Exhibit 10a(21)
EMPLOYMENT AGREEMENT
AGREEMENT, by and between Public Service Enterprise Group
Incorporated, a New Jersey Corporation ("Enterprise") and Xxxxxx X. Xxxxxx (the
"Executive"), dated as of October 17, 2000.
WHEREAS, the Executive is currently serving as President and
Chief Operating Officer of Public Service Electric and Gas Company, a New Jersey
Corporation, and a wholly-owned subsidiary of Enterprise (Enterprise and its
subsidiaries and affiliates being collectively hereinafter referred to as the
"Company").
WHEREAS, in consideration of the substantial benefits to be
provided by the Company pursuant to this Agreement, the Executive is willing to
commit himself to be employed by the Company on the terms and conditions herein
set forth; and
WHEREAS, the parties desire to enter into this Agreement
setting forth the terms and conditions for the employment relationship of the
Executive with the Company during the Employment Period (as hereinafter
defined):
NOW, THEREFORE, IN CONSIDERATION of the mutual premises,
covenants and agreements set forth below, it is hereby agreed as follows:
1. General.
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(a) Employment. The Company agrees to employ the Executive,
and the Executive agrees to be employed by the Company, in accordance with the
terms and provisions of this Agreement during the Employment Period.
(b) Term. The term of the Executive's employment under this
Agreement (the "Employment Period") shall commence as of the date hereof (the
"Effective Date") and shall continue until October 16, 2005. In the event a
Change in Control occurs during the Employment Period, the term of the
Executive's employment shall (unless terminated earlier pursuant to Section 4
hereof) automatically continue until the later of the last day of the Employment
Period or the second anniversary of the Change in Control. In the event this
Agreement is extended as provided in the preceding sentence, the Employment
Period shall be the period from the Effective Date to the second anniversary of
the Change in Control.
2. Position and Attention to Duties.
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(a) Position. During the Employment Period, the Executive
shall serve as President and Chief Operating Officer of Public Service Electric
and Gas Company or in another senior executive position or positions for the
Company, as determined by the Chief Executive Officer ("CEO") and Board of
Directors ("Board") of Enterprise.
(b) Attention. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote full attention and time during normal business hours
to the business and affairs of the Company and to use his reasonable best
efforts to perform such responsibilities in a professional manner. It shall not
be a violation of this Agreement for the Executive to (i) serve on corporate,
civic or charitable boards or committees, (ii) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (iii) manage
personal investments, so long as such activities do not interfere with the
performance of the Executive's responsibilities as an officer and director of
the Company in accordance with this Agreement.
3. Compensation.
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Except as modified by this Agreement, the Executive's
compensation shall be provided in accordance with the Company's standard
compensation and payroll practices as in effect from time to time. The aggregate
of Base Salary, Annual Incentive Compensation and Long-Term Incentives in
paragraphs (a), (b) and (c) below shall be determined based upon competitive
practices for companies of comparable size and standing.
(a) Base Salary. The annual rate of base salary payable to the
Executive during the Employment Period (the "Annual Base Salary") shall be
established by the Organization and Compensation Committee of the Board (the
"Compensation Committee"). During the Employment Period, the Annual Base Salary
shall be reviewed by the Compensation Committee for possible increase at least
annually. Annual Base Salary shall not be reduced, and after any such increase
and the term "Annual Base Salary" shall thereafter refer to the Annual Base
Salary as so increased.
(b) Annual Incentive Compensation. The Board has established
and intends to continue an annual incentive compensation plan for the benefit of
the officers and other key employees of the Company, including the Executive,
based on competitive practices for companies of comparable size and standing.
The performance objectives for the Executive in respect of such incentive will
be determined by the Compensation Committee in accordance with past practices.
(c) Long-Term Incentives. The Board has established and
intends to continue a long-term incentive plan for the benefit of the officers
and other key employees of the Company, including the Executive, based on
competitive practices for companies of comparable size and standing. Such plan
may, in the judgment of the Compensation Committee, provide for stock options,
stock appreciation rights, restricted stock or stock units, performance stock or
units and/or other type of long-term incentive awards. The type and amount of
equity and any other long-term incentive grants will be determined by the
Compensation Committee from time to time, and awards thereunder shall be payable
to the Executive in accordance with the long-term incentive plan or plans in
effect from time to time.
(d) Option Award.
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(i) In consideration of the commitment he will assume during the
Employment Period, the Executive shall be granted an award (the "Option
Award") of non-qualified options under the Enterprise Long-Term
Incentive Plan ("LTIP") to purchase 250,000 shares of the Common Stock
without nominal or par value of Enterprise ("Stock"). Options granted
under the Option Award are herein referred to as "Options". The xxxxx
xxxxx of the Options shall be the closing price of the Common Stock on
the New York Stock Exchange on the Effective Date. The Executive's
right to the Option Award shall vest and become exercisable in
accordance with the following schedule, provided that the Executive has
remained continuously employed by the Company during the Employment
Period through the dates indicated below:
Date Number of Shares
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October 17, 2001 50,000
October 17, 2002 50,000
October 17, 2003 50,000
October 17, 2004 50,000
October 17, 2005 50,000
If, during the Employment Period (1) there occurs a Change in Control, or (2)
Enterprise enters into an agreement to merge or consolidate with any other
corporation which, if consummated, would meet the requirements of Section 6(b)
(iii) and the shareholders of Enterprise approve that agreement, the entire
Option Award shall vest and become exercisable. If, during the Employment
Period, the Company terminates the Executive's employment without Cause or the
Executive terminates his employment for Good Reason, or the Executive's
Employment terminates by reason of death or Disability, the Executive's right to
the entire Option Award shall vest and become exercisable as of the Date of
Termination. If, during the Employment Period, the Company terminates the
Executive's employment for Cause or the Executive terminates his employment
without Good Reason, including Retirement, the Executive shall forfeit all right
to all shares of the Option Award that are not vested as of the Date of
Termination.
(ii) The Options shall expire ten (10) years after the Effective Date.
(iii) Once Options become exercisable hereunder, the Executive may
exercise such Options in any manner permitted by the LTIP. All vested
options shall be exercised or shall be forfeited no later than the
earlier of three years after termination of employment or 10 years
after the Effective Date.
(iv) Unless specifically provided by this Agreement, all terms and
conditions of the Options granted hereunder shall be governed by the
LTIP.
(v) The Compensation Committee may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding of
any taxes that the Company is required by law or regulation of any
governmental authority, whether federal, state or local, domestic or
foreign, to withhold in connection with the Option Award, including,
but not limited to (1) withholding delivery of the certificate for
shares of Stock until the Executive reimburses the Company for the
amount it is required to withhold with respect to such taxes, (2) the
canceling of any number of shares of Stock issuable to the Executive in
an amount necessary to reimburse the Company for the amount it is
required to so withhold, or (3) withholding the amount due from the
Executive's other compensation.
(e) Employee Benefit Programs. During the Employment Period,
(i) the Executive shall be eligible to participate in all savings and retirement
plans, practices, policies and programs to the same extent as other senior
executives of the Company and (ii) the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs provided
by the Company, other than severance plans, practices, policies and programs but
including, without limitation, medical, prescription, dental, disability, salary
continuance, employee life insurance, group life insurance, accidental death and
travel accident insurance plans and programs, and, upon retirement, all
applicable retirement benefit plans to the same extent and subject to the same
terms, conditions, cost-sharing requirements and the like, as other senior
executives of the Company, as such plans may be amended from time to time, and
as supplemented hereby. Following a Change in Control, no benefit coverage
available to the Executive and/or to his family under any such plan, practice,
policy or program shall be materially reduced without the prior written consent
of the Executive.
(f) Retirement Benefit. During the Employment Period, the
Executive shall participate in Enterprise's Pension Plan, and also in
Enterprise's Limited Supplemental Benefits Plan, Mid-Career Hire Plan,
Reinstatement Plan and such other supplemental executive retirement plans as may
be adopted and amended by Enterprise from time to time ("SERPs"), such that the
aggregate value of the retirement benefits that he and his beneficiaries will
receive under all pension benefit plans of the Company (whether qualified or
not) will not be less than the benefits he would have received had he continued
to participate in such plans, as in effect immediately before the date hereof
through the earlier of the end of the Employment Period or Retirement, and
giving effect to the service credits set forth in Section 8 of the employment
agreement dated August 23, 1995, between PSE&G and the Executive (the "PSE&G
Employment Agreement"), the terms of which Section 8 are incorporated herein by
reference, and a copy of which PSE&G Employment Agreement is attached hereto. It
is agreed that the Option Award and any dividends or other distributions in
respect of the Option Award shall not be included in any pension calculation.
The Executive's right to retire shall be governed by the Enterprise Pension Plan
("Retirement").
(g) Expenses. The Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this Agreement.
The Company shall promptly reimburse him for all such expenses in accordance
with the policies of the Company in effect from time to time for reimbursement
of expenses for senior executives, and subject to documentation provided by the
Executive in accordance with such Company policies.
(h) Fringe Benefits. During the Employment Period, the
Executive shall participate in all fringe benefits and perquisites available to
senior executives of the Company, including provision of an automobile, on terms
and conditions that are commensurate with his positions and responsibilities at
the Company.
(i) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with Company policy for its
most senior executives as in effect from time to time, or six weeks vacation,
whichever is greater.
(j) Deferred Compensation. The Executive will retain all of
his rights in any compensation deferred prior to the date hereof in accordance
with the Deferred Compensation Plan, including earnings thereon, and following
the date hereof the obligations of the Company to pay such deferred compensation
at the times and in the manner specified in the Deferred Compensation Plan will
continue.
4. Termination of Employment.
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(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 4(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" means that (i) the Executive has been unable, for the period, if
any, specified in the Company's disability plan for senior executives, but not
less than a period of 180 consecutive days, to perform the Executive's duties
under this Agreement and (ii) a physician selected by the Company or its
insurers, and acceptable to the Executive or the Executive's legal
representative, has determined that the Executive is disabled within the meaning
of the applicable disability plan for senior executives.
(b) By the Company.
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(i) The Company may terminate the Executive's employment during
the Employment Period for Cause or without Cause. For purposes of this
Agreement, "Cause" shall mean (A) willful and continued failure by the
Executive to substantially perform his duties under this Agreement, (B)
the willful engaging by the Executive in gross misconduct which is
materially and demonstrably injurious to the Company, or (C) the
conviction of the Executive of a felony. No act or failure to act on the
part of the Executive shall be considered "willful" unless it is done,
or omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive's action or omission was in the
best interests of the Company. Any act or failure to act that is based
upon authority given pursuant to a resolution duly adopted by the Board
of Directors of the Company, or the advice of counsel for the Company,
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
(ii) A termination of the Executive's employment for Cause shall
be effected in accordance with the following procedures. The Company
shall give the Executive written notice ("Notice of Termination for
Cause") of its intention to terminate the Executive's employment for
Cause, setting forth in reasonable detail the specific conduct of the
Executive that it considers to constitute Cause and the specific
provision(s) of this Agreement on which it relies. Such notice shall be
given no later than 60 days after the act or failure (or the last in a
series of acts or failures) that the Company alleges to constitute
Cause. The Executive shall have 30 days after receiving the Notice of
Termination for Cause in which to cure such act or failure, to the
extent such cure is possible. In the case of a termination under Section
4(b)(i)(A) or Section 4(b)(i)(B), if the Executive fails to cure such
act or failure to the reasonable satisfaction of the Company, the
Company shall give the Executive a second written notice stating that in
the good faith opinion of the Board, the Executive is guilty of the
conduct described in the Notice of Termination for Cause and that such
conduct constitutes Cause under this Agreement.
(c) Good Reason.
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(i) The Executive may terminate his employment during the
Employment Period for Good Reason or without Good Reason. For purpose of
this Agreement, "Good Reason" shall mean:
(A) prior to the occurrence of a Change in Control,
any reduction in the Executive's Annual Base
Salary;
(B) following a Change in Control:
(1) any reduction in the Executive's Annual Base Salary,
target annual bonus, target long-term incentive or Retirement
benefit;
(2) any adverse change in the Executive's title,
authority, duties, responsibilities and reporting lines or the
assignment to the Executive of any duties or responsibilities
inconsistent in any respect with those customarily associated
with the position of the Executive immediately prior to the
Change in Control;
(3) any purported termination of the Executive's
employment by the Company for a reason or in a manner not
expressly permitted by this Agreement;
(4) any failure by Enterprise to comply with Section
10(c) of this Agreement; or
(5) any other material breach of this Agreement by the
Company that either is not taken in good faith or, even if taken
in good faith, is not remedied by the Company promptly after
receipt of notice thereof from the Executive.
Following a Change in Control, the Executive's determination
that an act or failure to act constitutes Good Reason shall be
conclusively presumed to be valid unless such determination is
decided to be unreasonable by an arbitrator pursuant to
Section 9.
(ii) A termination of employment by the Executive for Good
Reason shall be effectuated by giving the Company written notice
("Notice of Termination for Good Reason") of the termination, setting
forth in reasonable detail the specific acts or omissions of the Company
that constitute Good Reason and the specific provision(s) of this
Agreement on which the Executive relies. Unless the CEO determines
otherwise, a Notice of Termination for Good Reason by the Executive must
be made within 60 days after the Executive first has actual knowledge of
the act or omission (or the last in a series of acts or omissions) that
the Executive alleges to constitute Good Reason, and the Company shall
have 30 days from the receipt of such Notice of Termination for Good
Reason to cure the conduct cited therein. A termination of employment by
the Executive for Good Reason shall be effective on the final day of
such 30-day cure period unless prior to such time the Company has cured
the specific conduct asserted by the Executive to constitute Good Reason
to the reasonable satisfaction of the Executive.
(iii) A termination of the Executive's employment by the
Executive without Good Reason, including Retirement, shall be effected
by giving the Company at least 30 days' written notice specifying the
effective date of termination.
(d) Date of Termination. The "Date of Termination" means the
date of the Executive's death, the Disability Effective Date, or the date on
which the termination of the Executive's employment by the Company for Cause or
without Cause or by the Executive for Good Reason or without Good Reason,
including Retirement, is effective, as the case may be.
5. Obligations of the Company upon Termination.
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(a) Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the Executive's employment other
than for Cause, death or Disability, or the Executive shall terminate his
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash, within 15 days after the Date of Termination, the aggregate of the
amounts set forth in clauses A and B below:
A. The sum of:
(1) the Executive's Annual Base Salary
through the Date of Termination;
(2) the product of (x) the "target" annual bonus
under Section 3(b) (the "Target Bonus") and
(y) a fraction, the numerator of which is
the number of days in the current calendar
year through the Date of Termination, and
the denominator of which is 365; and
(3) any accrued vacation pay;
in each case to the extent not theretofore paid (the sum of
the amounts described in clauses (1), (2) and (3) shall be
hereinafter referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) two and (2) the
sum of (x) the Executive's Annual Base Salary and (y)
the Target Bonus.
(ii) the Option Award shall vest in accordance with Section
3(d)(i);
(iii) any stock awards, stock options, other than the Option
Award, stock appreciation rights or other equity-based awards that were
outstanding immediately prior to the Date of Termination ("Prior Equity
Awards") shall vest and/or become exercisable in accordance with the
underlying plan for such Prior Equity Award;
(iv) for two years after the Executive's Date of Termination or
such longer period as may be provided by the terms of the appropriate
plan, program, practice or policy, the Company shall continue benefits
to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the welfare
plans, programs, practices and policies described in Section 3(e) of
this Agreement if the Executive's employment had not been terminated or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided however, that if the
Executive becomes reemployed with another employer and is eligible to
receive medical or dental benefits under another employer provided plan,
the medical and dental benefits described herein shall be secondary to
those provided under such other plan during such applicable period of
eligibility;
(v) any compensation previously deferred (other than pursuant to
a tax-qualified plan) by or on behalf of the Executive (together with
any accrued interest or earnings thereon), whether or not then vested,
shall become vested on the Date of Termination and shall be paid in
accordance with the terms of the plan, policy or practice under which it
was deferred;
(vi) the Company shall, at its sole expense as incurred, provide
the Executive with outplacement services suitable to the Executive's
position for a period not to exceed two years with a nationally
recognized outplacement firm; and,
(vii) to the extent not theretofore paid or provided, the
Company shall pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is
entitled to receive under any plan, program, policy, practice, contract
or agreement of the Company and its affiliated companies (other than
medical or dental benefits if the Executive is eligible for such
benefits to be provided by a subsequent employer), including earned but
unpaid stock and similar compensation but excluding any severance plan
or policy (such other amounts and benefits shall be hereinafter referred
to as the "Other Benefits").
(b) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, or if the
Executive voluntarily terminates employment during the Employment Period,
excluding a resignation for Good Reason, the Company shall have no further
payment obligations to the Executive other than for amounts described in
Sections 5(a)(i)(A)(1) and 5(a)(i)(A)(3) and the timely payment or provision of
Other Benefits. In such case, all such amounts shall be paid to the Executive in
a lump sum within 30 days of the Date of Termination. Any unvested portion of
the Option Award shall be forfeited in accordance with Section 3(d)(i).
(c) Death. If the Executive's employment terminates by reason
of the Executive's death during the Employment Period, all Accrued Obligations
as of the time of death shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within 30 days of the Date of Termination
and the Executive's estate or beneficiary shall be entitled to any Other
Benefits in accordance with their terms. In addition, the Option Award shall
vest in accordance with Section 3(d)(i). Any Prior Equity Awards shall vest
and/or become exercisable, as the case may be, as of the Date of Termination and
the Executive's estate or beneficiary, as the case may be, shall have the right
to exercise any such stock option, stock appreciation right or other exercisable
equity-based award until the earlier of (A) one year from the Date of
Termination (or such longer period as may be provided under the terms of any
such stock option, stock appreciation right or other equity-based award) and (B)
the normal expiration date of such stock option, stock appreciation right or
other equity-based award.
(d) Disability. If the Executive's employment is terminated by
reason of Disability during the Employment Period, all Accrued Obligations shall
be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination, and the Executive shall be entitled to any Other Benefits in
accordance with their terms. In addition, the Option Award shall vest in
accordance with Section 3(d)(i). Any Prior Equity Awards shall vest immediately
and/or become exercisable, as the case may be, and the Executive shall have the
right to exercise any such stock option, stock appreciation right or other
exercisable equity-based award until the earlier of (A) one year from the Date
of Termination (or such longer period as may be provided under the terms of any
such stock option, stock appreciation right or other equity-based award) and (B)
the normal expiration date of such stock option, stock appreciation right or
other equity-based award.
(e) Retirement. If the Executive's employment terminates as a
result of Retirement, the Executive shall be paid the Accrued Obligations in a
lump sum in cash within 30 days of the Date of Termination and the Executive
shall be entitled to any Other Benefits in accordance with their terms. Any
remaining portion of the Option Award shall vest or be forfeited in accordance
with Section 3(d)(i).
6. Change in Control.
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(a) Benefits Upon a Change in Control. The Executive's rights
upon a termination of employment that occurs following a Change in Control shall
be as specified in Section 5 generally for termination of employment, except (i)
the amount payable under 5(a)(i)(B) shall be three times the sum of (x) the
Executive's Annual Base Salary and (y) the Target Bonus; (ii) the benefits under
Section 5(a)(iv) shall be provided for three years after the Date of Termination
and the Executive's eligibility (but not the time of commencement of such
benefits) for retiree benefits pursuant to such plans, practices, programs and
policies shall be determined as if the Executive had remained employed until
three years after the Date of Termination and to have retired on the last day of
such period; (iii) the Option Award shall have vested in accordance with Section
3(d)(i); and (iv) the Executive shall be paid within 15 days after the Date of
Termination, an amount equal to the excess of
(A) the actuarial equivalent of the benefit under the
Company's applicable qualified defined benefit retirement plan
in which the Executive is participating immediately prior to
his Date of Termination (the "Retirement Plan") (utilizing the
rate used to determine lump sums and, to the extent
applicable, other actuarial assumptions no less favorable to
the Executive than those in effect under the Retirement Plan
immediately prior to the Date of this Agreement), any SERPs in
which the Executive participates and, to the extent
applicable, any other defined benefit retirement arrangement
between the Executive and the Company ("Other Pension
Benefits") which the Executive would receive if the
Executive's employment continued for three additional years
beyond the Date of Termination, assuming for this purpose that
all accrued benefits are fully vested, and, assuming that the
Executive's compensation for such deemed additional period was
the Executive's Annual Base Salary as in effect immediately
prior to the Date of Termination and assuming a bonus in each
year during such deemed additional period equal to the Target
Bonus, over
(B) the actuarial equivalent of the Executive's
actual benefit (paid or payable), if any, under the Retirement
Plan, the SERPs and Other Pension Benefits as of the Date of
Termination (utilizing the rate used to determine lump sums
and, to the extent applicable, other actuarial assumptions no
less favorable to the Executive than those in effect under the
Retirement Plan immediately prior to the date of this
Agreement).
(b) Definition. For purposes of this Agreement, a "Change in
Control" shall mean the occurrence of any of the following events after the date
of this Agreement:
(i) any "person" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") is or
becomes the beneficial owner within the meaning of Rule 13d-3 under the
Exchange Act (a "Beneficial Owner"), directly or indirectly, of
securities of Enterprise (not including in the securities beneficially
owned by such person any securities acquired directly from Enterprise or
its affiliates) representing 25% or more of the combined voting power of
Enterprise's then outstanding securities, excluding any person who
becomes such a Beneficial Owner in connection with a transaction
described in clause (A) of paragraph (iii) below; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors of Enterprise then
serving: individuals who, on the date of this Agreement, constitute the
Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation,
relating to the election of directors of Enterprise) whose appointment
or election by the Board or nomination for election by Enterprise's
stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or recommended; or
(iii) there is consummated a merger or consolidation of
Enterprise or any direct or indirect wholly-owned subsidiary of
Enterprise with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of Enterprise
outstanding immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of Enterprise or any
subsidiary of Enterprise, at least 75% of the combined voting power of
the securities of Enterprise or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or
(B) a merger or consolidation effected to implement a recapitalization
of Enterprise (or similar transaction) in which no person is or becomes
the Beneficial Owner, directly or indirectly, of securities of
Enterprise representing 25% or more of the combined voting power of
Enterprise's then outstanding securities; or
(iv) the shareholders of Enterprise approve a plan of complete
liquidation or dissolution of Enterprise or there is consummated an
agreement for the sale or disposition by Enterprise of all or
substantially all of Enterprise's assets, other than a sale or
disposition by Enterprise of all or substantially all of Enterprise's
assets to an entity, at least 75% of the combined voting power of the
voting securities of which are owned by stockholders of Enterprise in
substantially the same proportions as their ownership of Enterprise
immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of Enterprise immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of Enterprise
immediately following such transaction or series of transactions.
7. Confidential Information; No Competition.
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(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all confidential information, knowledge or data (defined
below) relating to the Company or any of its affiliates or subsidiaries, and
their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). Upon Termination of the Executive's employment, he shall return to
the Company all Company information. After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it, except (x) otherwise publicly
available information, or (y) as may be necessary to enforce his rights under
this Agreement or necessary to defend himself against a claim asserted directly
or indirectly by the Company or its affiliates. Unless and until a determination
has been made in accordance with Section 7(d) or Section 9 hereof that the
Executive has violated this Section 7, an asserted violation of the provisions
of this Section 7 shall not constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
(b) As used herein, the term "confidential information,
knowledge or data" means all trade secrets, proprietary and confidential
business information belonging to, used by, or in the possession of the Company
or any of its affiliates and subsidiaries, including but not limited to
information, knowledge or data related to business strategies, plans and
financial information, mergers, acquisitions or consolidations, purchase or sale
of property, leasing, pricing, sales programs or tactics, actual or past
sellers, purchasers, lessees, lessors or customers, those with whom the Company
or its affiliates and subsidiaries has begun negotiations for new business,
costs, employee compensation, marketing and development plans, inventions and
technology, whether such confidential information, knowledge or data is oral,
written or electronically recorded or stored, except information in the public
domain, information known by the Executive prior to employment with the Company,
and information received by the Executive from sources other than the Company or
its affiliates and subsidiaries, without obligation of confidentiality.
(c) The confidential knowledge, information and data, as
defined in the previous paragraph, gained in the performance of the Executive's
duties hereunder may be valuable to those who are now, or might become,
competitors of the Company or its affiliates and subsidiaries. Accordingly, the
Executive agrees that, without the written consent of Enterprise, he will not,
for the period of one year from Date of Termination or completion of the
Employment Period, whichever occurs first, directly own, manage, operate, join,
control, become employed by, consult to or participate in the ownership,
management, or control of any business which is in direct competition with the
Company and/or its affiliates and subsidiaries. Further, the Executive agrees
that, for two years following the Date of Termination, he will not, directly or
indirectly, solicit or hire, or encourage the solicitation or hiring of any
person who was a managerial or higher level employee of the Company at any time
during the term of the Executive's employment by the Company by any employer
other than the Company for any position as an employee, independent contractor,
consultant or otherwise. The foregoing agreement of the Executive shall not
apply to any person after 6 months have elapsed subsequent to the date on which
such person's employment by the Company has terminated. In the case of any such
prohibited activity, the Executive shall not be entitled to post-employment
payments (including any unexercised options under the Option Award).
(d) In the event of a breach by the Executive of any of the
agreements set forth in Paragraphs (a), (b) or (c) above, it is agreed that the
Company shall suffer irreparable harm for which money damages are not an
adequate remedy, and that, in the event of such breach, the Company shall be
entitled to obtain an order of a court of competent jurisdiction for equitable
relief from such breach, including, but not limited to, temporary restraining
orders and preliminary and/or permanent injunctions against the breach of such
agreements by the Executive. In the event that the Company should initiate any
legal action for the breach or enforcement of any of the provisions contained in
this Section 7 and the Company does not prevail in such action, the Company
shall promptly reimburse the Executive the full amount of any court costs,
filing fees, attorney's fees which the Executive incurs in defending such
action, and any loss of income during the period of such litigation.
8. Full Settlement.
---------------
(a) No Duty to Mitigate; No Reduction. Except as provided in
Section 7(c), and except to the extent that a Court under Section 7(d) or an
arbitrator appointed under Section 9 shall determine to permit an offset in
respect of a violation by the Executive of his obligations under Section 7, 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
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as specifically provided in Section
5(a)(iv) and Section 5(a)(vii) with respect to certain medical and dental
benefits, such amounts shall not be reduced whether or not the Executive obtains
other employment.
(b) Non-exclusivity of Rights. Except as provided in Section
7(c), nothing in the Agreement shall prevent or limit the Executive's continuing
or future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies for which the Executive may qualify.
Vested benefits and other amounts that the Executive is otherwise entitled to
receive under the incentive compensation plans referred to in Section 3(c), the
SERPs, or any other plan, policy, practice of program of the Company or any of
its affiliated companies on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, policy, practice or program, as the
case may be, except as explicitly modified by this Agreement.
9. Disputes
Except with respect to equitable relief provided for in
Section 7(d), any dispute about the validity, interpretation, effect or alleged
violation of this Agreement shall be resolved by confidential binding
arbitration before one arbitrator to be held in Newark, New Jersey in accordance
with the Employment Dispute Resolution Rules of the American Arbitration
Association and the United States Arbitration Act. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereover. All costs and expenses incurred by the Company or the Executive or
the Executive's beneficiaries in connection with any such controversy or
dispute, including without limitation reasonable attorney's fees, shall be borne
by the Company as incurred, except that the Executive shall be responsible for
any such costs and expenses incurred in connection with any claim determined by
the arbitrator to have been without reasonable basis or to have been brought in
bad faith. The Executive shall be entitled to interest at the applicable Federal
rate provided for in Section 7872 (f) (2)(A) of the Internal Revenue Code of
1986, as amended (the "Code"), on any delayed payment which the arbitrator
determine he was entitled to under this Agreement.
10. Successors.
----------
(a) No Assignment by Executive. This Agreement is personal to
the Executive and without the prior written consent of Enterprise 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) Successors to Enterprise. This Agreement shall inure to
the benefit of and be binding upon Enterprise and its successors and assigns.
(c) Performance by a Successor to Enterprise. Enterprise will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of Enterprise to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that Enterprise would be required to
perform it if no such succession had taken place. As used in this Agreement,
"Enterprise" shall mean Enterprise as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 11) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income and employment taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 11(c), all
determinations required to be made under this Section 11, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the Company's independent auditors or such other certified public accounting
firm as may be jointly designated by the Executive and the Company (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the Company and the Executive. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 11, shall be paid by the Company to the Executive
within 15 days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 11(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 11(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 11(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 11(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 11(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
12. Miscellaneous.
-------------
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
agreements executed and performed entirely therein. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. 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.
(b) 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: 00 Xxxx Xxxxx
X. X. Xxx 0000
Xxxxxx, XX 00000
If to the Company: 00 Xxxx Xxxxx
X. X. Xxx 0000
Xxxxxx, XX 00000
Attention: Vice President and General Counsel
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.
(c) Invalidity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement shall
be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law. Further, to the extent that a provision is to be
held invalid or unenforceable, it shall be limited or construed in a manner that
is valid and enforceable and gives maximum permissible effect to the provision
and the intent of this Agreement.
(d) Tax Withholding. Notwithstanding any other provision of
this Agreement, the Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) Failure to Assert Rights. The Executive's or the Company's
failure to insist upon strict compliance with any provisions of, or to assert
any right under, this Agreement shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under this Agreement.
(f) No Alienation. The rights and benefits of the Executive
under this Agreement may not be anticipated, assigned, alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable process
except as required by law. Any attempt by the Executive to anticipate, alienate,
assign, sell, transfer, pledge, encumber or charge the same shall be void.
Payments hereunder shall not be considered assets of the Executive in the event
of insolvency or bankruptcy.
(g) Entire Agreement. This Employment Agreement represents the
complete agreement between the Executive and the Company relating to employment
and termination and may not be altered or changed except by written agreement
executed by the parties hereto or their respective successors or legal
representatives. This Agreement supersedes the PSE&G Employment Agreement,
except Section 8 thereof, which is hereby incorporated by reference into this
Agreement.
IN WITNESS WHEREOF, the Executive and, pursuant to due
authorization from its Board of Directors, the Company have caused this
Agreement to be executed as of the day and year first above written.
By: XXXXXX X. XXXXXX
________________________________
Xxxxxx X. Xxxxxx
President and Chief Operating Officer
Public Service Electric and Gas Company
PUBLIC SERVICE ENTERPRISE
GROUP INCORPORATED
By: E. XXXXX XXXXXXX
________________________________
E. Xxxxx Xxxxxxx
Chairman of the Board, President and Chief
Executive Officer
