exhke.htm


        Exhibit 10.26

    

    
 

    NEW
JERSEY NATURAL GAS COMPANY

    


    Deferred
Stock Retention Award Agreement

    


    This
Deferred Stock Retention Award Agreement (the "Agreement"), which includes the
attached “Terms and Conditions of Deferred Stock,” confirms the grant on
November 11, 2008 (the “Grant Date”) by NEW JERSEY NATURAL GAS COMPANY, a New
Jersey corporation (the "Company"), to KATHLEEN T. ELLIS
("Employee"), under Section 6(e) of the 2007 Stock Award and Incentive Plan (the
"Plan"), of Deferred Stock as follows:

    


    Based
upon her contribution to the success of New Jersey Natural Gas Company (“NJNG”)
in fiscal year 2008, Employee is hereby awarded a deferred stock retention award
(“Retention Award”) of 4,947.696 deferred stock units of New Jersey Resources
Corporation (“NJR”) common stock issued under the Plan (“Deferred Stock”). No
dividends or distributions on NJR Common Stock will be applied to the Deferred
Stock.

    


    Beginning
on November 11, 2011, the Retention Award will be paid to Employee in quarterly
installments on the following schedule:

    

     

    This
payout will be in the form of fully transferable shares of NJR common stock. In
addition, if not previously forfeited, the Retention Award will be paid in full
upon a Change in Control, and will be immediately paid upon the occurrence of
certain events relating to Disability and death to the extent provided in
Section 3 of the attached Terms and Conditions.

    


    Conditions
to Retention Award:  Employee is not
required to continue his/her employment with NJNG in order to receive
distribution of the Retention Award. However, NJNG’s obligation to pay the
Retention Award and Employee’s right to distribution of the Retention Award are
conditioned upon the following:

     

    
      	
              ·  

            	
              Employee
      shall not assume an executive officer position of a company engaged in the
      distribution of retail and/or wholesale energy services, including, but
      not limited to, energy trading, within the state of New
      Jersey;

            


    

     

    
      	
              ·  

            	
              Employee
      shall not solicit NJR’s or any of its subsidiaries’ customers, vendors or
      employees including, but not limited to, by interaction with existing or
      prospective customers, vendors or employees of NJR or any of its
      subsidiaries that takes place in an effort to establish, maintain and/or
      further a business relationship with such customers, vendors or employees,
      diversion of a customer’s or prospective customer’s business from NJR or
      any of its subsidiaries or by other interference with NJR’s or any of its
      subsidiaries’ business with an existing or prospective customer, vendor or
      employee, even if such customer, vendor or employee initiates contact with
      you;

            


    

     

    
      	
              ·  

            	
              Employee
      shall not disclose any confidential information related to NJR’s or any of
      its subsidiaries’ business plans or
practices;

            


    

    
      
      

    

    
      	
              ·  

            	
              Employee
      shall not make any statements, either verbally or in writing, that are
      disparaging with regard to NJR or any of its subsidiaries (including, but
      not limited to, NJNG) or their respective executives and Board members;
      and

            


    

    
      
        
        

      

      
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              ·  

            	
              Employee
      shall not engage in any financial or other misconduct that results in the
      termination of Employee’s employment for “Cause.”  For purposes
      of this letter, "Cause" means (A) conviction of a felony or the entering
      by Employee of a plea of nolo contendere to a felony charge, (B)
      Employee’s gross neglect, willful malfeasance or willful gross misconduct
      in connection with Employee’s employment hereunder which has had a
      significant adverse effect on the business of NJR or any of its
      subsidiaries, unless Employee reasonably believed in good faith that such
      act or non-act was in or not opposed to the best interests of NJR or any
      of its subsidiaries, or (C) repeated material violations by Employee of
      his or her obligations under any applicable employment agreement or policy
      of NJR or any of its subsidiaries, which have continued after written
      notice thereof from NJR or any of its subsidiaries, which violations are
      demonstrably willful and deliberate on Employee’s part and which result in
      material damage to NJR or any of its subsidiaries’ business or
      reputation.

            


    

    


    If it is
determined by the Leadership Development and Compensation Committee of the NJR
Board of Directors that Employee has engaged in any of the above activities
prior to full distribution of the Retention Award, any unpaid portion of the
Retention Award will be forfeited.

    


    The value
of the Retention Award will not be taxable to Employee until it is distributed
and will, at that time, be equal to the value of the current fair market value
of the shares of NJR common stock.  Required withholding taxes will be
deducted in the form of shares from the share payout as described in Section
7(c) of the attached Terms and Conditions, unless Employee has elected at least
90 days prior to payout to satisfy the tax obligations by other
means.

    


    The
Retention Award will not be considered as compensation for purposes of any
pension or retirement plan, or other plan that provides for benefits based on
Employee’s level of compensation.

    


    The
Retention Award and the granting thereof shall not constitute or be evidence of
any agreement or understanding, express or implied, that Employee has a right to
continue as an officer of employee of NJR or any of its subsidiaries for any
period of time, or at any particular rate of compensation.

    


    The
validity, construction, and effect of this Agreement and the Retention Award
shall be determined in accordance with the laws (including those governing
contracts) of the state of New Jersey, without giving effect to principles of
conflicts of laws, and applicable federal law.

    


    If any
provision in this Agreement is held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions will in no way
be affected or impaired thereby. In the event that any provision of this
Agreement is not enforceable in accordance with its terms, such provision shall
be reformed to make it enforceable in a manner which provides NJR and its
subsidiaries the maximum rights permitted by law.

    


    The terms
of this Retention Award are governed by the Plan and this Agreement, including
the attached Terms and Conditions.  Capitalized terms used in this
Agreement but not defined herein shall have the same meanings as in the
Plan.

    


    Employee
acknowledges and agrees that (i) receipt of a copy of the Plan and agrees to be
bound by all the terms and provisions thereof, (ii) the Deferred Stock is
nontransferable, except as provided in Section 2 of the attached Terms and
Conditions and Section 11(b) of the Plan, (iii) the Deferred Stock is subject to
forfeiture as described above in certain limited circum­stances prior to
payout, and (iv) sales of the shares following payout of the Deferred Stock will
be subject to the Company's policy governing the purchase and sale of NJR
securities.

    


    IN
WITNESS WHEREOF, NEW JERSEY NATURAL GAS COMPANY has caused this Agreement to be
executed by its officer thereunto duly authorized, and Employee has duly
executed this Agreement, by which each has agreed to the terms of this
Agreement.

    


     

    
      


      /s/Laurence M.
Downes

      LAURENCE
M. DOWNES

      Chairman
and Chief Executive Officer

      
Acknowledged

    

    


    


    /s/Kathleen T.
Ellis                                                      12/31/08

    KATHLEEN
T.
ELLIS                                                    Date

    
      
        
        

      

      
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    TERMS AND
CONDITIONS OF DEFERRED STOCK

    


    The
following Terms and Conditions apply to the Deferred Stock granted to Employee
by NEW JERSEY NATURAL GAS COMPANY (the "Company"), as specified in the Deferred
Stock Retention Award Agreement (of which these Terms and Conditions form a
part).  Certain terms and conditions of the Retention Award, including
the number of shares granted and payment date(s), are set forth on the preceding
pages, which are an integral part of this Agreement.

    


    1.           General.  The
Deferred Stock is granted to Employee under the Company's 2007 Stock Award and
Incentive Plan (the "Plan"), a copy of which has been previously delivered to
Employee and/or is available upon request to the Human Resources
Department.  All of the applicable terms, conditions and other
provisions of the Plan are incorporated by reference
herein.  Capitalized terms used in this Agreement but not defined
herein shall have the same meanings as in the Plan.  If there is any
conflict between the provisions of this document and mandatory provisions of the
Plan, the provisions of the Plan govern.  Employee agrees to be bound
by all of the terms and provisions of the Plan (as presently in effect or later
amended), the rules and regula­tions under the Plan adopted from time to
time, and the decisions and determinations of the Leadership Development and
Compensation Committee of the Company's Board of Directors (the "Committee")
made from time to time.

     

          2.           Nontransferability.  Until
such time as the Deferred Stock has been distributed in accordance with the
terms of this Agreement, Employee may not transfer Deferred Stock or any rights
hereunder to any third party other than by will or the laws of descent and
distribution except for transfers to a Beneficiary or as otherwise permitted and
subject to the conditions under Section 11(b) of the Plan.  This
restriction on transfer precludes any sale, assignment, pledge, or other
encumbrance or disposition of the shares of Deferred Stock (except for
forfeitures to the Company).

    


    3.           Early Payment
Provisions. The following provisions will govern the payment of the
Deferred Stock that is outstanding at the time of Employee's death or
Disability:

    


    (a)           Death.  In the
event of Employee's death, the unpaid Deferred Stock will be paid immediately to
the Employee’s Beneficiary.

    


    (b)           Disability.  In the
event of Employee’s Disability (as defined below), the unpaid Deferred Stock
will be paid immediately to the Employee.

    


    "Disability"
means Employee has been unable to engage in any substantial gainful activity for
a period of six consecutive months by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months.  The Company and Employee shall agree on the identity of a
physician to resolve any question as to Employee's disability.  If the
Company and Employee cannot agree on the physician to make such determination,
then the Company and Employee shall each select a physician and those physicians
shall jointly select a third physician, who shall make the
determination.  The determination of any such physician shall be final
and con­clusive for all purposes of this Agreement.

    


    4.           Dividends and
Adjustments.

    


    (a)           Dividends. No dividends or
distributions on NJR Common Stock will be applied to the Deferred
Stock.

    


    (b)           Adjustments.  The
number and kind of shares of Deferred Stock, the number of such shares to be
distributed and other terms and conditions of Deferred Stock or otherwise
contained in this Agreement, other than the time and form of payment of the
Deferred Stock, shall be appropriately adjusted, in order to prevent dilution or
enlargement of Employee’s rights hereunder, to reflect any changes in the number
of outstanding shares of Common Stock resulting from any event referred to in
Section 11(c) of the Plan, taking into account any Deferred Stock or other
amounts paid or credited to Employee in connection with such event under Section
4(a) hereof, in the sole discretion of the Committee subject to the requirements
of Code Section 409A.The Committee may determine how to treat or settle any
fractional share resulting under this Agreement.

    


    5.           409A
Award.  The Deferred Stock payable under the Agreement is a
409A Award and is subject to all applicable terms and conditions set forth in
Section 11(k) of the Plan.  All provisions of the Agreement shall be
interpreted in a manner as to comply with Section 11(k) of the Plan and Code
Section 409A.

    
      
        
        

      

      
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    6.           Other Terms of Deferred
Stock.  

    


    (a)           Voting and Other Shareholder
Rights.  Employee shall not be entitled to vote Deferred Stock
on any matter submitted to a vote of holders of Common Stock, and shall not have
all other rights of a shareholder of the Company until the Deferred Stock is
distributed to Employee as described in the Agreement.

    


    (b)           Consideration for Grant of Deferred
Stock.  Employee shall not be required to pay cash
consideration for the grant of the Deferred Stock, but Employee's performance of
services to the Company prior to the payout of the Deferred Stock shall be
deemed to be consideration for this grant of Deferred Stock.

     

                (c)           Insider Trading Policy
Applicable.  Employee acknowledges that sales of shares
resulting from Deferred Stock that have been distributed will be subject to the
Company's policies governing the purchase and sale of Company
securities.

    


    (d)           Certificates Evidencing Deferred
Stock.  On the date any
Deferred Stock subject to the Retention Award becomes payable (the “Payment
Date”), such Deferred Stock shall be paid by the Company delivering to the
Employee, a number of shares of NJR common stock equal to the number of shares
of Deferred Stock that become payable upon that Payment Date. The Company shall
issue the shares either (i) in certificate form or (ii) in book entry
form, registered in the name of the Employee. Delivery of any certificates will
be made to the Employee’s last address reflected on the books of the Company
unless the Company is otherwise instructed in writing. Neither the Employee nor
any of the Employee’s successors, heirs, assigns or personal representatives
shall have any further rights or interests in any Deferred Stock that are so
paid.

    


    (e)           Stock
Powers.  Employee agrees to execute and deliver to the Company
one or more stock powers, in such form as may be specified by the General
Counsel, authorizing the transfer of the Deferred Stock to the Company, at the
Grant Date or upon request at any time thereafter.

    


    7.           Employee
Representations and Warranties and Release.  As a condition
to any non-forfeiture of the Deferred Stock that would be distributed to
Employee upon Disability, the Company may require Employee (i) to make any
representation or warranty to the Company as may be required under any
applicable law or regulation, and (ii) to execute a release from claims against
the Company arising at or before the date of such release, in such form as may
be specified by the Company.

    


    8.           Miscellaneous.

    


    (a)           Binding Agreement; Written
Amendments.  This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties.  This
Agreement constitutes the entire agreement between the parties with respect to
the Deferred Stock, and supersedes any prior agreements or documents with
respect to the Deferred Stock.  No amendment or alteration of this
Agreement which may impose any additional obligation upon the Company shall be
valid unless expressed in a written instrument duly executed in the name of the
Company, and no amendment, alteration, suspension or termination of this
Agreement which may materially impair the rights of Employee with respect to the
Deferred Stock shall be valid unless expressed in a written instrument executed
by Employee.  All amendments must comply with the requirements of Code
Section 409A.

    


    (b)           Governing Law.  The
validity, construction, and effect of this Agreement shall be determined in
accordance with the laws (including those governing contracts) of the state of
New Jersey, without giving effect to principles of conflicts of laws, and
applicable federal law.

    


    (c)           Mandatory Tax
Withholding.  Unless otherwise determined by the Committee, at
the time of payment of the Deferred Stock to Employee, the Company will withhold
from any Shares deliverable, in accordance with Section 11(d)(i) of the Plan,
the number of Shares having a value nearest to, but not exceeding, the amount of
income and employment taxes required to be withheld under applicable local laws
and regulations, and pay the amount of such withholding taxes in cash to the
appropriate taxing authorities.  Employee will be responsible for any
withholding taxes not satisfied by means of such mandatory withholding and for
all taxes in excess of such withholding taxes that may be due upon payment of
the Deferred Stock.

    


    (e)           Notices.  Any
notice to be given the Company under this Agreement shall be addressed to the
Company at its principal executive offices, in care of the Vice President,
Corporate Services, and any notice to Employee shall be addressed to Employee at
Employee’s address as then appearing in the records of the Company.

    


    (f)           Shareholder
Rights.  Employee and any Beneficiary shall not have any rights
with respect to Shares (including voting rights) covered by this Agreement prior
to the settlement and distribution of the Shares as specified
herein.

    


    
      
         

      

      
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