EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
AN EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") dated this
26th day of March, 1997, by and between Chesapeake Utilities
Corporation, a Delaware corporation (the "Company"), and
XXXXXXXXXX ("Executive").
WITNESSETH:
WHEREAS, the Company is currently obtaining the benefit of
Executive's services as a full-time executive employee in the
capacity of XXXXXXXXXX;
WHEREAS, the Company's Board of Directors (the "Board") has
authorized the Company to agree to provide for Executive's con-
tinued employment pursuant to the terms of this Agreement; and
WHEREAS, Executive is willing, in consideration of the
covenants hereinafter provided, to continue to be employed by the
Company in the capacity of XXXXXXXXXX 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 Executive hereby agree
as follows:
1. EMPLOYMENT. The Company agrees to employ Executive, and
Executive agrees to accept employment, as an executive officer of
the Company in the capacity of XXXXXXXXXX, with such reasonable
duties and responsibilities as are consistent with the By-laws of
the Company as of the date hereof, including, but not limited to
being in compliance with goals, policies, and objectives
established by the Chief Executive Officer and the Board of
Directors. Directs, coordinates, and administers all aspects of
Company operations or subsidiary operations. Recommends short and
long-term plans to achieve organization growth and
diversification. Responsible for recommending to or advising
management on potential mergers, acquisitions, divestitures, new
ventures and research in both energy and non-energy related
fields.
2. TERM.
(a) TERM OF AGREEMENT. The term of this Agreement
("Term") shall be the Initial Term (as defined in Paragraph 2(b)
hereof), and, if applicable, the Extended Term (as defined in
Paragraph 2(c) hereof).
(b) INITIAL TERM. Subject to Paragraph 2(c) hereof,
the Initial Term of this Agreement shall extend for five (5) years
commencing on the date of this Agreement.
(c) EXTENDED TERM. Upon the occurrence of a Change in
Control (as defined in Paragraph 2(d) hereof), the Initial Term
shall end and the Term of this Agreement shall thereupon
automatically be extended, commencing on the date of such Change
in Control, for the shorter of five (5) years or the period until
Executive attains the earliest age, if any, at which his
compulsory retirement is permitted under section 12(c) of the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C.
section 631(c), or its successor (such extended five-year or shorter
term constituting the "Extended Term").
(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 of this Agreement, 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 was 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 Executive, or
a group of persons or entities with which Executive 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.
3. TIME. Executive agrees to devote all reasonable full
time and best efforts for the benefit of the Company and any
subsidiary of the Company, and not to serve any other business
enterprise or organization in any capacity during the Term hereof
without the prior written consent of the Company, which consent
shall not be unreasonably withheld.
4. OFFICE.
(a) INITIAL TERM. During the Initial Term, the Company
shall elect Executive XXXXXXXXXX.
(b) EXTENDED TERM. During the Extended Term of this
Agreement:
(i) Executive shall hold and perform an office
with the responsibility, importance and scope within the
Company at least equal to that of the office described
and contemplated in Paragraph 1 hereof; and
(ii) Executive's office shall be located in Dover,
Delaware, and Executive shall not be required, without
his written consent, to change his office location or to
be absent therefrom on business for more than 60 working
days in any year.
5. COMPENSATION.
(a) INITIAL TERM. The Company shall compensate
Executive for his services hereunder during the Initial Term at a
rate of $XXXXX per annum, payable in equal semi-monthly
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.
(b) EXTENDED TERM. During the Extended Term, the
Company shall compensate Executive for his services hereunder at a
rate per annum, payable in equal semi-monthly installments, equal
to his Base Compensation at the time the Extended Term commences,
increased:
(i) effective on each anniversary of the date of
this Agreement during the Extended Term by an amount
equal to the product of such Base Compensation times the
increase in the preceding calendar year of the Consumer
Price Index for Urban Wage Earners and Clerical Workers
for the Philadelphia metropolitan region as reported by
the U.S. Department of Labor (or, if such index is no
longer reported, the corresponding increase in a
comparable index); and
(ii) by such additional amounts as the Board may
determine from time to time based, in part, on an annual
review of Executive's compensation.
6. EXPENSES. During the Term of this Agreement, the
Company shall pay all necessary and reasonable business expenses
incurred by Executive on behalf of the Company in the course of
his employment hereunder, 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) Executive 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 the
Company executive employees are permitted to participate. The
Executive's participation shall be in accordance with the terms
and provisions of such plans.
(b) The Company shall furnish Executive with a suitable
office, necessary administrative support and customary furniture
and furnishings for such office. The Company further agrees that
Executive shall have the use of a Company-owned or Company-leased
and Company-maintained automobile, new every three years, of a
kind and model appropriate to his position with the Company.
(c) Nothing in this Agreement shall preclude the
Company from amending or terminating any employee benefit plan or
practice, but, it being the intent of the parties that the
Executive shall continue to be entitled during the Extended Term
to benefits and perquisites as set forth in Paragraphs 7(a) and
7(b) hereof at least equal to those attached to his position on
the date of this Agreement, nothing in this Agreement shall
operate as, or be construed to authorize, a reduction during the
Extended Term without Executive's written consent in the level of
such benefits or perquisites as in effect on the date of a Change
in Control. If and to the extent that such benefits or
perquisites are not payable or provided to Executive under any
such plan or practice by reason of an amendment thereto or
termination thereof during the Extended Term, the Company shall
pay or provide such benefits or perquisites to Executive.
8. TERMINATION.
(a) TERMINATION FOR CAUSE. This Agreement and
Executive's employment hereunder may be terminated by the Company
at any time for Cause. In the event of termination for Cause, the
Executive shall not be entitled to any severance benefits under
this agreement. During the Initial Term, Cause shall be as the
Board may reasonably determine. During the Extended Term,
termination of this Agreement and the Executive's employment shall
be deemed to have been for Cause only if it shall have been the
result of:
(i) conduct by Executive that constitutes a felony
under the laws of the United States or a state in which
Executive works or resides;
(ii) an act or acts of dishonesty by Executive
resulting or intended to result directly or indirectly
in material gain to or personal enrichment of Executive
at the Company's expense;
(iii) a deliberate and intentional refusal by
Executive during the Extended Term (except by reason of
incapacity due to illness or accident) to comply with
the provisions of Paragraph 1 hereof, provided that such
breach shall have resulted in demonstrably material
injury to the Company and the Executive shall have
failed to remedy such breach within thirty days after
notice from the Secretary of the Company demanding that
the Executive remedy such breach; or
(iv) the engagement in conduct by Executive 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 DURING EXTENDED TERM. During the
Extended Term of this Agreement, the term "Termination" shall
mean:
(i) Termination by the Company of Executive's
employment; or
(ii) Termination by Executive of his employment
following the occurrence of any of the following events:
(A) Failure to elect or re-elect Executive
to, or removal of Executive from, the office or
offices set forth in Paragraph 1 hereof, or the
Board if Executive shall have been a member of the
Board immediately prior to a Change in Control of
the Company;
(B) Executive's 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
positions contemplated in Paragraph 1 hereof or a
reduction in his compensation as provided in
Paragraph 5 hereof or his benefits as provided in
Paragraph 7, which change or reduction is not
remedied within thirty days after notice to the
Company by Executive;
(C) Any other breach by the Company of any
provision of this Agreement (including, without
limitation, relocation of Executive in violation of
Paragraph 4(b) hereof), which breach is not
remedied within thirty days after notice to the
Company by Executive; 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 Paragraph
8(b)(ii), Executive shall have elected to terminate his
employment under this Agreement upon not less than forty (40)
and not more than ninety (90) days' notice to the Board,
attention of the Secretary, given, except in the case of a
continuing breach, 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 Executive to terminate his employment under
the provisions of this Paragraph shall not be deemed a voluntary
termination of employment by Executive for the purpose of this
Agreement or any plan or practice of the Company.
(c) PAYMENT UPON TERMINATION DURING EXTENDED TERM. In
the event of a Termination of this Agreement during the Extended
Term hereof for any reason other than Cause or Executive's death,
the Company shall, subject to Paragraph 9 hereof, pay to Executive
(or, in the event of his death following the Termination, his
legal representative) in cash within thirty (30) days after the
date of such Termination (the "Termination Date"):
(i) An amount equal to the product of multiplying
the monthly rate of Base Compensation to which Executive
was entitled under Paragraph 5(b) hereof on the day
immediately prior to the Termination Date by the lesser
of (A) twenty-four (24) months or (B) the number of
months remaining in the Term of this Agreement (the
shorter of such periods constituting the "Covered
Period");
(ii) An amount equal to the present value of the
additional benefits that would have been paid Executive
under the Company's retirement plans if he had continued
to be employed pursuant to this Agreement during the
Covered Period and the retirement plans had continued
during such period without change from the date of the
Change in Control;
(iii) For each share of Company stock subject to a
stock option that was awarded to Executive under a
Company stock option plan, was held by Executive on the
day immediately prior to his Termination Date, was not
exercisable on that date but would have become
exercisable during the Covered Period if Executive's
employment with the Company had continued during that
period, an amount equal to the excess of (A) the daily
average closing price for a share of the Company's stock
on the New York Stock Exchange, or such other national
securities exchange on which such stock may be listed,
during the 30-day period ending upon the date of the
Change in Control, or, if higher, during the 30-day
period ending upon the Termination Date (adjusted as
appropriate for any changes in the capital structure of
the Company) over (B) the option price for a share of
the Company's stock subject to the option; and
(iv) An amount equal to the aggregate of the
Company's contributions to the Company's savings plan in
respect of Executive that were not vested on the day
immediately prior to the Termination Date but that would
have been vested at the end of the Covered Period if
Executive had remained employed by the Company for the
duration of that period.
For purposes of calculating the present value specified in
Paragraph 8(c)(ii), the discount rate shall equal the PBGC
interest rate for immediate annuities, as provided in 29 C.F.R.
Part 4044, Appendix B, Table II or its successor, in effect for a
valuation date coinciding with the Termination Date. If that rate
should no longer be published, the discount rate shall be such
closely comparable interest rate as the Company may reasonably
determine.
(d) PAYMENT UPON TERMINATION DURING INITIAL TERM. In
the event that the Company terminates this Agreement during, or
elects pursuant to Paragraph 17 hereof not to renew this Agreement
at the end of, the Initial Term hereof for any reason other than
Cause or Executive's death, the Company shall continue to pay to
Executive (or in the event of his death following such
termination, his legal representative) his Base Compensation under
Paragraph 5(a) hereof, at the semi-monthly rate in effect
immediately prior to the date of such termination ("Termination
Date"), for a period of six months following the Termination Date.
9. MAXIMUM PAYMENT UPON TERMINATION. Notwithstanding any
other provision of this Agreement, if the Company should
determine, in consultation with tax advisors satisfactory to
Executive, that any amount payable to Executive pursuant to
Paragraph 8 of this Agreement during the extended term, either
alone or in conjunction with any payments or benefits to or on
behalf of Executive pursuant to this Agreement or otherwise, would
not be deductible by the Company, in whole or in part, for federal
income tax purposes by reason of section 280G of the Internal
Revenue Code or its successor, then the aggregate amount payable
to Executive pursuant to Paragraph 8 shall be reduced to the
largest amount that, in the opinion of such tax advisors, the
Company could pay Executive under Paragraph 8 without any part of
that amount being nondeductible by the Company as a result of
Section 280G or its successor.
10. MITIGATION. Executive 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
Executive may earn from employment with another employer or
otherwise following his Termination Date.
11. NONCOMPETITION COVENANT. For a period of one year
following the Termination Date and, if Executive has given a
notice pursuant to Paragraph 8(b)(ii) hereof, for a period of 15
months following the giving of such notice, Executive shall assist
no individual or entity other than the Company to acquire any
entity with respect to which a proposal to acquire was presented
to the Board prior to the beginning of the period.
12. INDEMNIFICATION. The Company shall indemnify Executive
to the fullest extent permitted by applicable Delaware law (as may
be amended from time to time), including the advance of expenses
permitted herein.
13. 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.
14. 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.
15. 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 the which shall remain in full force and effect.
16. 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, Executive 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 ninety (90) days of receipt of notice in
any form (including, without limitation, failure by the Company to
respond to a notice from Executive within thirty (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 Executive 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 Executive from and
against any and all expenses incurred in connection with such
determination, including legal and other fees and expenses.
Without limitation of or by the foregoing, the Company shall,
within ten (10) days after notice from Executive, provide
Executive with an irrevocable letter of credit in the amount of
$100,000 from a bank satisfactory to Executive against which
Executive may draw to pay legal fees and other fees and expenses
in connection with any attempt by Executive to enforce any of his
rights under this Agreement during the Extended Term. Said letter
of credit shall not expire before ten (10) years following the
date of this Agreement.
17. RENEWAL. If the Initial Term of this Agreement expires
without there having been a Change in Control, this Agreement
shall be renewed, as of the day following such expiration, unless,
during the period beginning ninety (90) days prior and ending
thirty (30) days prior to such day, either the Company or
Executive shall have given notice to the other that this Agreement
will not be renewed. If this Agreement is renewed as provided
under this Paragraph, the new Agreement shall be identical to this
Agreement (except insofar as the Company and Executive may
otherwise agree in writing) except that the date of the new
Agreement shall be as of the day following the expiration of the
Initial Term of this Agreement.
18. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the Executive (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.
19. 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.
20. AMENDMENTS. No Amendment to this Agreement shall be
effective unless in writing and signed by both the Company and
Executive.
21. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
22. 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 19904, and, if to Executive, the
last address therefore shown on the records of the Company.
Either the Company or Executive may, by notice to the other,
designate an address other than the foregoing for the receipt of
subsequent notices.
23. WITHHOLDING. The Company may withhold from any amounts
payable to Executive 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.
24. NATURE OF PAYMENTS UPON TERMINATION. All payments to
Executive pursuant to Paragraphs 8 and 9 of this Agreement shall
be considered as liquidated damages or, in the case of certain
payments pursuant to Paragraph 8(d), as severance payments in
consideration of Executive's past services to the Company, and no
such payment shall be regarded as a penalty to the Company.
25. 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: _______________________________
Title:
ATTEST:
__________________________
Secretary EXECUTIVE
____________________________________
_____________