PERFORMANCE SHARE AGREEMENT
pursuant to the
CHESAPEAKE UTILITIES CORPORATION
PERFORMANCE INCENTIVE PLAN
AGREEMENT dated as of January 1, 1998 and entered into, in duplicate,
by and between Chesapeake Utilities Corporation, a Delaware corporation
(the "Company"), and [Ralph J. Adkins/John R. Schimkaitis] (the "Grantee")
who resides at [address].
WITNESSETH that:
WHEREAS, the Chesapeake Utilities Corporation Performance Incentive
Plan (the "Plan") has been duly adopted by action of the Company's Board of
Directors as of January 1, 1992; and
WHEREAS, the Committee of the Board of Directors of the Company
referred to in the Plan (the "Committee") has determined that it is in the
best interests of the Company to grant the performance share award
described herein pursuant to the Plan; and
WHEREAS, the shares of the Common Stock of the Company that may be
delivered pursuant to this Agreement do not exceed the total number of
shares of the Common Stock of the Company with respect to which awards are
authorized to be granted under the Plan;
NOW, THEREFORE, it is hereby covenanted and agreed by and between the
Company and the Grantee as follows:
Section 1. PERFORMANCE SHARE AWARD
The Company hereby grants to the Grantee a Performance Share Award for
the three-year period commencing January 1, 1998 and ending December 31,
2000 (the "Award Period"). As more fully described herein, the Performance
Share Award consists of the right to earn [XX,XXX] Performance Shares upon
the Company's achieving the Performance Goals set forth in Section 2
hereof. Such Performance Shares shall be restricted as to transfer as set
forth in Section 2(b) hereof.
Section 2. PERFORMANCE SHARES
(a) As soon as practicable after the Company's independent auditors
have certified the Company's financial statements for each calendar year in
the Award Period ("Award Year"), the Committee shall determine for purposes
of this Agreement the Company's earnings growth (measured by reference to
book value per share), growth in non-gas net income ("NGNI") and share
price relative to book value ("Price/Book Value") as of the end of that
Award Year. EG, NGNI and Price/Book Value shall be determined by the
Committee based on financial results reported to shareholders in the
Company's annual reports but shall be subject to adjustment by the
Committee for extraordinary events. The Committee shall promptly notify
the Grantee of its determination. For each Award Year, the Grantee shall
be eligible to earn a maximum number of Performance Shares equal to [X,XXX]
plus the Rollover Number as defined below (the "Maximum Award").
On a cumulative basis, a Grantee shall earn
Performance Shares in each Award Year as follows:
-- If book value per share for the Award Year
exceeds book value per share for the prior calendar year by
seven percent (7%) or more, then the Grantee shall receive
fifty percent (50%) of the Maximum Award for such Award Year;
-- If NGNI for the Award Year exceeds NGNI for the
prior calendar year by ten percent (10%) or more, then the
Grantee shall receive thirty percent (30%) of the Maximum
Award for such Award Year; and/or
-- If Price/Book Value for the Award Year falls
within the top quintile of companies included in the C.A.
Turner database (natural gas distribution companies and
integrated natural gas distribution companies) for such Award
Year, then the Grantee shall receive twenty percent (20%) of
the Maximum Award for such Award Year.
For purposes of this Agreement, the "Rollover Number" of
Performance Shares for Award Year 1998 shall be zero and the
Rollover Number of Performance Shares for each of Award Years
1999 and 2000 shall be seventy-five percent (75%) of the
difference between the Maximum Award for the prior Award Year
and the number of Performance Shares earned by the Grantee for
such Award Year.
(b) Performance Shares shall be issued to the Grantee
promptly upon the determination described in paragraph (a),
without payment of consideration by the Grantee. The Grantee
shall have the right to vote the Performance Shares and
receive the cash dividends distributable with respect to such
shares on, but not before, the date on which the Grantee is
recorded on the Company's ledger as holder of record of the
Performance Shares (the "Issue Date"). Sale, transfer,
pledge, or hypothecation of the Performance Shares shall be
prohibited for a period of three (3) years after the Issue
Date (the "Restriction Period"), and the Performance Shares
will bear a restrictive legend to that effect.
(c) Upon expiration of the Restriction Period, the
transfer restrictions imposed by this Agreement will expire
and new certificates representing the Performance Shares,
without the restrictive legend described in paragraph (b) of
this Section 2, shall be issued, subject to the provisions of
paragraph (d) of this Section 2.
(d) The Performance Shares will be not registered for
resale under the Securities Act of 1933 or the laws of any
state except when and to the extent determined by the Board
pursuant to a resolution. Until a registration statement is
filed and becomes effective, however, transfer of the
Performance Shares after expiration of the Restriction Period
will require the availability of an exemption from such
registration, and prior to the issuance of new certificates,
the Company will be entitled to take such measures as it deems
appropriate (including but not limited to obtaining from the
Grantee an investment representation letter and/or further
legending the new certificates) to ensure that the Performance
Shares are not transferred in the absence of such exemption.
(e) In the event of a Change of Control as defined in
the Plan during an Award Year, the maximum number of
Performance Shares set forth in Section 2(a) for such Award
Year, pro rated based on the proportion of such Award Year
expired as of the date of such Change of Control, shall be
deemed earned upon the occurrence of the Change of Control.
(f) If during an Award Year, the Grantee is separated
from employment, Performance Shares shall be deemed earned or
forfeited as follows:
(i) Upon voluntary termination by the Grantee
(other than for retirement at age 65 or as accepted by the
Committee) or termination by the Company for failure of job
performance or other just cause as determined by the
Committee, all Performance Shares for uncompleted Award Years
shall be forfeited immediately;
(ii) If the Grantee separates from employment by
reason of death or total and permanent disability (as
determined by the Committee), the number of Performance Shares
that would otherwise have been earned at the end of the Award
Year of separation shall be reduced by pro rating such
Performance Shares based on the proportion of the Award Year
during which the Grantee was employed by the Company, unless
the Committee determines that the Performance Shares shall not
be so reduced;
(iii) Retirement of the Grantee at age 65 or as
accepted by the Committee shall not affect unearned
Performance Shares, which shall continue to be earned through
the remaining term of this Agreement as set forth above.
Section 3. WITHHOLDING
(a) The Grantee shall be solely responsible for any
federal, state or local income taxes imposed in connection
with the delivery of Performance Shares. Prior to the
transfer of Performance Shares to the Grantee, the Grantee
shall remit to the Company an amount sufficient to satisfy any
federal, state, local or other withholding tax requirements.
(b) The Grantee may elect to have any withholding tax
obligation satisfied by having the Company withhold shares
otherwise deliverable to the Grantee as Performance Shares,
unless the Committee otherwise determines by resolution.
Section 4. ADDITIONAL CONDITIONS TO ISSUANCE OF
SHARES
Each transfer of Performance Shares shall be subject to
the condition that if at any time the Committee shall
determine, in its sole discretion, that it is necessary or
desirable as a condition of, or in connection with, transfer
of Performance Shares (i) to satisfy withholding tax or other
withholding liabilities, (ii) to effect the listing,
registration or qualification on any securities exchange or
under any state or federal law of any Shares deliverable in
connection with such exercise, or (iii) to obtain the consent
or approval of any regulatory body, then in any such event
such exercise or transfer shall not be effective unless such
withholding, listing, registration, qualification, consent or
approval shall have been effected or obtained free of any
conditions not acceptable to the Company.
Section 5. ADJUSTMENT OF SHARES
(a) If the Company shall be involved in merger,
consolidation or other reorganization, whether or not the
Company is the surviving corporation, any right to earn
Performance Shares shall be deemed a right to earn the
compensation into which the shares of Common Stock represented
by the Performance Shares would have been converted under the
terms of the merger, consolidation or other reorganization.
If the Company is not the surviving corporation, the surviving
corporation (the "Successor") shall succeed to the rights and
obligations of the Company under this Agreement.
(b) If any subdivision or combination of shares of
Common Stock or any stock dividend, capital reorganization or
recapitalization occurs after the adoption of the Plan, the
Committee shall make such proportionate adjustments as are
appropriate in the number of Performance Shares to be earned
in order to prevent the dilution or enlargement of the rights
of the Grantee.
Section 6. NO RIGHT TO EMPLOYMENT
Nothing contained in this Agreement shall be deemed by
implication or otherwise to confer upon the Grantee any right
to continued employment by the Company or any affiliate of the
Company.
Section 7. NOTICE
Any notice to be given hereunder by the Grantee shall be
sent by mail addressed to Chesapeake Utilities Corporation,
861 Silver Lake Boulevard, Cannon Building, Dover, Delaware
19904, for the attention of the Committee, c/o the Secretary,
and any notice by the Company to the Grantee shall be sent by
mail addressed to the Grantee at the address of the Grantee
shown on the first page hereof. Either party may, by notice
given to the other in accordance with the provisions of this
Section 7, change the address to which subsequent notices
shall be sent.
Section 9. ASSUMPTION OF RISK
It is expressly understood and agreed that the Grantee
assumes all risks incident to any change hereafter in the
applicable laws or regulations or incident to any change in
the market value of the Performance Shares.
Section 10. TERMS OF PLAN
This Agreement is entered into pursuant to the Plan (a
copy of which has been delivered to the Grantee). This
Agreement is subject to all of the terms and provisions of the
Plan, which are incorporated into this Agreement by reference,
and the actions taken by the Committee pursuant to the Plan.
In the event of a conflict between this Agreement and the
Plan, the provisions of the Plan shall govern. All
determinations by the Committee will be in its sole discretion
and will be binding on the Company and the Grantee.
Section 11. GOVERNING LAW; AMENDMENT
This Agreement shall be governed by, and shall be
construed, enforced and administered in accordance with the
laws of the State of Delaware and the requirements of any
applicable federal law. This Agreement may be modified or
amended only in writing signed by the parties hereto.
Section 12. TERMS OF AGREEMENT
This Agreement shall remain in full force and effect and
shall be binding against the parties hereto for so long as
long as any Performance Shares issued to the Grantee under
this Agreement continue to be held by the Grantee.
IN WITNESS WHEREOF, the Company has caused this Agreement
to be executed in its corporate name, and the Grantee has
executed the same in evidence of the Grantee's acceptance
hereof, upon the terms and conditions herein set forth, as of
the day and year first above written.
CHESAPEAKE UTILITIES CORPORATION
By:
_________________________________
_________________________________
Grantee
(..continued)