Exhibit 10.7
S. Robert Zola
FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
This First Amendment to Executive Employment Agreement (this “Amendment”) is
made effective as of January 1, 2009, by and between Chesapeake Utilities
Corporation, a Delaware corporation (the “Company”), and S. Robert Zola (the
“Executive”).
Background Information
The parties to this Amendment (the “Parties”) entered into an Executive
Employment Agreement as of December 29, 2006 (the “Original Agreement”),
regarding the Executive’s employment relationship with the Company. The Parties
desire to amend the Original Agreement as set forth below.
Agreement
1. Definitions. All capitalized terms used in this Amendment but which are not
otherwise defined herein, shall have the respective meanings given those terms
in the Original Agreement.
2. Amendments to Original Agreement.
(a) Compensation and Benefits. Subparagraphs 5(c)(i) and 5(c)(ii) of the
Original Agreement are hereby deleted in their entirety and, in lieu thereof,
there is substituted the following:
“(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 granted on an annual basis at the discretion of the
Board during the Term of this Agreement.
(ii) Chesapeake Utilities Corporation Cash Bonus Incentive Plan. Executive shall
be eligible for a cash bonus award equal to 30 percent (30%) of Base
Compensation, granted on an annual basis at the discretion of the Board during
the Term of this Agreement. At the discretion of the Board, 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.”
(b) Expenses. Paragraph 5(g) of the Agreement is hereby amended by adding the
following to the end thereof:
“If any reimbursements under this provision are taxable to the Executive, such
reimbursements shall be paid on or before the end of the calendar year following
the calendar year in which the reimbursable expense was incurred, and the
Company shall not be obligated to pay any such reimbursement amount for which
Executive fails to submit an invoice or other documented reimbursement request
at least 10 business days before the end of the calendar year next following the
calendar year in which the expense was incurred. Such expenses shall be
reimbursable only to the extent they were incurred during the Term of the
Agreement. In addition, the amount of such reimbursements that the Company is
obligated to pay in any given calendar year shall not affect the amount the
Company is obligated to pay in any other calendar year. In addition, Executive
may not liquidate or exchange the right to reimbursement of such expenses for
any other benefits.”

 

 

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(c) Payment Upon Termination During Extended Term. Paragraph 6(c) of the
Agreement is hereby amended by adding the following to the end thereof:
“In addition, and notwithstanding the foregoing provisions of this
Paragraph 6(c), if the Extended Termination Date occurs more than two (2) years
after the occurrence of a Change in Control, then the amount payable in cash
under this provision shall be payable in substantially equal installments over
the one (1) year period following the Executive’s “separation from service”
within the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”). The number of substantially equal installments shall be
equal to the number of regular payroll periods during said one (1) year period,
with one installment payable on each such payroll period. In addition, to the
extent required in order to comply with Code Section 409A, cash amounts that
would otherwise be payable under this Paragraph 6(c) during the six-month period
immediately following the Extended Termination Date (and which are not eligible
for the exception applicable to payments due to involuntary separation under
Treas. Reg. Section 1.409A-1(b)(9)(iii)) 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. Further, any taxable welfare benefits provided to Executive
pursuant to this Paragraph 6(c) that are not “disability pay” or “death
benefits” within the meaning of Treas. Reg. Section 1.409A-1(a)(5)
(collectively, the “Applicable Benefits”) shall be subject to the following
requirements in order to comply with Code Section 409A. The amount of any
Applicable Benefits provided during one taxable year shall not affect the amount
of the Applicable Benefits provided in any other taxable year, except that with
respect to any Applicable Benefits that consist of the reimbursement of expenses
referred to in Code Section 105(b), a limitation may be imposed on the amount of
such reimbursements over some or all of the Covered Period, as described in
Treas. Reg. Section 1.409A-3(i)(1)iv)(B). To the extent that any Applicable
Benefits consist of the reimbursement of eligible expenses, such reimbursement
must be made on or before the last day of the calendar year following the
calendar year in which the expense was incurred. No Applicable Benefits may be
liquidated or exchanged for another benefit. During the period of six (6) months
immediately following Executive’s separation from service (within the meaning of
Code Section 409A), Executive shall be obligated to pay the Company the full
cost for any Applicable Benefits that do not constitute health benefits of the
type required to be provided under the health continuation coverage requirements
of Code Section 4980B, and the Company shall reimburse Executive for any such
payments on the first business day that is more than six (6) months after
Executive’s separation from service, together with interest on such amount from
the date of separation from service through the date of payment at the
applicable federal rate under Code Section 7872(f)(2)(A).”

 

 

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(d) Maximum Payment Upon Termination. Paragraph 7(b) of the Agreement is hereby
amended by adding the following to the end thereof:
“Notwithstanding the foregoing, if the exercise of discretion reserved to the
Executive in determining the Notice of Application would violate Code
Section 409A, then such discretion shall be eliminated and the amounts payable
under Paragraph 6(c) shall be reduced proportionately.”
(e) Code Section 409A. Paragraph 20 of the Agreement is hereby deleted in its
entirety and, in lieu thereof, there is substituted the following:
“Notwithstanding any provision of Paragraph 10 or 14 of this Agreement to the
contrary, any legal fees and expenses to be paid by the Company pursuant to
Paragraph 10 or 14 shall be subject to the following requirements in order to
comply with Code Section 409A. Such legal fees and expenses shall be paid by the
Company only to the extent incurred during the Term of the Agreement or for a
period of ten (10) years after the Executive’s “separation from service” (as
defined in Code Section 409A). The Company shall pay such legal fees and
expenses no later than the end of the calendar year next following the calendar
year in which such fees and expenses were incurred, and the Company shall not be
obligated to pay any such fees and expenses for which the Executive fails to
submit an invoice at least ten (10) business days before the end of the calendar
year next following the calendar year in which such fees and expenses were
incurred. The amount of such legal fees and expenses that the Company is
obligated to pay in any given calendar year shall not affect the legal fees and
expenses that the Company is obligated to pay in any other calendar year, and
the Executive’s right to have the Company pay such legal fees and expenses may
not be liquidated or exchanged for any other benefit.”
3. Captions. The captions of the various sections of this Amendment are not part
of the context of this Amendment, but are only labels to assist in locating
those sections, and shall be ignored in construing this Amendment.
4. Construction. This document is an amendment to the Original Agreement. As
used in the Original Agreement, the term “Agreement” shall mean the Original
Agreement as amended by this Amendment. In the event of any conflict with or
inconsistency between the provisions of the Original Agreement and this
Amendment, the provisions of this Amendment shall control and supersede to the
extent of such conflict or inconsistency. Except as modified by this Amendment,
the Original Agreement shall continue in full force and effect without change.
The Company and Executive hereby ratify and confirm the Original Agreement, as
amended hereby.
[Signatures on Following Page]

 

 

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IN WITNESS WHEREOF, the parties have executed this First Amendment to Executive
Employment Agreement as of the day and year first above written.

       
THE EXECUTIVE:
 
 
     
 
S. Robert Zola
 
 
     
THE COMPANY:
 
 
     
CHESAPEAKE UTILITIES CORPORATION
 
 
     
By:
     
 
    Name:       
Its: