EXECUTIVE EMPLOYMENT AGREEMENT
AN EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") dated this 1st day
of January, 1999, by and between Chesapeake Utilities Corporation, a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxx ("Executive").
WITNESSETH:
WHEREAS, the Company is currently obtaining the benefit of
Executive's services as a part-time executive employee in the capacity of
Chairman of the Company's Board of Directors ("Chairman");
WHEREAS, the Company's Board of Directors (the "Board") has
authorized the Company to agree to provide for Executive's continued
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 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 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 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, 1999, appended to this Agreement.
2. Term of Agreement. The term of this Agreement ("Term") shall
extend until December 31, 2000.
3. Time. Executive agrees to devote one-half of a full-time work
schedule and, during that time, his full 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. During the Term, Executive shall serve as the
Company's Chairman.
5. Compensation. The Company shall compensate Executive for his
services hereunder at a rate of $XXXXXX 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 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 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 -maintained automobile,
new every three years, of a kind and model appropriate to his position with
the Company.
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, Executive shall not be entitled to any
severance benefits under this Agreement. Unless there is a Change in
Control, Cause shall be as the Board may reasonably determine. Following a
Change in Control, 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
(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 Executive
shall have failed to remedy such breach within thirty days
after notice from the Secretary of the Company demanding
that 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 Following a Change in Control. After a
Change in Control, 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 reelect Executive to, or
removal of Executive from, the office set forth in
Paragraph 1 hereof;
(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 that 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 purposes of this Agreement or any plan or
practice of the Company.
(c) Payment Upon Termination. In the event that the Company
terminates this Agreement during the 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 hereof at the semi-
monthly rate in effect immediately prior to the date of such termination
("Termination Date"), until December 31, 2000.
(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 0000 Xxx) 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.
9. 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.
10. 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.
11. 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.
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, 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.
16. Successors. This Agreement shall be binding upon and inure to
the benefit of 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.
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 Executive.
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, 000 Xxxxxx Xxxx Xxxxxxxxx, Xxxxx, Xxxxxxxx
00000, and, if to Executive, the last address therefor 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.
21. 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.
22. Nature of Payments Upon Termination. All payments to
Executive pursuant to Paragraph 8 of this Agreement shall be considered as
liquidated damages or 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.
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.
24. Effect of Prior Agreement. This Agreement supersedes, as of
January 1, 1999, the Executive Employment Agreement between the Company and
Executive dated March 26, 1997, which is hereby terminated as of January 1,
1999, by mutual consent of the Company and Executive.
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
_____________________________________
Xxxxx X. Xxxxxx