Exhibit 10a(24)
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this 10th day of August,
1995 by and between Atlantic Energy, Inc., a New Jersey corporation
(the "Company"), and Scott B. Ungerer, (the "Executive").
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. Term of Agreement. The term of this Agreement shall
commence on the date hereof (the "Effective Date") and shall
continue until the second anniversary of the Effective Date (the
"Employment Period"); provided, however, that the Employment Period
shall be automatically renewed for two years unless either party
shall send the other written notice of its intention to terminate
the agreement at the end of such Employment Period one year prior
to the end of such Employment Period; and, provided, further, that
upon the occurrence of a Change of Control, the Employment Period
shall become three years and shall commence on the date of the
Change of Control, and shall thereafter be automatically renewed
for two years unless either party shall send the other written
notice of its intention to terminate the agreement one year prior
to the end of the then current Employment Period.
2. Place of Employment. The Executive's services during
the term of this Agreement shall be performed primarily at the
principal offices of the Company in Egg Harbor Township, New
Jersey. The Executive shall be furnished with a suitable office
and such other facilities and services as he may reasonably require
in performing his obligations under this Agreement.
3. Employment Obligations.
(a) Position and Duties. The Company hereby agrees to
employ the Executive as its Vice President, Enterprise Activities
and as President and Chief Operating Officer of Atlantic Energy
Enterprises, Inc. for the Employment Period. The Executive shall
exercise his reasonable best efforts in furtherance of, and shall
devote substantially all of his working time and attention to the
affairs of the Company and its affiliates, and shall perform such
duties and services as may reasonably be assigned to him by, and
shall report directly to the Chief Executive Officer and the Board
of Directors of the Company (the "Board") and the Board of
Directors of AEE.
(b) Business Time. From and after the Effective Date,
the Executive agrees to devote his full business time during normal
business hours to the business and affairs of the Company and to
use his best efforts to perform faithfully and efficiently the
responsibilities assigned to him hereunder, to the extent necessary
to discharge such responsibilities, except for (i) time spent in
managing his personal, financial and legal affairs and serving on
corporate, civic or charitable boards or committees on which he
served prior to the Effective Date, in each case only if and to the
extent not substantially interfering with the performance of such
responsibilities, 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 im-
mediately preceding the Effective Date which is not in violation of
any Company policy shall not be deemed to interfere with the
performance of the Executive's services to the Company. In
addition, the Executive may commence service as a director of other
corporations or organizations after the Effective Date upon
approval by the Board which, in the judgment of the Board, will not
present any conflict of interest with the Company or any subsidiary
or affiliate thereof, and which would not affect the performance of
Executive's duties pursuant to this Agreement, which approval shall
not be unreasonably withheld; provided, however, that the Executive
shall neither (a) become an officer or director of (i) another
entity which has or will have the status of a public utility under
the Federal Power Act, or any successor act, (ii) any bank, trust
company, banking association or firm that is authorized by law to
underwrite or participate in the marketing of securities of a
public utility, or (iii) any company supplying electrical equipment
to the Company, nor (b) accept any such position and commence the
performance of any duties or services in such capacity (an
"Interlock"), unless the Executive shall have first (x) furnished
the Board with at least thirty (30) days prior written notice of
his intention to create such Interlock and (y) secured, if the
Board shall request that such action be taken, any necessary
authorization for such Interlock, in form and substance
satisfactory to the Board, from the Federal Energy Regulatory
Commission, or successor regulatory agency, pursuant to Section
305(b) of the Federal Power Act, or any supplement or amendment
thereto.
4. Compensation. (a) Base Salary. During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at an annual rate at least equal to the annual 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 any individual
having authority to take such action in accordance with the
Company's regular practices. Once increased, any reference to Base
Salary herein shall be a reference to such increased amount.
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 have the
opportunity to receive an annual bonus ("Annual Bonus
Opportunity"), based on the achievement of target levels of
performance. Without limiting the generality of the foregoing,
following any Change of Control (as defined hereinafter), the
amount actually payable to the Executive as an annual bonus shall
not be less than an amount equal to the higher of the bonus paid to
the Executive for the most recently completed fiscal year of the
Company or the target bonus (which, if established in an affiliate
company, to be consistent with AEI shall mean one hundred percent
as the target rather than any greater percentage) for the then
current fiscal year (the "Minimum Bonus Amount"). Any amount
payable in respect of the Annual Bonus Opportunity or the Minimum
Bonus Amount shall be paid no later than sixty (60) days after the
close of the fiscal year for which the amount (or prorated portion)
is earned or awarded, 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 and Equity
Programs. During the Employment Period, the Executive shall par-
ticipate in all long-term incentive compensation programs and
equity programs 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
such level(s) as may be made available to the Executive and other
similarly situated executive officers of the Company or to
Executive as an Officer of an affiliated company, from time to 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,
supplemental retirement or excess benefit (collectively, the
"Supplemental Retirement Benefits"), deferred compensation,
savings, medical, dental, health, disability, 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 and provides the same level and quality of
coverage as the Executive's participation in such plans immediately
prior to the Effective Date (except for the Medical Executive
Reimbursement Plan (the "MERP"), it being understood that the MERP
shall be terminated as of September 30, 1995), or, if more
favorable to the Executive, at the level made available to the
Executive as an Officer of an affiliated company, from time to time
thereafter.
(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 from time
to time; provided; however, that in no event shall such policies
and procedures after the occurrence of a Change of Control be less
favorable to the Executive than immediately prior to a Change of
Control. Notwithstanding the foregoing, the Company may apply the
policies and procedures in effect after the Change of Control date
to the Executive, if such policies and procedures are more
favorable to the Executive than those in effect immediately prior
to the Change of Control date.
(f) Vacation and Fringe Benefits. During the Employment
Period, the Executive shall be entitled to paid vacation and fringe
benefits at a level that is commensurate with the paid vacation 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 executive officers at any time thereafter.
(g) Indemnification. During and after the Employment
Period, the Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of
action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its
subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the "Governing
Documents"); provided, however, that in no event shall the
protection afforded to the Executive hereunder be less than that
afforded under the Governing Documents as in effect immediately
prior to the Effective Date, or if later, the Change of Control.
5. Termination. (a) Death, Permanent Disability or
Retirement. Subject to the provisions of Section 1 hereof, this
Agreement shall terminate automatically upon the Executive's death,
Permanent Disability (as defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"), except that
a six month period shall be substituted for the twelve month period
provided for therein) or voluntary retirement under any of the
Company's retirement plans as in effect from time to time.
(b) Voluntary Termination. Notwithstanding anything in
this Agreement to the contrary, the Executive may, upon not less
than 60 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); provided, however, any termination by the Executive
pursuant to Section 5(d) on account of Good Reason (as defined
therein) shall not be treated as a voluntary termination under this
Section 5(b).
(c) Cause. The Company may terminate the Executive's
employment for Cause. For purposes of this Agreement, "Cause"
means (i) willful and continuous failure by Executive to perform
his duties under this Agreement (other than resulting from
incapacity due to physical or mental illness),(ii) the Executive's
conviction or plea of nolo contendere to a felony; (iii) the
Executive's willful engagement in misconduct in connection with
employment which results in material damage to the Company's
business or reputation; or (iv) material breach of Executive's
duties hereunder which result in material damage to the Company's
business or reputation, in each of (ii) through (iv) above, upon 30
days written notice to the Executive, the opportunity for the
Executive to be heard by the Board and the good faith determination
by at least two-thirds of the Company's non-employee directors that
Cause exists; provided, however, that after the occurrence of a
Change of Control (as hereinafter defined), "Cause" shall be
limited to (ii) through (iv) above.
(d) Good Reason. During the Employment Period,
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:
(i (A) the assignment to the Executive of any duties
inconsistent with the Executive's position, authority or
responsibilities as contemplated by Section 3 of this
Agreement, or (B) any other adverse change in such position,
including titles, authority or responsibilities;
(ii reduction of Executives's base salary or bonus
opportunities, or any other material breach by the Company of
this Agreement;
(iii the Company's requiring the Executive to be based
at any office or location more than 25 miles from that
location at which he performed his services specified under
the provisions of Section 2 immediately prior to the Change of
Control, except for travel reasonably required in the
performance of the Executive's responsibilities; or
(iv any failure by the Company to obtain the
assumption and agreement to perform this Agreement by a
successor as contemplated by Section 12(b) upon the occurrence
of a Change of Control; provided, however, the successor has
had actual written notice of the existence of this Agreement
and its terms and an opportunity to assume the Company's
responsibilities under this Agreement during a period of 10
business days after receipt of such notice.
(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(f). For purposes of this
Agreement, a "Notice of Termination" means a written notice given,
in the case of a termination for Cause, within 10 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 180 days of the Executive's having actual knowledge of the
events 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 this Agreement (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 purposes of this
Agreement, the term "Date of Termination" means (i) in the case of
a termination for which a Notice of Termination is required, the
date of receipt of such Notice of Termination or, if later, the
date specified therein, as the case may be, and (ii) in all other
cases, the actual date on which the Executive's employment
terminates during the Employment Period. On or as soon practicable
following the Date of Termination, 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.
6. Obligations of the Company upon Termination.
(a) Death, Permanent Disability or Retirement. If the Executive's
employment is terminated during the Employment Period by reason of
the Executive's death, Permanent Disability or voluntary retirement
this Agreement 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 the Company shall pay or provide to the
Executive or the Executive's legal representative under this
Agreement the following amounts either in a lump sum or in such
other form of payment as is provided or elected by the Executive
under the operative plan:
(i the Executive's full Base Salary through the Date
of Termination (the "Earned Salary");
(ii the Supplemental Retirement Benefits and the
amount otherwise payable to or in respect of the Executive
under the Company's otherwise applicable long-term incentive
compensation and equity plans and programs (the "Incentive and
Equity Amounts") it being understood that, in the event of
death or disability, any applicable performance targets
thereunder (to the extent not already determined as of the
Termination Date) shall be deemed to have been met for the
applicable performance period and that payments thereunder
shall be pro-rated as of the Date of Termination; and in the
event of a termination by reason of retirement, then the
Supplemental Retirement Benefits and the Incentive and Equity
Amounts, the Incentive and Equity Amounts being calculated and
payable in accordance with the terms of the underlying plans
and payable to the Executive when awards are payable to all
other participants in such plans in accordance with the terms
thereof, but prorated through the date of such retirement; and
(iii an amount (the "Pro-Rated Bonus") equal to the
product of (x) times (y), minus (z):
(x) the Minimum Bonus Amount;
(y) a fraction, the numerator of which is the
number of days in the then current calendar
year which have elapsed as of the Date of
Termination, and the denominator of which is
365;
(z) if Executive's termination occurs in the
same calendar year as the Change of Control,
an amount equal to the amount paid to the
Executive under the Company's applicable bonus
plan (the "Actual Bonus Payment")
(iv) all vested amounts or 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").
Any Earned Salary, Accrued Obligations and Pro-Rated Bonus shall be
paid in cash in a single lump sum as soon as practicable ( but in
no event more than 20 days) following the Date of Termination. Any
Incentive and Equity Amounts and Supplemental Retirement Benefits
accrued by the Executive shall be payable in accordance with the
terms of the underlying plans.
(b) Cause and Voluntary Termination. If, during the
Employment Period, the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than on
account of Good Reason), the Company shall pay the Executive the
Earned Salary and the Accrued Obligations (including, but not
limited to, the Incentive and Equity Amounts and Supplemental
Retirement Benefits, each in accordance with the terms of the
underlying plan) in cash in a single lump sum as soon as
practicable (but in no event more than 20 days following) the Date
of Termination, or in accordance with the terms of the underlying
plan.
(c) Termination by the Company other than for Cause and
Termination by the Executive for Good Reason.
(A) Prior to the Occurrence of a Change of Control.
(i Payments. If, prior to a Change of Control, the
Company terminates the Executive's employment other than for
Cause, or the Executive terminates his employment for Good
Reason, the Company shall pay to the Executive the following
amounts, either in a lump sum or in such other form of payment
as is provided or elected by the Executive under the operative
plan:
(A) the Executive's Earned Salary;
(B) a cash amount (the "Pre-Change Severance Amount")
equal to two multiplied by the sum of
(1) the Executive's annual Base Salary; plus
(2) the Minimum Bonus Amount.
(C) the Pro-Rated Bonus;
(D) the Incentive and Equity Amounts;
(E) the Supplemental Retirement Benefits, it being
understood that upon the occurrence of a
termination under this Section 6(c)(A), Executive's
vested interest in such benefits shall accelerate;
and
(F) the Accrued Obligations.
Any Earned Salary, Pre-Change Severance Amount, Accrued
Obligations and Pro-Rated Bonus shall be paid in cash in a
single lump sum as soon as practicable (but in no event more
than 20 days) following the Date of Termination. The
Supplemental Retirement Benefits and Incentive and Equity
Amounts shall be payable in accordance with the terms of the
underlying plans.
(ii Continuation of Benefits. If, during the
Employment Period, the Company terminates the Executive's
employment other than for Cause, or the Executive terminates
employment for Good Reason prior to the occurrence of a Change
of Control:
(A) the Executive (and, to the extent applicable, his
dependents) shall be entitled, after the Date of
Termination until the earlier of (i) the second
anniversary of the Date of Termination or, (ii) the
date on which the Executive is covered under any
comparable plans of a subsequent employer (the "End
Date"), to continue participation (including, but
not limited to, vesting and accruals) in all of the
Company's employee and executive pension, welfare
and fringe benefit plans, it being understood that
for purposes of the calculation of Supplemental
Retirement Benefits, Final Annual Compensation (as
defined in the underlying plans) shall be equal to
Final Annual Compensation as of the 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. 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;
(B) the Executive (or, in the event of the Executive's
death during such period, the Executive's
beneficiary or estate) shall have the right to
exercise any outstanding options to purchase shares
of Common Stock of the Company then exercisable by
the Executive or which would become exercisable in
accordance with the applicable option agreement and
the applicable equity incentive plan of the Company
(such agreements and plans referred to collectively
as the "Equity Documents") for the period of time
permitted in accordance with the generally
applicable terms of the governing Equity Documents)
after the Date of Termination; and
(C) for purposes of the Benefit Plans and the Equity
Documents, the Executive will be deemed to have
terminated employment under mutually satisfactory
conditions.
(B) After the Occurrence of a Change of Control.
(i Payments. If, following a Change of Control, the
Company terminates the Executive's employment other than for
Cause, or the Executive terminates his employment for Good
Reason, the Company shall pay to the Executive the following
amounts, either in a lump sum or in such other form of payment
as is provided or elected by the Executive under the operative
plan:
(A) the Executive's Earned Salary;
(B) a cash amount (the "Severance Amount") equal to
three times the sum of
(1) the Executive's annual Base Salary; and
(2) the Minimum Bonus Amount;
(C) the Pro-Rated Bonus;
(D) the Incentive and Equity Amounts, all of which
shall be fully accelerated and deemed earned, and
all applicable performance targets thereunder shall
be deemed to have been met upon the occurrence of a
Change of Control;
(E) the Supplemental Retirement Benefits, which shall
be determined based on the granting of service
credit for a period of three years and, after such
credit has been granted, shall be computed based
upon the deemed age of the Executive at the end of
such three year period, it being understood that
upon the occurrence of a Change of Control,
Executive's vested interest in such benefits shall
accelerate and that for purposes of the calculation
of Supplemental Retirement Benefits, Final Annual
Compensation (as defined in the underlying plans)
shall be equal to Final Annual Compensation as of
the Date of Termination; and
(F) the Accrued Obligations.
Any Earned Salary, Severance Amount, Accrued Obligations, and
Pro-Rated Bonus shall be paid in cash, or in the case of the
Incentive and Equity Amounts, in kind if so provided under the
relevant plan, in a single lump sum as soon as practicable
(but in no event more than 20 days) following the Date of
Termination. The Supplemental Retirement Benefits shall be
payable in accordance with the terms of the underlying plans
(after giving effect to the acceleration and granting of
service credit provided for herein) and the elections of the
Executive thereunder.
(ii) Continuation of Benefits. If, during the
Employment Period and after the occurrence of a Change of
Control, the Company terminates the Executive's employment
other than for Cause or the Executive terminates his
employment for Good Reason:
(A) the Executive (and, to the extent applicable, his
dependents) shall be entitled, after the Date of
Termination until the earlier of (i) the third
anniversary of the Date of Termination, or (ii) the
date on which the Executive is covered under any
comparable plans of a subsequent employer, (the
"End Date"), to continue participation (including,
but not limited to, vesting and accruals) in all of
the Company's employee and executive pension,
welfare and fringe benefit plans, excluding the
Supplemental Retirement Benefits (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. 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;
(B) the Executive (or, in the event of the Executive's
death during such period, the Executive's
beneficiary or estate) shall have the right to
exercise any outstanding options to purchase shares
of Common Stock of the Company then exercisable by
the Executive or which would become exercisable in
accordance with the applicable Equity Documents for
the period of time permitted in accordance with the
generally applicable terms of the governing Equity
Documents, after the Date of Termination; and
(C) for purposes of the Benefit Plans and the Equity
Documents, the Executive will be deemed to have
terminated employment under mutually satisfactory
conditions.
(d) Discharge of the Company's Obligations.
Except as expressly provided in the last sentence of this Section
6(d), the amounts payable to the Executive pursuant to this Section
6 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. Nothing in this Section 6(d) shall
be construed to release the Company from its commitment to
indemnify the Executive and hold the Executive harmless from and
against any claim, loss or cause of action arising from or out of
the Executive's performance as an officer, director or employee of
the Company or any of its Subsidiaries or in any other capacity,
including any fiduciary capacity, in which the Executive served at
the request of the Company to the maximum extent permitted by
applicable law and the Governing Documents.
(e) Certain Further Payments by the Company.
(i 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 6(e)(v) below an additional amount (the
"Tax Reimbursement Payment") such that the net amount retained
by the Executive with respect to such Covered Payments, after
deduction of any Excise Tax on the Covered Payments and any
Federal, state and local income, employment or other tax and
Excise Tax on the Tax Reimbursement Payment provided for by
this Section 6(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 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 28OG of the
Code, and all "parachute payments" in excess of the
"base amount" (as defined under Section 28OG(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
28OG(b)(4)(B) of the Code) in excess of the "base
amount," or such "parachute payments" are otherwise
not subject to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the
Accountants in accordance with the principles of
Section 28OG of the Code.
(iii For purposes of determining the amount of the Tax
Reimbursement Payment, the Executive shall be deemed to pay:
(A) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the
calendar year in which the Tax Reimbursement
Payment is to be made, and
(B) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for
the calendar year in which the Tax Reimbursement
Payment is to be made, net of the maximum reduction
in Federal incomes taxes which could be obtained
from the deduction of such state or local taxes if
paid in such year.
(iv In the event that the Excise Tax is subsequently
determined by the Accountants or pursuant to any proceeding or
negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax
Reimbursement Payment made, the Executive shall repay to the
Company, at the time that the amount of such reduction in the
Excise Tax is finally determined, the portion of such prior
Tax Reimbursement Payment that would not have been paid if
such Excise Tax had been applied in initially calculating such
Tax Reimbursement Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. Notwithstanding the foregoing, in the event any portion
of the Tax Reimbursement Payment to be refunded to the Company
has been paid to any Federal, state or local tax authority,
repayment thereof shall not be required until actual refund or
credit of such portion has been made to the Executive, and
interest payable to the Company shall not exceed interest
received or credited to the Executive by such tax authority
for the period it held such portion. The Executive and the
Company shall mutually agree upon the course of action to be
pursued (and the method of allocating the expenses thereof) if
the Executive's good faith claim for refund or credit is
denied.
In the event that the Excise Tax is later determined by
the Accountants or pursuant to any proceeding or negotiations
with the Internal Revenue Service (the "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,
such that the net amount retained by the Executive with
respect to the Covered Payments, after deduction of any Excise
Tax on the Covered Payments and any Federal, state and local
income, employment or other tax and Excise Tax on the Tax
Reimbursement Payment provided for by this Section, 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.
The Company agrees to reimburse the Executive for reasonable
fees and expenses in connection with any audit or assessment
by the Service if a claim ("Claim") by the Service arises out
of, or results from the treatment by the Service of any
payments made by the Company as parachute payments and for the
cost of preparing the Executive's income tax returns for the
year in which any payment by the Company may be characterized
as a parachute payment. The Executive shall notify the
Company in writing of any such Claim as soon as practicable
but in no event later than ten (10) business days after the
Executive is informed of such Claim and shall cooperate with
the Company in good faith to effectively contest the Claim.
The Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect
of such Claim and the Executive agrees to prosecute such
contest as the Company shall determine. Notwithstanding the
foregoing, if the Company forgoes further prosecution of such
contest, the Executive may elect to continue such prosecution;
provided, however, that in no event shall the Company be
liable for the fees and expenses in connection with such
further prosecution.
(v The Tax Reimbursement Payment (or portion thereof)
provided for in Section 6(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 Ac-
countants 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).
7. Definitions. (a) Change of Control. For purposes of
this Agreement, a "Change of Control" shall be deemed to have
occurred:
(i when any "person" as defined in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and as used in Section 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) of the
Exchange Act but excluding the Company and any subsidiary and
any employee benefit plan sponsored or maintained by the
Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), of securities of the Company representing 20
percent or more of the combined voting power of the Company's
then outstanding securities; or
(ii when, during any period of 24 consecutive months
during the Employment Period, the individuals who, at the
beginning of such period, constitute the Board (the "Incumbent
Directors") cease for any reason other than death to
constitute at least a majority thereof; provided, however,
that a director who is not a director at the beginning of such
24-month period shall be deemed to have satisfied such 24-
month requirement (and be an Incumbent Director) if such
director was elected 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 (because they
were directors at the beginning of such 24-month period) or by
prior operation of this Section; or
(iii) upon the occurrence of a transaction requiring
stockholder approval for the acquisition of the Company by an
entity other than the Company or a subsidiary through purchase
of assets, or by merger, or otherwise.
For purposes of this Section 7, if any of the above occur with
respect to Atlantic City Electric Company ("Electric") in the event
that the Executive is employed by Electric, "Company" shall include
Electric.
8. Non-exclusivity 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. Full Settlement. 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 whether by reason of the
subsequent employment of the Executive or otherwise 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, except as provided in the last preceding sentence,
the Executive shall be entitled to receive only his Earned Salary
and the Accrued Obligations.
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 reasonably acceptable to the Company.
11. 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:
(a) 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.
(b) Injunctive Relief and Other Remedies with Respect to
Covenants. The Executive acknowledges and agrees that the
covenants and obligations of the Executive with respect to
confidentiality and Company property 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 (i) 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 and (ii) have no further
obligation to make any payments to the Executive hereunder
following any material violation of the covenants and obligations
contained in this Section 11. These remedies are cumulative and
are in addition to any other rights and remedies the Company may
have at law or in equity. In connection with the foregoing
provisions of this Section 11, the Executive represents that his
economic means and circumstances are such that such provisions will
not prevent him from providing for himself and his family on a
basis satisfactory to him. In no event shall an asserted violation
of the provisions of this Section 11 constitute a basis for
deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
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) Effect of this Agreement on
Existing Employment Agreements. Any other agreements between the
Executive and the Company or any of its Subsidiaries relating to
Executive's employment by any such entity shall be automatically
superseded upon the occurrence of the Effective Date.
(b) 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.
(c) Arbitration. Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by
binding arbitration. The arbitration shall be held in the City of
Atlantic City, New Jersey or in the City of Philadelphia,
Pennsylvania and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with 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.
(d) 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.
(e) 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.
(f) 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: Atlantic Energy, Inc.
6801 Black Horse Pike
Pleasantville, New Jersey 08232
Attention: Secretary
with a copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, York, NY 10019
Attention: Alvin H. Brown, Esq.
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.
(g) Tax Withholding. The Company may 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.
(h) 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) 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.
(i) 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.
(j) 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.
(k) Captions. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.
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.
ATTEST: Atlantic Energy, Inc.
By:/s/ J. Michael Galvin, Jr.
Secretary J. Michael Galvin, Jr.
(Seal) Title: Chairman, Personnel &
Benefits Committee
By:/s/ J. L. Jacobs
J. L. Jacobs
Title: President & Chief
Executive Officer
EXECUTIVE:
/s/ Scott B. Ungerer
Scott B. Ungerer
SUPPLEMENT TO EMPLOYMENT AGREEMENT
BETWEEN
ATLANTIC ENERGY, INC. and SCOTT B. UNGERER
Dated August 10, 1995
THIS AGREEMENT SUPPLEMENT is entered into this 10th day of
August, 1995 by and between ATLANTIC ENERGY, INC., a New Jersey
corporation (the "Company") and SCOTT B. UNGERER (the
"Executive") and is a supplement to that Employment Agreement
dated the same date hereof (the "Employment Agreement").
In consideration of the mutual promises and covenants herein
contained and as contained in the Employment Agreement, the
adequacy and sufficiency of which is deemed by the parties to be
fair and reasonable and to constitute due consideration, the
Company and the Executive hereby agree as follows:
1. Capitalized Terms. Capitalized terms, when used
herein, shall have the same meaning as in the Employment
Agreement.
2. Agreement Not To Compete. The Executive hereby
represents, covenants and warrants to the Company that, for a
period of one (1) year following the Date of Termination
Executive shall not undertake any activity, employment, task or
assignment, whether through ownership, employment, consulting
arrangement or otherwise, with any person or entity engaged in
any business activity in competition with the Company or any of
its subsidiaries or affiliates. This covenant not to compete is
limited to the geographic area which, as of the date of this
Agreement Supplement, comprises the Pennsylvania-New Jersey-
Maryland Interconnection area and is also intended to include the
southeastern portion of the State of New York which lies south of
the northern most boundary line of the Commonwealth of
Pennsylvania.
It is the intent of this covenant not to compete that
the Executive will not, during the one year period following Date
of Termination and within the geographical limits hereinabove
described, directly or indirectly engage, participate or make any
financial investments in, or become employed by or render
(whether or not for compensation) any consulting, advisory or
other services to or for the benefit of any person, firm or
corporation, or otherwise engage in any business activity which
directly or indirectly competes with any of the business
operations or activities in which the Company or any of its
subsidiaries or affiliates is engaged as of the Date of
Termination, nor any business in which the Company or any of its
subsidiaries or affiliates is actively engaged in pursuing or
developing as of the Date of Termination.
Nothing contained herein is intended to restrict the
Executive from making any investments in any corporation,
partnership or other business enterprise whose outstanding
capital stock or other equity interests are listed or admitted to
unlisted trading privileges on a national securities exchange or
included for quotation through an inter-dealer quotation system
of a registered national securities association, provided that
such investment (i) represents less than five percent (5%) of the
aggregate outstanding capital stock or other equity interests of
such corporation, partnership or business enterprise and (ii)
does not otherwise provide Executive or any affiliate of
Executive with the right or power (whether or not exercised) to
influence, direct or cause the direction of the management
policies and/or affairs of any such business or enterprise which
is or might directly or indirectly compete with any business,
operations or activities of the Company or any of its
subsidiaries and affiliates.
IN WITNESS WHEREOF, intending to be legally bound 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.
ATTEST: ATLANTIC ENERGY, INC.
(Seal)
____________________ BY:/s/ J. Michael Galvin, Jr.
J. Michael Galvin, Jr.
Chairman, Personnel & Benefits
Committee
BY:/s/ J. L. Jacobs
J. L. Jacobs
President & Chief Executive Officer
EXECUTIVE:
/s/ Scott B. Ungerer
Scott B. Ungerer