Document:

Executive Officer Compensation Arrangements

Exhibit
10.4

EXECUTIVE
OFFICER COMPENSATION ARRANGEMENTS

The
following table sets forth for each named executive officer of Chesapeake
Utilities Corporation (“Chesapeake”) (which officers were determined by
reference to Item 402(a)(3) of SEC Regulation S-K based on 2004 compensation)
information concerning determinations made with respect to the compensation paid
or payable for services in all capacities to Chesapeake and its subsidiaries,
which compensation decisions may be deemed the entry into or the amendment of a
material contract within the meaning of Item 601(b)(10) of SEC Regulation S-K.
These decisions consisting of (i) the establishment of the executive’s base
salary for 2005, (ii) the determination of the executive’s annual bonus for 2004
under the Cash
Bonus Incentive Plan, (iii)
the establishment of the executive’s 2005 target cash bonus (as a percentage of
salary) under the Cash Bonus Incentive Plan, (iv) determination of the
executive’s restricted stock award for 2004 under the Performance Incentive Plan
and (v) the establishment of the executive’s target restricted stock award for a
performance cycle ending December 31, 2005 under the Performance Incentive
Plan.

 

	
      Name
      and Pricipal Position
	 	
      2004
      Base Salary
	 	
      2004
      Cash Bonus
	 	
      2005
      Cash Bonus Target (1)
	 	
      2004
      Restricted Stock Awards (3)
	 	
      2005
      Restricted Stock Awards Target (4)
	 	 
	
      John
      R. Schimkaitis, President, CEO and Director
	 	
      $
	
      330,000
	 	
      $
	
      107,539
	 	 	
      30
	
      %
	 	 	 	
      6,720
      
	 	 	
      9,600
      
	 	 
	
      Paul
      M. Barbas, Executive Vice President
	 	
      $
	
      265,000
	 	
      $
	
      72,875
	 	 	
      25
	
      %
	 	 	 	
      3,584
      
	 	 	
      5,120
      
	 	 
	
      Michael
      P. McMasters, Sr. Vice President and CFO
	 	
      $
	
      230,000
	 	
      $
	
      61,669
	 	 	
      25
	
      %
	 	 	 	
      3,584
      
	 	 	
      5,120
      
	 	 
	
      Stephen
      C. Thompson, Sr. Vice President
	 	
      $
	
      227,000
	 	
      $
	
      55,626
	 	 	
      25
	
      %
	 	 	 	
      -
      
	 	 	
      7,680
      
	 	
      (5)

	
      S.
      Robert Zola, President, Sharp Energy, Inc.
	 	
      $
	
      126,500
	 	
      $
	
      41,417
	 	 	
      30
	
      %
	
      (2
	
      )
	 	
      -
      
	 	 	
      7,680
      
	 	
      (5)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
      (1) Up
      to 150% of this cash bonus target can be earned to the extent certain
      performance targets are achieved. The performance targets are based upon
      the following performance criteria: (i) earnings per share, (ii) pretax
      return on average investment of the Company's regulated
      natural gas operations and (iii) earnings before interest and taxes of the
      Company's Delmarva propane distribution operations.
	 	 
	
      (2)
      Mr. Zola has an additional cash bonus arrangement under which he can earn
      a cash bonus equal to 10% of actual propane distribution net income in
      excess of the upper end of a target income range.
	 	 
	
      (3)
      Represents the shares of Chesapeake stock awarded to each executive for
      2004 under the Performance Incentive Plan.
	 	 
	
      (4)
      Represents a target restricted share award granted to each executive under
      the Performance Incentive Plan for the performance period ending December
      31, 2005. Messrs. Schimkaitis, Barbas and McMasters can earn up to 100% of
      the target restricted stock award to the extent the following performance
      criteria are attained: (i) earnings growth based on the achievement of
      targeted measures of earnings for the Company's regulated natural gas
      operations, Delmarva propane distribution operations, and overall
      corporate results, (ii) growth in non-regulated investments based upon the
      achievement of established milestones and objectives under the Company’s
      long-term strategic plan, and (iii) shareholder value as measured by the
      performance of the Company’s stock price (including the reinvestment of
      dividends), in relationship to an index of industry peers.
	 	 
	
      (5)
      For 2005, Messrs. Thompson and Zola can earn up to 960 shares of
      restricted stock , contingent upon Chesapeake achieving specified
      performance goals relative to the Industry Peer Group relating to
      stockholder value performance.
      Mr. Thompson is also entitled to earn 6,720 shares of restricted stock if
      the Company's natural gas segment achieves at least 90% of the target
      pre-tax return on investment over the three-year period January 1, 2003 to
      December 31, 2005. Mr. Zola is also entitled to earn
      6,720 shares of restricted stock if the Company's propane distribution
      income exceeds the income target for the three-year period January 1, 2003
      to December 31, 2005.Non-Employee Director Compensation Arrangements

Exhibit
10.5

NON-EMPLOYEE
DIRECTOR COMPENSATION ARRANGEMENTS

The
non-employee director compensation arrangements consist of the following:

 

The
Chairman of the Board, who is a non-employee director, is paid an annual cash
retainer of $120,000 for his services in that capacity. Each of the Company’s
non-employee directors receives for his services as a director an annual cash
retainer of $12,000. Each non-employee director also is paid a fee of $1,000 for
each Board or committee meeting attended, except that, if a director attends
more than one meeting on the same day, the director is paid an additional fee of
$500 for each additional meeting attended. The Company is submitting to a
stockholder vote at the 2005 Annual Meeting the approval of a new Directors
Stock Compensation Plan (“DSCP”). If the DSCP is approved, each non-employee
director will receive an annual award of 600 shares of common stock and an
additional award of 150 shares for service as a committee chairman, subject to
adjustment in future years consistent with the terms of the DSCP. If the DSCP is
not approved by the stockholders at the 2005 Annual Meeting, each non-employee
director will be paid a retainer of an equivalent amount in cash.Exhibit 10h(i) Incentive Stock Option Agreement

Exhibit
10h (i)

 

INCENTIVE
STOCK OPTION AGREEMENT

(Under
the Kaman Corporation

2003
Stock Incentive Plan)

THIS
AGREEMENT, made and
entered into as of the ___ day of _________, 20___ by and between KAMAN
CORPORATION, a Connecticut corporation, with its principal office in Bloomfield,
Connecticut (the "Corporation"), and ___________ (the "Optionee");

W
I T N E S S E T H :

 

WHEREAS, the
Optionee is now a full-time salaried employee of the Corporation or a subsidiary
thereof, the term "subsidiary" being used herein as defined in the Corporation's
2003 Stock Incentive Plan (the "Plan"); and

WHEREAS, the
Corporation desires to give the Optionee an opportunity to acquire shares of the
Class A Common Stock of the Corporation (the "Stock" or "shares") pursuant to
the Plan in consideration of and on the terms and conditions stated in this
Agreement; 

NOW,
THEREFORE, in
consideration of the premises, and of the mutual covenants and agreements
contained in this Agreement, the parties agree as follows:

1.
GRANT OF OPTION. Subject
to the terms and conditions set forth in this Agreement, the Corporation grants
to the Optionee, effective the day and year first above written (hereinafter
called the "date of grant"), the right and option (hereinafter called the
"option"), exercisable during the period commencing on the date of grant and
ending ten (10) years after the date of grant, to purchase from the Corporation
from time to time, up to but not exceeding in the aggregate _______ shares of
the Stock to be issued upon the exercise hereof, fully paid and non-assessable;
provided that the exercise of the option is restricted as set forth in Section 2
of this Agreement. 

 

2.
  TERMS
AND CONDITIONS OF OPTION. The
following terms and

conditions
shall apply to the option:

   (a)
Option
Price. The
purchase price of each share subject to the option shall be $_____ being 100% of
the fair market value of the shares subject to the option on the date of
grant.

(b)
Type
of Option. The
option is an incentive stock option meeting the requirements of such options as
defined in Section 422 of the Internal Revenue Code of 1986, as
amended.

(c)
Period
of Option. The
option granted under the Plan shall have a term of ten (10) years from the date
on which it is granted; provided that the option or the unexercised portion
thereof (to the extent exercisable on the date of termination of employment)
shall terminate at the close of business on the day three (3) months following
the date on which the Optionee ceases to be employed by the Corporation or a
subsidiary, unless the option shall have already expired by its terms, except as
provided under subsection (f) of this section in the event of the death or
disability of the Optionee.

(d)
Exercise
of Option. The
option granted under the Plan shall be exercisable with respect to not more than
______ percent (___%) of the shares subject thereto after the expiration of one
(1) year following the date of grant, and shall be exercisable as to an
additional _______ percent (___%) of such shares after the expiration of each of
the succeeding ________ (___) years, on a cumulative basis, so that the option,
or any unexercised portion thereof, shall be fully exercisable after a period of
________ (___) years from the date of grant, provided that any portion of the
option which remains unexercisable shall become exercisable in the event of a
Change in Control, as defined and subject to the conditions set forth in the
Plan. Except as provided in subsection (f) of this section, the Optionee may not
exercise the option or any part thereof unless at the time of such exercise the
Optionee shall be employed by the Corporation or a subsidiary and shall have
been so employed continuously since the date of grant, excepting leaves of
absence approved by the Committee, as defined in the Plan; provided, however,
that an Optionee may exercise the option during the three (3) month period
following such continuous employment unless such option shall have already
expired by its terms. The option shall be exercised in the manner set forth in
Section 3 of this Agreement by serving written notice of exercise on the
Corporation accompanied by full payment of the purchase price in cash. Any
obligation of the Corporation to accept such payment and issue the shares as to
which such option is being exercised shall be conditioned upon the Corporation's
ability at nominal expense to issue such shares in compliance with all
applicable statutes, rules or regulations of any governmental authority. The
Corporation may secure from the Optionee any assurances or agreements that the
Committee, in its sole discretion, shall deem necessary or advisable in order
that the issuance of such shares shall comply with any such statutes, rules or
regulations. 

(e)
Nontransferability. The
option shall not be transferable by the Optionee otherwise than by will or by
the laws of descent and distribution, and the option shall be exercisable,
during the Optionee’s lifetime, only by the Optionee.

(f)
Death
or Disability of Optionee. In the
event of the death or disability of the Optionee while in the employ of the
Corporation or a subsidiary, the option may be exercised within the period of
one (1) year succeeding death or disability to the extent otherwise exercisable
at the time of exercise, but in no event later than ten (10) years from the date
the option was granted. In the event of the death of the Optionee, the option
may be so exercised by the person or persons designated in the Optionee's will
for that purpose. If no such person or persons are so designated or if the
Optionee dies intestate, then the option may be exercised within said period by
the legal representative or representatives of the Optionee's estate. In the
event that the Optionee is disabled, the term "disabled", meaning permanent and
total disability as defined in Section 22(e)(3) of the Internal Revenue Code of
1986, as amended, while in the employ of the Corporation or a subsidiary, the
option may be exercised within said period either by the Optionee or by his
representative, as the case may be.

(g)
Stockholder
Rights. The
Optionee shall not be entitled to any rights as a stockholder with respect to
any shares subject to the option prior to the date of issuance to the Optionee
of a stock certificate representing such shares.

3.
MANNER OF EXERCISE OF OPTION. The
option shall be exercised by delivering to the Chief Financial Officer of the
Corporation from time to time a signed statement of exercise specifying the
number of shares to be purchased, together with cash or a check to the order of
the Corporation for an amount equal to the purchase price of such shares. In the
discretion of the Committee, payment in full or in part may also be made by
delivery of (i) irrevocable instructions to a broker to deliver promptly to the
Corporation the amount of sale or loan proceeds to pay the exercise price, or
(ii) previously owned shares of Stock not then subject to restrictions under any
Corporation plan (but which may include shares the disposition of which
con-stitutes a disqualifying disposition for purposes of obtaining incentive
stock option treatment for federal tax purposes), or (iii) shares of Stock
otherwise receivable upon the exercise of such option (which will constitute a
disqualifying disposition of such shares for federal tax purposes). The issuance
of optioned shares shall be conditioned on the Optionee having either (i) paid,
or (ii) made provisions satisfactory to the Committee for the payment of, all
applicable tax withholding obligations, if any.

Within
twenty (20) days after such exercise of the option in whole or in part, the
Corporation shall deliver to the Optionee, at the principal office of the
Corporation, certificates for the number of shares with respect to which the
option shall be so exercised, issued in the Optionee's name, provided that, if
the stock transfer books of the Corporation are closed for the whole or any part
of said twenty (20) day period, then such period shall be extended accordingly.
Each purchase of Stock hereunder shall be a separate and divisible transaction
and a completed contract in and of itself.

4.
STOCK RESERVATIONS. The
Corporation shall at all times during the term of this Agreement reserve and
keep available such number of shares of its Stock as will be sufficient to
satisfy the requirements of this Agreement, and shall pay all original issue
taxes, if any, on the exercise of the option, and all other fees and expenses
necessarily incurred by the Corporation in connection therewith.

5.
TERMINATION OF OPTION. If the
Optionee shall no longer be a full-time salaried employee of the Corporation or
a subsidiary, Optionee’s employment being terminated for any reason whatsoever
other than death or disability, any unexercised portion of the option shall
terminate at the close of business on the day three (3) months following the
date of the termination of Optionee’s employment, unless such option shall have
already expired by its terms. This option shall be exercisable, if at all,
during such three (3) month period only to the extent exercisable on the date of
termination of employment. For purposes of this option, a transfer of the
employment of Optionee from the Corporation to a subsidiary, or vice versa, or
from one subsidiary to another subsidiary, shall not be deemed a termination of
employment. 

6.
EFFECT ON CHANGES IN CAPITAL STRUCTURE. The
existence of the option shall not affect in any way the right or power of the
Corporation or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Corporation's capital
structure or its business, or any merger or consolidation of the Corporation, or
any issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Stock or the rights thereof, or the dissolution or liquidation of
the Corporation, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceedings, whether of a similar
character or otherwise.

 

7.
DILUTION OR OTHER ADJUSTMENTS. In the
event that prior to delivery by the Corporation of all the shares of Stock
subject to the option, the Corporation shall have effected one or more stock
splits, stock dividends, mergers, reorganizations, consolidations, combinations
or exchanges of shares, recapitalizations or similar capital adjustments, the
Board of Directors of the Corporation shall equitably adjust the number, kind
and option price of the shares remaining subject to the option in order to avoid
dilution or enlargement of option rights.

8.
COMPLIANCE WITH LAWS.
Notwithstanding any of the provisions hereof, the Optionee agrees for
himself/herself and his/her legal representatives, legatees and distributees
that the option shall not be exercisable, and that the Corporation shall not be
obligated to issue any shares hereunder, if the exercise of said option or the
issuance of such shares shall constitute a violation by the option holder or the
Corporation of any provision of any law or regulation of any governmental
authority.

9.
NOTICES. Every
notice or other communication relating to this Agreement shall be in writing,
and shall be mailed or delivered to the party for whom it is intended at such
address as may from time to time be designated by such party in a notice mailed
or delivered to the other party as herein provided; provided that, unless and
until some other address be so designated, all notices or communications to the
Corporation shall be mailed to or delivered to the Chief Financial Officer at
the principal office of the Corporation, and all notices by the Corporation to
the Optionee may be given to the Optionee personally or by mail, facsimile or
electronic mail to the Optionee at the Optionee’s place of employment with the
Corporation or a subsidiary or the last designated address for the Optionee on
the employment records of the Corporation.

10.
ADMINISTRATION AND INTERPRETATION. The
administration of the option shall be subject to such rules and regulations as
the Committee deems necessary or advisable for the administration of the Plan.
The determination or the interpretation and construction of any provision of the
option by the Committee shall be final and conclusive upon all concerned, unless
otherwise determined by the Board of Directors of the Corporation. The option
shall at all times be interpreted and applied in a manner consistent with the
provisions of the Plan, and in the event of any inconsistency between the terms
of the option and the terms of the Plan, the terms of the Plan shall control,
the terms of the Plan being incorporated herein by reference.

    IN WITNESS
WHEREOF, the
parties have caused this Agreement to be executed as of the date first written
above.

	
       

       
	
       

       
	
       

       KAMAN
      CORPORATION

	 	
      By:  
	 __________________________________
	
       
	
      Its

	
       
	 
	
       
	 __________________________________
	 	
                                                                               
      , Optionee

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