EXECUTIVE EMPLOYMENT AGREEMENT
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AN EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") dated this 26th day of
March, 2002, by and between Chesapeake Utilities Corporation, a Delaware
corporation (the "Company"), and [name of executive] ("Executive").
WITNESSETH:
WHEREAS, the Company is currently obtaining the benefit of Executive's
services as a full-time executive employee in the capacity of President and
Chief Executive Officer;
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 President
and Chief Executive Officer 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 President and Chief Executive Officer, 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 Board of Directors.
Directs, coordinates, and administers all aspects of Company operations or
subsidiary operations.
2. Term.
(a) Term of Agreement. The term of this Agree-ment ("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. 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 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-con-trolled 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 occur-red 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 with-held.
4. Office.
(a) Initial Term. During the Initial Term, the Company shall elect
Executive, as its President and Chief Executive Officer.
(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 $__________ 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 hereun-der 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 Execu-tive 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 employ-ment following the
occurrence of any of the following events:
(A) Failure to elect or re-elect Execu-tive 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 immedi-ately prior to a Change in Control of
the Company;
(B) Executive's good-faith determina-tion 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 Para-graph 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 conjunc-tion 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 Para-graph 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), includ-ing 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 subse-quently 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 Asso-ciation, which right shall be
invoked by serving upon the Company a notice to arbitrate, stating the
place of arbi-tration, 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 dis-pute, 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 indemni-fy 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 interpret-ed 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, 000 Xxxxxx Xxxx Xxxxxxxxx, Xxxxx, Xxxxxxxx 00000, 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 deter-mine 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 Agree-ment 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 acknowl-edge 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
____________________________________
Date: _____________
