CHAIRMAN OF THE BOARD
EMPLOYMENT AGREEMENT
THE CHAIRMAN OF THE BOARD EMPLOYMENT AGREEMENT ("Agreement"), dated this
1st day of January 2003, by and between Chesapeake Utilities Corporation, a
Delaware corporation (the "Company"), and Ralph J. Adkins ("Adkins").
WITNESSETH:
WHEREAS, the Company is currently obtaining the benefit of Adkins' services
as an employee in the capacity of Chairman of the Company's Board of Directors
("Chairman") under an Executive Employment Agreement, dated January 1, 2001;
WHEREAS, the Company's Board of Directors (the "Board") has authorized the
Company to agree to provide for Adkins' continued employment on the terms set
forth in this Agreement; and
WHEREAS, Adkins is willing, in consideration of the covenants hereinafter
provided, to continue to be employed by the Company in the capacity of Chairman
and to render services incident to such position during the term of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the Company and Adkins hereby agree as follows:
1. Employment. The Company agrees to employ Adkins, and Adkins agrees
to accept employment, as Chairman, with such reasonable duties and
responsibilities as are consistent with the By-laws of the Company, as of the
date hereof, and the Position Description dated January 1, 2003, appended to
this Agreement.
2. Term of Agreement. The term of Adkins' employment under this
Agreement (the "Term") shall extend until May 18, 2004, unless such employment
is earlier terminated (i) by either the Company or Adkins upon 90 days prior
written notice to the other or (ii) otherwise accordance with the provisions of
Section 8.
3. Time. Adkins agrees to devote sufficient time consistent with the
duties of the Chair and, during that time, his full best efforts for the benefit
of the Company and its subsidiaries, and not to serve any other business
enterprise or organization in any capacity during the Term, without the prior
written consent of the Company, which consent shall not be unreasonably
withheld.
4. Office. During the Term, Adkins shall serve as the Company's
Chairman and act as the liaison between the Board of Directors and Management.
5. Compensation. During the Term, the Company shall compensate Adkins
for his services hereunder at a rate of $200,000 per annum, payable in equal
semimonthly installments, or such greater or lesser amount as the Board may
determine ("Base Compensation"). The Base Compensation rate shall be reviewed
annually and may be increased or decreased from time to time.
6. Expenses. During the Term, the Company shall pay all necessary and
reasonable business expenses incurred by Adkins on behalf of the Company in the
course of his employment under this Agreement, including, without limitation,
expenses incurred in the conduct of the Company's business while away from his
domicile and expenses for travel, meals, lodging, entertainment and related
expenses that are for the benefit of the Company.
7. Other Benefits.
(a) During the Term, Adkins shall be entitled to participate in all
profit-sharing, insurance, medical and retirement benefit plans,
together with vacation and other employee benefits of the Company, now
in effect or as hereafter amended or established, in which Company
executive employees are permitted to participate. Adkins'
participation shall be in accordance with the terms and provisions of
such plans.
(b) During the Term, the Company shall furnish Adkins with a suitable
office, necessary administrative support and customary furniture and
furnishings for such office. The Company further agrees that Adkins
shall have the use of a Company-owned or Company-leased and maintained
automobile, new every three years, of a kind and model appropriate to
his position with the Company.
8. Termination.
(a) Termination for Cause. Adkins' employment under this Agreement may be
terminated by the Company at any time for "cause". In the event of
termination for "cause," Adkins (i) shall only be entitled to the
payment of the compensation and benefits contemplated by Section 5, 6,
and 7 through the date termination (except for any benefits that the
Company may be required to continue to provide by law) and (ii) and
shall not be entitled to any severance benefits under this Agreement.
Unless a Change in Control has occurred, "cause" shall be as the Board
may reasonably determine. Following a Change in Control, the Company
may terminate the Adkins' employment for "cause" only if Adkins
engages in:
(i) conduct that constitutes a felony under the laws of the United
States or a state in which Adkins works or resides;
(ii) an act or acts of dishonesty resulting, or intended to result,
directly or indirectly in material gain to or personal enrichment
of Adkins at the Company's expense;
(iii) a deliberate and intentional refusal (except by reason of
incapacity due to illness or accident) to comply with the
provisions of Section 1, provided that such breach shall have
resulted in demonstrably material injury to the Company, and
Adkins shall have failed to remedy such breach within thirty days
after notice received from the Secretary of the Company demanding
that Adkins remedy such breach; or
(iv) conduct by Adkins that is materially injurious to the Company, if
such conduct was undertaken without good faith and the reasonable
belief that such conduct was in the best interest of the Company.
(b) Termination Following a Change in Control. After a Change in Control:
(i) the Company may terminate the Adkins' employment under this
Agreement at any time and for any reason; and
(ii) Adkins may terminate his employment at any time following the
occurrence of any of the following events:
(A) failure to elect or reelect Adkins to, or removal of Adkins
from, the position described in Section 1;
(B) Adkins' good-faith determination that there has been a
significant change in the nature or scope of his
authorities, powers, functions, duties or responsibilities
attached to the position described in Section 1 or a
reduction in his compensation as provided in Section 5 or
his benefits as provided in Section 7, which change or
reduction is not remedied within thirty days after notice to
the Company by Adkins;
(C) any other breach by the Company of any provision of this
Agreement that is not remedied within 30 days after notice
to the Company by Adkins; or
(D) the liquidation, dissolution, consolidation or merger of the
Company or transfer of all or a significant portion of its
assets, unless a successor or successors (by merger,
consolidation or otherwise) to which all or a significant
portion of its assets has been transferred shall have
assumed all duties and obligations of the Company under this
Agreement; provided that in any event set forth in this
Section 8(b)(ii), Adkins shall have elected to terminate his
employment under this Agreement upon not less than 40 and
not more than 90 days' notice to the Board, attention of the
Secretary of the Company, given within three calendar months
after (1) failure to be so elected or reelected, or such
removal, (2) expiration of the 30-day cure period with
respect to such event, or (3) the closing date of such
liquidation, dissolution, consolidation, merger or transfer
of assets.
An election by Adkins to terminate his employment under the provisions of
this Section 8(b)(ii) shall not be deemed a voluntary termination of employment
by Adkins for the purposes of this Agreement or any plan or practice of the
Company.
(c) Payment Upon Termination. In the event that (i) the Company terminates
Adkins' employment under this Agreement for any reason other than
Cause or Adkins' death or (ii) Adkins terminates his employment under
this Agreement pursuant to Section 8(B)(ii), the Company shall
continue to pay to Adkins (or in the event of his death following such
termination, his legal representative) his Base Compensation under
Section 5, at the semi-monthly rate in effect immediately prior to the
date of such termination, until May 31, 2004.
(d) Change In Control. For the purposes of this Agreement, Change in
Control shall mean a change in the control of the Company during the
Term, which shall be deemed to have occurred if:
(i) The registration of the Company's voting securities under the
Securities Exchange Act of 1934, as amended (the "1934 Act"),
terminates or the Company shall have fewer than 300 stockholders
of record; or
(ii) any person or group (within the meaning of sections 13(d) and
14(d) of the 1934 Act), other than the Company or any of its
majority-controlled subsidiaries, becomes the beneficial owner
(within the meaning of Rule 13d-3 under the 1934 Act) of 30
percent or more of the combined voting power of the Company's
then outstanding voting securities; or
(iii) a tender offer or exchange offer (other than an offer by the
Company or a majority-controlled subsidiary), pursuant to which
30 percent or more of the combined voting power of the Company's
then outstanding voting securities is purchased, expires; or
(iv) the stockholders of the Company approve an agreement to merge or
consolidate with another corporation (other than a
majority-controlled subsidiary of the Company) unless the
stockholders of the Company immediately before the merger or
consolidation are to own more than 70 percent of the combined
voting power of the resulting entity's voting securities; or
(v) the Company's stockholders approve an agreement (including,
without limitation, a plan of liquidation) to sell or otherwise
dispose of all or substantially all of the business or assets of
the Company; or
(vi) during any period of two consecutive years, individuals who, at
the beginning of such period, constituted the Board cease for any
reason to constitute at least a majority thereof, unless the
election or the nomination for election by the Company's
stockholders of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were
directors at the beginning of the period; or
(vii) the acquisition of direct or indirect beneficial ownership of
more than 15 percent of the Company's then outstanding voting
securities by any person or group is approved over the formal
objection of the Company by the Securities and Exchange
Commission pursuant to section 9 of the Public Utility Holding
Company Act of 1935, as amended.
However, no Change in Control shall be deemed to have occurred by reason of
any event involving a transaction in which Adkins, or a group of persons or
entities with which Adkins acts in concert, acquires, directly or indirectly,
more than 30 percent of the common stock or the business or assets of the
Company; any event involving or arising out of a proceeding under Title 11 of
the United States Code (or the provisions of any future United States bankruptcy
law), an assignment for the benefit of creditors or an insolvency proceeding
under state or local law; or any event constituting approval by the Company's
stockholders of a merger or consolidation if a majority of the group consisting
of the President and Vice Presidents of the Company who are parties to
agreements conferring rights upon a Change in Control shall have agreed in
writing prior to such approval that approval shall be deemed not to constitute a
Change in Control.
9. Mitigation. Adkins shall not be required to mitigate the amount of
any payment provided for in this Agreement either by seeking other employment or
otherwise. The amount of any payment provided for herein shall not be reduced by
any remuneration that Adkins may earn from employment with another employer or
otherwise following the termination of his employment under this Agreement.
10. Noncompetition Covenant. For a period of one year following the
termination of Adkins' employment under this Agreement or, if Adkins has given a
notice pursuant to Section 8(b)(ii), for a period of 15 months following the
giving of such notice, Adkins shall assist no individual or entity other than
the Company to acquire any entity with respect to which a proposal to acquire
the entity was presented to the Board prior to the beginning of the period.
11. Indemnification. The Company shall indemnify Adkins to the fullest
extent permitted by applicable Delaware law (as it may be amended from time to
time), including the advance of expenses permitted herein.
12. Performance. The failure of either party to this Agreement to
insist upon strict performance of any provision hereof shall not constitute a
waiver of its rights subsequently to insist upon strict performance of such
provision or any other provision of this Agreement.
13. Non-Assignability. Neither party shall have the right to assign
this Agreement or any rights or obligations hereunder without the consent of the
other party.
14. Invalidity. If any provisions of this Agreement shall be found to
be invalid by any court of competent jurisdiction, such finding shall not affect
the remaining provisions of this Agreement, all of which shall remain in full
force and effect.
15. Arbitration and Legal Fees. In the event of any dispute regarding a
refusal or failure by the Company to make payments or provide benefits hereunder
for any reason, Adkins shall have the right, in addition to all other rights and
remedies provided by law, to arbitration of such dispute under the rules of the
American Arbitration Association, which right shall be invoked by serving upon
the Company a notice to arbitrate, stating the place of arbitration, within 90
days of receipt of notice in any form (including, without limitation, failure by
the Company to respond to a notice from Adkins within 30 days) that the Company
is withholding or proposes to withhold payments or provisions of benefits. In
the event of any such dispute, whether or not Adkins exercises his right to
arbitration, if it shall ultimately be determined that the Company's refusal or
failure to make payments or provide benefits hereunder was wrongful or otherwise
inconsistent with the terms of this Agreement, the Company shall indemnify and
hold harmless Adkins from and against any and all expenses incurred in
connection with such determination, including legal and other fees and expenses.
16. Successors. This Agreement shall be binding upon and inure to the
benefit of Adkins (and his personal representative), the Company and any
successor organization or organizations that shall succeed to substantially all
of the business and property of the Company, whether by means of merger,
consolidation, acquisition of substantially all of the assets of the Company or
otherwise, including by operation of law.
17. Set-off. The Company shall have no right of set-off or counterclaim
in respect of any claim, debt or obligation against any payments or benefits
provided for in this Agreement.
18. Amendments. No amendment to this Agreement shall be effective
unless in writing and signed by both the Company and Adkins.
19. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
20. Notices. Unless otherwise stated herein, all notices hereunder
shall be in writing and shall be deemed to be given when personally delivered or
mailed by United States registered or certified mail, postage prepaid, to, if to
the Company, 909 Silver Lake Boulevard, Dover, Delaware 19901, and, if to
Adkins, the last address therefor shown on the records of the Company. Either
the Company or Adkins may, by notice to the other, designate an address other
than the foregoing for the receipt of subsequent notices.
21. Withholding. The Company may withhold from any amounts payable to
Adkins hereunder all federal, state, city or other taxes that the Company may
reasonably determine are required to be withheld pursuant to any applicable law
or regulation.
22. Nature of Payments Upon Termination. All payments to Adkins
pursuant to Section 8 be considered as liquidated damages or as severance
payments in consideration of Adkins' past services to the Company, and no such
payment shall be regarded as a penalty to the Company.
23. Acknowledgment. The parties hereto each acknowledge that each has
read this Agreement and understands the same and that each enters into this
Agreement freely and voluntarily.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CHESAPEAKE UTILITIES CORPORATION
[CORPORATE SEAL] By: ___________________________________
Name:
Title:
ATTEST:
___________________________
Secretary
CHAIRMAN
_________________________________
Ralph J. Adkins
CHAIRMAN OF THE BOARD
POSITION DESCRIPTION
JANUARY 1, 2003
Provide leadership to the Board, and serve as Chair of the Executive Sessions.
Acts as a liaison between the Board and management.
Along with other Directors, ensure the proper functioning of the Board in
fulfilling its approved role and responsibilities.
Schedule meetings of the full Board and works with committee chairmen to
coordinate the schedule of meetings for committees.
Organizes and presents agenda for regular and special board meetings based on
input from the Chief Executive Officer and the other directors.
Ensure proper flow of information to the Board, reviewing adequacy and timing of
documentary materials in support of management's proposals.
Ensures adequate lead time for effective study and discussion of business under
consideration.
Oversees the preparation and distribution of proxy materials to stockholders.
Helps the Board fulfill the goals it sets by assigning specific tasks to members
of the Board.
Identifies guidelines for the conduct of the directors and ensures that each
director is making a significant contribution.
Together with the Chief Executive Officer, represents the Company to external
groups: shareholders, bankers, local communities, federal, state and local
governments.
Working with the Governance Committee, ensures proper committee structure
including assignments of members and committee chairmen.
Carries out other duties as requested by the Board as a whole, depending on need
and circumstances.