Material Contract - Michael P. McMasters


    Exhibit
      10.2

     

    

      EXECUTIVE
        EMPLOYMENT AGREEMENT

      


      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 Michael P. McMasters (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 Senior Vice President and
        Chief
        Financial 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 Senior Vice President and Chief Financial 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 Senior Vice President
        and Chief Financial 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, responsibility for formulating financial
        policy and plans, as well as providing overall direction for the accounting,
        tax, credit and treasury functions.

       

      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 Senior Vice
        President and Chief Financial 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 $246,000 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
        5,760
        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.

      


      (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 thirty-six (36) 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 three (3) 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.

      


      
        	 	 	 	
                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.

              


      

      


      (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, 909
        Silver
        Lake Boulevard, Dover, Delaware 19904, 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.
        The
        Company and the Executive are parties to an Executive Employment Agreement
        executed on March 26, 2003 (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: