on the Participant’s job title as of the Date of Loan.

 

  (r)   “Loan” means a loan from the Financial Institutions to a Participant to
acquire Company Stock which shall be evidenced by the Master

 

2

--------------------------------------------------------------------------------

 

Promissory Note of the Participant and such other documents as determined by the
Committee.

 

  (s)   “Master Promissory Note” means a promissory note evidencing a Loan to a
Participant.

 

  (t)   “Ownership Guidelines” means the Dominion Resources, Inc. Stock
Ownership Guidelines, Executive Group, attached as Exhibit A.

 

  (u)   “Participant” means any employee who purchases Company Stock under the
Plan.

 

  (v)   “Plan Pool” means the total shares of Company Stock acquired on behalf
of the Plan for distribution to Participants that shall not exceed a total value
based on the prices at acquisition of $83 million.

 

  (w)   “Pool Stock” means Company Stock acquired pursuant to the Plan Pool.

 

  (x)   “Plan Stock” means Pool Stock and stock acquired pursuant to the
Restricted Stock Match.

 

  (y)   “Reimbursement Agreement” means an agreement between the Participant and
Dominion, in such form as the Committee shall determine, under which the
Participant agrees to repay Dominion in the event Dominion is required to repay
the Financial Institutions under the Facility Agreement.

 

  (z)   “Restricted Stock Match” means the shares of Company Stock issued under
Section 7 of the Incentive Plan.

 

  (aa)   “Subsidiaries” means any wholly-owned first-tier subsidiary of
Dominion.

 

3.         Eligibility. An employee of Dominion or the Subsidiaries with the
title of Vice President or higher or General Manager, Gas Supply (Consolidated
Natural Gas) when the Plan is implemented may be eligible to participate in the
Plan. The Committee may determine that all or a part of these eligible employees
may be eligible for each phase of the Plan. An employee’s participation in the
Plan shall not obligate Dominion or the Subsidiaries to pay any particular
salary or to continue the employment of a Participant after the Loan.

 

4.         Participation. To become a Participant, an eligible employee must
satisfy the following requirements:

 

  (a)   complete, sign and submit all agreements and other documents as may be
required by Dominion, the Bank and the Financial Institutions, relating to the
Plan and to a Loan, including but not limited to, an Enrollment Agreement, a
Reimbursement Agreement and a Master Promissory Note; and

 

3

--------------------------------------------------------------------------------

 

  (b)   provide such financial information as Dominion, the Bank and the
Financial Institutions may reasonably request, including but not limited to, a
financial statement.

 

The agreements and other documents specified in this Section 4 shall be in such
form and shall be submitted at such times and to such Dominion offices as
specified by the Committee. No eligible employee is required to participate in
the Plan.

 

5.        Plan Pool. The Plan Pool shall be acquired as follows:

 

  (a)   Dominion shall engage a Broker to acquire the Plan Pool under the terms
of this Section 5.

 

  (b)   The Plan shall arrange for financing of the Plan Pool from the Bank
and/or the Financial Institutions under the Facility Agreement. The Plan may
enter into margin borrowing arrangements with the Broker.

 

  (c)   The Broker shall be directed to acquire the Plan Pool during an
acquisition period established by the Committee. Except as provided in Section
5(d), the Broker shall have complete discretion as to the prices of the Company
Stock to be purchased and the timing of, or the manner in which, the Company
Stock is to be purchased during the acquisition period.

 

  (d)   Once during the acquisition period, Dominion may change the amount of
funds available under the Facility Agreement or the length of the acquisition
period. The Committee may set a maximum price at which shares of Company Stock
may be acquired for the Plan Pool.

 

  (e)   Any shares of Company Stock remaining in the Plan Pool after all
acquisitions by Participants are complete shall be transferred to Dominion.

 

6.        Stock Purchases. Participants may acquire Company Stock under the Plan
by obtaining Loans from the Bank under the following procedures:

 

  (a)   Acquisitions of Company Stock for the Participant shall be achieved
through the purchase of Company Stock from the Plan Pool. Participants are not
required as a condition of participation in the Plan to meet their Individual
Targets. The price per share of Company Stock from the Plan Pool paid by a
Participant will be the Average Cost.

 

  (b)   If the Broker is unable to acquire shares for the Plan Pool equal to
Participants’ subscriptions because of the maximum price established by the
Committee pursuant to Section 5(d), each Participant’s subscription shall be
reduced proportionately. If the Broker is unable to acquire sufficient shares
for the Plan Pool equal to the minimum $100,000 loan amount for each
Participant, no Plan Pool shall be established and

 

4

--------------------------------------------------------------------------------

         Dominion may thereafter solicit new subscriptions for participation in
the Plan under revised terms

 

  (c)   Plan Stock shall initially be held in each individual Participant’s
Dominion Direct Investment® Account. Participants shall have full shareholders
rights with respect to Plan Stock, including the right to vote the shares and
receive dividends (subject to Section 10).

 

  (d)   The amount of the Loan that is attributable to the acquisition of shares
from the Plan Pool will be reduced to the extent necessary to provide an amount
equal to the Applicable Taxes payable by the Participant, unless the Participant
elects under Section 8 to apply the entire proceeds of the Loan to the purchase
of Company Stock under the Plan.

 

7.        Restricted Stock Match. Participants who achieve their Individual
Targets as a result of participation in the Plan shall receive a grant of shares
of restricted Company Stock that equals 5% of the Pool Stock acquired by the
Participant (the “Restricted Stock Match”). Restrictions on Company Stock
comprising the Restricted Stock Match shall terminate as of the day after the
Date of Loan. Company Stock received pursuant to the Restricted Stock Match
shall be held in the Participant’s Dominion Direct Investment® Account.

 

8.        Amounts of Loans. Loan proceeds shall be used exclusively to purchase
Company Stock under the Plan and to pay Applicable Taxes. The Participant may
elect in accordance with procedures established by Dominion to apply the entire
proceeds of a Loan to the purchase of Company Stock under the Plan.

 

  (a)   The maximum amount of Loans under the Plan for all Participants will be
Loans with an aggregate principal amount of $83,000,000.

 

  (b)   The maximum aggregate principal amount of a Loan outstanding 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.

 

  (c)   The minimum amount a Participant may borrow under the Plan shall be
$100,000.

 

  (d)   If Loan subscriptions by Participants total more than the maximum amount
of loans for a phase of the Plan, every Participant’s subscription shall be
proportionately reduced, except that the Loan subscription amount shall not be
reduced below $100,000 for any Participant. The Committee may also give priority
for Loans to Participants who have not achieved their Individual Target.

 

  (e)   For purposes of calculating Applicable Taxes, Dominion shall use the
highest Federal and state income tax rates estimated to be applicable to the

 

5

--------------------------------------------------------------------------------

         Participant and the FICA rate on amounts in excess of the Social
Security wage base.

 

9.         Loan Terms.

 

  (a)   All Loans made pursuant to the Plan shall include the following
provisions:

 

  (i)   Loans shall be unsecured by the Plan Stock or any other asset of a
Participant but shall be full recourse to the Participant.

 

  (ii)   The term of a Loan shall be five (5) years from the Date of Loan.

 

  (b)   Pursuant to the terms of the Facility Agreement, Dominion shall
guarantee repayment to the Financial Institutions 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 Financial Institutions all principal and
interest on a Loan when due and payable.

 

  (c)   Interest on the Loans shall be set by the Bank at the market rate as
provided in the Facility Agreement. The Participant shall remain fully obligated
at all times under the Master Promissory Note to repay the entire amount of
interest on the Loan, however, Dominion will pay a portion of the interest rate
on each Participant’s behalf, subject to certain conditions of this Plan. The
Participant’s rate of interest (the “Participant’s Rate”) shall be determined as
provided in Exhibit B. Dominion shall pay the amount of interest on the Loan
that is greater than the Participant’s Rate (“Company’s Rate”) subject to the
further conditions in the Plan. The Participant’s Rate and Company’s 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.

 

  (d)   Dominion shall cease payment of Company’s Rate if the Loan is pre-paid,
if the Loan is accelerated pursuant to Section 10 below, or if the Participant
withdraws any Plan Stock from his Dominion Direct Investment® Account by sale or
otherwise.

 

  (e)   At any time, the Committee may, in its sole discretion (but subject to
the consent of the Financial Institutions), and subject to such other conditions
as it may impose or authorize, extend the time for repayment of a Loan or make
other adjustments to a Loan, provided that a change to a Loan shall not, without
the consent of the Participant, adversely affect a Participant’s rights under
such Loan.

 

6

--------------------------------------------------------------------------------

 

10.        Repayment of Loans.

 

  (a)   Each Participant shall authorize Dominion to pay dividends and other
payments related to Plan Stock to an account that each Participant shall open at
the Bank to facilitate the administration of the Loan. Each Participant will
authorize the Bank to use funds in the account to pay interest on the Loan, and
each Participant will be responsible for payment of any amount of the interest
that is not covered by withdrawals from the Participant’s account at the Bank or
by Dominion’s payment of Company’s Rate. Any amount in a Participant’s account
that is in excess of the interest payments will be invested by the Bank subject
to the Participant’s direction.

 

  (b)   A Participant may voluntarily prepay a Loan only in the event of (i)
death; (ii) retirement on or after the Participant’s early retirement date or
normal retirement date as defined in the Dominion Resources, Inc. Retirement
Plan; (iii) Hardship; (iv) a Change of Control; or (v) upon approval of
Dominion’s Chief Executive Officer or the Committee. In the event of prepayment
under this subsection 10(b), 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, Dominion shall pay any early payment fee which may be imposed by the
Financial Institutions.

 

  (c)   A Participant’s Loan shall become due and payable if (i) 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; (ii) the
Participant voluntarily terminates employment with Dominion; (iii) the
Participant’s employment is involuntarily terminated for a reason other than
that specified in (ii); or (iv) the Participant declares bankruptcy. In the
event of acceleration of a Loan under subsections 10(c)(ii), 10(c)(iii) or
10(c)(iv), the Participant shall pay any early payment fee which may be imposed
by the Financial Institutions. Dominion shall pay any early payment fee imposed
by the Financial Institutions in the event of acceleration of a Loan under
subsection 10(c)(i). The Committee or Dominion’s Chief Executive Officer may
waive the requirement that a Loan becomes due and payable under this subsection
10(c).

 

  (d)   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 Plan
Event of Default. In the event of acceleration of a Loan under this subsection
10(d), the Participant shall pay any early payment fee which may be imposed by
the Financial Institutions.

 

  (e)   All Participants’ Loans may become due and payable if a Plan Event of
Default as defined in the Facility Agreement occurs. All Participant’s

 

7

--------------------------------------------------------------------------------

         Loans will become due and payable in the event of Dominion’s
Bankruptcy. In the event of acceleration of a Loan under this subsection 10(e),
Dominion shall pay any early payment fee which may be imposed by the Financial
Institutions.

 

11.        Effective Date of the Plan. This Plan shall be effective on January
28, 2000.

 

12.        Termination, Modification, Change. If not sooner terminated or
extended by the Board, this Plan shall terminate at the close of business on the
fifth anniversary of the Date of Loan as to new phases of the Plan. The
Committee may terminate the Plan or may amend the Plan in such respects as it
shall deem advisable except to increase the amount available for Loans. The
Board may amend the Plan to increase the amount available for Loans. A
termination or amendment of the Plan shall not, without the consent of the
Participant, adversely affect the Participant’s rights under a previously
granted Loan.

 

13.        Administration of the Plan. The Plan shall be administered by the
Committee. The Committee shall have the authority to interpret the Plan and its
interpretations shall be binding on all parties. The Committee may establish and
revise from time to time rules and regulations for the Plan. The Committee may
delegate any of its duties and responsibilities under the Plan to employees of
Dominion. The terms of this Plan shall be governed by the laws of the
Commonwealth of Virginia.

 

14.        Notice. All notices and other communications required or permitted to
be given under this Plan 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 Dominion—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.

 

IN WITNESS WHEREOF, Dominion has caused this Executive Stock Purchase and Loan
Plan to be executed this 15th day of February, 2000.

 

DOMINION RESOURCES, INC.

 

 

By     /s/    G. Scott Hetzer                                       
                     

 

8

--------------------------------------------------------------------------------

 

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

 

 

9

--------------------------------------------------------------------------------

EXHIBIT B

 

CALCULATION OF PARTICIPANT’S RATE

 

 

The Participant’s Rate on each Loan will be calculated according to the formula
below, where the terms are defined as:

 

B0 = The base amount of the loan used for the acquisition of Pool Stock. The
base amount of the loan is calculated by multiplying the number of Company
shares the Participant acquires by the price per share.

 

P = Price per share of Pool Stock.

 

RM = Market rate of interest on the loan.

 

RP = Participant’s rate of interest on the loan.

 

T = The Participant’s assumed marginal income tax rate which is 45.711%.

 

Z = Total loan balance grossed up for taxes on Bonus Shares.

 

D = Dividends per share of Company stock which is assumed to be $2.58 annually.

 

Q = Total shares acquired under the Plan.

 

Initially, the calculations are:

 

Q = ( B0 / P ) * 1.05, and

 

Z = B0 ( 1 + 0.05T).

 

The Participant’s Rate is calculated as :

 

RP = [ 1 / ( (1-T) * Z ) ] * [ (D * Q) – (T * RM * Z) ]

 

10