EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.4
This
Executive Employment Agreement (the "Agreement") dated this 29th
day of
December, 2006, is hereby made by and between Chesapeake Utilities Corporation,
a Delaware corporation (the "Company"), and S. Xxxxxx Xxxx (the
"Executive").
Recitals
WHEREAS,
the Company is currently obtaining the benefit of Executive's services as
a
full-time executive employee in the capacity of President of the Company’s
subsidiary, Sharp Energy, Inc. (“Sharp”);
WHEREAS,
the Company's Board of Directors (the "Board") has authorized the Company
to
provide for the Executive's con-tinued employment pursuant to the terms of
this
Agreement; and
WHEREAS,
Executive is willing, in consideration of the covenants and consideration
hereinafter provided, to continue to be employed by the Company in the capacity
of President of Sharp and to render services incident to such position during
the term of this Agreement.
Agreement
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 of Sharp,
with such authority, duties and responsibilities as are customarily assigned
to
such position, including such reasonable duties and responsibilities as may
be
requested of the Executive by the Board of Directors and which are consistent
with the By-laws of the Company as in effect from time to time including,
but
not limited to, developing policies and procedures for and directing the
operation of the Sharp’s operations.
2. Term.
(a) Term
of Agreement.
The
term of this Agree-ment ("Term") shall be the Current Term (as defined in
Paragraph 2(b), and, if applicable, the Extended Term (as defined in Paragraph
2(c)).
(b) Current
Term.
Subject
to Paragraph 2(c), the Current Term of this Agreement shall extend for three
(3)
years commencing on January 1, 2007. The Current Term is subject to extension
in
accordance with the provisions of Paragraph 15 of this Agreement.
(c) Extended
Term.
Upon
the occurrence of a Change in Control (as defined in Paragraph 2(d)), the
Current 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 three (3) 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 any successor provision thereto (such extended
three-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 upon the first of the following events:
(i) any
one
person, or group of owners of another corporation who acting together through
a
merger, consolidation, purchase, acquisition of stock or the like (a "Group"),
acquires ownership of stock of the Company (or a majority-controlled subsidiary
of the Company) that, together with the stock held by such person or Group,
constitutes more than fifty percent (50%) of the total fair market value
or
total voting power of the stock of the Company. However, if such person or
Group
is considered to own more than fifty percent (50%) of the total fair market
value or total voting power of the stock of the corporation before this transfer
of the Company's stock, the acquisition of additional stock by the same person
or Group shall not be considered to cause a Change in Control of the Company;
or
(ii) any
one
person or Group acquires (or has acquired during the twelve (12) month period
ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the Company (or a majority-controlled subsidiary of
the
Company) possessing thirty-five percent (35%) or more of the total voting
power
of the stock of the Company where such person or Group is not merely acquiring
additional control of the Company; or
(iii)
a
majority of members of the Company's Board (other than the Board of a
majority-controlled subsidiary of the Company) is replaced during any twelve
(12) month period by directors whose appointment or election is not endorsed
by
a majority of the members of the Company's Board prior to the date of the
appointment or election; or
(iv) any
one
person or Group acquires (or has acquired during the twelve (12) month period
ending on the date of the most recent acquisition by such person or Group)
assets from the Company (or a majority-controlled subsidiary of the Company)
that have a total gross fair market value equal to or more than forty percent
(40%) of the total fair market value of all assets of the Company immediately
prior to such acquisition or acquisitions. For this purpose, gross fair market
value means the value of the assets of the Company, or the value of the assets
being disposed of, determined without regard to any liabilities associated
with
such assets. A transfer of assets by the Company will not result in a Change
in
Control if the assets are transferred to:
(A) a
stockholder of the Company (immediately before the asset transfer)
in exchange for or with respect to its stock;
(B) an
entity, fifty percent (50%) or more of the total value or voting power
of
which is owned, directly or indirectly, by the Company immediately after
the
transfer of assets;
(C) a
person
or Group that owns, directly or indirectly, fifty percent
(50%) or more of the total value or voting power of all the outstanding
stock
of
the Company; or
(D) an
entity, at least fifty percent (50%) of the total value or voting power
of
which is owned directly or indirectly, by a person described in subparagraph
(d)(i), above.
However,
no Change in Control shall be deemed to have occur-red with respect to the
Executive by reason of (1) any event involving a transaction in which the
Executive or a group of persons or entities with which the Executive acts
in
concert, acquires, directly or indirectly, more than thirty percent (30%)
of the
Common Stock of the business or assets of the Company; (2) 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), or an assignment
for the
benefit of creditors or an insolvency proceeding under state or local law;
or
(3) 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 the approval
that
the approval shall not be deemed 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
of
this Agreement without the prior written consent of the Company, which consent
shall not be unreasonably with-held.
4. Office.
(a) Current
Term.
During
the Current Term, the Executive shall serve as the Sharp's President and
the
parties agree that the Company shall elect the Executive to this office,
on an
annual basis if necessary, during the Current Term of this Agreement.
(b) Extended
Term.
During
the Extended Term of this Agreement the Executive shall hold and perform
an
office with the responsibility, importance and scope within Sharp at least
equal
to that of the office described and contemplated in Paragraph 1. Further,
Executive's office shall be located in Salisbury, Maryland 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 sixty (60) working days
in any
year.
5. Compensation
and Benefits.
(a)
Base
Compensation; Current Term.
The
Company shall compensate Executive for his services hereunder during the
Current
Term at a rate of $135,000 per annum, or such amount as the Board may from
time
to time determine ("Base Compensation"), payable in installments on the
Company’s regular payroll dates for salaried executives. The Base Compensation
rate shall be reviewed annually and may be increased or decreased, from time
to
time, provided, however, that Base Compensation shall only be decreased by
the
Board on a good faith basis and with reasonable justification for the same,
and
provided further, that in the event of a Change in Control, Base Compensation
shall not be decreased.
(b) Base
Compensation; Extended Term.
During
the Extended Term, the Company shall compensate Executive for his services
hereun-der at a rate per annum, payable in installments on the Company’s regular
payroll dates for salaried executives, equal to his Base Compensation at
the
time the Extended Term commences, increased, but not decreased:
(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 the Executive's compensation and performance.
(c) Incentive
Plans.
During
the Term of this Agreement, Executive shall be entitled to participate in
all
bonus, incentive compensation and performance based compensation plans, and
other similar policies, practices, programs and arrangements of the Company,
now
in effect or as hereafter amended or established, on a basis that is
commensurate with his position and no less favorable than those generally
applicable or made available to other executives of the Company. The Executive's
participation shall be in accordance with the terms and provisions of such
plans
and programs. Participation shall include, but not be limited to:
(i) Chesapeake
Utilities Corporation Performance Incentive Plan.
Executive shall be eligible for an incentive compensation award equal to
3,200
shares of the Company’s common stock as granted on an annual basis by the Board
during the Term of this Agreement.
(ii) Chesapeake
Utilities Corporation Cash Bonus Incentive Plan.
Executive shall be eligible for a minimum cash bonus award equal to 30 percent
(30%) of Base Compensation as determined on an annual basis by the Board
during
the Term of this Agreement. Executive shall also be eligible for an additional
cash bonus award equal to 10 percent (10%) of the excess of the Sharp’s earnings
before interest and taxes (“EBIT”) for the respective year over the upper EBIT
target for the same year.
(d) Retirement
Plans.
During
the Term of this Agreement, Executive shall be entitled to participate in
all
profit-sharing, savings and retirement benefit plans, plans that are
supplemental to any tax-qualified savings and retirement plans, and other
similar policies, practices, programs and arrangements of the Company, now
in
effect or as hereafter amended or established, on a basis that is commensurate
with his position and no less favorable than those generally applicable or
made
available to other executives of the Company. The Executive's participation
shall be in accordance with the terms and provisions of such plans and programs.
(e) Welfare
Benefits.
During
the Term of this Agreement, Executive, and his family, as applicable, shall
be
entitled to participate in all insurance, medical, health and welfare, and
similar plans and arrangements, as well as all vacation and other employee
fringe benefit plans, perquisite plans, and other policies, practices, programs
and arrangements of the Company, now in effect or as hereafter amended or
established, on a basis that is commensurate with his position and no less
favorable than those generally applicable or made available to other executives
of the Company. The Executive’s participation shall be in accordance with the
terms and provisions of such plans.
(f) Other
Benefits.
During
the Term of this Agreement, 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 (3) years, of a kind and model appropriate to his position with the
Company.
(g) 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 properly
substantiated expenses for travel, meals, lodging, entertainment and related
expenses that are for the benefit of the Company. All expense reimbursements
shall comply with applicable rules or guidelines of the Company in effect
at the
time the expense is incurred.
(h) 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 5(a) through 5(g) 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 nevertheless
pay
or provide such benefits or perquisites to Executive, either directly or
through
alternative arrangements.
6. Termination.
(a) Payment
Upon Termination During Current Term.
In the
event that the Company terminates this Agreement during the Current Term,
or
elects pursuant to Paragraph 15 not to renew this Agreement at the end of
the
Current Term for any reason other than Cause, as defined below, or the
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), at the rate in effect immediately
prior
to the date of such termination ("Termination Date"), for a period of one
(1)
year following the Termination Date. In addition, and notwithstanding the
foregoing provisions of this Paragraph 6(a), to the extent required in order
to
comply with Section 409A of the Internal Revenue Code of 1986, as amended
(the
"Code"), cash amounts that would otherwise be payable under this Paragraph
6(a)
during the six-month period immediately following the Termination Date shall
instead be paid, with interest on any delayed payment at the applicable federal
rate under Code Section 7872(f)(2)(A), on the first business day after the
date
that is six (6) months following the Executive’s "separation from service"
within the meaning of Code Section 409A.
(b) 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.
Termination of the Executive's employment shall be deemed to have been "for
Cause" only if it shall have been the result of:
(i) Executive’s
conviction of a felony under the laws of the United States or a state in
which
Executive works or resides;
(ii) a
willful
or deliberate 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 (except by reason of incapacity
due to illness or accident) to comply with the provisions of Paragraph 1,
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 (30) days after notice from the Secretary of the Company demanding
that
the Executive remedy such breach; or
(iv) 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.
(c) Payment
Upon Termination During Extended Term.
In the
event of a Termination Without Cause, as defined below, during the Extended
Term, the Company shall 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 "Extended Termination Date")
the
sum of all accrued but unpaid salary, bonus, vacation pay, expense
reimbursements and any other amounts due, plus the following:
(i) an
amount
equal to the product of multiplying the monthly rate of Base Compensation
to
which Executive was entitled under Paragraph 5(a) on the day immediately
prior
to the Extended Termination Date by twenty-four (24) months ("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 (including, but not limited
to,
the Chesapeake Utilities Corporation Pension Plan and any related excess
benefit
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) an
amount
equal to the aggregate of the Company's contributions to the Company's savings
plan (including, but not limited to, the Chesapeake Utilities Corporation
Retirement Savings Plan, and any related excess benefit plans) in respect
of
Executive that were not vested on the day immediately prior to the Extended
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; and
(iv) an
amount
equal to the product of multiplying the average of the annual aggregate benefits
awarded to the Executive under all bonus, incentive compensation or performance
based compensation program(s) of the Company in which the Executive was a
participant, whether annual, short or long term, in each of the three (3)
calendar years immediately preceding the calendar year in which the Extended
Termination Date occurs by two (2) years.
For
purposes of calculating the present value specified in Paragraph 6(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 Extended 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. In addition,
the Company shall continue to provide medical, prescription drug, vision,
dental
and other Company welfare benefits to the Executive and his eligible dependents
during the Covered Period as if the Executive remained an active employee
of the
Company.
(d) Termination
Without Cause.
For
purposes of Paragraph 6(c) above, "Termination Without Cause" shall
mean:
(i) Termination
by the Company of Executive's employment without Cause (as "Cause" is defined
in
Paragraph 6(b) above); 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, 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 or a reduction in his
compensation or in the benefits available to the Executive and his family,
as
provided in Para-graph 5, which change or reduction is not remedied within
thirty (30) days after notice to the Company by the Executive;
(C) any
other
breach by the Company of any provision of this Agreement (including, without
limitation, relocation of the Executive in violation of Paragraph 4(b)),
which
breach is not remedied within thirty (30) 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.
In
order
to effect a Termination Without Cause in any event set forth in this Paragraph
6(d)(ii), Executive must elect to terminate his employment under this Agreement
upon not less than forty (40) days and not more than ninety (90) days' written
notice to the Board, attention of the Corporate Secretary, given, except
in the
case of a continuing breach, within three (3) 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.
Further, the death of the Executive during the Extended Term but prior to
a
Termination Without Cause, as defined, shall not constitute Cause or be deemed
to be a Termination Without Cause.
7. Maximum
Payment Upon Termination.
(a) Determination.
Notwithstanding any other provision of this Agreement, if any payment or
distribution (a "Payment") by the Company or any other person or entity to
or
for the benefit of the Executive is determined to be an "excess parachute
payment" (within the meaning of Code Section 280G(b)(1) or any successor
provision of similar effect), whether paid or payable or distributed or
distributable pursuant to Paragraph 6(c) of this Agreement or otherwise,
then
the Executive’s benefits under this Agreement shall be reduced by the amount
necessary so that the Executive’s total "parachute payment" as defined in Code
Section 280G(b)(2)(A) under this and all other agreements will be $1.00 less
than the amount that would be a "parachute payment". The determination
concerning the application of the reduction shall be made by a
nationally-recognized firm of independent accountants (together with legal
counsel of its choosing) selected by the Company after consultation with the
Executive (which may be the Company’s independent auditors), whose determination
shall be conclusive and binding on all parties. Any fees and expenses of
such
independent accountants and counsel (including counsel for the Executive)
shall
be borne by the Company.
(b) Notices.
If it
is determined that the benefits under this Agreement must be reduced under
this
Paragraph, within 10 days of the date of such determination, the Company
will
apprise the Executive of the amount of the reduction ("Notice of Reduction").
Within 10 days of receiving that information, the Executive may specify how
(and
against which benefit or payment source) the reduction is to be applied ("Notice
of Application"). The Company will be required to implement these directions
within 10 days of receiving the Notice of Application. If the Company has
not
received a Notice of Application from the Executive within 10 days of the
date
of the Notice of Reduction, the Company will apply this Paragraph
proportionately based on the amounts otherwise payable under Paragraph 6(c).
If
the Company receives a Notice of Application that does not fully implement
the
requirements of this Paragraph, the Company will apply this Paragraph
proportionately on the basis of the reductions specified in the Notice of
Application first, then to any remaining reduction based on the amounts
otherwise payable under Paragraph 6(c).
8. 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 or Extended Termination Date, as
applicable.
9. Covenants.
(a) Introduction.
The
parties acknowledge that the provisions and covenants contained in this
Paragraph 9 are ancillary and material to this Agreement and that the
limitations contained herein are reasonable in geographic and temporal scope
and
do not impose a greater restriction or restraint than is necessary to protect
the goodwill and other legitimate business interests of the Company. The
parties
also acknowledge and agree that the provisions of this Paragraph 9 do not
adversely affect Executive’s ability to earn a living in any capacity that does
not violate the covenants contained herein. The parties further acknowledge
and
agree that the provisions of Paragraph 19 below are accurate and necessary
because (i) Delaware is the headquarters state of the Company, which has
operations in multiple states and a compelling interest in having its employees
treated uniformly, (ii) the use of Delaware law provides certainty to the
parties in any covenant litigation in the United States, and (iii) enforcement
of the provisions of this Paragraph 9 would not violate any fundamental public
policy of Delaware or any other jurisdiction.
(b) Confidential
Information.
Executive shall hold in a fiduciary capacity for the benefit of the Company,
all
secret or confidential information, knowledge or data relating to the Company
and its businesses (including, but not limited to, any proprietary and not
publicly available information concerning any processes, methods, trade secrets,
costs, names of users or purchasers of the Company’s products or services,
business methods, financial affairs, operating procedures or programs or
methods
of promotion and sale) that Executive has obtained or obtains during Executive’s
employment by the Company and that is not public knowledge (other than as
a
result of Executive’s violation of this Paragraph 9(b)) ("Confidential
Information"). For purposes of this Paragraph 9(b), information shall not
be
deemed to be publicly available merely because it is embraced by general
disclosures or because individual features or combinations thereof are publicly
available. Executive shall not communicate, divulge or disseminate Confidential
Information at any time during or after Executive’s employment with the Company
except:
(i)
to
employees or agents of the Company that need the Confidential Information
to
perform their duties on behalf of the Company;
(ii)
in
the performance of Executive’s duties to the Company;
(iii)
as
a necessary (and only to the extent necessary) part of any undertaking by
Executive to enforce Executive’s rights under this Agreement; or
(iv)
as
otherwise required by law or legal process.
All
confidential records, files, memoranda, reports, customer lists, drawings,
plans, documents and the like that Executive uses, prepares or comes into
contact with during the course of Executive’s employment shall remain the sole
property of the Company and shall be turned over to the Company upon termination
of Executive’s employment.
(c) Non-solicitation
of Company Employees.
Executive shall not, at any time during the Restricted Period (as defined
below), without the prior written consent of the Company, engage in the
following conduct (a "Solicitation"):
(i)
directly or indirectly, contact, solicit, recruit or employ (whether as an
employee, officer, director, agent, consultant or independent contractor)
any
person who was or is at any time during the previous six months an employee,
representative, officer or director of the Company; or
(ii)
take
any action to encourage or induce any employee, representative, officer or
director of the Company to cease his or her relationship with the Company
for
any reason. A "Solicitation" does not include any recruitment of employees
for
the Company.
The
"Restricted Period" means the period including Executive's employment with
the
Company and one (1) year following the Termination Date or Extended Termination
Date, as applicable, and, if the Executive has given a notice pursuant to
Paragraph 6(d)(ii), for a period of fifteen (15) months following the giving
of
such notice.
(d) Non-solicitation
of Third Parties.
During
the Restricted Period, the Executive shall not (either directly or indirectly
or
as an officer, agent, employee, partner or director of any other company
or
entity) solicit, service, recruit, induce, influence, or accept on behalf
of any
competitor of the Company the business of:
(i)
any
customer of the Company at the time of Executive's employment or Termination
Date or Extended Termination Date, as applicable; or
(ii)
any
potential customer of the Company which Executive knew to be an identified,
prospective purchaser of services or products of the Company.
(e) Non-competition.
During
the Restricted Period, Executive shall not, directly or indirectly, accept
employment with, act as a consultant to, or otherwise perform services that
are
substantially the same or similar to those for which Executive was compensated
by the Company (such comparison to be based on job-related functions and
responsibilities and not job title) for any business that directly competes
with
any portion of the Company. This restriction applies to any parent, division,
affiliate, newly formed or purchased business(es) and/or successor of a business
that competes with the Company. Further, during the Restricted Period, Executive
shall not assist any individual or entity other than the Company in acquiring
any entity with respect to which a proposal to acquire such entity was presented
to the Board during the one (1) year period beginning prior to Executive's
Termination Date, Extended Termination Date or notice given by Executive
pursuant to Paragraph 6(d)(ii), as applicable.
(f) Post-Termination
Cooperation.
Executive agrees that during and after employment with the Company and without
additional compensation (other than reimbursement for reasonable associated
expenses) to cooperate with the Company in the following areas:
(i) Cooperation
with the Company.
Executive agrees to:
(A) be
reasonably available to answer questions for the Company's officers regarding
any matter, project, initiative or effort for which Executive was responsible
while employed by the Company; and
(B) cooperate
with the Company during the course of all third-party proceedings arising
out of
the Company's business about which Executive has knowledge or
information.
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For
purposes of this Agreement, "proceeding" includes internal investigations,
administrative investigations or proceedings and lawsuits (including
pre-trial discovery and trial testimony) and "cooperation" includes
(1)
Executive being reasonably available for interviews, meetings,
depositions, hearings and/or trials without the need for a subpoena
or
assurances by the Company, (2) providing any and all documents
in
Executive's possession that relate to the proceeding, and (3) providing
assistance in locating any and all relevant notes and/or
documents.
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(ii) Cooperation
with Third Parties.
Unless
compelled to do so by lawfully-served subpoena or court order, Executive
agrees
not to communicate with, or give statements or testimony to, any attorney
representing an interest opposed to the Company's interest ("Opposing
Attorney"), Opposing Attorney's representative (including a private
investigator) or current or former employee relating to any matter (including
pending or threatened lawsuits or administrative investigations) about which
Executive has knowledge or information as a result of employment with the
Company. Executive also agrees to notify the Company immediately after being
contacted by a third party or receiving a subpoena or court order to appear
and
testify with respect to any matter that may include a claim opposed to the
Company's interest. However, this Paragraph 9(f)(ii) shall not apply to any
effort undertaken by Executive to enforce Executive's rights under this
Agreement, but only to the extent necessary for that purpose.
(iii) Cooperation
with the Media.
Executive agrees not to communicate with, or give statements to, any member
of
the media (including print, television, electronic or radio media) relating
to
any matter (including pending or threatened lawsuits or administrative
investigations) about which Executive has knowledge or information as a result
of employment with the Company. Executive also agrees to notify the Company
immediately after being contacted by any member of the media with respect
to any
matter affected by this Paragraph.
(g) Non-Disparagement.
Executive and Company shall at all times refrain from taking actions or making
statements, written or verbal, that:
(i)
denigrate, disparage or defame the goodwill or reputation of Executive or
the
Company, as the case may be, or any of its trustees, officers, security holders,
partners, agents or former or current employees and directors, or
(ii)
are
intended to, or may be reasonably expected to, adversely affect the morale
of
the employees of the Company.
Executive
further agrees not to make any negative statements to third parties relating
to
Executive's employment or any aspect of the business of the Company and not
to
make any statements to third parties about the circumstances of the termination
of Executive's employment, or about the Company or its trustees, directors,
officers, security holders, partners, agents or former or current employees
and
directors, except as may be required by a court or governmental
body.
(h) Enforcement.
The
Executive acknowledges and agrees that: (i) the purpose of the foregoing
covenants, including, without limitation, the nonsolicitation and noncompetition
covenants of Paragraphs 9(d) and (e), is to protect the goodwill, trade secrets
and other Confidential Information of the Company; (ii) because of the nature
of
the business in which the Company is engaged and because of the nature of
the
Confidential Information to which the Executive has access, the Company would
suffer irreparable harm and it would be impractical and excessively difficult
to
determine the actual damages of the Company in the event the Executive breached
any of the covenants of this Paragraph 9; and (iii) remedies at law (such
as
monetary damages) for any breach of the Executive's obligations under this
Paragraph 9 would be inadequate. The Executive therefore agrees and consents
that if the Executive commits any breach of a covenant under this Paragraph
9,
or threatens to commit any such breach, the Company shall have the right
(in
addition to, and not in lieu of, any other right or remedy that may be available
to it) to temporary and permanent injunctive relief from a court of competent
jurisdiction, without posting any bond or other security and without the
necessity of proof of actual damage, and that the arbitration provisions
of
Paragraph 14 shall not apply.
10. 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.
11. Performance.
The
failure of either party to this Agreement to insist upon strict performance
of
any provision of this Agreement 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.
12. 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.
13. 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.
14. 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 any payments or the provision
of
any benefits the Executive, in good faith, believes are called for hereunder.
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 reasonable 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.
15. Renewal.
If the
Current Term of this Agreement expires without there having been a Change
in
Control, this Agreement shall be renewed for successive one-year terms, 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 Current Term of this Agreement or any subsequent one-year term.
16. 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 and assume the Company’s obligations hereunder, whether
by means of merger, consolidation, acquisition of substantially all of the
assets of the Company, or operation of law. The Company shall require any
successor organization or organizations to agree to assume the obligations
of
this Agreement.
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. Notwithstanding the foregoing, if any
compensation or benefits provided by this Agreement may result in the
application of Code Section 409A, the Company shall, in consultation with
the
Executive, modify the Agreement in the least restrictive manner necessary
in
order to exclude such compensation from the definition of "deferred
compensation" within the meaning of Code Section 409A or in order to comply
with
the provisions of Code Section 409A, other applicable provisions of the Code
and/or any rules, regulations or other regulatory guidance issued under such
statutory provisions, and without any diminution in the value of the payments
to
the Executive.
19. Governing
Law.
This
Agreement shall be interpret-ed and enforced in accordance with the laws
of the
State of Delaware. The parties hereto irrevocably agree to submit to the
jurisdiction and venue of the courts of the State of Delaware in any action
or
proceeding brought with respect to or in connection with this Agreement except
for an action described in Paragraph 14.
20. Code
Section 409A.
If any
compensation or benefits provided by this Agreement may result in the
application of Section 409A of the Code, the Company shall, in consultation
with
the Executive, modify the Agreement in the least restrictive manner necessary
in
order to exclude such compensation from the definition of “deferred
compensation” within the meaning of Code Section 409A or in order to comply with
the provisions of Section 409A, other applicable provisions of the Code,
and any
rules, regulations or other regulatory guidance issued under such statutory
provisions and without any diminution in the value of the payments due to
the
Executive.
21. 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.
22. 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.
23. Nature
of Payments Upon Termination.
All
payments to Executive pursuant to Paragraph 6 of this Agree-ment shall be
considered as liquidated damages or, in the case of certain payments pursuant
to
Paragraph 6(c), 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.
24. Prior
Agreement.
Sharp
and the Executive are parties to an Executive Employment Agreement executed
on
January 1, 2006 (the "Prior Agreement"). The parties acknowledge and agree
that
the terms of this Agreement constitute the entire agreement of the parties
with
respect to the subject matter and supersede all prior agreements with respect
thereto, including, without limitation, the Prior Agreement.
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:
