other Loan Documents to “the Credit Agreement” and the “the Agreement” (and indirect references suchas “thereunder,” “thereof” and words of like import referring to the Credit Agreement) shall be deemed to be references to the Credit Agreement as amended by this Amendment.  2.02.    Definitions.    Section 1.01 of the Credit Agreement shall be amended by replacing in their entirety each of the followingdefinitions:  ***“Lenders”*** means each of the Lenders identified on the signature pages toAmendment No. 1 to 364-Day Credit Agreement dated June 26, 2001, between the Borrower, the Parent, the Administrative Agent, and the Lenders thereunder, and the successors and permitted assigns of such Lenders.  ***“Termination Date”*** means June 25, 2002, unless such date is otherwise extended pursuant to Section 2.05. 2.03.    Financial Condition.    Section 4.05 of the Credit Agreement shall beamended to read in its entirety as follows:  **SECTION 4.05.*****  Financial Information.******* (a) The consolidated balance sheet of the Parent and its Subsidiaries, as of December 31, 2000, and the relatedstatements of income and cash flows for the Fiscal Year then ended, reported on by independent public accountants of nationally recognized standing, and the unaudited consolidated balance sheet of the Parent and its Subsidiaries, as of March 31,2001, and the related statements of income and cash flows for the Fiscal Quarter then ended (copies of each which have been delivered to the Lenders), fairly present, in conformity with GAAP, subject to normal year-end adjustments and the absence offootnotes, the consolidated financial position of the Parent and its Subsidiaries, as of such dates, and of their results of operations and cash flows for such periods stated.  (b)  Since December 31, 2000, there has occurred no event which has had, or could reasonably be expected to have, a Material Adverse Effect.  2.04.    Commitments of Lenders.    Schedule 1.01A to the Credit Agreement shall be amended toread in its entirety as set forth on Schedule 1.01A hereto.  2.05.    Notice and Lending Officesof Lenders.    Schedule 1.01B to the Credit Agreement shall be amended to read in its entirety as set forth on Schedule 1.01B hereto.  2.06    Applicable Percentage. The table set forth in the definition of ***“Applicable Percentage”*** in the Credit Agreement is herebydeleted and replaced in its entirety with the table set forth on Schedule 2.06 hereto.  Section3.    Representations and Warranties.    The Borrower and the Parent each represent and warrant to the Lenders and the Administrative Agent that:   2 
 (a) the representations and warranties set forth in Article IV of the CreditAgreement are true and complete on the date hereof as if made on and as of the date hereof and as if each reference in said Article IV to “this Agreement” includes reference to this Amendment; and  (b) no Default or Event of Default has occurred and is continuing on the date hereof.  Section 4.    Conditions Precedent.    As provided in Section 2 above, the amendments to the CreditAgreement set forth in Section 2 shall become effective as of the date hereof, upon the satisfaction of the following conditions precedent:  4.01.    Execution by All Parties.    This Amendment shall have been executed and delivered by each of the parties hereto.  4.02.    Documents.    The Administrative Agent shall have received the following documents, each ofwhich shall be satisfactory to the Administrative Agent in form and substance:  (a)    Corporate Documents.    All documents which the Administrative Agent and the Lenders may reasonably request relating to the existence of the Borrower and the Parent, the corporateauthority for and the validity of this Amendment, the Loan Documents as amended hereby, and any other matters relevant hereto, all in form and substance satisfactory to the Administrative Agent and the Lenders, including without limitation acertificate of incumbency of each of the Borrower and the Parent, signed by the respective Secretary or an Assistant Secretary of the Borrower and the Parent, certifying as to the names, true signatures and incumbency of the officer or officersauthorized to execute and deliver this Amendment and each other document to be executed, delivered by the Borrower and/or the Parent, as applicable, from time to time in connection with the Credit Agreement as amended hereby, and certified copies ofthe following items: (i) the Borrower’s and the Parent’s Articles of Incorporation (or, in the alternative, a certification that none of such documents have been modified since delivery thereof in connection with the execution and deliveryof the Credit Agreement), (ii) the Borrower’s and the Parent’s By-laws (or, in the alternative, a certification that none of such documents have been modified since delivery thereof in connection with the execution and delivery of theCredit Agreement), (iii) certificates of the Secretary of State of the Delaware as to the existence of the Borrower and the Parent as Delaware corporations, and (iv) the resolutions adopted by the Board of Directors of the Borrower and the Parentauthorizing the Borrower’s and the Parent’s execution, delivery and performance of this Amendment and each other document to be executed, delivered and performed by the Borrower and/or the Parent, as applicable, from time to time inconnection with the Credit Agreement as amended hereby.  (b)    Opinion of Counsel tothe Company.    An opinion of Dechert Price and Rhoads, counsel to the Borrower and the Parent, and an opinion of W. Timothy Pohl, Esq., General Counsel to the Borrower and the Parent, each in form and substance satisfactoryto the Administrative Agent and the Lenders.   3 
 (c)  Other Documents.    Such otherdocuments, approvals and opinions as the Administrative Agent and the Lenders may reasonably request.  4.03.    Fees.    Receipt by the Administrative Agent (for its own account and the account of the Lenders, as applicable) of all fees required to be received in connection with this Amendment. Section 5.    Lenders not Original Lenders under the Credit Agreement.  5.01    Bound by Execution.    Subject to the satisfaction of the conditions precedent specified inSection 4 above, but effective as of the date hereof, each of the Lenders hereunder that was not an Original Lender, by its execution of the Amendment, is a party to the Credit Agreement and has all rights and obligations of a Lender thereunder. 5.02    Confirmation of Receipt.    Each of the Lenders hereunder that was not aOriginal Lender, (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statement referred to in Section 4.05(a) and (b) and Section 5.01 thereof and such other documents and information as it hasdeemed appropriate to make its own credit analysis and decision to enter into this Amendment; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any Lender and based on such documents and information as itshall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and toexercise such powers and discretion under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (iv) agrees that it will perform inaccordance with their terms all of the obligations that attaches any U.S. Internal Revenue Service or other forms required under Section 2.05 of the Credit Agreement  6.    Expenses.    The Borrower shall pay (i) all out-of-pocket expenses of the Administrative Agent (including reasonable fees anddisbursements of counsel for the Administrative Agent) in connection with the preparation of this Amendment and any other instruments or documents to be delivered hereunder, any waiver or consent hereunder or thereunder or any amendment hereof orthereof or any Default hereunder or thereunder, and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Administrative Agent and each of the Lenders, including fees and disbursements of counsel of the Administrative Agentand each Lender, in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom, including out-of-pocket expenses incurred in enforcing the Credit Agreement as amended by this Amendment, and the otherLoan Documents.  Section 7.    Miscellaneous.    Except as herein provided, theCredit Agreement and all other Loan Documents shall remain unchanged and shall continue to be in full force and effect and are hereby ratified and confirmed in all respects. This Amendment may be executed in any number of counterparts, all of whichtaken together shall constitute one and the same amendatory instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart. This Amendment shall be governed by, and construed in accordance with, the law of theState of North Carolina.   4 
 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed anddelivered as of the day and year first above written.  **BORROWER:** **AMERICAN WATER CAPITAL CORP.**By: /s/    Joseph F. Hartnett, Jr.  Name: Joseph F. Hartnett, Jr.Title:   Vice President and Treasurer AddressforNotices:1025 Laurel Oak RoadVoorhees, NJ 08043Attention: TreasurerTelecopy number: 856.346.8363 **PARENT:** **AMERICAN WATER WORKS COMPANY,****INC.**By: /s/    Ellen C. Wolf  Name: Ellen C. WolfTitle:   Vice President and Chief Financial Officer AddressforNotices:1025 Laurel Oak RoadVoorhees, NJ 08043Attention: TreasurerTelecopy number: 856.346.8363 Signature Page toAmendment No. 1 to 364-Day Credit Agreement (American Water Capital Corp.)   5 
 FIRST UNION NATIONAL BANK, asAdministrative Agent, Swing LineBank and a Lender By: /s/    Joe K. Dancy  Name: Joe K. DancyTitle:Vice President Signature Page toAmendment No. 1 to 364-Day CreditAgreement (American Water Capital Corp.)   6 
 MELLON BANK, N.A., as DocumentationAgent and Lender By: /s/    J. Wade Bell  Name: J. Wade BellTitle:Vice President Signature Page toAmendment No. 1 to 364-Day CreditAgreement (American Water Capital Corp.)   7 
 FLEET NATIONAL BANKBy: /s/    Suresh V. Chivukula  Name: Suresh V. ChivukulaTitle: Managing Director Signature Page toAmendment No. 1 to 364-Day CreditAgreement (American Water Capital Corp.)   8 
 THE NORINCHUKIN BANK, NEW YORKBRANCHBy: /s/    Yoshiro Niiro  Name: Yoshiro NiiroTitle:General Manager Signature Page toAmendment No. 1 to 364-Day CreditAgreement (American Water Capital Corp.)   9 
 PNC BANK, NATIONAL ASSOCIATIONBy: /s/    Robert J. Giannone  Name: Robert J. GiannoneTitle: Vice President Signature Page toAmendment No. 1 to 364-Day CreditAgreement (American Water Capital Corp.)   10 
 BANK ONE, N.A.By: /s/    Kenneth J. Bauer  Name: Kenneth J. BauerTitle:Director, Capital Markets Signature Page toAmendment No. 1 to 364-Day CreditAgreement (American Water Capital Corp.)   11 
 CREDIT SUISSE FIRST BOSTONBy: /s/    Andrea E. Shkane Karl M. Studer  Name: Andrea E. ShkaneTitle:Vice President Karl M. StuderDirector Signature Page toAmendment No. 1 to 364-Day CreditAgreement (American Water Capital Corp.)   12 
 NATIONAL CITY BANK OF INDIANABy: /s/    Tracey J. Venable  Name: Tracey J. VenableTitle: Vice President Signature Page toAmendment No. 1 To 364-Day CreditAgreement (American Water Capital Corp.)   13 
 BRANCH BANKING AND TRUST COMPANYBy: /s/    J. Mark Bias  Name: J. Mark BiasTitle:Senior Vice President—Corporate Banker Signature Page toAmendment No. 1 to 364-Day CreditAgreement (American Water Capital Corp.)   14 
 THE CHASE MANHATTAN BANKBy: /s/    Wing Lee-Ong  Name: Wing Lee-OngTitle:Vice President Signature Page toAmendment No. 1 to 364-Day CreditAgreement (American Water Capital Corp.)   15 
 SCHEDULE 1.01A COMMITMENTS OFLENDERS  LENDER  COMMITMENT    INITIAL PRO RATA PERCENTAGE  SWING LINE COMMITMENTFirst Union National Bank  $71,250,000    23.50%  $20,000,000Mellon Bank, N.A.  $71,250,000    18.00%                N/AFleet National Bank  $65,000,000                     N/AThe NorinchukinBank NewYorkBranch  $65,000,000    13.00%                N/APNC Bank, NationalAssociation  $55,000,000    11.00%                N/ABank One, N.A.  $45,000,000      9.00%                N/ACredit Suisse FirstBoston  $45,000,000      9.00%                N/ANational City BankofIndiana  $37,500,000      7.50%                N/ABranch Banking andTrustCompany  $22,500,000      4.50%                N/AThe Chase ManhattanBank  $22,500,000      4.50%                N/ATOTAL  $500,000,000      100%  $20,000,000  16 
 SCHEDULE 1.01B NOTICE AND LENDINGOFFICES OF LENDERS  LENDER  NOTICE AND DOMESTIC LENDING OFFICE  LIBOR LENDING OFFICEFirst Union NationalBank  One First Union Center201 South College StreetCharlotte, NorthCarolina28288-0680Attn: Agency ServicesTelephone: (704) 383-6591Facsimile: (704) 383-0835  One First Union Center201 South College StreetCharlotte, NorthCarolina28288-0680Attn: Agency ServicesTelephone: (704) 383-6591Facsimile: (704) 383-0835   With a copy of Notices to:First Union Securities, Inc.      Structuring & Underwriting – Utilities301 South College Street, DC-5Charlotte, North Carolina 28288-0251Attn: Joe K. DancyTelephone: (704) 383-4748Facsimile: (704) 383-6670   Mellon Bank, N.A.  3 Mellon Bank Center12th Floor – 153-1203Pittsburgh,Pennsylvania15259Attn: Sannford RichardsTelephone: (412) 234-8285Facsimile: (412) 209-6118  3 Mellon Bank Center12th Floor – 153-1203Pittsburgh,Pennsylvania15259Attn: Sannford RichardsTelephone: (412) 234-8285Facsimile: (412) 209-6118Fleet NationalBank  1 Federal StreetBoston Massachusetts 02110MA OFDO7KAttn: Francia CastilloTelephone: (617) 346-0626Facsimile: (617)346-0595  1 Federal StreetBoston, Massachusetts 02110MA OFDO7KAttn: Francia CastilloTelephone: (617) 346-0626Facsimile: (617)346-0595  17 
 LENDER  NOTICE AND DOMESTIC LENDING OFFICE  LIBOR LENDING OFFICEThe NorinchukinBank, New YorkBranch  245 Park Avenue, 29th FloorNew York, New York 10167Attn: JunyaMorishitaVice President(Primary)Katsuyoshi YamaguchiVice President & Manager(Backup)Telephone: (212) 808-4195Facsimile: (212) 697-5754(Primary)(212) 697-6853(Backup)  245 Park Avenue, 29th FloorNew York, New York 10167Attn: JunyaMorishitaVice President(Primary)Katsuyoshi YamaguchiVice President & Manager(Backup)Telephone: (212) 808-4195Facsimile: (212) 697-5754(Primary)(212) 697-6853(Backup)PNC Bank, NationalAssociation  1600 Market Street22nd FloorPhiladelphia,Pennsylvania19103Attn: Colleen M. RuizTelephone: (215) 585-6086Facsimile: (215) 585-6987  1600 Market Street22nd FloorPhiladelphia,Pennsylvania19103Attn: Colleen M. RuizTelephone: (215) 585-6086Facsimile: (215) 585-6987Bank One, N.A.  1 Bank One PlazaSuite 0634Chicago, Illinois 60670Attn: Torin JohnsonTelephone: (312) 732-8573Facsimile: (312) 732-4840  1 Bank One PlazaSuite 0634Chicago, Illinois 60670Attn: Torin JohnsonTelephone: (312) 732-8573Facsimile: (312) 732-4840Credit Suisse FirstBoston  Attn: Steven KaoTelephone: (212) 325-9153Facsimile: (212)325-8309   National City Bankof Indiana  One National City CenterSuite 200EIndianapolis,Indiana46255Attn: Tracey VenableTelephone: (317) 267-7066Facsimile: (317) 267-8899  One National City CenterSuite 200EIndianapolis,Indiana46255Attn: Tracey VenableTelephone: (317) 267-7066Facsimile: (317) 267-8899  18 
LENDER  NOTICE AND DOMESTIC LENDING OFFICE  LIBOR LENDING OFFICEBranch Banking andTrust Company  300 Summers StreetCharleston, West Virginia25326Attn: Mark Bias, Sr. VicePresident, CorporateBankerTelephone: (304) 348-7368Facsimile: (304) 348-7250(Primary)110 South Stratford RoadWinston-Salem North Carolina27113  300 Summers Street Charleston, West Virginia25326Attn: MarkBias, Sr. VicePresident, CorporateBankerTelephone: (304) 348-7368Facsimile: (304) 348-7250(Primary)110 South Stratford RoadWinston-Salem North Carolina27113   Attn: Thatcher TonwsendSenior Vice PresidentCorporateAccountsTelephone: (336) 733-3245Facsimile: (336) 733-3254(Backup)  Attn: Thatcher TonwsendSenior Vice PresidentCorporateAccountsTelephone: (336) 733-3245Facsimile: (336) 733-3254(Backup)The Chase ManhattanBank  One Riverfront Plaza2nd FloorNewark, New Jersey07102Attn: Wing Lee-Ong(Primary)Robert Stanchak(Backup)Telephone: (973) 353-6165(Primary)(973) 353-6160(Backup)Facsimile: (973) 353-6158  One Riverfront Plaza2nd FloorNewark, New Jersey07102Attn: Wing Lee-Ong(Primary)Robert Stanchak(Backup)Telephone: (973) 353-6165(Primary)(973) 353-6160(Backup)Facsimile: (973) 353-6158  19 
  SCHEDULE 2.06 APPLICABLE PERCENTAGE TABLE  SeniorUnsecured LTDRatings  Applicable LIBOR Rate Margin  Applicable Facility Fee  Applicable Swing Line Margin  Applicable Utilization Fee(S&P/Moody’s)            Level 1 at least A+/A1  0.275%  0.075%  0.475%  0.125%Level 2 less than A+/A1; at least A/A2  0.315%  0.085%  0.515%  0.125%Level 3 less than A/A2; at least A-/A3  0.400%  0.100%  0.575%  0.125%Level 4 less than A-/A3; at least BBB+/Baa1  0.500%  0.125%  0.650%  0.125%Level 5 less than BBB+/Baa1; at least BBB/Baa2  0.600%  0.150%  0.725%  0.125%Level 6 less than BBB/Baa2  0.700%  0.175%  0.875%  0.25%  20