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Exhibit 10.11
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the
"Agreement") dated this 29 th day of December, 2006, is
hereby made by and between Chesapeake Utilities Corporation, a
Delaware corporation (the "Company"), and John R. Schimkaitis (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 and Chief Executive
Officer;
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
and Chief Executive Officer 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 and Chief Executive
Officer, 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, operating the Company in compliance with the goals,
policies, and objectives established by the Board of Directors. The
Executive shall direct, coordinate, and administer all aspects of
the Company’s and each subsidiary’s operations and
shall report directly to the Board of Directors of the
Company.
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 four (4) 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 four-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 Company's President and Chief Executive Officer and the parties
agree that the Company shall elect the Executive to these offices,
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 the Company at least equal to that of
the office described and contemplated in Paragraph 1. Further,
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 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 $360,000 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
10,800 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 40
percent (40%) of Base Compensation as determined on an annual basis
by the Board during the Term of this Agreement.
(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
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