EMPLOYMENT CONTINUATION AGREEMENT
Exhibit
10.12
THIS
AGREEMENT between New Jersey Resources Corporation, a New Jersey
corporation (the "Company"), and XXXXXXXX X. XXXXXX (the
"Executive"), dated as of this 28th day of November, 2008.
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, 2009 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.
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(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 the Change in Control
occurs.
(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.
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 November 28,
2008:
(i) any
Person (as defined below) acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such Person) 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 fifty percent (50%) or
more of the combined Voting Power (as defined below) of the Company's
securities;
(ii) within
any 12-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 a
majority of the directors who then qualified as Incumbent Directors either
actually or by prior operation of this Section 2(a)(ii); 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 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.
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(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).
(e) The
above definition of a Change in Control shall be interpreted and applied in a
manner that complies with the change in control or ownership trigger event rules
under Code Section 409A.
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).
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(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 2 ½ months after the close of
the later of the calendar year during which the bonus is earned or the Company’s
taxable year during which the bonus is earned, 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. Subject
to the above referenced procedures, reimbursements shall be made no later than
two months following the calendar year during which the reimbursements are
incurred.
(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.
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(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;
(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.
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(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 and subject to
Section 7(f), 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).
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(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:
| (A) | the Executive's Earned Salary; | |
| (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 | |
| (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 such amounts 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 payable in a single
lump sum as soon as practicable, but in no event more than 30 days following the
Date of Termination, subject to Section 7(f). 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 payable in a
single lump sum as soon as practicable, but in no event more than 30 days
following the Date of Termination, subject to Section 7(f);
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(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 that the
Executive was participating in immediately prior to his Date of Termination (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). The benefits provided in this subsection (iii) during any calendar year
shall not affect the benefits to be provided to the Executive or his dependents
in any other calendar year except for medical reimbursement arrangements as
allowed under Code Section 409A. Any reimbursements shall be made no later than
two months following the calendar year during which the reimbursements are
incurred.
(iv) Outplacement. Subject
to Section 7(f), the Company shall provide reimbursement for reasonable
outplacement and job search expenses incurred by the Executive, from the date of
termination through the End Date or until other employment is secured, whichever
comes first, not to exceed $25,000, prorated between
calendar years on a time weighted basis and provided or reimbursable based on
when the expense is incurred. The amount reimbursed during any calendar year
shall not affect the amounts to be reimbursed to the Executive in any other
calendar year. Any reimbursements shall be made no later than two months
following the calendar year during which the reimbursements are
incurred.
(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 maximum period
permitted under Code Section 409A (or, if less, until the end of the stated term
of the Options determined without regard to the termination of employment) (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.
(vi) Vesting of Performance Share
Awards and Other Equity Awards. Vesting and payout of
Performance Units or any other equity award shall be governed by the terms of
the relevant plan and any award agreement relating to such Performance Shares or
other equity award.
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(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 withholding 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
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(B)
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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.
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10
| (iii) |
Calculation of Tax
Reimbursement Payment. For purposes of
determining the amount of the Tax Reimbursement Payment, the Executive
shall be deemed to pay:
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(A)
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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
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(B)
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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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| (iv) |
Adjustments in Respect
of Tax Reimbursement Payment. In the event that the
Excise
Tax is subsequently determined by the Accountants
or
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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).
11
(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 only upon a
termination of Executive that constitutes a Separation from Service (as defined
below) and the Date of Termination shall be the date of the Separation from
Service and (ii) if Executive is a “specified employee” (as determined in
accordance with procedures adopted by the Board of Directors of the Company or
its delegate) and the distribution is required to be delayed for six months to
comply with Code Section 409A, such distribution shall occur on the first day of
the seventh month after such Separation from Service (or upon the Executive’s
death, if earlier). 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 Code Section 409A. A
Separation from Service shall occur where it is reasonably anticipated that no
further services will be performed after that date or that the level of bona
fide services the Executive will perform after that date (whether as an employee
or independent contractor of the Company or an affiliate) will permanently
decrease to less than [50%] of the average level of bona fide services performed
over the immediately preceding thirty-six (36) month period. An Executive shall
be considered to continue employment and to not have a Separation from Service
while on a leave of absence if the leave does not exceed 6 consecutive months
(29 months for a disability leave of absence) or, if longer, so long as the
Executive retains a right to reemployment with the Company or an affiliate under
an applicable statute or by contract. For this purpose, a “disability leave
of absence” is an absence due to any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 6 months, where such impairment causes
the Executive to be unable to perform the duties of his job or a substantially
similar job. Continued services solely as a director of the Company or an
affiliate shall not prevent a Separation from Service from occurring. [Discuss
50% requirement with each Executive.] This Agreement shall be interpreted and
applied in a manner as to comply with Code Section 409A. However, the Company
shall not be responsible for any taxes due for payments under this Agreement for
any reason including failure to comply with Code Section 409A.
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.
9. No Mitigation or
Offset. The Executive shall have no obligation to seek other
employment and, except as expressly provided in Sections 7(c)(iii), there shall
be no offset against amounts due to Executive under this Agreement on account of
any remuneration attributable to subsequent employment that he may obtain. The
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against the
Executive or others, including, without limitation, any claim arising due to the
Executive's violation of his covenants under Section 11(a) and (b)(i) hereof. In
the event that the Executive shall in good faith give a Notice of Termination
for Good Reason and it shall thereafter be determined that Good Reason did not
exist, the employment of the Executive shall, unless the Company and the
Executive shall otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual consent of the
Company and the Executive and the Executive shall be entitled to receive only
his Earned Salary and the Accrued Obligations which he would have been entitled
to receive upon a Voluntary Termination.
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.
12
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.
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.
13
(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 and, with regard to payments and benefits subject to Code
Section 409A, shall only be amended in a manner that complies with Code Section
409A.
(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 and February 20, 2007. 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.
(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.
14
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.
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NEW JERSEY RESOURCES
CORPORATION
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||
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By:
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/s/ Xxxxx X.
Xxxxxxxx
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|
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XXXXX
X. XXXXXXXX
|
||
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Title:
Senior Vice President & Chief Financial Officer
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||
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ATTEST:
|
||
|
/s/ Xxxxxx X.
Xxxxxxxx
|
||
|
XXXXXX
X. XXXXXXXX
|
||
|
Corporate
Secretary
|
||
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By:
|
/s/ Xxxxxxxx X.
Xxxxxx
|
|
|
XXXXXXXX
X. XXXXXX
|
||
|
Chairman
& Chief Executive Officer
|
||
|
WITNESSED:
|
||
|
/s/ Xxxxxx X.
Xxxx
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15
