PERFORMANCE SHARE AGREEMENT pursuant to the CHESAPEAKE UTILITIES CORPORATION PERFORMANCE INCENTIVE PLAN
Exhibit
10.14
pursuant
to the
CHESAPEAKE
UTILITIES CORPORATION
PERFORMANCE
INCENTIVE PLAN
AGREEMENT
dated as of December ___, 2006, and entered into, in duplicate, by and between
Chesapeake Utilities Corporation, a Delaware corporation (the "Company"), and
Xxxx X. Xxxxxx (the "Grantee") who resides at
[address
of executive].
WITNESSETH
that:
WHEREAS,
the Chesapeake Utilities Corporation Performance Incentive Plan (the "Plan"),
to
be effective January 1, 2006, has been duly adopted by action of the Company's
Board of Directors (the "Board") on February 24, 2005 and by its shareholders
on
May 5, 2005; 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 (“Shares”) that are subject to
this Agreement, when added to the other shares of Common Stock that are subject
to awards granted under the Plan, do not exceed the total number of shares
of
Common Stock 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 year
ending December 31, 2007 (the "Award Year"). As more fully described herein,
the
Grantee may earn a maximum total of 3,600 Shares (the "Contingent Performance
Shares") upon the Company's achievement of the Performance Goals set forth
in
Section 2. Alternatively, the Grantee may elect to receive 800 Shares (the
"Forfeitable Performance Shares"), as detailed in Section 3, in lieu of
receiving any Contingent Performance Shares. The Forfeitable Performance Shares
shall be subject to forfeiture conditions, as set forth in Section
3(c).
Section
2. Contingent
Performance Shares
(a) As
soon
as practicable after the Company’s independent auditors have certified the
Company’s financial statements for the Award Year, the Committee shall determine
for purposes of this Agreement the Company’s (1) earnings growth (“EG”), (2)
achievement of established milestones and objectives under the Company’s
long-term strategic plan (“SP”), and (3) Shareholder Value as of the end of the
Award Year. The EG, SP and Shareholder Value shall be determined by the
Committee in accordance with the terms of the Plan and this Agreement based
on
financial results reported to shareholders in the Company’s annual reports and
shall be subject to adjustment by the Committee for extraordinary events
during
the
Award Year. The Committee shall promptly notify the Grantee of its
determination.
(b) The
Grantee may earn up to 3,600 Contingent Performance Shares (the “Maximum Award”)
as follows:
(1) The
performance measured for Shareholder Value will be the value of $10,000 invested
in the Company stock compared to a Utility Index. If the Company’s performance
exceeds the Utility Index, the Grantee will be eligible to earn up to 800
Contingent Performance Shares of the Maximum Award for the Award Year. If the
value of $10,000 invested for the Award Year does not exceed the Utility Index
for the Award Year, the Grantee shall not earn any Contingent Performance Shares
under this Paragraph (b)(1).
(2) The
performance measured for EG will be based upon achieving a growth in earnings
per share of 3.5% to 7% for the award year. If the Company earnings per share
for 2007 is equal to or exceeds $1.79, the Grantee is eligible to earn 1,200
Contingent Performance Shares of the Maximum Award. If the earnings per share
is
equal to or greater than $1.82, the Grantee is eligible to earn an additional
400 Contingent Performance Shares of the Maximum Award. If the earnings per
share is equal to or greater than $1.85, the Grantee is eligible to earn an
additional 400 Contingent Performance Shares of the Maximum Award but in no
event shall the Grantee earn more than 2,000 Contingent Performance Shares
of
the Maximum Award under this paragraph (b) (2).
(3)The
performance measured for SG will be based upon execution of the Company’s
long-term strategic plan, assuming attainment of pre-authorized milestones
and
objectives as established by the Compensation Committee. If the long-term
strategy is executed, the Grantee will be eligible to earn 800 Contingent
Performance Shares of the Maximum Award. After approval from the Company’s Board
of Directors, if the long-term strategic plan is not executed, the Grantee
shall
not earn any Contingent Performance Shares under this paragraph
(b)(3).
(c) Contingent
Performance Shares that are earned by the Grantee pursuant to this Section
2
shall be issued promptly, without payment of consideration by the Grantee,
within 2 ½ months of the end of the Award Year. The Grantee shall have the right
to vote the Contingent Performance Shares and to receive the dividends
distributable with respect to such Shares on and after, but not before, the
date
on which the Grantee is recorded on the Company's ledger as holder of record
of
the Contingent Performance Shares (the "Issue Date"). If, however, the Grantee
receives Shares as part of any dividend or other distribution with respect
to
the Contingent Performance Shares, such Shares shall be treated as if they
are
Contingent Performance Shares, and such Shares shall be subject to all of the
terms and conditions imposed by this Section 2.
(d) Sale,
transfer, pledge, or hypothecation of the Contingent Performance Shares shall
be
prohibited for a period of three (3) years after the Issue Date (the "Limitation
Period"), and the Performance Shares shall bear a restrictive legend to that
effect. Any attempt to dispose of Contingent Performance Shares in contravention
of this Agreement shall be ineffective. Upon expiration of the Limitation
Period, the transfer restrictions imposed by this Section shall expire, and
new
certificates representing the Contingent Performance Shares, without the
restrictive legend described in this paragraph (d), shall be issued, subject
to
the provisions of paragraph (e) of this Section 2.
(e) 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 Contingent Performance Shares after
expiration of the Limitation Period shall require the availability of an
exemption from such registration, and prior to the issuance of new certificates,
the Company shall 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 Contingent Performance Shares are not transferred in the absence of
such exemption.
(f)
In the
event of a Change in Control, as defined in the Plan, during the Award Year,
the
Grantee shall earn at least the Maximum Award of Contingent Performance Shares
set forth in this Section 2, as if all employment and performance criteria
were
satisfied, without any pro ration based on the proportion of the Award Year
that
has expired as of the date of such Change in Control.
(g) If,
during the Award Year, the Grantee is separated from employment, Contingent
Performance Shares shall be deemed earned or forfeited as follows:
(1) 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 unearned
Contingent Performance Shares shall be forfeited immediately;
(2) If
the
Grantee separates from employment by reason of death or total and permanent
disability (as determined by the Committee), the number of Contingent
Performance Shares that would otherwise have been earned at the end of the
Award
Year shall be reduced by pro rating such Contingent 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 Contingent Performance Shares
shall not be so reduced;
(3) Retirement
of the Grantee at age 65 or as accepted by the Committee shall not affect the
Contingent Performance Shares, which shall continue to be earned through the
remainder of the Award Year, as set forth above.
(h) The
Grantee shall be solely responsible for any federal, state and local taxes
of
any kind imposed in connection with the delivery of Contingent Performance
Shares. Prior to the transfer of any Contingent Performance Shares to the
Grantee, the Grantee shall remit to the Company an amount sufficient to satisfy
any federal, state, local and other withholding tax requirements. The Grantee
may elect to have all or part of any withholding tax obligation satisfied by
having the Company withhold Shares otherwise deliverable to the Grantee as
Contingent Performance Shares, unless the Committee determines otherwise by
resolution. If the Grantee fails to make such payments or election, the Company
and its subsidiaries shall, to the extent permitted by law, have the right
to
deduct from any payments of any kind otherwise due to the Grantee any taxes
required by law to be withheld with respect to the Contingent Performance
Shares.
Section
3. Forfeitable
Performance Shares
(a) In
lieu
of earning Contingent Performance Shares, the Grantee may elect to receive
800
Forfeitable Performance Shares, irrespective of whether the Company meets any
Performance Goals. The Grantee must make any such election on or before
September 30, 2007, and the election must be made in writing, in a manner
prescribed by the Committee. Once made, the election is irrevocable. If a
Grantee makes such an election, he shall not receive any Contingent Performance
Shares under this Agreement.
(b) Any
Forfeitable Performance Shares received by the Grantee pursuant to this Section
3 shall be issued as promptly as possible after December 31, 2007, without
payment of consideration by the Grantee. The Grantee shall have the right to
vote the Forfeitable Performance Shares and to receive the dividends
distributable with respect to such Shares on and after, but not before, the
date
on which the Grantee is recorded on the Company's ledger as holder of record
of
the Forfeitable Performance Shares (the "Issue Date"). If, however, the Grantee
receives Shares as part of any dividend or distribution with respect to the
Forfeitable Performance Shares, such Shares shall be treated as if they are
Forfeitable Performance Shares, and such Shares shall be subject to all of
the
terms and conditions imposed by this Section 3.
(c) The
Forfeitable Performance Shares shall be subject to the following
restrictions:
(1) Sale,
transfer, pledge or hypothecation of the Forfeitable Performance Shares shall
be
prohibited for a period of three (3) years after the Issue Date (the
"Restriction Period"), and the certificates evidencing the Forfeitable
Performance Shares shall bear an appropriate restrictive legend that refers
to
the terms, conditions, and restrictions set forth in this Agreement. Any attempt
to dispose of Forfeitable Performance Shares in contravention of this Agreement
shall be ineffective. Upon expiration of the Restriction Period, the transfer
restrictions imposed by this Section shall expire, and new certificates
representing the Forfeitable Performance Shares, without the restrictive legend
described in this paragraph (c)(1), shall be issued, subject to the provisions
of paragraph (f) of this Section 3.
(2) If,
during the Restriction Period, the Grantee separates from employment for any
reason other than death, normal retirement, total and permanent disability
(as
determined by the Committee), or involuntary termination without cause (as
determined by the Committee), all Forfeitable Performance Shares shall be
forfeited immediately.
(d) All
restrictions under paragraph (c) of this Section 3 shall immediately expire
on
the earliest of: (A) the Grantee's separation from employment because of death,
total and permanent disability (as determined by the Committee), or involuntary
termination without cause (as determined by the Committee), (B) a Change in
Control, as defined in the Plan, or (C) the end of the Restriction Period.
(e)
If,
after the Grantee has made an election to receive Forfeitable Performance Shares
pursuant to Section 3(a), a Change in Control, as defined in the Plan, occurs
during the Award Year, the Grantee shall receive at least the total number
of
Forfeitable Performance Shares due under this Agreement, without any pro ration
based on the proportion of the Award Year that has expired as of the date of
such Change in Control. Pursuant to Section 3(d), such Shares shall not be
subject to any of the restrictions imposed by this Section.
(f) The
Forfeitable Performance Shares shall 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 Forfeitable Performance
Shares after expiration of the Restriction Period shall require the availability
of an exemption from such registration, and prior to the issuance of new
certificates, the Company shall 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 Forfeitable Performance Shares are not transferred in the
absence of such exemption.
(g) The
Grantee shall be solely responsible for any federal, state and local taxes
of
any kind imposed in connection with receipt of the Forfeitable Performance
Shares:
(1) The
Grantee agrees that, no later than the date that the restrictions set forth
in
Section 3(c) lapse, he shall remit to the Company an amount sufficient to
satisfy any federal, state, local and other withholding tax requirements.
(2) The
Grantee may elect to have all or part of any withholding tax obligation
satisfied by having the Company withhold Shares otherwise deliverable to the
Grantee in connection with the Award of Restricted Stock, unless the Committee
determines otherwise by resolution.
(3) If
the
Grantee properly elects, within 30 days of the Issue Date, to include in gross
income for federal income tax purposes an amount equal to the fair market value
of the Forfeitable Performance Shares, he shall make arrangements satisfactory
to the Committee to remit in the year of issue an amount sufficient to satisfy
any federal, state, local and other withholding tax requirements with respect
to
such Forfeitable Performance Shares.
(4) If
the
Grantee fails to make satisfactory arrangements to meet all withholding tax
obligations, the Company and its subsidiaries shall, to the extent permitted
by
law, have the right to deduct from any payments of any kind otherwise due to
the
Grantee any taxes required by law to be withheld with respect to the Forfeitable
Performance Shares.
Section
4. Additional
Conditions to Issuance of Shares
Each
transfer of Contingent Performance Shares or Forfeitable Performance Shares
(together, the "Award 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 Award 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 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 become involved in a merger, consolidation or other
reorganization, whether or not the Company is the surviving corporation, any
right to earn Contingent Performance Shares or to elect to receive Forfeitable
Performance Shares shall be deemed a right to earn or to elect to receive the
consideration into which the Shares represented by the Contingent Performance
Shares or by the Forfeitable 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 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 to the
number of Contingent Performance Shares to be earned and/or to the number of
Forfeitable Performance Shares to be received 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, 000 Xxxxxx Xxxx Xxxxxxxxx, Xxxxx, Xxxxxxxx
00000, 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,
change the address to which subsequent notices shall be sent.
Section
8. 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 Award Shares.
Section
9. 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 shall be in its sole discretion
and
shall be binding on the Company and the Grantee.
Section
10. Governing
Law; Amendment
This
Agreement shall be governed by, and shall be construed and administered in
accordance with, the laws of the State of Delaware (without regard to its choice
of law rules) and the requirements of any applicable federal law. This Agreement
may be modified or amended only by a writing signed by the parties
hereto.
Section
11. Terms
of Agreement
This
Agreement shall remain in full force and effect and shall be binding on the
parties hereto for so long as any Award 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: ___________________________________
___________________________________
Xxxx
X.
Xxxxxx, Grantee
