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                                                                    EXHIBIT 10.1

                           PERFORMANCE SHARE AGREEMENT

                                 PURSUANT TO THE

                        CHESAPEAKE UTILITIES CORPORATION
                           PERFORMANCE INCENTIVE PLAN

      AGREEMENT dated as of January 1, 2000, and entered into, in duplicate, by
and between Chesapeake Utilities Corporation, a Delaware corporation (the
"Company"), and [Ralph J. Adkins / John R. Schimkaitis] (the "Grantee") who
resides at [address].

      WITNESSETH that:

      WHEREAS, the Chesapeake Utilities Corporation Performance Incentive Plan
(the "Plan") has been duly adopted by action of the Company's Board of Directors
(the "Board") as of January 1, 1992; and

      WHEREAS, the Committee of the Board of Directors of the Company referred
to in the Plan (the "Committee") has determined that it is in the best interests
of the Company to grant the Performance Share Award described herein pursuant to
the Plan; and

      WHEREAS, the shares of the Common Stock of the Company that are subject to
this Agreement, when added to the other shares of Common Stock that are subject
to awards granted under the Plan, do not exceed the total number of shares of
Common Stock with respect to which awards are authorized to be granted under the
Plan;

      NOW, THEREFORE, it is hereby covenanted and agreed by and between the
Company and the Grantee as follows:

      Section 1.  Performance Share Award

      The Company hereby grants to the Grantee a Performance Share Award for the
year ending December 31, 2000 (the "Award Year"). As more fully described
herein, the Grantee may earn a maximum total of [X,XXX] shares (the "Contingent
Performance Shares") upon the Company's achievement of the Performance Goals set
forth in Section 2. Alternatively, the Grantee may elect to receive [X,XXX]
shares (the "Forfeitable Performance Shares"), as detailed in Section 3, in lieu
of receiving any Contingent Performance Shares. The Forfeitable Performance
Shares shall be subject to forfeiture conditions, as set forth in Section 3(c).

      Section 2.  Contingent Performance Shares

      (a) As soon as practicable after the Company's independent auditors have
certified the Company's financial statements for the Award Year, the Committee
shall determine for purposes of this Agreement the Company's (1) earnings growth
("EG"), (2) growth in non-regulated net income ("NRNI"), and (3) share price
relative to book value ("Price/Book Value") as of the end of the Award Year. The
EG, NRNI and Price/Book Value shall be determined by the Committee based on
financial results reported to shareholders in the Company's annual reports and
shall be subject to adjustment by the Committee for
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extraordinary events, including, but not limited to, temperature fluctuation
during the Award Year. The Committee shall promptly notify the Grantee of its
determination.

      (b) The Grantee may earn up to [X,XXX] Contingent Performance Shares (the
"Maximum Award"), as follows:

             (1) If the EG for the Award Year exceeds the median five-year
weighted average growth for companies included in the C.A. Turner database
(natural gas distribution companies and integrated natural gas distribution
companies), the Grantee may earn up to fifty percent (50%) of the Maximum Award,
as follows:

                  (i)   If the EG is in the fourth quartile of companies in the
                        C.A. Turner database, the Grantee shall earn fifty
                        percent (50%) of the Maximum Award, or

                  (ii)  If the EG falls between the median and the fourth
                        quartile, the Grantee shall earn a portion of the fifty
                        percent (50%) available under this paragraph that is
                        pro-rated to reflect the position of the Company's
                        earnings growth within the third quartile, or

                  (iii) If the EG is at or below the median, the Grantee shall
                        not earn any Contingent Performance Shares under this
                        paragraph (1);

             (2) If the temperature-adjusted NRNI for the Award Year exceeds the
temperature-adjusted NRNI for the prior calendar year by fifteen percent (15%)
or more, the Grantee shall earn thirty percent (30%) of the Maximum Award. If
the temperature-adjusted NRNI for the Award Year does not exceed the
temperature-adjusted NRNI for the prior calendar year by at least fifteen
percent (15%), the Grantee shall not earn any Contingent Performance Shares
under this paragraph (2); and

             (3) If the Price/Book Value for the Award Year is equal to or
greater than the average Price/Book Value for the Award Year of companies in the
third quartile of the C.A. Turner database (natural gas distribution companies
and integrated natural gas distribution companies), the Grantee shall earn
twenty percent (20%) of the Maximum Award. If the Price/Book Value for the Award
Year does not equal or exceed the average Price/Book Value for the Award Year of
companies in the third quartile of the C.A. Turner database, the Grantee shall
not earn any Contingent Performance Shares under this paragraph (3). If one or
more of the companies in the C.A. Turner database is at any time during the
Award Year the subject of an announced acquisition, its stock shall not be
considered for purposes of this paragraph (3).

       (c) Contingent Performance Shares that are earned by the Grantee pursuant
to this Section 2 shall be issued promptly, without payment of consideration by
the Grantee. The Grantee shall have the right to vote the Contingent Performance
Shares and to receive the dividends distributable with respect to such shares on
and after, but not before, the date on which the Grantee is recorded on the
Company's ledger as holder of record of the Contingent Performance Shares (the
"Issue Date"). If, however, the Grantee receives shares of Common Stock as part
of any dividend or other distribution with respect to the Contingent Performance
Shares, such shares shall be treated as if they are Contingent Performance
Shares, and such shares shall be subject to all of the terms and conditions
imposed by this Section 2.

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      (d) Sale, transfer, pledge, or hypothecation of the Contingent Performance
Shares shall be prohibited for a period of three (3) years after the Issue Date
(the "Limitation Period"), and the Performance Shares shall bear a restrictive
legend to that effect. Any attempt to dispose of Contingent Performance Shares
in contravention of this Agreement shall be ineffective. Upon expiration of the
Limitation Period, the transfer restrictions imposed by this Section shall
expire, and new certificates representing the Contingent Performance Shares,
without the restrictive legend described in this paragraph (d), shall be issued,
subject to the provisions of paragraph (e) of this Section 2.

       (e) The Performance Shares will be not registered for resale under the
Securities Act of 1933 or the laws of any state except when and to the extent
determined by the Board pursuant to a resolution. Until a registration statement
is filed and becomes effective, however, transfer of the Contingent Performance
Shares after expiration of the Limitation Period shall require the availability
of an exemption from such registration, and prior to the issuance of new
certificates, the Company shall be entitled to take such measures as it deems
appropriate (including but not limited to obtaining from the Grantee an
investment representation letter and/or further legending the new certificates)
to ensure that the Contingent Performance Shares are not transferred in the
absence of such exemption.

       (f) In the event of a Change in Control, as defined in the Plan, during
the Award Year, the Grantee shall earn at least the Maximum Award of Contingent
Performance Shares set forth in this Section 2, as if all employment and
performance criteria were satisfied, pro rated based on the proportion of the
Award Year that has expired as of the date of such Change in Control.

      (g) If, during the Award Year, the Grantee is separated from employment,
Contingent Performance Shares shall be deemed earned or forfeited as follows:

             (1) Upon voluntary termination by the Grantee (other than for
retirement at age 65 or as accepted by the Committee) or termination by the
Company for failure of job performance or other just cause as determined by the
Committee, all unearned Contingent Performance Shares shall be forfeited
immediately;

             (2) If the Grantee separates from employment by reason of death or
total and permanent disability (as determined by the Committee), the number of
Contingent Performance Shares that would otherwise have been earned at the end
of the Award Year shall be reduced by pro rating such Contingent Performance
Shares based on the proportion of the Award Year during which the Grantee was
employed by the Company, unless the Committee determines that the Contingent
Performance Shares shall not be so reduced;

             (3) Retirement of the Grantee at age 65 or as accepted by the
Committee shall not affect the Contingent Performance Shares, which shall
continue to be earned through the remainder of the Award Year, as set forth
above.

       (h) The Grantee shall be solely responsible for any federal, state and
local income taxes imposed in connection with the delivery of Contingent
Performance Shares. Prior to the transfer of any Contingent Performance Shares
to the Grantee, the Grantee shall remit to the Company an amount sufficient to
satisfy any federal, state, local and other withholding tax requirements. The
Grantee may elect to have all or part of any withholding tax obligation
satisfied by having the Company withhold shares otherwise deliverable to the
Grantee as Contingent Performance Shares, unless the Committee determines
otherwise by resolution. If

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the Grantee fails to make such payments or election, the Company and its
subsidiaries shall, to the extent permitted by law, have the right to deduct
from any payments of any kind otherwise due to the Grantee any taxes required by
law to be withheld with respect to the Contingent Performance Shares.

      Section 3.  Forfeitable Performance Shares

      (a) In lieu of earning Contingent Performance Shares, the Grantee may
elect to receive [X,XXX] Forfeitable Performance Shares, irrespective of whether
the Company meets any Performance Goals. The Grantee must make any such election
on or before September 30, 2000, and the election must be made in writing, in a
manner prescribed by the Committee. Once made, the election is irrevocable. If a
Grantee makes such an election, he shall not receive any Contingent Performance
Shares under this Agreement.

       (b) Any Forfeitable Performance Shares received by the Grantee pursuant
to this Section 3 shall be issued as promptly as possible after December 31,
2000, without payment of consideration by the Grantee. The Grantee shall have
the right to vote the Forfeitable Performance Shares and to receive the
dividends distributable with respect to such shares on and after, but not
before, the date on which the Grantee is recorded on the Company's ledger as
holder of record of the Forfeitable Performance Shares (the "Issue Date"). If,
however, the Grantee receives shares of Common Stock as part of any dividend or
distribution with respect to the Forfeitable Performance Shares, such shares
shall be treated as if they are Forfeitable Performance Shares, and such shares
shall be subject to all of the terms and conditions imposed by this Section 3.

      (c) The Forfeitable Performance Shares shall be subject to the following
restrictions:

             (1) Sale, transfer, pledge or hypothecation of the Forfeitable
Performance Shares shall be prohibited for a period of three (3) years after the
Issue Date (the "Restriction Period"), and the certificates evidencing the
Forfeitable Performance Shares shall bear an appropriate restrictive legend that
refers to the terms, conditions, and restrictions set forth in this Agreement.
Any attempt to dispose of Forfeitable Performance Shares in contravention of
this Agreement shall be ineffective. Upon expiration of the Restriction Period,
the transfer restrictions imposed by this Section shall expire, and new
certificates representing the Forfeitable Performance Shares, without the
restrictive legend described in this paragraph (c)(1), shall be issued, subject
to the provisions of paragraph (f) of this Section 3.

             (2) If, during the Restriction Period, the Grantee separates from
employment for any reason other than death, total and permanent disability (as
determined by the Committee), or involuntary termination without cause (as
determined by the Committee), all Forfeitable Performance Shares shall be
forfeited immediately.

      (d) All restrictions under paragraph (c) of this Section 3 shall
immediately expire on the earliest of: (A) the Grantee's separation from
employment because of death, total and permanent disability (as determined by
the Committee), or involuntary termination without cause (as determined by the
Committee), (B) a Change in Control, as defined in the Plan, or (C) the end of
the Restriction Period.

       (e) If, after the Grantee has made an election to receive Forfeitable
Performance Shares pursuant to Section 3(a), a Change in Control, as defined in
the Plan, occurs during the Award Year, the Grantee shall receive at least the
total number of Forfeitable Performance

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Shares due under this Agreement, pro rated based on the proportion of the Award
Year that has expired as of the date of such Change in Control. Pursuant to
Section 3(d), such Shares shall not be subject to any of the restrictions
imposed by this Section.

      (f) The Forfeitable Performance Shares shall be not registered for resale
under the Securities Act of 1933 or the laws of any state except when and to the
extent determined by the Board pursuant to a resolution. Until a registration
statement is filed and becomes effective, however, transfer of the Forfeitable
Performance Shares after expiration of the Restriction Period shall require the
availability of an exemption from such registration, and prior to the issuance
of new certificates, the Company shall be entitled to take such measures as it
deems appropriate (including but not limited to obtaining from the Grantee an
investment representation letter and/or further legending the new certificates)
to ensure that the Forfeitable Performance Shares are not transferred in the
absence of such exemption.

      (g) The Grantee shall be solely responsible for any federal, state and
local income taxes imposed in connection with receipt of the Forfeitable
Performance Shares:

             (1) The Grantee agrees that, no later than the date that the
restrictions set forth in Section 3(c) lapse, he shall remit to the Company an
amount sufficient to satisfy any federal, state, local and other withholding tax
requirements.

             (2) The Grantee may elect to have all or part of any withholding
tax obligation satisfied by having the Company withhold shares otherwise
deliverable to the Grantee in connection with the Award of Restricted Stock,
unless the Committee determines otherwise by resolution.

             (3) If the Grantee properly elects, within 30 days of the Issue
Date, to include in gross income for federal income tax purposes an amount equal
to the fair market value of the Forfeitable Performance Shares, he shall make
arrangements satisfactory to the Committee to remit in the year of issue an
amount sufficient to satisfy any federal, state, local and other withholding tax
requirements with respect to such Forfeitable Performance Shares.

             (4) If the Grantee fails to make satisfactory arrangements to meet
all withholding tax obligations, the Company and its subsidiaries shall, to the
extent permitted by law, have the right to deduct from any payments of any kind
otherwise due to the Grantee any taxes required by law to be withheld with
respect to the Forfeitable Performance Shares.

      Section 4.  Effect on Prior Agreements

      Pursuant to an Agreement dated January 1, 1998, between the Company and
the Grantee (the "1998 Agreement"), awards may vest as of the end of each of
1998, 1999, and 2000. This Agreement hereby modifies the 1998 Agreement to
provide that no awards shall vest for years after December 31, 1999. This
Agreement does not affect the awards that vest as of the end of 1998 or 1999,
and the terms of the 1998 Agreement shall continue in effect with respect to
those awards.

      Section 5.  Additional Conditions to Issuance of Shares

      Each transfer of Contingent Performance Shares or Forfeitable Performance
Shares (together, the "Award Shares") shall be subject to the condition that if
at any time the Committee shall determine, in its sole discretion, that it is
necessary or desirable as a condition

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of, or in connection with, transfer of Award Shares (i) to satisfy withholding
tax or other withholding liabilities, (ii) to effect the listing, registration
or qualification on any securities exchange or under any state or federal law of
any Shares deliverable in connection with such exercise, or (iii) to obtain the
consent or approval of any regulatory body, then in any such event such transfer
shall not be effective unless such withholding, listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company.

      Section 6.  Adjustment of Shares

      (a) If the Company shall become involved in a merger, consolidation or
other reorganization, whether or not the Company is the surviving corporation,
any right to earn Contingent Performance Shares or to elect to receive
Forfeitable Performance Shares shall be deemed a right to earn or to elect to
receive the consideration into which the shares of Common Stock represented by
the Contingent Performance Shares or by the Forfeitable Performance Shares would
have been converted under the terms of the merger, consolidation or other
reorganization. If the Company is not the surviving corporation, the surviving
corporation (the "Successor") shall succeed to the rights and obligations of the
Company under this Agreement.

      (b) If any subdivision or combination of shares of Common Stock or any
stock dividend, capital reorganization or recapitalization occurs after the
adoption of the Plan, the Committee shall make such proportionate adjustments as
are appropriate to the number of Contingent Performance Shares to be earned
and/or to the number of Forfeitable Performance Shares to be received in order
to prevent the dilution or enlargement of the rights of the Grantee.

      Section 7.  No Right to Employment

      Nothing contained in this Agreement shall be deemed by implication or
otherwise to confer upon the Grantee any right to continued employment by the
Company or any affiliate of the Company.

      Section 8.  Notice

      Any notice to be given hereunder by the Grantee shall be sent by mail
addressed to Chesapeake Utilities Corporation, 909 Silver Lake Boulevard, Dover,
Delaware 19904, for the attention of the Committee, c/o the Secretary, and any
notice by the Company to the Grantee shall be sent by mail addressed to the
Grantee at the address of the Grantee shown on the first page hereof. Either
party may, by notice given to the other in accordance with the provisions of
this Section, change the address to which subsequent notices shall be sent.

      Section 9.  Assumption of Risk

       It is expressly understood and agreed that the Grantee assumes all risks
incident to any change hereafter in the applicable laws or regulations or
incident to any change in the market value of the Award Shares.

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      Section 10. Terms of Plan

       This Agreement is entered into pursuant to the Plan (a copy of which has
been delivered to the Grantee). This Agreement is subject to all of the terms
and provisions of the Plan, which are incorporated into this Agreement by
reference, and the actions taken by the Committee pursuant to the Plan. In the
event of a conflict between this Agreement and the Plan, the provisions of the
Plan shall govern. All determinations by the Committee shall be in its sole
discretion and shall be binding on the Company and the Grantee.

      Section 11. Governing Law; Amendment

       This Agreement shall be governed by, and shall be construed and
administered in accordance with, the laws of the State of Delaware (without
regard to its choice of law rules) and the requirements of any applicable
federal law. This Agreement may be modified or amended only by a writing signed
by the parties hereto.

      Section 12  Terms of Agreement

       This Agreement shall remain in full force and effect and shall be binding
on the parties hereto for so long as any Award Shares issued to the Grantee
under this Agreement continue to be held by the Grantee.

       IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in its corporate name, and the Grantee has executed the same in evidence of the
Grantee's acceptance hereof, upon the terms and conditions herein set forth, as
of the day and year first above written.

                                CHESAPEAKE UTILITIES CORPORATION

                                By: ___________________________________

                                    ___________________________________
                                    Grantee

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                                                                    EXHIBIT 10.2

                       STOCK APPRECIATION RIGHTS AGREEMENT

                                 PURSUANT TO THE

                        CHESAPEAKE UTILITIES CORPORATION
                           PERFORMANCE INCENTIVE PLAN

      AGREEMENT dated as of January 1, 2000, and entered into, in duplicate, by
and between Chesapeake Utilities Corporation, a Delaware corporation (the
"Company"), and [William C. Boyles / Philip S. Barefoot / Thomas A. Geoffroy /
James R. Schneider / William P. Schneider] (the "Grantee") who resides at
[address].

      WITNESSETH that:

      WHEREAS, the Chesapeake Utilities Corporation Performance Incentive Plan
(the "Plan") has been duly adopted by action of the Company's Board of Directors
(the "Board") as of January 1, 1992; and

      WHEREAS, the Committee of the Board of Directors of the Company referred
to in the Plan (the "Committee") has determined that it is in the best interests
of the Company to grant the Stock Appreciation Rights Award described herein
pursuant to the Plan; and

      WHEREAS, the shares of the Common Stock of the Company that are subject to
Stock Appreciation Rights under this Agreement, when added to the other shares
of Common Stock that are subject to awards granted under the Plan, do not exceed
the total number of shares of Common Stock with respect to which awards are
authorized to be granted under the Plan;

      NOW, THEREFORE, it is hereby covenanted and agreed by and between the
Company and the Grantee as follows:

      Section 1.  Stock Appreciation Rights Award

      The Company hereby grants to the Grantee a Stock Appreciation Rights Award
(the "Award") for the year ending December 31, 2000 (the "Award Year"). As more
fully described herein, the Award consists of Stock Appreciation Rights (the
"Rights") on a maximum total of [X,XXX] shares of the Company's Common Stock
(par value $.4867 per share). Subject to the employment restrictions in Section
4(d), the Grantee may exercise Rights on [X,XXX] shares (the "Service-Based
Stock Appreciation Rights") on or after December 31, 2000, and he may exercise
Rights on up to [X,XXX] shares (the "Performance-Based Stock Appreciation
Rights") upon the Company's achievement of the Performance Goals set forth in
Section 3.

      When the Grantee exercises Rights, he will receive a cash payment equal to
the amount by which the Fair Market Value of one share of Common Stock on the
date of exercise exceeds the Fair Market Value of one share of Common Stock on
the date of grant, multiplied by the number of shares with respect to which
Rights are exercised. For purposes of the exercise of the Rights under this
Agreement, the Fair Market Value of one (1) share of Common Stock on the date of
grant is as of the close of business on December 31, 1999.

      The Grantee's exercise of Rights is subject to the other restrictions set
forth in this Agreement. In no event may the Grantee exercise Rights after
December 31, 2005 (the "Expiration Date").
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      Section 2.  Service-Based Stock Appreciation Rights

      Subject to the employment restrictions in Section 4(d), the Rights on
[X,XXX] shares become exercisable at the end of the Award Year. The Grantee may
exercise these Rights in addition to any Rights that may be exercisable pursuant
to Section 3.

      Section 3.  Performance-Based Stock Appreciation Rights

       As soon as practicable after the Company's independent auditors have
certified the Company's financial statements for the Award Year, the Committee
shall determine for purposes of this Agreement the Company's (1) earnings growth
("EG"), (2) growth in non-regulated net income ("NRNI"), and (3) share price
relative to book value ("Price/Book Value") as of the end of the Award Year. The
EG, NRNI and Price/Book Value shall be determined by the Committee based on
financial results reported to shareholders in the Company's annual reports and
shall be subject to adjustment by the Committee for extraordinary events,
including, but not limited to, temperature fluctuation. The Committee shall
promptly notify the Grantee of its determination.

             In addition to the Rights that may be exercised pursuant to Section
2, and subject to the continued employment requirements in Section 4(d), the
Grantee may exercise Rights on up to [X,XXX] shares (the "Maximum Performance
Award") as follows:

       (1) If the EG for the Award Year exceeds the median five-year weighted
average growth for companies included in the C.A. Turner database (natural gas
distribution companies and integrated natural gas distribution companies), the
Grantee may exercise Rights on up to fifty percent (50%) of the Maximum
Performance Award, as follows:

            (i)   If the EG is in the fourth quartile of companies in the C.A.
                  Turner database, the Grantee may exercise Rights on fifty
                  percent (50%) of the Maximum Performance Award, or

            (ii)  If the EG falls between the median and the fourth quartile,
                  the Grantee may exercise Rights on a portion of the fifty
                  percent (50%) available under this paragraph that is pro-rated
                  to reflect the position of the Company's earnings growth
                  within the third quartile, or

            (iii) If the EG is at or below the median, the Grantee may not
                  exercise any Rights available under this paragraph (1);

       (2) If the temperature-adjusted NRNI for the Award Year exceeds the
temperature-adjusted NRNI for the prior calendar year by fifteen percent (15%)
or more, the Grantee may exercise Rights on thirty percent (30%) of the Maximum
Performance Award. If the temperature-adjusted NRNI for the Award Year does not
exceed the temperature-adjusted NRNI for the prior calendar year by at least
fifteen percent (15%), the Grantee may not exercise any Rights available under
this paragraph (2); and

      (3) If the Price/Book Value for the Award Year is equal to or greater than
the average Price/Book Value for the Award Year of companies in the third
quartile of the C.A. Turner database (natural gas distribution companies and
integrated natural gas distribution companies), the Grantee may exercise Rights
on twenty percent (20%) of the Maximum Performance Award. If the Price/Book
Value for the Award Year is not equal to or greater than

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the average Price/Book Value for the Award Year of companies in the third
quartile of the C.A. Turner database the Grantee may not exercise any Rights
available under this paragraph 93). If one or more of the companies in the C.A.
Turner database is at any time during the Award Year the subject of an announced
acquisition, its stock shall not be considered for purposes of this paragraph
(3).

      Section 4.  Additional Terms and Conditions

      (a) In the event of a Change in Control, as defined in the Plan, during
the Award Year, the Grantee may exercise Rights on the maximum number of shares
set forth in Sections 2 and 3, as if all service and performance criteria were
satisfied, pro rated based on the proportion of the Award Year that has expired
as of the date of such Change in Control.

      (b) The Grantee may exercise Rights by delivering or mailing to the
Committee at the Company's address at the time of exercise a notice in writing
specifying the number of Rights to be exercised.

      (c) The Rights are exercisable only by the Grantee or, in the case of the
Grantee's death or incapacity, by the Grantee's executors, administrators,
guardians or other legal representatives, and shall not be assignable or
transferable by the Grantee, other than by will or the laws of descent and
distribution.

       (d) If the Grantee is separated from employment before Rights have been
exercised, such unexercised Rights shall be exercisable or forfeited as follows,
except that under no circumstances may any Rights be exercised after the
Expiration Date:

             (i) Upon voluntary termination by the Grantee (other than for
retirement at age 65 or as accepted by the Committee), any unexercised Rights
shall be forfeited, unless otherwise determined by the Committee.

             (ii) Upon termination by the Company for failure of job performance
or other just cause as determined by the Committee, any unexercised Rights that
are exercisable on the date of termination may be exercised during a period of
30 days following termination, after which time the Rights will expire, unless
such period is extended by the Committee.

             (iii)If the Grantee terminates employment during the Award Year by
reason of death or total and permanent disability (as determined by the
Committee), the Grantee may exercise Rights that would otherwise have been
exercisable at the end of the Award Year, pro rated based on the proportion of
the Award Year during which the Grantee was employed by the Company. The
remaining Rights shall be forfeited unless the Committee determines otherwise.
If the Grantee terminates employment at any time by reason of death, all
unexercised Rights shall expire (if they have not otherwise expired) on the
later of (A) six months from the date of death, or (B) March 15, 2001, unless
extended by the Committee.

             (iv) Upon retirement of the Grantee at age 65 or as accepted by the
Committee, any unexercised Rights may be exercised no later than the fifth
anniversary of such retirement, at which time unexercised Rights shall expire,
unless such period is extended by the Committee.

      Section 5.  Effect on Prior Agreement

      Pursuant to an Agreement dated January 1, 1998, between the Company and
the Grantee (the "1998 Agreement"), awards may vest as of the end of each of
1998, 1999, and

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2000. This Agreement hereby modifies the 1998 Agreement to provide that no
awards shall vest for years after December 31, 1999. This Agreement does not
affect the status of awards that vested as of the end of 1998 or 1999, and the
terms of the 1998 Agreement shall continue in effect with respect to those
awards.

      Section 6.  Withholding

       The Grantee shall be solely responsible for any federal, state and local
income taxes imposed in connection with the exercise of the Rights. The Company
may satisfy any withholding tax obligation by withholding an appropriate amount
of any cash due the Grantee upon exercise of the Rights.

      Section 7.  Additional Conditions to Exercise of Rights

       Each exercise of Rights shall be subject to the condition that if at any
time the Committee shall determine, in its sole discretion, that it is necessary
or desirable as a condition of, or in connection with, such exercise (i) to
satisfy withholding tax or other withholding liabilities, or (ii) to obtain the
consent or approval of any regulatory body, then in any such event such exercise
shall not be effective unless such withholding, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
Any such limitation affecting the right to exercise Rights shall not extend the
time within which Rights may be exercised, unless the Committee in its sole
discretion determines otherwise; and neither the Company or any affiliate of the
Company, the directors or officers of the Company or any affiliate of the
Company, nor the Committee shall have any obligation or liability to the Grantee
or to any executor, administrator, guardian or other legal representative of the
Grantee regarding Rights which may expire because of such limitation.

      Section 8.  Adjustment of Shares

       (a) If the Company shall be involved in a merger, consolidation or other
reorganization, whether or not the Company is the surviving corporation, any
unexercised Rights received hereunder shall be deemed Stock Appreciation Rights
as to the same number of shares in the surviving corporation that a holder of
the number of shares of Common Stock subject to the unexercised Rights would be
entitled to receive under the terms of the merger, consolidation or other
reorganization. Any Rights deemed granted under this Section 8(a) shall be
deemed granted on the date the original Rights were granted. If the Company is
not the surviving corporation, the surviving corporation (the "Successor") shall
succeed to the rights and obligations of the Company under this Agreement.

      (b) If any subdivision or combination of shares of Common Stock or any
stock dividend, capital reorganization or recapitalization occurs after the
adoption of the Plan, the Committee shall make such proportionate adjustments as
are appropriate in order to prevent the dilution or enlargement of the Grantee's
Rights.

      Section 9.  No Right to Employment

      Nothing contained in this Agreement shall be deemed by implication or
otherwise to confer upon the Grantee any right to continued employment by the
Company or any affiliate of the Company.

      Section 10. Notice

                                       4
<PAGE>   5
      Any notice to be given hereunder by the Grantee shall be sent by mail
addressed to Chesapeake Utilities Corporation, 909 Silver Lake Boulevard, Dover,
Delaware 19904, for the attention of the Committee, c/o the Secretary, and any
notice by the Company to the Grantee shall be sent by mail addressed to the
Grantee at the address of the Grantee shown on the first page hereof. Either
party may, by notice given to the other in accordance with the provisions of
this Section 10, change the address to which subsequent notices shall be sent.

      Section 11. Assumption of Risk

      It is expressly understood and agreed that the Grantee assumes all risks
incident to any change hereafter in the applicable laws or regulations or
incident to any change in the market value of shares of Common Stock.

      Section 12. Terms of Plan

      This Agreement is entered into pursuant to the Plan (a copy of which has
been delivered to the Grantee). This Agreement is subject to all of the terms
and provisions of the Plan, which are incorporated into this Agreement by
reference, and the actions taken by the Committee pursuant to the Plan. In the
event of a conflict between this Agreement and the Plan, the provisions of the
Plan shall govern. All determinations by the Committee shall be in its sole
discretion and will be binding on the Company and the Grantee.

      Section 13. Governing Law; Amendment

      This Agreement shall be governed by, and shall be construed, enforced and
administered in accordance with, the laws of the State of Delaware (without
regard to its choice of law rules) and the requirements of any applicable
federal law. This Agreement may be modified or amended only by a writing signed
by the parties hereto.

      Section 14. Terms of Agreement

      This Agreement shall remain in full force and effect and shall be binding
on the parties hereto for so long as Rights remain outstanding.

      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in its corporate name, and the Grantee has executed the same in evidence of the
Grantee's acceptance hereof, upon the terms and conditions herein set forth, as
of the day and year first above written.

                                    CHESAPEAKE UTILITIES CORPORATION

                                    By:   ________________________________

                                          ________________________________
                                          Grantee

                                       5

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