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Exhibit 10.1

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THE YORK WATER COMPANY

Cash Incentive Plan

Purpose:
 
The purpose of the Incentive Plan (the "Plan") is to aid The York Water Company
(the "Company") in retaining, attracting, motivating and rewarding associates
("Participants") who provide substantial services to the Company, to recognize
contributions and reward achievement of Company goals, and promote the creation
of value for customers by more closely aligning the interest of participants
with those of customers. The Plan authorizes cash-based incentives for
participants.
 
Definitions:
 

(a)   "Annual Incentive Award" means a cash-based performance award granted to a
Participant representing a right to receive payment, as determined by the
Compensation Committee, based on the achievement of Company goals in a period of
one (1) fiscal year or portion thereof.

 

(b)   "Beneficiary" means the legal representatives of the Participant's estate
entitled to receive benefits under a Participant's Annual Incentive Award upon a
Participant's death. Each Participant will be permitted to designate a
beneficiary to receive the benefits specified under the Participant's Annual
Incentive Award upon the Participants death.

 

(c)   "Committee" means the Compensation Committee of the Board of Directors of
the Company.

 

(d)   "Participant" means a person designated by the Committee to be eligible to
receive an Annual Incentive Award under the Plan.

 
Administration:
 
The Plan shall be administered by the Committee, which shall have complete and
final authority to select Participants, to determine the goals and circumstances
under which Annual Incentive Awards are granted, to grant awards, to prescribe
documents evidencing or setting terms of Annual Incentive Awards, to make
amendments to the Plan, to establish rules and regulations for the
administration of the Plan, to construe and interpret the Plan, to correct
defects, supply omissions or reconcile inconsistencies as the Committee may deem
necessary or advisable for the administration of the Plan. Decisions of the
Committee with respect to the administration and interpretation of the Plan
shall be final, conclusive and binding upon all persons interested in the Plan,
including Participants and Beneficiaries.
 
 

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Terms of Awards:
 
The Committee is authorized to grant cash-based Annual Incentive Awards, which
may be earned upon the attainment or satisfaction of organizational goals. In
addition, the Committee may specify that any Annual Incentive Award be
conditioned upon achievement or satisfaction of business criteria or other
measures of performance. The Committee may exercise its discretion to eliminate,
to reduce or increase the amounts payable as Annual Incentive Awards, subject to
such business criteria or other measures of performance.
 

(a)   One or more of the following business criteria or other measures of
performance may be used by the Committee in establishing Annual Incentive
Awards: (1) growth in revenues or assets; (2) earnings from operations; (3) net
income or net income per common share; (4) return on investment or return on
equity; (5) stock price or shareholder return and (6) strategic business
criteria, consisting of meeting specified water quality standards, environmental
or safety standards, affordability of rates and customer satisfaction standards.

 
The targeted levels of performance with respect to such business criteria or
other measures may be established at such levels and in such terms as the
Committee may determine.
 
The Plan shall become effective upon approval of the Board of Directors of the
Company. The Plan will remain in effect until terminated by action of the Board
of Directors of the Company.
 
Performance Measures:
 
Annual Incentive Awards are granted upon the successful attainment and
satisfaction of Performance Objectives within a given year. Attainment of
Performance Objectives shall be measured over an annual incentive period of up
to or more than one year, as specified by the Committee. A Performance Objective
shall be established no later than ninety (90) days after the beginning of any
annual incentive period.
 
Performance Objectives are approved by the Committee. The successful attainment
and satisfaction of Performance Objectives is determined by the Committee and
shall be final, conclusive and binding.
 
The achievement of each Performance Objective will be awarded a score of five
(5) points. No points will be awarded for partial achievement of Performance
Objectives. Annual Incentive Awards will be granted upon an overall score of
seventy-five (75) percent of the available Performance Objective score.
Achieving Performance Objectives and receiving Annual Incentive Awards will be
the shared responsibility of the Participants. If an overall score of
seventy-five (75) percent of the available Performance Objective is achieved,
all Participants will receive Annual Incentive Awards. If an overall score of
less than seventy-five (75%) of the available Performance Objective score is
achieved, no Participant will receive an Annual Incentive Award.
 

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Certain Performance Objectives may be designated by the Committee to be eligible
for a Performance Bonus Score. The Committee may select Performance Objectives
that are critical and highly important to the successful completion of the
Company's mission and, at the Committee's sole discretion, award a Performance
Bonus Score of five (5) points for the successful achievement or completion of
Performance Objectives so designated.
 
Settlement:
 
Each year, the Committee will determine the amount of the Annual Incentive
Award. Settlement of the Annual Incentive Award will be in cash. The Company is
authorized to withhold from any Annual Incentive Award amounts of withholding or
other taxes due in connection with the payment of the Annual Incentive Award.
Settlement of the Annual Incentive Award will be made upon the release of the
Company’s annual earnings.

 

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