G:\CDH\SHARE\CPK\REGRGHTB.AGR March 10, 1997 12:06PM
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement")
is made and entered into as of March 6, 1997, by and between
Chesapeake Utilities Corporation, a Delaware corporation (the
"Company") and Xxxxxxx X. Xxxxxxxxx ("Shareholder").
This Agreement is made as contemplated by that
certain Agreement and Plan of Merger dated as of January 10,
1997, by and among the Company, CPK Sub-A, Inc., a Delaware
corporation and wholly owned subsidiary of the Company ("CPK
Sub-A"), Tri-County Gas Co., Incorporated, a Maryland
corporation ("Tri-County"), Shareholder and Xxxxx X. Xxxxxxxxx
(the "Merger Agreement"), which provides for the merger of CPK
Sub-A with and into Tri-County (the "Merger"). Whereas the
securities to be delivered to Shareholder pursuant to the
Merger Agreement are restricted securities, as defined in
Rule 144 under the Securities Act of 1933, in order to induce
Tri-County and Shareholder to enter into the Merger Agreement,
the Company has agreed to provide the registration rights set
forth in this Agreement.
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties
hereby agree as follows:
1. Securities Subject to this Agreement. The
securities entitled to the benefits of this Agreement are the
shares of common stock, par value $.4867 per share, of the
Company (the "Common Stock") issued to Shareholder in
accordance with the terms of the Merger Agreement (the
"Registrable Securities").
2. Registration.
(a) Within 60 days following the time at which
results covering at least 30 days of post-Merger combined
operations of the Company have been filed with the Securities
and Exchange Commission (the "Commission"), sent to
stockholders of the Company or otherwise publicly issued, the
Company will, subject to the terms of this Agreement, and
subject to the full cooperation of Shareholder, at its
expense, file with the Commission a registration statement
(the "Registration Statement") covering the sale by
Shareholder of the Registrable Securities. The Company will
use its reasonable best efforts to cause the Registration
Statement to become effective as promptly as practicable and
to maintain the effectiveness of the Registration Statement
for a period of three (3) years from the Effective Time, as
that term is defined in the Merger Agreement, or such shorter
time as may be required by Rule 144(k) under the Securities
Act of 1933, as amended (the "Securities Act"), or any
successor provision. The Company may postpone for a
reasonable period of time, not to exceed 60 days, the filing
or effectiveness of the Registration Statement, or the
undertaking of any work by the Company with respect to the
preparation of the Registration Statement, if the Board of
Directors of the Company in good faith determines that such
filing or registration would reasonably be expected to have a
material adverse effect on any plan or proposal by the Company
with respect to any financing, acquisition, recapitalization,
reorganization or other material transaction.
(b) Before filing with the Commission the
Registration Statement or any amendments or supplements
thereto, the Company will furnish to Shareholder for review
copies of all documents proposed to be filed.
(c) The Company shall furnish to Shareholder
such number of copies of the Registration Statement and of
each amendment and supplement thereto (in each case including
all exhibits), such number of copies of the prospectus
included in such Registration Statement (including each
preliminary prospectus and summary prospectus), and such other
documents as Shareholder may reasonably request in order to
facilitate the disposition of the Registrable Securities by
Shareholder.
(d) The Company shall use its best efforts to
register or qualify the Registrable Securities covered by the
Registration Statement under such other securities or blue sky
laws of such jurisdictions as Shareholder may reasonably
request, provided that the Company shall not for any such
purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the
requirements of this Section 2(d), it would not be obligated
to be so qualified, to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in
any such jurisdiction (a general service of process would not
include a consent on Form U-2 or its substantial equivalent).
(e) The Company may require Shareholder to
furnish the Company with such information regarding
Shareholder and pertinent to the disclosure requirements
relating to the registration and the distribution of the
Registrable Securities as the Company may from time to time
reasonably request.
(f) If Shareholder determines to distribute
the Registrable Securities in an underwritten offering, all
costs, fees, and disbursements of underwriters and all
underwriting discounts, commissions and transfer taxes
relating to such distribution will be the sole responsibility
of Shareholder.
(g) Shareholder agrees that upon notice from
the Company he will suspend from time to time all sales of the
Registrable Securities for such period of time as is required
to permit the Company to complete any future financing
transaction involving an underwritten offering by the Company
of its Common Stock. Shareholder will not be required to
suspend sales of the Registrable Securities (pursuant to this
Section 2(g)) for more than three months in any 12-month
period.
(h) Shareholder agrees that, upon receipt of
any notice from the Company that the Company has become aware
that the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing,
Shareholder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement
until Shareholder's receipt of copies of a properly
supplemented or amended prospectus and, if so directed by the
Company, Shareholder will deliver to the Company all copies,
other than permanent file copies then in Shareholder's
possession, of the prospectus covering Registrable Securities
current at the time of receipt of such notice.
3. Indemnification.
(a) Indemnification by the Company. The
Company will indemnify and hold harmless, to the extent
permitted by law, Shareholder against any and all losses,
claims, damages or liabilities, joint or several, to which
Shareholder may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and subject to the
provisions of Section 3(c), the Company will reimburse
Shareholder for any legal or any other expenses reasonably
incurred by it in connection with investigating or defending
any such loss, claim, liability, action or proceeding;
provided, however, that the Company shall not be liable to
Shareholder in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any such
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement thereto in reliance upon and in
conformity with information furnished to the Company by
Shareholder for use in the preparation thereof; and provided
further that the Company shall not be liable under this
Section 3(a) to Shareholder to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of Shareholder's failure to
send or give a copy of the final prospectus, as the same may
be then supplemented or amended, to the person asserting an
untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of
the sale of Registrable Securities to such person if such
statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of
Shareholder and shall survive the transfer of such securities
by Shareholder.
(b) Indemnification by Shareholder.
Shareholder will indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a)
of this Section 3) the Company, each director of the Company
and each officer of the Company with respect to any statement
or alleged statement in or omission or alleged omission from
the Registration Statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with information furnished to the
Company by Shareholder for use in the preparation of the
Registration Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement
thereto. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf
of the Company, any director of the Company or any officer of
the Company and shall survive the transfer of such securities
by Shareholder.
(c) Notices of Claims, etc. Promptly after
receipt by an indemnified party of notice of the commencement
of any action or proceeding or threat of claim involving a
claim referred to in the preceding subdivisions of this
Section 3, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such
action or threat of claim, provided that the failure of any
indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 3, except to the extent
that the indemnifying party is prejudiced by such failure to
give notice. In case any such action is brought against an
indemnified party, unless and except to the extent that in the
reasonable judgment of the indemnified party, based on advice
of counsel, a conflict of interest between such indemnified
and indemnifying parties exists in respect of such claim, the
indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that the
indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable
costs of investigation. No indemnified party shall consent to
entry of any judgment or enter into any settlement of any such
action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying
party.
(d) Indemnification Payments. The
indemnification required by this Section 3 shall be made by
periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred subject to
the receipt of such documentary support therefor as the
indemnifying party may reasonably request.
(e) Contribution. If the indemnification
provided for in this Section 3 shall for any reason be
unavailable to an indemnified party in respect of any loss,
claim, damage or liability, or any action in respect thereof,
referred to therein, then each indemnifying party shall, in
lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as shall be appropriate to reflect
the relative fault of the indemnifying party on the one hand
and the indemnified party on the other with respect to the
statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative
fault shall be determined by reference to whether the untrue
or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to
information supplied by the indemnifying party on the one hand
or the indemnified party on the other, the intent of the
parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or
omission, but not by reference to an indemnified party's stock
ownership in the Company. The amount paid or payable by an
indemnified party as a result of the loss, claim damage or
liability, or action in respect thereof, referred to above in
this paragraph shall be deemed to include, for purposes of
this paragraph, any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 12(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
4. Restriction on Transfer.
(a) Shareholder covenants and agrees that in
any calendar quarter he will not offer to sell, sell or
otherwise dispose of any amount of Registrable Securities in
excess of one percent (1%) of the total number of shares of
Common Stock then issued and outstanding.
(b) Notwithstanding the provisions of
Section 4(a) of this Agreement, in the event that a
Shareholder becomes liable for a payment obligation under the
indemnification provisions of the Merger Agreement,
Shareholder may, at his option, sell or pledge in accordance
with the Registration Statement as then in effect or pursuant
to an applicable exemption from registration, such number of
shares of the Registrable Securities sufficient to generate
net funds in the amount of that payment obligation.
5. Notices. Any notices or other communications
required or permitted hereunder shall be in writing and shall
be deemed duly given upon (a) confirmed delivery by a standard
overnight carrier or when delivered by hand or (b) the
expiration of five business days after the day when mailed by
certified or registered mail, postage prepaid, addressed at
the following addresses (or at such other address as the
parties hereto shall specify by like notice):
(x) If to the Company, to:
Chesapeake Utilities Corporation
000 Xxxxxx Xxxx Xxxxxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxxx
with a copy to:
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxx
(y) If to Shareholder, to the most recent address
given by Shareholder to the Company, which address
initially appears on Schedule I attached hereto.
6. Miscellaneous. This Agreement and any term
hereof may be changed, waived, discharged or terminated only
by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination
is sought or by Shareholder and the Company. This Agreement
shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware. The section
headings in this Agreement are for purposes of convenience
only and shall not constitute a part hereof.
IN WITNESS WHEREOF, the Company and Shareholder have
caused this Agreement to be duly executed as of the date first
above written.
CHESAPEAKE
UTILITIES CORPORATION
By: /S/ XXXX X. XXXXXXXXXXX
Xxxx X. Xxxxxxxxxxx
Chief Operating Officer and
Executive Vice President
SHAREHOLDER
/S/ XXXXXXX X. XXXXXXXXX
Xxxxxxx X. Xxxxxxxxx
SCHEDULE I
Xx. Xxxxxxx X. Xxxxxxxxx
c/o Xxxxx X. Xxxxx, Esq.
Xxxxxxxxxx & Otway
000 Xxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
