EMPLOYMENT CONTINUATION AGREEMENT
EMPLOYMENT
CONTINUATION AGREEMENT
THIS
AGREEMENT
between
New Jersey Resources Corporation, a New Jersey corporation (the "Company"),
and
XXXXXXXX X. XXXXXX (the "Executive"), dated as of this 20th day of February,
2007.
W I T N E S S E T H :
WHEREAS,
the
Company has employed the Executive in an officer position with the Company
or
affiliate thereof and has determined that the Executive holds an important
position with same;
WHEREAS,
the
Company believes that continuity of management will be essential to its ability
to evaluate and respond to a situation that could result in a change in
ownership or control of the Company in a manner that serves the best interests
of shareholders;
WHEREAS,
the
Company understands that any such situation will present significant concerns
for the Executive with respect to his financial and job security;
WHEREAS,
the
Company desires to assure itself of the Executive's services during the period
in which it is confronting such a situation, and to provide the Executive
certain financial assurances to enable the Executive to perform the
responsibilities of his position without undue distraction and to exercise
his
judgment without bias due to his personal circumstances;
WHEREAS,
to
achieve these objectives, the Company and the Executive desire to enter into
an
agreement providing the Company and the Executive with certain rights and
obligations upon the occurrence of a Change in Control or Potential Change
in
Control (each as defined in Section 2);
NOW,
THEREFORE,
in
consideration of the premises and mutual covenants herein contained, it is
hereby agreed by and between the Company and the Executive as
follows:
1. Operation
of Agreement.
(a) Effective
Date.
The
effective date for purposes of this Agreement shall be the date on which a
Change in Control occurs (the "Effective Date"), provided
that,
except
as provided in Section 1(b), if the Executive is not employed by the Company
on
the Effective Date, this Agreement shall be void and without effect. This
Agreement may be terminated with at least one year’s prior written notice on
December 31, 2007 or any December 31 thereafter by either the Company or
Executive, provided that no such termination of the Agreement shall occur within
24 months following a Potential Change in Control or within 24 months following
a Change in Control or at any time following a termination of employment that
triggers compensation hereunder.
(b) Termination
of Employment Following a Potential Change in Control.
Notwithstanding Section 1(a), if, after the occurrence of a Potential Change
in
Control and prior to the occurrence of a Change in Control, (i)
the
Executive's employment is terminated by the Company Without Cause (as defined
in
Section 6(c)) or Executive terminates employment for Good Reason (determined
by
treating a Potential Change in Control as a Change in Control in applying the
definition of Good Reason, and treating the Effective Date as having been the
date of the Potential Change in Control) and (ii)
a
Change in Control occurs within one year of such termination, the Executive
shall be deemed, solely for purposes of determining his rights under this
Agreement, to have remained employed until the date such Change in Control
occurs and to have been terminated by the Company Without Cause or to have
terminated with Good Reason (as the case may be) immediately after this
Agreement becomes effective.
(c) Obligation
of Subsidiary of the Company Directly Employing Executive.
If at
the Effective Date Executive is an employee of a subsidiary of the Company
rather than the Company, the Company will cause such subsidiary to become a
party to this Agreement promptly at the Effective Date. In such case, the right
to employ Executive and the obligations to pay compensation to Executive shall
be primarily those of such subsidiary, with the Company guaranteeing all such
obligations, provided that any compensation provided under plans and programs
of
the Company (including equity-based compensation) will continue to be a primary
obligation of the Company, subject to the terms of this Agreement. Unless the
context shall otherwise require, references to the Company herein shall be
understood to refer to such subsidiary to the extent necessary to give effect
to
this provision, provided that references to the Company in Section 2 in all
cases shall be understood to mean New Jersey Resources Corporation.
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2. Definitions.
(a) Change
in Control.
For the
purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred if on or after February 20, 2007:
(i)
any
Person (as defined below) has acquired Voting Securities (as defined below)
of
the Company and, immediately thereafter, is the "beneficial owner" (within
the
meaning of Rule 13d-3, as promulgated under Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of Voting Securities
of
the Company representing thirty-five percent (35%) or more of the combined
Voting Power (as defined below) of the Company's securities;
(ii)
within any 24-month period, the persons who were directors of the Company
immediately before the beginning of such period (the "Incumbent Directors")
shall cease (for any reason other than death) to constitute at least a majority
of the Board or the board of directors of any successor to the Company,
provided
that
any
director who was not a director at the beginning of such period shall be deemed
to be an Incumbent Director if such director (A)
was
elected to the Board by, or on the recommendation of or with the approval of,
at
least two-thirds of the directors who then qualified as Incumbent Directors
either actually or by prior operation of this Section 2(a)(ii) and (B)
was not
designated by a person who has entered into an agreement with the Company to
effect a Corporate Event, as described in Section 2(a)(iii); or
(iii)
the
consummation of a merger, consolidation, share exchange, division, sale or
other
disposition of all or substantially all of the assets of the Company, or a
complete liquidation of the Company (a "Corporate Event"), except that a
Corporate Event shall not trigger a Change in Control under this clause (iii)
if
the shareholders of the Company immediately prior to such Corporate Event shall
hold, directly or indirectly and without substantial change in the proportionate
interest of each shareholder, immediately following such Corporate Event a
majority of the Voting Power of (x)
in the
case of a merger or consolidation, the surviving or resulting corporation,
(y)
in the
case of a share exchange, the acquiring corporation or (z)
in the
case of a division or a sale or other disposition of assets, each surviving,
resulting or acquiring corporation which, immediately following the relevant
Corporate Event, holds more than 10% of the consolidated assets of the Company
immediately prior to such Event.
(b) Potential
Change in Control.
For the
purposes of this Agreement, a "Potential Change in Control" shall be deemed
to
have occurred if:
(i)
a
Person commences a bona fide tender offer for securities representing at least
20% of the Voting Power of the Company's securities;
(ii)
the
Company enters into an agreement the consummation of which would constitute
a
Change in Control;
(iii)
proxies for the election of directors of the Company are solicited by anyone
other than the Company in a bona fide effort to change or influence the control
of the Company through the election of one or more persons who would not be
Incumbent Directors; or
(iv)
any
other event occurs which is deemed to be a Potential Change in Control by the
Board.
(c) Person
Defined.
For
purposes of this Section 2, "Person" shall have the meaning ascribed to such
term in Section 3(a)(9) of the Exchange Act, as supplemented by Section 13(d)(3)
of the Exchange Act; provided, however, that Person shall not include
(i)
the
Company or any subsidiary of the Company or (ii)
any
employee benefit plan sponsored by the Company or any subsidiary of the
Company.
(d) Voting
Power Defined.
A
specified percentage of "Voting Power" of a company shall mean such number
of
the Voting Securities as shall enable the holders thereof to cast such
percentage of all the votes which could be cast in an annual election of
directors (without consideration of the rights of any class of stock other
than
the common stock of the company to elect directors by a separate class vote);
and "Voting Securities" shall mean all securities of a company entitling the
holders thereof to vote in an annual election of directors (without
consideration of the rights of any class of stock other than the common stock
of
the company to elect directors by a separate class vote).
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3. Employment
Period.
Subject
to Section 6 of this Agreement, the Company agrees to continue the Executive
in
its employ, and the Executive agrees to remain in the employ of the Company,
for
the period (the "Employment Period") commencing on the Effective Date and ending
on the second anniversary of the Effective Date. The foregoing notwithstanding,
it shall not constitute a breach of this Section 3 for the employment of the
Executive to terminate in accordance with Section 6 prior to the end of the
Employment Period. In the event of a termination of employment under Section
6,
the Employment Period shall end.
4. Position
and Duties.
(a) No
Reduction in Position.
During
the Employment Period, the Executive's position (including titles), authority
and responsibilities shall be at least commensurate with those held, exercised
and assigned immediately prior to the Effective Date. It is understood that,
for
purposes of this Agreement, such position, authority and responsibilities shall
not be regarded as not commensurate merely by virtue of the fact that a
successor shall have acquired all or substantially all of the business and/or
assets of the Company as contemplated by Section 12(b) of this Agreement except
that, if Executive has a position (including titles), authority, and
responsibilities that relate to the Company’s status as a publicly held company
immediately before the Effective Date, the Executive’s position, authority, and
responsibilities shall be deemed commensurate only if they continue to relate
to
the ultimate parent corporation (whether or not that company is a publicly
held
company).
(b) Business
Time.
From
and after the Effective Date, the Executive agrees to devote substantially
all
of his attention during normal business hours to the business and affairs of
the
Company, to the extent necessary to discharge his responsibilities hereunder,
except for (i)
time
spent in managing his personal, financial and legal affairs, serving on
corporate, civic or charitable boards or committees or working for any
charitable or civic organization, in each case only if and to the extent not
materially interfering with the performance of the Executive’s responsibilities
hereunder, and (ii)
periods
of vacation and sick leave to which he is entitled. It is expressly understood
and agreed that the Executive's continuing to serve on any boards and committees
on which he is serving or with which he is otherwise associated immediately
preceding the Effective Date shall not be deemed to interfere with the
performance of the Executive's services to the Company.
5. Compensation.
(a) Base
Salary.
During
the Employment Period, the Executive shall receive a base salary at a monthly
rate at least equal to the monthly salary paid to the Executive by the Company
and any of its affiliated companies immediately prior to the Effective Date.
The
base salary shall be reviewed at least once each year after the Effective Date,
and may be increased (but not decreased) at any time and from time to time
by
action of the Board or any committee thereof or by any individual having
authority to take such action in accordance with the Company's regular
practices. The Executive's base salary, as it may be increased from time to
time, shall hereinafter be referred to as "Base Salary". Neither the Base Salary
nor any increase in Base Salary after the Effective Date shall serve to limit
or
reduce any other obligation of the Company hereunder.
(b) Annual
Bonus.
During
the Employment Period, in addition to the Base Salary, for each fiscal year
of
the Company ending during the Employment Period, the Executive shall be afforded
the opportunity to receive an annual bonus on terms and conditions no less
favorable to the Executive (taking into account reasonable changes in the
Company's goals and objectives) than the annual bonus opportunity that had
been
made available to the Executive for the fiscal year ended immediately prior
to
the Effective Date (the "Annual Bonus Opportunity"). Any amount payable in
respect of the Annual Bonus Opportunity shall be paid as soon as practicable
following the year for which the amount (or prorated portion) is earned or
awarded, but not later than 90 days after the close of the calendar year for
which the bonus is payable, unless electively deferred by the Executive pursuant
to any deferral programs or arrangements that the Company may make available
to
the Executive.
(c) Long-term
Incentive Compensation Programs.
During
the Employment Period, the Executive shall participate in all long-term
incentive compensation programs (each, an "LTICP") for key executives at a
level
that is commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to the Executive,
at the level made available to the Executive or other similarly situated
officers at any time thereafter.
(d) Benefit
Plans.
During
the Employment Period, the Executive (and, to the extent applicable, his
dependents) shall be entitled to participate in or be covered under all pension,
retirement, deferred compensation, savings, medical, dental, health, disability,
severance, group life, accidental death and travel accident insurance plans
and
programs of the Company and its affiliated companies at a level that is
commensurate with the Executive's participation in such plans immediately prior
to the Effective Date, or, if more favorable to the Executive, at the level
made
available to the Executive or other similarly situated officers at any time
thereafter.
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(e)
Expenses.
During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the policies and procedures of the Company as in effect
immediately prior to the Effective Date. Notwithstanding the foregoing, the
Company may apply the policies and procedures in effect after the Effective
Date
to the Executive, if such policies and procedures are more favorable to the
Executive than those in effect immediately prior to the Effective
Date.
(f) Vacation,
Perquisites and Fringe Benefits.
During
the Employment Period, the Executive shall be entitled to paid vacation,
perquisites and fringe benefits at a level that is commensurate with the paid
vacation, perquisites and fringe benefits available to the Executive immediately
prior to the Effective Date, or, if more favorable to the Executive, at the
level made available from time to time to the Executive or other similarly
situated officers at any time thereafter.
(g) Indemnification.
The
Company agrees that if at any time (including after the Employment Period)
the
Executive is made a party, or is threatened to be made a party, to any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(a
"Proceeding"), by reason of the fact that he is or was a director, officer
or
employee of the Company, the Executive shall be indemnified and held harmless
by
the Company to the fullest extent legally permitted or authorized by agreement,
or by the Company's certificate of incorporation or bylaws or resolutions of
the
Board or, if greater, by the laws of the State of New Jersey, against all cost,
expense, liability and loss (including, without limitation, attorney's fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
paid
in settlement) reasonably incurred or suffered by the Executive in connection
therewith. The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering Executive to the extent the
Company provides such coverage for its other executive officers.
(h) Office
and Support Staff.
During
the Employment Period, the Executive shall be entitled to an office with
furnishings and other appointments, and to secretarial and other assistance,
at
a level that is at least commensurate with that provided to the Executive
immediately prior to the Effective Date.
6. Termination.
(a) Death,
Disability or Retirement.
Subject
to the provisions of Section 1 hereof, Executive’s employment under this
Agreement shall terminate automatically upon the Executive's death, termination
due to "Disability" (as defined below) or voluntary retirement under any of
the
Company's retirement plans as in effect from time to time. For purposes of
this
Agreement, Disability shall mean the Executive has been incapable of
substantially fulfilling the positions, duties, responsibilities and obligations
set forth in this Agreement because of physical, mental or emotional incapacity
resulting from injury, sickness or disease for a period of at least six
consecutive months. The Company and the Executive shall agree on the identity
of
a physician to resolve any question as to the Executive's disability. If the
Company and the Executive cannot agree on the physician to make such
determination, then the Company and the Executive shall each select a physician
and those physicians shall jointly select a third physician, who shall make
the
determination. The determination of any such physician shall be final and
conclusive for all purposes of this Agreement. The Executive or his legal
representative or any adult member of his immediate family shall have the right
to present to such physician such information and arguments as to the
Executive's disability as he, she or they deem appropriate, including the
opinion of the Executive's personal physician.
(b) Voluntary
Termination.
Notwithstanding anything in this Agreement to the contrary, following a Change
in Control the Executive may, upon not less than 30 days' written notice to
the
Company, voluntarily terminate employment for any reason (including early
retirement under the terms of any of the Company's retirement plans as in effect
from time to time) (any such termination will be referred to as a “Voluntary
Termination” under this Agreement), provided
that
any
termination by the Executive pursuant to Section 6(d) on account of Good Reason
(as defined therein) shall not be treated as a Voluntary Termination under
this
Section 6(b).
(c) Cause.
The
Company may terminate the Executive's employment for Cause. For purposes of
this
Agreement, "Cause" means (i)
the
Executive's conviction of a felony or the entering by the Executive of a plea
of
nolo
contendere
to a
felony charge, (ii)
the
Executive's gross neglect, willful malfeasance or willful gross misconduct
in
connection with his employment hereunder which has had a significant adverse
effect on the business of the Company and its subsidiaries, unless the Executive
reasonably believed in good faith that such act or non-act was in or not opposed
to the best interests of the Company, or (iii)
repeated material violations by the Executive of his obligations under Section
4
of this Agreement which have continued after written notice thereof from the
Company, which violations are demonstrably willful and deliberate on the
Executive's part and which result in material damage to the Company's business
or reputation.
(d) Good
Reason.
Executive may terminate his employment for Good Reason. For purposes of this
Agreement, "Good Reason" means the occurrence of any of the following, without
the express written consent of the Executive, after the occurrence of a Change
in Control:
(i)
(A)
the
assignment to the Executive of any duties inconsistent with the Executive's
position, authority or responsibilities as contemplated by Section 4 of this
Agreement, or (B)
any
other material adverse change in such position, including titles, authority
or
responsibilities;
4
(ii)
any failure by the Company
to comply with any of the provisions of Section 5 of this
Agreement;
(iii)
the
Company's requiring the Executive to be based at any office or location more
than 50 miles from that location at which he performed his services specified
under the provisions of Section 4 immediately prior to the Change in Control,
except for travel reasonably required in the performance of the Executive's
responsibilities;
(iv)
any
other material breach of this Agreement by the Company; or
(v)
any
failure by the Company to obtain the assumption and agreement to perform this
Agreement by a successor as contemplated by Section 12(b);
provided,
however, that Good Reason shall not arise under clauses (i), (ii) or (iv) above
until the Executive has given the Company written notice of the circumstances
that would constitute Good Reason thereunder and the Company has not eliminated
or corrected such circumstances within 30 business days after receipt of such
notice.
In
no event
shall the mere occurrence of a Change in Control, absent any further impact
on
the Executive, be deemed to constitute Good Reason.
(e) Notice
of Termination.
Any
termination by the Company for Cause or by the Executive for Good Reason shall
be communicated by Notice of Termination to the other party hereto given in
accordance with Section 13(e). For purposes of this Agreement, a "Notice of
Termination" means a written notice given, in the case of a termination for
Cause, within 30 business days of the Company's having actual knowledge of
the
events giving rise to such termination, and in the case of a termination for
Good Reason, within 60 days of the Executive's having actual knowledge of the
events constituting Good Reason giving rise to such termination, and which
(i)
indicates the specific termination provision in this Agreement relied upon,
(ii)
sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, and (iii)
if the
termination date is other than the date of receipt of such notice, specifies
the
termination date of the Executive's employment (which date shall be not more
than 15 days after the giving of such notice). The failure by the Executive
to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
(f) Date
of Termination.
For the
purpose of this Agreement, the term "Date of Termination" means (i)
in the
case of a termination for which a Notice of Termination is required, the date
of
receipt of such Notice of Termination or, if later, the date specified therein,
as the case may be, and (ii)
in all
other cases, the actual date on which the Executive's employment terminates
during the Employment Period.
7. Obligations
of the Company upon Termination.
(a) Death
or Disability.
If the
Executive's employment is terminated during the Employment Period by reason
of
the Executive's death or Disability, the Employment Period shall terminate
without further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations accrued
hereunder at the Date of Termination (and obligations under Section 5(g)),
and
the Company shall pay to the Executive (or his beneficiary or estate)
(i)
the
Executive's full Base Salary through the Date of Termination (the "Earned
Salary"), (ii)
any
vested amounts or vested benefits owing to the Executive under the Company's
otherwise applicable employee benefit plans and programs, including any
compensation previously deferred by the Executive (together with any accrued
earnings thereon) and not yet paid by the Company and any accrued vacation
pay
not yet paid by the Company (the "Accrued Obligations"), and (iii)
any
other benefits payable due to the Executive's death or Disability under the
Company's plans, policies or programs (the "Additional Benefits").
Any
Earned
Salary shall be paid in cash in a single lump sum as soon as practicable, but
in
no event more than 30 days (or at such earlier date required by law), following
the Date of Termination. Accrued Obligations and Additional Benefits shall
be
paid in accordance with the terms of the applicable plan, program or
arrangement, subject to Section 7(f).
(b) Cause
and Voluntary Termination.
If the
Executive's employment shall be terminated for Cause or by a Voluntarily
Termination by the Executive in accordance with Section 6(b) of this Agreement,
the Company shall pay the Executive (i)
the
Earned Salary in cash in a single lump sum as soon as practicable, but in no
event more than 10 days, following the Date of Termination, and (ii)
the
Accrued Obligations in accordance with the terms of the applicable plan, program
or arrangement, subject to Section 7(f).
(c) Termination
by the Company other than for Cause and Termination by the Executive for Good
Reason.
(i)
Lump
Sum Payments.
If,
during the Employment Period, the Company terminates the Executive's employment
other than for Cause (and not due to a Disability) or the Executive terminates
his employment for Good Reason, the Company shall pay to the Executive the
following amounts:
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|
(A)
|
the
Executive's Earned Salary;
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|
(B)
|
a
cash amount (the "Severance Amount") equal to THREE (3) times the
sum of
(x)
the Executive's annual Base Salary and (y)
an amount equal to the average of the annual bonuses paid or payable
to
the Executive with respect to each of the last three calendar years
ended
prior to the Change in Control (or, if at the Date of Termination,
the
Executive has been employed for less than three full calendar years,
for
the number of full calendar years during which the Executive was
employed); for purposes of this Section 7(c)(i)(B), any bonus that
was
offered to the Executive but declined or reallocated by the Executive
shall be deemed to be bonus payable to the Executive;
and
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(C)
|
the
Accrued Obligations.
|
The
Earned
Salary and Severance Amount shall be paid in cash in a single lump sum as soon
as practicable, but in no event more than 30 days (or at such earlier date
required by law), following the Date of Termination, subject to Section 7(f)
(which may require a delay in the payment of Severance until six months after
termination). Accrued Obligations shall be paid in accordance with the terms
of
the applicable plan, program or arrangement, subject to Section
7(f).
(ii)
Pro
Rata Annual Incentive.
In lieu
of any annual incentive compensation under Section 4(b) for the year in which
Executive’s employment terminated, an amount equal to the Executive’s target
annual incentive compensation for the year of termination, multiplied by a
fraction the numerator of which is the number of days Executive was employed
in
the year of termination and the denominator of which is the total number of
days
in the year of termination. In addition, for any fiscal year that has been
completed at the time of Executive’s termination, the Company shall pay to
Executive the annual incentive under Section 5(b) to the extent earned based
on
performance in the completed year, without any exercise of negative discretion
except as such exercise of negative discretion may be consistent with the
exercise of negative discretion for executive officers of the Company whose
employment is not then contemplated to terminate;
(iii)
Continuation
of Benefits.
If,
during the Employment Period, the Company terminates the Executive's employment
other than for Cause (and not due to a Disability) or the Executive terminates
his employment for Good Reason, the Executive (and, to the extent applicable,
his dependents) shall be entitled, after the Date of Termination until the
earlier of (1)
the
third anniversary of the Date of Termination (the "End Date") and (2)
the
date the Executive becomes eligible for comparable benefits under a similar
plan, policy or program of a subsequent employer, to continue participation
in
all of the Company's employee and executive welfare and fringe benefit plans
(the "Benefit Plans"). To the extent any such benefits cannot be provided under
the terms of the applicable plan, policy or program, the Company shall provide
a
comparable benefit under another plan or from the Company's general assets,
subject to Section 7(f). The Executive's participation in the Benefit Plans
will
be on the same terms and conditions that would have applied had the Executive
continued to be employed by the Company through the End Date, subject to Section
7(f).
(iv)
Outplacement.
The
Company will provide reimbursement for reasonable outplacement and job search
expenses incurred by the Executive, provided that (A) such payments shall not
exceed $25,000 and (B) such payments shall apply only to those costs or
obligations that are incurred during the period following Executive’s
termination of employment until the End Date, subject to Section
7(f).
(v)
Vesting
and Exercisability of Stock Options.
If,
during the Employment Period, the Company terminates the Executive's employment
other than for Cause (and not due to a Disability) or the Executive terminates
his employment for Good Reason, all outstanding options held by the Executive
to
purchase shares of Common Stock of the Company and granted prior to the
effective date of this Agreement ("Options") shall become fully vested on the
date of such termination of employment and the Executive shall have the right
to
exercise the Options, whether or not such Options would otherwise be
exercisable, for a period of ninety days (provided that if this represents
an
extension of the applicable period for any outstanding Option, it shall be
limited to the “safe harbor” period permitted under Proposed Treasury Regulation
§ 1.409A-1(b)(5)(v)(C)) following such termination of employment (or, if less,
until the end of the stated term of the Options) (or such longer period as
may
be provided under the plan or agreement governing the Option). Vesting of
options granted on or after the effective date of this Agreement shall be
governed by the terms of the relevant plan and any award agreement relating
to
such
Options.
6
(vi)
Vesting
of Performance Unit Awards and Other Equity Awards.
Upon a
Change in Control, (1) all Performance Unit awards granted before the effective
date of this Agreement for which the earned value has not yet been determined
as
of the date of the Change in Control shall be deemed to have earned a value
equal to the greater of (A) the target value of the Performance Unit award
(including any Dividend Equivalent Rights (“DERs”) declared thereon), or (B) the
actual value of such Performance Unit award (including all DERs declared
thereon) calculated as if the performance period during which total shareholder
return is measured had terminated as of the Change in Control (without proration
of such award), and (2) all earned but unvested Performance Units, including
those earned in accordance with the preceding clause (1), shall become fully
vested. Vesting and payout of Performance Units or any other equity award
granted on or after the effective date of this Agreement shall be governed
by
the terms of the relevant plan and any award agreement relating to such
Performance Units or other equity award.
(d) Discharge
of the Company's Obligations.
Except
as expressly provided in the last sentence of this Section 7(d), the amounts
payable to the Executive pursuant to this Section 7 (whether or not reduced
pursuant to Section 7(e)) following termination of his employment shall be
in
full and complete satisfaction of the Executive's rights under this Agreement
and any other claims he may have in respect of his employment by the Company
or
any of its subsidiaries. Such amounts shall constitute liquidated damages with
respect to any and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged from any and
all
liability to the Executive in connection with this Agreement or otherwise in
connection with the Executive's employment with the Company and its
subsidiaries. Executive shall be required to execute a release to such effect
(in the Company’s standard form of release) as a condition of receipt of
payments and benefits hereunder. Nothing in this Section 7(d) shall be construed
to release the Company from its commitment to indemnify the Executive and hold
the Executive harmless as provided in Section 5(g) hereof, which provision
shall
survive any purported termination of this Agreement.
(e) Certain
Further Payments by the Company.
(i)
Application
of Section 7(e).
In the
event that any amount or benefit paid or distributed to the Executive pursuant
to this Agreement, taken together with any amounts or benefits otherwise paid
or
distributed to the Executive by the Company or any affiliated company
(collectively, the "Covered Payments"), are or become subject to the tax (the
"Excise Tax") imposed under Section 4999 of the Code or any similar tax that
may
hereafter be imposed, the Company shall pay to the Executive at the time
specified in Section 7(e)(v) below an additional amount (the "Tax
Reimbursement Payment") such that the net amount retained by Executive with
respect to such Covered Payments, after deduction of any Excise Tax on the
Covered Payments and any Federal, state and local income tax and Excise Tax
on
the Tax Reimbursement Payment provided for by this Section 7(e), but before
deduction for any Federal, state or local income or employment tax withhold-ing
on such Covered Payments, shall be equal to the amount of the Covered
Payments.
(ii)
Application
of Section 280G.
For
purposes of determining whether any of the Covered Payments will be subject
to
the Excise Tax and the amount of such Excise Tax,
|
(A)
|
such
Covered Payments will be treated as "parachute payments" within the
meaning of Section 280G of the Code, and all "parachute payments"
in
excess of the "base amount" (as defined under Section 280G(b)(3)
of the
Code) shall be treated as subject to the Excise Tax, unless, and
except to
the extent that, in the good faith judgment of the Company's independent
certified public accountants appointed prior to the Effective Date
or tax
counsel selected by such accountants (the "Accountants"), the Company
has
a reasonable basis to conclude that such Covered Payments (in whole
or in
part) either do not constitute "parachute payments" or represent
reasonable compensation for personal services actually rendered (within
the meaning of Section 280G(b)(4)(B) of the Code) in excess of the
"base
amount," or such "parachute payments" are otherwise not subject to
such
Excise Tax, and
|
|
(B)
|
the
value of any non-cash benefits or any deferred payment or benefit
shall be
determined by the Accountants in accordance with the principles of
Section
280G of the Code.
|
(iii)
Calculation
of Tax Reimbursement Payment.
For
purposes of determining the amount of the Tax Reimbursement Payment, the
Executive shall be deemed to pay:
|
(A)
|
Federal
income taxes at the highest applicable marginal rate of Federal income
taxation for the calendar year in which the Tax Reimbursement Payment
is
to be made, and
|
|
(B)
|
any
applicable state and local income taxes at the highest applicable
marginal
rate of taxation for the calendar year in which the Tax Reimbursement
Payment is to be made, net of the maximum reduction in Federal income
taxes which could be obtained from the deduction of such state or
local
taxes if paid in such year.
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7
(iv)
Adjustments
in Respect of Tax Reimbursement Payment.
In the
event that the Excise Tax is subsequently determined by the Accountants or
pursuant to any proceeding or negotiations with the Internal Revenue Service
to
be less than the amount taken into account hereunder in calculating the Tax
Reimbursement Payment made, the Executive shall repay to the Company, at the
time that the amount of such reduction in the Excise Tax is finally determined,
the portion of such prior Tax Reimbursement Payment that would not have been
paid if such Excise Tax had been applied in initially calculating such Tax
Reimbursement Payment, plus interest on the amount of such repayment at the
rate
provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing,
in
the event any portion of the Tax Reimbursement Payment to be refunded to the
Company has been paid to any Federal, state or local tax authority, repayment
thereof shall not be required until actual refund or credit of such portion
has
been made to the Executive, and interest payable to the Company shall not exceed
interest received or credited to the Executive by such tax authority for the
period it held such portion. The Executive and the Company shall mutually agree
upon the course of action to be pursued (and the method of allocating the
expenses thereof) if the Executive's good faith claim for refund or credit
is
denied.
In
the
event that the Excise Tax is later determined by the Accountants or pursuant
to
any proceeding or negotiations with the Internal Revenue Service to exceed
the
amount taken into account hereunder at the time the Tax Reimbursement Payment
is
made (including, but not limited to, by reason of any payment the existence
or
amount of which cannot be determined at the time of the Tax Reimbursement
Payment), the Company shall make an additional Tax Reimbursement Payment in
respect of such excess (plus any interest or penalty payable with respect to
such excess) at the time that the amount of such excess is finally
determined.
(v)
Payment.
Subject
to Section 7(f), the Tax Reimbursement Payment (or portion thereof) provided
for
in Section 7(e)(i) above shall be paid to the Executive not later than 10
business days following the payment of the Covered Payments; provided, however,
that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot
be finally determined on or before the date on which payment is due, the Company
shall pay to the Executive by such date an amount estimated in good faith by
the
Accountants to be the minimum amount of such Tax Reimbursement Payment and
shall
pay the remainder of such Tax Reimbursement Payment (together with interest
at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than 45 calendar days after
payment of the related Covered Payment. In the event that the amount of the
estimated Tax Reimbursement Payment exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth business day after written demand by the Company
for payment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(f) Provisions
for Compliance with Code Section 409A.
If any
right to payment or benefit under this Agreement would be deemed to be a
non-exempt deferral subject to Code Section 409A, and such payment or benefit
would be distributable based upon a termination of employment, such payment
(i)
shall be distributable upon a termination of Executive that constitutes a
“separation from service” within the meaning of Proposed Treasury Regulation §
1.409A-1(h), and (ii), if Executive is a “specified employee” and the
distribution is required to be delayed for six months to comply with Section
409A(a)(2)(B)(i), such distribution shall occur six months after such separation
from service. In the case of any delay in payment, interest shall be credited
on
the unpaid amount at a rate equal to the short-term applicable federal rate
(with semiannual compounding) established by the Internal Revenue Service under
Code Section 1274(b)(2)(B) and in effect at the date the amount would have
been
paid but for the delay hereunder. Any delay in payment hereunder shall not
cause
a corresponding delay in the timing of any other payment that is not
specifically subject to the six-month delay rule of Section 409A(a)(2)(B)(i).
In
addition, if any benefit to be provided in the period following termination
is
deemed to be a non-exempt deferral for purposes of Section 409A, the period
during which a specific type of benefit will be provided under Section 7(c)(iii)
shall be reduced so that it extends from the date of separation from service
until December 31 of the second calendar year following separation from service
if (i) providing such benefit for the period specified under Section 7(c)(iii)
would result in Executive being deemed to be in constructive receipt of
compensation and to tax penalties under Code Section 409A in respect of
substantially all of such benefit, and (ii) the reduced benefit period provided
under this sentence would avoid such constructive receipt and tax penalties.
If,
however, the provision of any type of benefits for the shorter period applicable
under the preceding sentence nevertheless would result in Executive being deemed
to be in constructive receipt of income and subject to tax penalties under
Section 409Awith respect to those benefits before the time of Executive’s actual
receipt of the goods or services constituting those benefits, the Company will
make cash payments to Executive in lieu of providing those benefits for the
required period following termination, which payments will equal the Company’s
cost of providing those benefits based on Executive’s circumstances through the
end of the month prior to the date each such payment is to be made hereunder.
The first such payment in lieu of those benefits, if payable, for the year
of
termination and for the subsequent year if the subsequent year has begun before
the payment is due, will be made six months after Executive’s separation from
service, with subsequent payments in lieu of those benefits and perquisites
due
quarterly on the 15th
day of
January, April, July and October in each year until payments in lieu of benefits
for the post-termination benefits period have been made.
8. Nonexclusivity
of Rights.
Except
as
expressly provided herein, nothing in this Agreement shall prevent or limit
the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise prejudice such rights as the Executive may have under any
other agreements with the Company or any of its affiliated companies, including
employment agreements or stock option agreements. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
plan
or program of the Company or any of its affiliated companies at or subsequent
to
the Date of Termination shall be payable in accordance with such plan or
program.
8
10. Legal
Fees and Expenses.
If
the
Executive asserts any claim in any contest (whether initiated by the Executive
or by the Company) as to the validity, enforceability or interpretation of
any
provision of this Agreement, the Company shall pay the Executive's legal
expenses (or cause such expenses to be paid) including, without limitation,
his
reasonable attorney's fees, on a quarterly basis, upon presentation of proof
of
such expenses in a form acceptable to the Company, provided
that
if the
Executive shall not prevail as to any material issue as to the validity,
enforceability or interpretation of any provision of this Agreement, the
Executive shall reimburse the Company for such amounts paid by the Company
for
the Executive’s legal expenses, plus simple interest thereon at the 90-day
United States Treasury Xxxx rate as in effect from time to time, compounded
annually, attributable to the litigation of such material issue by the
Executive.
11. Non-Competition;
Confidential Information; Company Property.
(a) Non-Competition.
As
a
condition to the right of the Executive to receive severance payments hereunder,
the Executive must, upon termination of his or her employment, enter into a
binding agreement with the Company agreeing that that, without the written
consent of the Board, the Executive will not, at any time for a period of two
years following termination of employment, acting alone or in conjunction with
others, directly or indirectly (i) engage (either as owner, investor, partner,
stockholder, employer, employee, consultant, advisor, or director) in any
business in
which
he has been directly engaged on behalf of the Company or any affiliate, or
has
supervised as an executive thereof, during the last two years prior to such
termination, or which was engaged in or planned by the Company or an affiliate
at the time of such termination, in the geographic area of New York, New Jersey,
Pennsylvania, or Delaware; (ii) induce any customers of the Company or any
of
its affiliates with whom Executive has had contacts or relationships, directly
or indirectly, during and within the scope of his employment with the Company
or
any of its affiliates, to curtail or cancel their business with the Company
or
any such affiliate; (iii) induce, or attempt to influence, any employee of
the
Company or any of its affiliates to terminate employment; or (iv) solicit,
hire
or retain as an employee or independent contractor, or assist any third party
in
the solicitation, hire, or retention as an employee or independent contractor,
any person who during the previous 12 months was an employee of the Company
or
any affiliate; provided, however, that activities engaged in by or on behalf
of
the Company are not restricted by this covenant. The provisions of subparagraphs
(i), (ii), (iii), and (iv) above shall be separate and distinct commitments
independent of each of the other subparagraphs. It is agreed that the ownership
of not more than one percent of the equity securities of any company having
securities listed on a securities exchange or regularly traded in the
over-the-counter market shall not, of itself, be deemed inconsistent with clause
(i) of this Section 11(a).
(b) Confidential
Information; Company Property. By and in consideration of the salary and
benefits to be provided by the Company hereunder, including the severance
arrangements set forth herein, the Executive agrees that:
(i)
Confidential
Information.
The
Executive shall hold in a fiduciary capacity for the benefit of the Company
all
secret or confidential information, knowledge or data relating to the Company
or
any of its affiliated companies, and their respective businesses, (i)
obtained by the Executive during his employment by the Company or any of its
affiliated companies and (ii)
not
otherwise public knowledge (other than by reason of an unauthorized act by
the
Executive). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company,
unless compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by
it.
The Executive acknowledges and agrees that the covenants and obligations of
the
Executive with respect to confidentiality relate to special, unique and
extraordinary matters and that a violation of any of the terms of such covenants
and obligations will cause the Company irreparable injury for which adequate
remedies are not available at law. Therefore, the Executive agrees that the
Company shall be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond) restraining Executive
from committing any violation of the covenants and obligations contained in
this
Section 11(b)(i). These remedies are cumulative and are in addition to any
other
rights and remedies the Company may have at law or in equity.
(ii)
Company
Property.
Except
as expressly provided herein, promptly following the Executive's termination
of
employment, the Executive shall return to the Company all property of the
Company and all copies thereof in the Executive's possession or under his
control, except that the Executive may retain his personal notes, diaries,
Rolodexes, calendars and correspondence.
9
12. Successors.
(a) This
Agreement is personal to the Executive and, without the prior written consent
of
the Company, shall not be assignable by the Executive otherwise than by will
or
the laws of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Executive's legal representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and
its
successors. The Company shall require any successor to all or substantially
all
of the business and/or assets of the Company, whether direct or indirect, by
purchase, merger, consolidation, acquisition of stock, or otherwise, by an
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Company would be required to perform if no such succession had
taken place.
13. Miscellaneous.
(a) Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New Jersey, applied without reference to principles of conflict of
laws.
(b) Arbitration.
Except
to the extent provided in Section 11(b)(i), any dispute or controversy arising
under or in connection with this Agreement shall be resolved by binding
arbitration. The arbitration shall be held in Newark, New Jersey and, except
to
the extent inconsistent with this Agreement, shall be conducted in accordance
with the Expedited Employment Arbitration Rules of the American Arbitration
Association (or such other voluntary arbitration rules applicable to employment
contract disputes) in effect at the time of the arbitration, supplemented,
as
necessary, by those principles which would be applied by a court of law or
equity. The arbitrator shall be acceptable to both the Company and the
Executive. If the parties cannot agree on an acceptable arbitrator, the dispute
shall be heard by a panel of three arbitrators, one appointed by each of the
parties and the third appointed by the other two arbitrators.
(c) Amendments.
This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(d) Entire
Agreement.
This
Agreement constitutes the entire agreement between the parties hereto with
respect to the matters referred to herein. No other agreement relating to the
terms of the Executive's employment by the Company, oral or otherwise, shall
be
binding between the parties unless it is in writing and signed by the party
against whom enforcement is sought. There are no promises, representations,
inducements or statements between the parties other than those that are
expressly contained herein. The Executive acknowledges that he is entering
into
this Agreement of his own free will and accord, and with no duress, that he
has
read this Agreement and that he understands it and its legal consequences.
In
particular, the Agreement supersedes the Employment Continuation Agreement
between the Company and Executive dated June 5, 1996 (the “Prior Agreement”),
and amended December 1, 1997. The Prior Agreements are terminated in their
entirety as of the date of this Agreement.
(e) Notices.
All
notices and other communications hereunder shall be in writing and shall be
given by hand-delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If
to the
Executive: at
the
home address of the Executive noted on the records
of the
Company
If
to the
Company:
New
Jersey Resources Corporation
0000 Xxxxxxx Xxxx
Xxxx,
Xxx
Xxxxxx 00000
Attn.:
Secretary or to
such
other address as either party shall have furnished to the other in writing
in
accordance herewith.
Notice
and communications shall be effective when actually received by the
addressee.
(f) Tax
Withholding.
The
Company shall withhold from any amounts payable under this Agreement such
Federal, state or local taxes as shall be required to be withheld pursuant
to
any applicable law or regulation.
10
(g) Severability;
Reformation.
In the
event that one or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby. In the event that any of the provisions of any of Section
11(a) or (b)(i) are not enforceable in accordance with its terms, the Executive
and the Company agree that such Section shall be reformed to make such Section
enforceable in a manner which provides the Company the maximum rights permitted
at law.
(h) Waiver.
Waiver
by any party hereto of any breach or default by the other party of any of
the
terms of this Agreement shall not operate as a waiver of any other breach
or
default, whether similar to or different from the breach or default waived.
No
waiver of any provision of this Agreement shall be implied from any course
of
dealing between the parties hereto or from any failure by either party hereto
to
assert its or his rights hereunder on any occasion or series of
occasions.
(i)
Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed
an
original but all of which together shall constitute one and the same
instrument.
(j)
Captions.
The
captions of this Agreement are not part of the provisions hereof and shall
have
no force or effect.
11
IN
WITNESS WHEREOF,
the
Executive has hereunto set his hand and the Company has caused this Agreement
to
be executed in its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Secretary, all as of the day and year first above
written.
NEW
JERSEY RESOURCES CORPORATION
/s/
Xxxxx X. Xxxxxxxx
By:
XXXXX
X. XXXXXXXX
Title:
Senior Vice President & Chief Financial Officer
ATTEST:
/s/
Xxxxxx X. Xxxxxxxx
XXXXXX
X.
XXXXXXXX
Corporate
Secretary
/s/
Xxxxxxxx X. Xxxxxx
XXXXXXXX
X. XXXXXX
Chairman
& Chief Executive Officer
WITNESSED:
/s/
Xxxxxx X. Xxxx
