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EMPLOYMENT CONTINUATION
AGREEMENT
THIS AGREEMENT between New Jersey
Resources Corporation, a New Jersey corporation (the "Company"),
and LAURENCE M. DOWNES (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;
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(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 oth
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