EXHIBIT 10.1
NEW JERSEY RESOURCES CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
New Jersey Resources Corporation ("NJR" or the "Corporation") hereby
establishes a deferral plan (the "Plan") for the purpose of permitting a member
of the Board of Directors of the Corporation (each an "NJR Director") and
members of the Board of Directors of New Jersey Natural Gas ("NJNG") who are not
employees of NJNG or any affiliate (each an "NJNG Director" and, together with
NJR Directors, "Directors") to elect from time to time to defer the receipt of
all or a portion of the Director's retainer and other fees. The provisions of
this Plan shall apply only to those deferred amounts that were otherwise to be
earned by and paid to the Directors subsequent to December 31, 2004.
Section 1. Initial Deferral Elections.
a. Election to Defer. A Director may irrevocably elect to defer (an
"Initial Deferral Election") the receipt of all or a portion of the fees,
including, without limitation, any retainer, meeting fee or committee meeting
fee ("Fees"), that the Director will become entitled to receive for services as
a member of the NJR Board of Directors for a given Plan Year (as defined below)
or for services as a member of the NJNG Board of Directors for a given Plan Year
beginning on or after January 1, 2007. An Initial Deferral Election shall remain
valid with respect to Fees earned in succeeding Plan Years until revoked or
revised by the Director in compliance with the deadlines and other provisions of
the Plan.
b. Election of Deferral Period. A Director who elects to defer
receipt of all or a portion of the Director's Fees for a given Plan Year shall
also elect whether the deferred Fees are to be paid, or commence to be paid,
(i) during January of the sixth year following the calendar
year in which the deferred Fees would otherwise have been paid to the
Director;
(ii) within a reasonable period of time after the last
business day of the calendar quarter in which the Director ceases to be a
member of both the NJR Board of Directors and the NJNG Board of Directors;
or
(iii) the earlier of clause (i) or clause (ii) above.
Initial Deferral Elections applicable to Fees otherwise payable in different
Plan Years may specify different times and forms of payment. If the Director
does not make an election under this Section 1(b) with respect to the time of
payment of his deferred Fees for a given Plan Year, the Director's deferred Fees
for that Plan Year shall be paid within a reasonable period of time (not
exceeding 90 days) after the last business day of the calendar quarter in which
the Director ceases to be a member of the NJR Board of Directors (with respect
to Fees deferred for such service) or ceases to be a member of the NJNG Board of
Directors (with respect to Fees deferred for such service).
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The Deferral Period is the period beginning on the date the deferred
Fees would otherwise have been paid to the Director and ending on the date the
deferred Fees are to be paid, or commence to be paid, pursuant to the Director's
election under this Section 1(b).
c. Election of Method of Payment of Deferred Fees. A Director who
elects to defer the receipt of all or a portion of the Director's Fees for a
given Plan Year shall also elect whether the deferred Fees are to be paid,
subject to Section 3,
(i) in a single sum payment, as soon as practicable after the
end of the Deferral Period, or
(ii) in the number of annual installments elected by the
Director (but not more than 5) with such installments commencing as soon
as practicable after the end of the Deferral Period. The amount of each
such installment shall be equal to the amount credited to the Director's
Deferred Fee Account (as defined in Section 2 below) on the day next
preceding the date of payment of the installment, divided by the number of
installments remaining to be paid. The unpaid portion of the Director's
deferred Fees shall continue to be adjusted, as provided in Section 2,
during the period that the Director is receiving such installment
payments. For the purposes of section 409A of the Code, the entitlement to
a series of installment payments will be treated as the entitlement to a
single payment.
A Director shall also elect the form and number of installments of
payments to be paid in the case of Disability. "Disability" shall mean that the
Director is considered disabled as defined by the Social Security
Administration. If a Director does not make an election under this Section 1(c)
with respect to the method of payment of his deferred Fees for a given calendar
year, the Director's deferred Fees for that calendar year shall be paid in the
same manner as the Director's deferred Fees for the next preceding calendar year
with respect to which the Director made an election as to the method of payment.
If the Director has not previously elected to defer Fees, or has not previously
elected the method of payment of his deferred Fees, the Director's deferred Fees
shall be paid in a single sum payment, as soon as practicable after the end of
the Deferral Period for such deferred Fees.
d. Time and Manner of Elections. A Director's elections shall be
made by filing a written notice with the Secretary of the Corporation (the
"Secretary") on the form prescribed by the Secretary for this purpose. The
elections with respect to the deferral of the Director's Fees for a given
calendar year shall be made no later than December 31st of the preceding year;
provided, however, that for the calendar year in which an individual first
becomes a Director or, in the case of NJNG Directors, such Directors first
become eligible to participate in the Plan, the Director may make the elections
with respect to Fees for such year to be earned after such elections are made
within 30 days after first becoming a Director or first becoming eligible to
participate. An Initial Deferral Election, if submitted to the Committee earlier
than the dates specified above, may be changed by the Director at any time prior
to the date specified above.
Section 2. Subsequent Deferral Elections. The Committee may, in its sole
discretion, permit participating Directors to submit additional deferral
elections with respect to
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amounts previously subject to an Initial Deferral Election in order to delay,
but not to accelerate, a payment, or to change the form of or number of
installments elected with respect to, the payment of an amount of deferred Fees
(a "Subsequent Deferral Election"), but if, and only if, the following
conditions are satisfied: (i) the Subsequent Deferral Election must not take
effect until 12 months after the date on which it is made, (ii) in the case of a
payment other than a payment attributable to the Director's death, the
Subsequent Election further defers the payment for a period of not less than 5
years from the date such payment would otherwise have been made, or in the case
of installment payments, 5 years from the date the first installment was
scheduled to be paid, and (iii) the Subsequent Election is received by the
Administrator at least 12 months prior to the date the payment would otherwise
have been made, or in the case of installment payments, 12 months prior to the
date the first installment was scheduled to be paid.
Section 3. Administration of the Plan.
a. Authority. The Nominating and Corporate Governance Committee of
the Board of Directors of the Corporation (hereinafter referred to as "the
Committee) shall administer the Plan in accordance with its terms, and shall
have all powers necessary to accomplish such purpose, including the power and
authority to construe and interpret the Plan, to define the terms used herein,
to prescribe, amend and rescind rules and regulations, agreements, forms, and
notices relating to the administration of the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan. Any
actions of the Committee with respect to the Plan shall be conclusive and
binding upon all persons interested in the Plan. The Committee may appoint
agents and delegate thereto powers and duties under the Plan, except as
otherwise limited by the Plan. The Committee shall not be entitled to act on or
decide any matter relating solely to members or any of their rights or benefits
under the Plan. The Committee shall not receive any special compensation for
serving in this capacity but shall be reimbursed for any reasonable expenses
incurred in connection therewith. No bond or other security need be required of
the Committee in any jurisdiction.
b. Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or other employee of the Corporation, the
Corporation's independent certified public accountants, or any executive
compensation consultant, legal counsel, or other professional retained by the
Corporation to assist in the administration of the Plan. To the maximum extent
permitted by law, no member of the Committee, nor any person to whom ministerial
duties have been delegated, shall be liable to any person for any action taken
or omitted in good faith in connection with the interpretation and
administration of the Plan.
c. Indemnification. To the maximum extent permitted by law, members
of the Committee shall be fully indemnified and protected by the Corporation
with respect to any action taken or omitted in good faith in connection with the
interpretation or administration of the Plan.
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d. Plan Year. The Plan's books and records and administrative
functions shall be maintained and operated on the basis of a 12-month calendar
year commencing each January 1.
Section 4. Earnings on Deferred Fees.
a. Establishment of Deferral Accounts. A Director's deferred Fees
for a given calendar year shall be credited to an account established and
maintained to record such deferred Fees (a "Deferred Fee Account"). Such credit
shall be as of the date such deferred Fees would otherwise have been payable to
the Director. A separate Deferred Fee Account shall be established and
maintained for each calendar year.
b. Hypothetical Investment Elections for Deferred Fees. At the time
a Director elects to defer receipt of Fees, the Director shall designate in
writing the portion of such Deferred Fees, stated as a whole percentage, to be
credited to the Interest Account and the portion to be credited to the Stock
Account. Any Deferred Fees to be credited to either such Account shall be
rounded to the nearest whole cent, with amounts equal to or greater than $.005
rounded up and amounts below $.005 rounded down. If a Director fails to elect
how to allocate any Deferred Fees between the two investment accounts, 100% of
such Deferred Fees shall be credited to the Interest Account. By written notice
to the Secretary of the Company, a Director may change the allocation of
Deferred Fees previously credited to the Interest Account to the Stock Account .
Any such election shall be effective as of the first calendar quarter commencing
after receipt of such election. No Director may make any election to change the
way in which amounts previously allocated to the Director's Deferral Account are
deemed invested within six months of the date of the last such election by such
Director to change the way in which such amounts are deemed invested. A Director
may elect to change the way Fees not yet credited to the Director's Deferred Fee
Account are deemed invested as of the end of any calendar month by written
notice to the Company received prior to the end of such month, and may make up
to three such elections each year.
As of the end of each calendar month, any Deferred Fees credited to
the Interest Account will be credited with interest, at an annual rate equal to
(1) the Prime Rate in effect on the last business day of such month plus two (2)
percentage points, on the average daily balance credited to the account during
such month. The Prime Rate with respect to a calendar month shall be determined
by reference to the Prime Rate listed in the Wall Street Journal as the "base
rate on corporate loans" posted by at least 75% of the nation's 30 largest banks
or, if at any time such rate is not reported in the Wall Street Journal, such
comparable publicly available measurement of the cost of corporate borrowing as
the NJR Board of Directors shall determine. If more than one Prime Rate is
listed in the Wall Street Journal for a given day, the Prime Rate for that day
shall be the average of such Prime Rates.
c. Stock Account. Any Deferred Fees allocated to the Stock Account
shall be deemed invested in a number of notional shares of the Company's common
stock (the "Units") equal to the quotient of (i) such Deferred Fees divided by
(ii) the Fair Market Value (defined below) on either the date the Deferred Fees
then being allocated to
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the Stock Account would otherwise have been paid or such other date, not later
than 90 days thereafter, as may be specified for deemed investment by the
Company (this provision permitting the Company to establish a quarterly
investment date, for convenient and economical administration of the Plan).
Fractional Units shall be credited, but shall be rounded to the nearest
hundredth percentile, with amounts equal to or greater than .005 rounded up and
amounts less than .005 rounded down. Whenever a dividend other than a dividend
payable in the form of shares is declared with respect to the shares, the number
of Units in the Director's Stock Account shall be increased by the number of
Units determined by dividing (i) the product of (A) the number of Units in the
Director's Stock Account on the related dividend record date and (B) the amount
of any cash dividend declared by the Company on a Share (or, in the case of any
dividend distributable in property other than common stock, the per share value
of such dividend, as determined by the Company for purposes of income tax
reporting) by (ii) the Fair Market Value on the related dividend payment date.
In the case of any dividend declared on common stock which is payable in shares
of common stock, the Director's Stock Account shall be increased by the number
of Units equal to the product of (i) the number of Units credited to the
Directors Stock Account on the related dividend record date and (ii) the number
of shares (including any fraction thereof) distributable as a dividend on a
share. In the event of any change in the number or kind of outstanding shares of
common stock by reason of any recapitalization, reorganization, merger,
consolidation, stock split or any similar change affecting such shares, other
than a dividend of cash, stock or property as provided above, the NJR Board of
Directors shall make an appropriate adjustment in the number of Units credited
to the Director's Stock Account. For purposes of this section, "Fair Market
Value" on any date shall mean the closing price of a share of Common Stock on
such date as reported in the principal consolidated transaction reporting system
on which the common stock is principally traded.
d. Distribution from Accounts Upon Termination of Service as a
Director. The time and form of payments of hypothetical investment earnings
shall be the same as those applicable to the deferred Fees to which such
earnings are attributable. Notwithstanding any other provision of the Plan to
the contrary, amounts credited to a Director's Stock Account may not be
reallocated or deemed reinvested in any other investment vehicle, but shall
remain as Deferred Stock until such time as the Deferred Fee Account is settled
in accordance with Section 1.c.
e. Statements. The Committee will furnish written statements to each
Participant reflecting the amount credited to a Participant's Deferral Accounts
and transactions therein not less frequently than once each calendar quarter.
Such written statements shall be in addition to any information or communication
available to a Participant with respect to his Deferral Account through other
means, such as the internet or telephony.
Section 5. Payments Not Specified in a Deferral Election.
a. Method of Payment in the Event of Death. If a Director dies while
a member of the NJR or NJNG Board of Directors or prior to the full payment to
the Director of all of the Director's deferred Fees, as adjusted as provided in
Section 2, an amount equal to the unpaid portion of such deferred Fees, as
adjusted as provided in Section 2, shall be paid in a single sum payment to the
Director's designated beneficiary
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or beneficiaries. Such single sum payment shall be made as soon as practicable
after the death of the Director.
b. Delay of Payments. Any payment otherwise due under the terms of
the Plan which would (i) not be deductible in whole or in part under section
162(m) of the Code, (ii) violate a loan covenant or similar contractual
requirement, or (iii) violate Federal securities laws or other applicable law
may not be made until the earliest date on which such payment no longer is
nondeductible or violates such contracts or laws.
c. Acceleration of Payments. The Committee may not permit the
acceleration of the time or schedule of any payment or amount scheduled to be
paid pursuant to the Plan, unless such acceleration of the time or schedule is
(i) necessary to fulfill a domestic relations order (as defined in section
414(p)(1)(B) of the Code) or to comply with a certificate of divestiture (as
defined in section 1043(b)(2) of the Code), (ii) de minimis in nature (as
defined in regulations promulgated under section 409A of the Code), or (iii)
equal to amounts included in the federal personal taxable income of the
Participant under section 409A of the Code. Other provisions of the Plan
notwithstanding, should the Director cease to be a member of both the NJR Board
of Directors and the NJNG Board of Directors within 60 days following the
occurrence of an event or transaction constituting a Change In Control, the
Committee will direct the payment to the participating Director of the balance
of his or her Deferred Fee Account as a lump sum as soon as practicable
following such cessation. For this purpose, "Change in Control" shall be deemed
to have occurred if (1) absent prior approval by the Board of Directors, fifty
percent (50%) or more of the Corporation's outstanding securities entitled to
vote in elections of directors shall be beneficially owned, directly or
indirectly, by any person, entity or group when that same person, entity or
group had not owned fifty percent (50%) or more of the Corporation prior to the
most recent acquisition; or (2) individuals constituting the Board of Directors
on any given date (or the successors of such individuals nominated by the Board
of Directors on which such individuals or such successors constituted a
majority) cease to constitute a majority of the Board of Directors within twelve
(12) months of such date.
Section 6. Assets Placed in Trust. The Corporation may, in its discretion,
establish one or more Trusts (including sub-accounts under such Trust(s)), and
deposit therein amounts of cash, Stock, or other property not exceeding the
amount of the Corporation's obligations with respect to a Director's Deferred
Fee Account established under Section 2. In such case, the amounts of
hypothetical income and appreciation and depreciation in value of such Deferred
Fee Account shall be equal to the actual income on, and appreciation and
depreciation of, the assets in such Trust(s). Other provisions of this Section 4
notwithstanding, the timing of allocations and reallocations of assets in such a
Deferred Fee Account, and the investment vehicles available with respect to such
Deferred Feel Account, may be varied to reflect the timing of actual investments
of the assets of such Trust(s) and the actual investments available to such
Trust(s).
Section 7. Plan Termination.
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a. In General. The Committee may, with prospective or retroactive
effect, amend, alter, suspend, discontinue, or terminate the Plan at any time
without the consent of participating Directors, stockholders, or any other
person; provided, however, that, without the consent of a participating
Director, no such action shall materially and adversely affect the rights of
such Director with respect to any rights to payment of amounts credited to such
Director's Deferred Fee Account.
b. Termination and Payment. Notwithstanding the provisions of
section 11(a), the Committee may, in its sole discretion, terminate the Plan (in
whole or in part) with respect to one or more participating Directors and
distribute to such affected Directors the amounts credited to their Deferred Fee
Accounts in a lump sum as soon as reasonably practicable following such
termination, but if, and only if, (i) all nonqualified defined contribution
deferred compensation plans maintained by the Corporation and its Affiliates are
terminated, (ii) no payments other than payments that would be payable under the
terms of the Plan if the termination had not occurred are made within 12 months
of the termination of the Plan, (iii) all payments of Deferred Fee Account
balances are made within 24 months of the termination of the Plan, and (iv) the
Corporation acknowledges to the participating Directors that it will not adopt
any new nonqualified defined contribution deferred compensation plans at any
time within 5 years following the date of the termination of the Plan.
Section 8. Miscellaneous.
a. Designation of Beneficiary. A Director may designate a
beneficiary or beneficiaries (which may be an entity other than a natural
person) to receive any payments of the Director's deferred Fees to be made upon
the Director's death. At any time, and from time to time, any such designation
may be changed or canceled by the Director without the consent of any
beneficiary. Any such designation, change or cancellation must be by written
notice filed with the Secretary and shall not be effective until received by the
Secretary. Any such written notice may apply to (i) only the Director's deferred
Fees for a particular calendar year or years, or (ii) all of the Director's
deferred Fees, including Fees to be deferred in future years.
If a Director designates more than one beneficiary with respect to any
portion of the Director's deferred Fees, any payments to such beneficiaries
shall be made in equal shares unless the Director has designated otherwise, in
which case the payments shall be made in the shares designated by the Director.
If no beneficiary has been named by a Director with respect to all or a portion
of the Director's deferred Fees, or the designated beneficiaries with respect to
all or a portion of the Director's deferred Fees have predeceased the Director,
the Director's beneficiary with respect to such deferred Fees shall be the
executor or administrator of the Director's estate.
b. Payments Generally In Cash. All payments of deferred Fees shall
be made in cash, provided that a Director who has elected to have all or a
portion of any of the Director's Deferred Fee Account treated as though invested
in shares of common stock and who elects to receive a distribution of any such
Account in a single lump sum may elect to receive the portion of such Account so
invested in shares of common stock.
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c. No Right to Continue as a Director. Nothing contained in this
Plan shall be construed as conferring upon a Director any right to continue as a
member of the NJR or NJNG Board of Directors.
d. No Right to Corporate Assets. Nothing contained in this Plan
shall be construed as giving a Director, a Director's designated beneficiaries
or any other person any equity or interest of any kind in the assets of the
Corporation or creating a trust of any kind or a fiduciary relationship of any
kind between the Corporation and any such person. As to any claim for payments
due with respect to a Director's deferred Fees, the Director, the Director's
designated beneficiaries and any other persons having a claim for payments shall
be unsecured creditors of the Corporation.
e. No Limit on Further Corporate Action. Nothing contained in this
Plan shall be construed so as to prevent the Corporation from taking any
corporate action which is deemed by the Corporation to be appropriate or in its
best interest.
f. Assignment; Successor in Interest. The rights and benefits of a
Director with respect to the Director's deferred Fees are personal to the
Director, and neither the Director nor the Director's designated beneficiaries
shall have the power or right to transfer, assign, anticipate, mortgage, or
otherwise encumber any payments to be made with respect to the Director's
deferred Fees.
The obligations of the Corporation with respect to deferred Fees are
not assignable or transferable except to a corporation which acquires all or
substantially all of the assets of the Corporation, or any corporation into
which the Corporation may be merged, converted or consolidated.
These terms and provisions shall inure to the benefit of a
Director's designated beneficiaries, heirs, executors, administrators and
successors in interest.
g. Amendment and Termination. The NJR Board of Directors may from
time to time and at any time alter or amend this Plan or suspend, discontinue or
terminate the deferral by Directors of their retainer and other fees; provided,
however, that no such action, which would adversely affect the amount, form or
time of payment of the retainer and other fees which, as of the effective date
of such action, had been deferred pursuant to a Director's election, shall be
effective without the Director's written consent.
h. Compliance with Code Section 409A. Other provisions of this Plan
notwithstanding, deferrals under this Plan (including amounts deferred before
2005) shall comply with the requirements under Section 409A of the Internal
Revenue Code of 1986, as amended, and, in accordance with U.S. federal income
tax laws and Treasury Regulations (including proposed regulations) thereunder as
presently in effect or hereafter implemented, (i) if the timing of any
distribution under this Plan would result in a Director's constructive receipt
of income or tax penalties prior to such distribution, the distribution will be
made at the earliest date after the specified payment date that distribution can
be effected without resulting in such constructive receipt or tax penalties;
(ii) the Company shall have no authority to accelerate any payment hereunder
except as permitted under Section 409A and regulations thereunder; and (iii) any
rights of the Director or retained authority of the Company with respect to
deferrals hereunder shall be
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automatically modified and limited to the extent necessary so that the
Director will not be deemed to be in constructive receipt of income
relating to the deferrals prior to the payment and so that the Participant
shall not be subject to any penalty under Section 409A.
i. NJNG Payments. The obligations of NJR under this Plan to
NJNG Directors shall be conditioned upon NJNG making satisfactory
arrangements with NJR to reimburse NJR for its expense relating to such
obligations.
j. Governing Law. This Plan shall be construed in accordance
with and be governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, New Jersey Resources Corporation has caused this
Plan to be executed this 16th day of May, 2006.
NEW JERSEY RESOURCES CORPORATION
Attest: /s/ Rhonda M. Figueroa By: /s/ Laurence M. Downes
----------------------- ----------------------
Rhonda M. Figueroa Laurence M. Downes
Corporate Secretary Chairman and Chief Executive Officer
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