Document:

CHAIRMAN OF THE BOARD

                              EMPLOYMENT AGREEMENT

     THE  CHAIRMAN  OF  THE BOARD EMPLOYMENT AGREEMENT ("Agreement"), dated this
1st  day  of  January  2003,  by and between Chesapeake Utilities Corporation, a
Delaware  corporation  (the  "Company"),  and  Ralph  J.  Adkins  ("Adkins").

                                   WITNESSETH:
     WHEREAS, the Company is currently obtaining the benefit of Adkins' services
as  an  employee in the capacity of Chairman of the Company's Board of Directors
("Chairman")  under  an  Executive  Employment Agreement, dated January 1, 2001;

     WHEREAS,  the Company's Board of Directors (the "Board") has authorized the
Company  to  agree  to provide for Adkins' continued employment on the terms set
forth  in  this  Agreement;  and

     WHEREAS,  Adkins  is willing, in consideration of the covenants hereinafter
provided,  to continue to be employed by the Company in the capacity of Chairman
and  to  render  services  incident  to  such  position  during the term of this
Agreement.

     NOW,  THEREFORE,  in  consideration  of  the  mutual promises and covenants
contained  herein,  the  Company  and  Adkins  hereby  agree  as  follows:

     1.     Employment.  The  Company agrees to employ Adkins, and Adkins agrees
to  accept  employment,  as  Chairman,  with  such  reasonable  duties  and
responsibilities  as  are  consistent with the By-laws of the Company, as of the
date  hereof,  and  the  Position Description dated January 1, 2003, appended to
this  Agreement.

     2.     Term  of  Agreement.  The  term  of  Adkins'  employment  under this
Agreement  (the  "Term") shall extend until May 18, 2004, unless such employment
is  earlier  terminated  (i)  by either the Company or Adkins upon 90 days prior
written  notice to the other or (ii) otherwise accordance with the provisions of
Section  8.

     3.     Time.  Adkins  agrees  to devote sufficient time consistent with the
duties of the Chair and, during that time, his full best efforts for the benefit
of  the  Company  and  its  subsidiaries,  and  not  to serve any other business
enterprise  or  organization  in any capacity during the Term, without the prior
written  consent  of  the  Company,  which  consent  shall  not  be unreasonably
withheld.

     4.     Office.  During  the  Term,  Adkins  shall  serve  as  the Company's
Chairman  and  act as the liaison between the Board of Directors and Management.

     5.     Compensation.  During  the Term, the Company shall compensate Adkins
for  his  services  hereunder  at a rate of $200,000 per annum, payable in equal
semimonthly  installments,  or  such  greater  or lesser amount as the Board may
determine  ("Base  Compensation").  The Base Compensation rate shall be reviewed
annually  and  may  be  increased  or  decreased  from  time  to  time.

     6.     Expenses.  During  the Term, the Company shall pay all necessary and
reasonable  business expenses incurred by Adkins on behalf of the Company in the
course  of  his  employment under this Agreement, including, without limitation,
expenses  incurred  in the conduct of the Company's business while away from his
domicile  and  expenses  for  travel,  meals, lodging, entertainment and related
expenses  that  are  for  the  benefit  of  the  Company.

     7.     Other  Benefits.
     (a)  During the Term, Adkins shall be entitled to participate in all
          profit-sharing, insurance, medical and retirement benefit plans,
          together with vacation and other employee benefits of the Company, now
          in effect or as hereafter amended or established, in which Company
          executive employees are permitted to participate. Adkins'
          participation shall be in accordance with the terms and provisions of
          such plans.

     (b)  During the Term, the Company shall furnish Adkins with a suitable
          office, necessary administrative support and customary furniture and
          furnishings for such office. The Company further agrees that Adkins
          shall have the use of a Company-owned or Company-leased and maintained
          automobile, new every three years, of a kind and model appropriate to
          his position with the Company.

     8.     Termination.
     (a)  Termination for Cause. Adkins' employment under this Agreement may be
          terminated by the Company at any time for "cause". In the event of
          termination for "cause," Adkins (i) shall only be entitled to the
          payment of the compensation and benefits contemplated by Section 5, 6,
          and 7 through the date termination (except for any benefits that the
          Company may be required to continue to provide by law) and (ii) and
          shall not be entitled to any severance benefits under this Agreement.
          Unless a Change in Control has occurred, "cause" shall be as the Board
          may reasonably determine. Following a Change in Control, the Company
          may terminate the Adkins' employment for "cause" only if Adkins
          engages in:

          (i)  conduct that constitutes a felony under the laws of the United
               States or a state in which Adkins works or resides;

          (ii) an act or acts of dishonesty resulting, or intended to result,
               directly or indirectly in material gain to or personal enrichment
               of Adkins at the Company's expense;

          (iii) a deliberate and intentional refusal (except by reason of
               incapacity due to illness or accident) to comply with the
               provisions of Section 1, provided that such breach shall have
               resulted in demonstrably material injury to the Company, and
               Adkins shall have failed to remedy such breach within thirty days
               after notice received from the Secretary of the Company demanding
               that Adkins remedy such breach; or

          (iv) conduct by Adkins 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.

     (b)  Termination Following a Change in Control. After a Change in Control:

          (i)  the Company may terminate the Adkins' employment under this
               Agreement at any time and for any reason; and

          (ii) Adkins may terminate his employment at any time following the
               occurrence of any of the following events:

               (A)  failure to elect or reelect Adkins to, or removal of Adkins
                    from, the position described in Section 1;

               (B)  Adkins' good-faith determination that there has been a
                    significant change in the nature or scope of his
                    authorities, powers, functions, duties or responsibilities
                    attached to the position described in Section 1 or a
                    reduction in his compensation as provided in Section 5 or
                    his benefits as provided in Section 7, which change or
                    reduction is not remedied within thirty days after notice to
                    the Company by Adkins;

               (C)  any other breach by the Company of any provision of this
                    Agreement that is not remedied within 30 days after notice
                    to the Company by Adkins; 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; provided that in any event set forth in this
                    Section 8(b)(ii), Adkins shall have elected to terminate his
                    employment under this Agreement upon not less than 40 and
                    not more than 90 days' notice to the Board, attention of the
                    Secretary of the Company, given within three 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 Adkins to terminate his employment under the provisions of
this  Section 8(b)(ii) shall not be deemed a voluntary termination of employment
by  Adkins  for  the  purposes  of this Agreement or any plan or practice of the
Company.

     (c)  Payment Upon Termination. In the event that (i) the Company terminates
          Adkins' employment under this Agreement for any reason other than
          Cause or Adkins' death or (ii) Adkins terminates his employment under
          this Agreement pursuant to Section 8(B)(ii), the Company shall
          continue to pay to Adkins (or in the event of his death following such
          termination, his legal representative) his Base Compensation under
          Section 5, at the semi-monthly rate in effect immediately prior to the
          date of such termination, until May 31, 2004.

     (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, which shall be deemed to have occurred if:

          (i)  The registration of the Company's voting securities under the
               Securities Exchange Act of 1934, as amended (the "1934 Act"),
               terminates or the Company shall have fewer than 300 stockholders
               of record; or

          (ii) any person or group (within the meaning of sections 13(d) and
               14(d) of the 1934 Act), other than the Company or any of its
               majority-controlled subsidiaries, becomes the beneficial owner
               (within the meaning of Rule 13d-3 under the 1934 Act) of 30
               percent or more of the combined voting power of the Company's
               then outstanding voting securities; or

          (iii) a tender offer or exchange offer (other than an offer by the
               Company or a majority-controlled subsidiary), pursuant to which
               30 percent or more of the combined voting power of the Company's
               then outstanding voting securities is purchased, expires; or

          (iv) the stockholders of the Company approve an agreement to merge or
               consolidate with another corporation (other than a
               majority-controlled subsidiary of the Company) unless the
               stockholders of the Company immediately before the merger or
               consolidation are to own more than 70 percent of the combined
               voting power of the resulting entity's voting securities; or

          (v)  the Company's stockholders approve an agreement (including,
               without limitation, a plan of liquidation) to sell or otherwise
               dispose of all or substantially all of the business or assets of
               the Company; or

          (vi) during any period of two consecutive years, individuals who, at
               the beginning of such period, constituted the Board cease for any
               reason to constitute at least a majority thereof, unless the
               election or the nomination for election by the Company's
               stockholders of each new director was approved by a vote of at
               least two-thirds of the directors then still in office who were
               directors at the beginning of the period; or

          (vii) the acquisition of direct or indirect beneficial ownership of
               more than 15 percent of the Company's then outstanding voting
               securities by any person or group is approved over the formal
               objection of the Company by the Securities and Exchange
               Commission pursuant to section 9 of the Public Utility Holding
               Company Act of 1935, as amended.

     However, no Change in Control shall be deemed to have occurred by reason of
any  event  involving  a  transaction  in which Adkins, or a group of persons or
entities  with  which  Adkins acts in concert, acquires, directly or indirectly,
more  than  30  percent  of  the  common  stock or the business or assets of the
Company;  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),  an  assignment  for  the benefit of creditors or an insolvency proceeding
under  state  or  local law; or 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 such approval that approval shall be deemed not to constitute a
Change  in  Control.

     9.     Mitigation.  Adkins  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 Adkins may earn from employment with another employer or
otherwise  following  the  termination  of  his employment under this Agreement.

     10.     Noncompetition  Covenant.  For  a  period of one year following the
termination of Adkins' employment under this Agreement or, if Adkins has given a
notice  pursuant  to  Section  8(b)(ii), for a period of 15 months following the
giving  of  such  notice, Adkins shall assist no individual or entity other than
the  Company  to  acquire any entity with respect to which a proposal to acquire
the  entity  was  presented  to  the Board prior to the beginning of the period.

     11.     Indemnification.  The Company shall indemnify Adkins to the fullest
extent  permitted  by applicable Delaware law (as it may be amended from time to
time),  including  the  advance  of  expenses  permitted  herein.

     12.     Performance.  The  failure  of  either  party  to this Agreement to
insist  upon  strict  performance of any provision hereof shall not constitute a
waiver  of  its  rights  subsequently  to insist upon strict performance of such
provision  or  any  other  provision  of  this  Agreement.

     13.     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.

     14.     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.

     15.     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, Adkins 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  Association, which right shall be invoked by serving upon
the  Company  a notice to arbitrate, stating the place of arbitration, within 90
days of receipt of notice in any form (including, without limitation, failure by
the  Company to respond to a notice from Adkins within 30 days) that the Company
is  withholding  or  proposes to withhold payments or provisions of benefits. In
the  event  of  any  such  dispute, whether or not Adkins 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 indemnify and
hold  harmless  Adkins  from  and  against  any  and  all  expenses  incurred in
connection with such determination, including legal and other fees and expenses.

     16.     Successors.  This  Agreement shall be binding upon and inure to the
benefit  of  Adkins  (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,  whether by means of merger,
consolidation,  acquisition of substantially all of the assets of the Company or
otherwise,  including  by  operation  of  law.

     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  Adkins.

     19.     Governing  Law. This Agreement shall be interpreted and enforced in
accordance  with  the  laws  of  the  State  of  Delaware.

     20.     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 19901, and, if to
Adkins,  the  last  address therefor shown on the records of the Company. Either
the  Company  or  Adkins may, by notice to the other, designate an address other
than  the  foregoing  for  the  receipt  of  subsequent  notices.

     21.     Withholding.  The  Company may withhold from any amounts payable to
Adkins  hereunder  all  federal, state, city or other taxes that the Company may
reasonably  determine are required to be withheld pursuant to any applicable law
or  regulation.

     22.     Nature  of  Payments  Upon  Termination.  All  payments  to  Adkins
pursuant  to  Section  8  be  considered  as  liquidated damages or as severance
payments  in  consideration of Adkins' past services to the Company, and no such
payment  shall  be  regarded  as  a  penalty  to  the  Company.

     23.     Acknowledgment.  The  parties hereto each acknowledge 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:  ___________________________________
                               Name:
                              Title:

ATTEST:

___________________________
Secretary

                               CHAIRMAN

                               _________________________________
                               Ralph  J.  Adkins

<PAGE>

                              CHAIRMAN OF THE BOARD

                              POSITION DESCRIPTION
                                 JANUARY 1, 2003

Provide  leadership  to the Board, and serve as Chair of the Executive Sessions.

Acts  as  a  liaison  between  the  Board  and  management.

Along  with  other  Directors,  ensure  the  proper  functioning of the Board in
fulfilling  its  approved  role  and  responsibilities.

Schedule  meetings  of  the  full  Board  and  works  with committee chairmen to
coordinate  the  schedule  of  meetings  for  committees.

Organizes  and  presents  agenda for regular and special board meetings based on
input  from  the  Chief  Executive  Officer  and  the  other  directors.

Ensure proper flow of information to the Board, reviewing adequacy and timing of
documentary  materials  in  support  of  management's  proposals.

Ensures  adequate lead time for effective study and discussion of business under
consideration.

Oversees  the  preparation  and distribution of proxy materials to stockholders.

Helps the Board fulfill the goals it sets by assigning specific tasks to members
of  the  Board.

Identifies  guidelines  for  the  conduct of the directors and ensures that each
director  is  making  a  significant  contribution.

Together  with  the  Chief Executive Officer, represents the Company to external
groups:  shareholders,  bankers,  local  communities,  federal,  state and local
governments.

Working  with  the  Governance  Committee,  ensures  proper  committee structure
including  assignments  of  members  and  committee  chairmen.

Carries out other duties as requested by the Board as a whole, depending on need
and  circumstances.PERFORMANCE SHARE AGREEMENT

                                 PURSUANT TO THE

                        CHESAPEAKE UTILITIES CORPORATION
                           PERFORMANCE INCENTIVE PLAN

     AGREEMENT  dated  as of January 1, 2003, and entered into, in duplicate, by
and  between  Chesapeake  Utilities  Corporation,  a  Delaware  corporation (the
"Company"),  and  [name  of  officer] (the "Grantee") who resides at [address of
officer].

     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,  2003  (the  "Award  Year"). As more fully described
herein,  the Grantee may earn a maximum total of [number of shares awarded] (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 [number of shares awarded] (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 investments ("NRIG")
     and (3) Shareholder Value as of the end of the Award Year. The EG, NRIG and
     Shareholder 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 during
     the Award Year. The Committee shall promptly notify the Grantee of its
     determination.

(b)  The Grantee may earn up to [number of shares awarded] Contingent
     Performance Shares (the "Maximum Award") as follows:

     (1)  The performance measured for Shareholder Value will be the value of
          $10,000 invested in the Company stock compared to a Utility Index. If
          the Company's performance exceeds the Utility Index, the Grantee will
          be eligible to earn up to 30% of the Maximum Award for the Award Year.
          If the value of $10,000 invested for the Award Year does not exceed
          the Utility Index for the Award Year, the Grantee shall not earn any
          Contingent Performance Shares under this Paragraph (b)(1).

[Note:  Paragraphs (2) and (3) below apply to Messrs. Schimkaitis, McMasters and
Boyles]

     (2)  The performance measured for EG will be based upon the performance of
          the Company's regulated natural gas operations and the Company's
          Delmarva propane distribution operations.

          a.   The performance measured for EG for the Company's regulated
               natural gas operations will be based upon achieving at least 90%
               of the average allowed pre-tax return on investment ("target
               return on investment") in the Award Year. If the Company's
               regulated operations achieve the target return on investment in
               the Award Year, the Grantee will be eligible to earn at least 25%
               of the Maximum Award. If the target return on investment is not
               achieved in the Company's regulated natural gas operations, the
               Grantee shall not earn any Contingent Performance Shares under
               this paragraph (b)(2)(a).

          b.   The performance measured for EG for the Company's Delmarva
               propane distribution operation will be based upon generating at
               least the target level of earnings, before interest expense and
               income taxes ("target EBIT"), for the Award Year. If the Delmarva
               propane distribution operation achieves the target EBIT, the
               Grantee will be eligible to earn 20% of the Maximum Award. If the
               target EBIT in the Company's Delmarva propane distribution
               operation is not achieved, the Grantee will not be eligible to
               any Contingent Performance Shares under this paragraph (b)(2)(b).

     (3)  The performance measured for growth in non-regulated investments
          ("NRIG") will be based upon execution of the Company's long-term
          strategic plan, assuming attainment of pre-authorized milestones and
          objectives. If the long-term strategy is executed, the Grantee will be
          eligible to earn 25% of the Maximum Award. If the long-term strategic
          plan is not executed, after approval from the Company's Board of
          Directors, the Grantee shall not earn any Contingent Performance
          Shares under this paragraph (b)(3).

[Note:  The  criteria  below  applies  to  Mr.  Thompson]

(c)  The Grantee may earn up to [number of shares] Contingent Performance Shares
     at the end of the Award Period (the "Three-Year Award") as follows, subject
     to the restrictions specified in Section 3(a), and further described in
     Section 2(c)(2) below:

     (1)  The performance measured for EG will be based upon the Company's
          regulated natural gas operations achieving at least 90% of the average
          allowed pre-tax return on investment ("target return on investment").
          If the Company's regulated operations achieve the target return on
          investment over the Award Period, the Grantee will be eligible for the
          Three-Year Award. If the target return on investment is not achieved
          in the Company's regulated natural gas operations, the Grantee shall
          not earn any Contingent Performance Shares under this Paragraph
          (c)(1).

     (2)  If the Grantee is eligible to receive the Three-Year Award, but has
          received Forfeitable Performance Shares for 2003 and/or 2004, the
          number of Contingent Performance Shares awarded at the end of the
          Award Period shall equal [number of shares] less any Forfeitable
          Performance Shares received.

[Note:  The  remainder of the agreement applies to all officers; however, in Mr.
Thompson's  agreement,  the  paragraph  lettering  is  different.]

(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.

(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 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  2,400  Forfeitable  Performance  Shares,  irrespective  of  whether the
Company  meets any Performance Goals. The Grantee must make any such election on
or  before  September  30,  2003, 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, 2003,
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, normal retirement, 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 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.     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 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  5.     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  6.     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  7.     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  8.     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.

     Section  9.     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  10.     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  11.     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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