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                                                                    EXHIBIT 4.1
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                          ARTESIAN WATER COMPANY, INC.

                                      TO

                           WILMINGTON TRUST COMPANY,
                                                    AS TRUSTEE

                                  ----------

                       FIFTEENTH SUPPLEMENTAL INDENTURE
                         Dated as of December 1, 2000

                                  ----------

                    Supplemental to Indenture of Mortgage
                           Dated as of July 1, 1961

                                  ----------

                    FIRST MORTGAGE BONDS, SERIES O, 8.17%

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     FIFTEENTH SUPPLEMENTAL INDENTURE, dated as of the first day of December,
2000, made by and between ARTESIAN WATER COMPANY, INC. (successor to Artesian
Resources Corporation under the Original Indenture hereinafter referred to),
a corporation organized and existing under the laws of the State of Delaware
(hereinafter called the "COMPANY"), party of the first part, and WILMINGTON
TRUST COMPANY, a corporation organized and existing under the laws of the
State of Delaware, having its principal office and place of business at Tenth
and Market Streets, in the City of Wilmington, Delaware, as Trustee
(hereinafter called the "TRUSTEE") under the Original Indenture, the party of
the second part.

     WHEREAS, the Company is a wholly-owned subsidiary of ARTESIAN RESOURCES
CORPORATION (its name having been changed from "ARTESIAN WATER COMPANY"), a
corporation organized and existing under the laws of the State of Delaware
(hereinafter called the "CORPORATION"); and

     WHEREAS, the Corporation has heretofore executed and delivered to the
Trustee an Indenture of Mortgage (hereinafter called the "ORIGINAL
INDENTURE") dated as of July 1, 1961, and duly recorded the Original
Indenture in the Recorder's Office at Wilmington, in Mortgage Record A Volume
56, Page 1 etc., on the 13th day of November, A.D. 1961, for the purpose of
securing First Mortgage Bonds of the Corporation to be issued from time to
time in one or more series as therein provided; and

     WHEREAS, there have been issued under the Original Indenture $1,600,000
principal amount of First Mortgage Bonds, Series A, 4-1/2%, which were paid
at maturity on November 1, 1978; and

     WHEREAS, there have been issued under the Original Indenture $1,000,000
principal amount of First Mortgage Bonds, Series B, 5-3/8%, the $912,750
outstanding principal balance of which was paid at maturity on July 1, 1986;
and

     WHEREAS, there have been issued under the Original Indenture as
supplemented by a first supplemental indenture dated as of April 15, 1964
(hereinafter sometimes referred to as the "FIRST SUPPLEMENTAL INDENTURE"),
$1,250,000 principal amount of First Mortgage Bonds, Series C, 5-1/8%, the
$1,225,000 outstanding principal balance of which was paid at maturity on
April 15, 1989; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a second supplemental indenture dated as of June 1, 1970
(hereinafter sometimes referred to as the "SECOND SUPPLEMENTAL INDENTURE"),
$1,000,000 principal amount of First Mortgage Bonds, Series D, 9-3/4%, the
$640,000 outstanding principal balance of which was paid at maturity on June
1, 1990; and

     WHEREAS, there have been issued under the Original Indenture as
supplemented by a third supplemental indenture dated as of January 1, 1973
(hereinafter sometimes referred to as the "THIRD SUPPLEMENTAL INDENTURE"),
$800,000 principal amount of First Mortgage Bonds,

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Series E, 8-1/2%, due January 1, 1998, $800,000 principal amount of which was
redeemed on February 1, 1993; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a fourth supplemental indenture dated as of November 1, 1975
(hereinafter sometimes referred to as the "FOURTH SUPPLEMENTAL INDENTURE"),
$1,500,000 principal amount of First Mortgage Bonds, Series F, 10-7/8%, due
November 1, 1995, $225,000 principal amount of which was redeemed on February
1, 1993; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a fifth supplemental indenture dated as of March 1, 1977
(hereinafter sometimes referred to as the "FIFTH SUPPLEMENTAL INDENTURE"),
$1,800,000 principal amount of First Mortgage Bonds, Series G, 8-7/8%, due
March 1, 1997, $1,080,000 principal amount of which was redeemed on February
1, 1993; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a sixth supplemental indenture dated as of December 1, 1978
(hereinafter sometimes referred to as the "SIXTH SUPPLEMENTAL INDENTURE"),
$1,800,000 principal amount of First Mortgage Bonds, Series H, 9-3/4%, due
December 1, 1998, $1,260,000 principal amount of which was redeemed on
February 1, 1993; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a seventh supplemental indenture dated as of November 1, 1981
(hereinafter sometimes referred to as the "SEVENTH SUPPLEMENTAL INDENTURE"),
$3,000,000 principal amount of First Mortgage Bonds, Series I, 11-7/8%, due
October 1, 1987, $3,000,000 principal amount of which was redeemed on
October 1, 1986; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a ninth supplemental indenture dated as of December 1, 1986
(hereinafter sometimes referred to as the "NINTH SUPPLEMENTAL INDENTURE"),
$5,000,000 principal amount of First Mortgage Bonds, Series J, 9.55%, due
December 1, 1996, $5,000,000 principal amount of which was paid at maturity
on December 1, 1996; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a tenth supplemental indenture dated as of April 1, 1989
(hereinafter sometimes referred to as the "TENTH SUPPLEMENTAL INDENTURE"),
$7,000,000 principal amount of First Mortgage Bonds, Series K, 10.17%, due
April 1, 2009, $7,000,000 principal amount of which was outstanding as of
December 1, 2000; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a eleventh supplemental indenture dated as of February 1, 1993
(hereinafter sometimes referred to as the "ELEVENTH SUPPLEMENTAL INDENTURE"),
$10,000,000 principal amount of First Mortgage Bonds, Series L, 8.03%, due
February 1, 2003, $10,000,000 principal amount of which was outstanding as of
December 1, 2000; and

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     WHEREAS, the Original Indenture has been further supplemented pursuant
to a Twelfth Supplemental Indenture dated as of December 5, 1995 (hereinafter
sometimes referred to as the "TWELFTH SUPPLEMENTAL INDENTURE") which provided
for the release from the Indenture of certain assets of the Company; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a thirteenth supplemental indenture dated as of June 1, 1997
(hereinafter sometimes referred to as the "THIRTEENTH SUPPLEMENTAL INDENTURE"),
$10,000,000 principal amount of First Mortgage Bonds, Series M, 7.84%, due
December 31, 2007, $10,000,000 principal amount of which was outstanding as
of December 1, 2000; and

     WHEREAS, there have been issued under the Original Indenture, as
supplemented by a fourteenth supplemental indenture dated as of June 1, 1997
(hereinafter sometimes referred to as the "FOURTEENTH SUPPLEMENTAL INDENTURE"),
$5,000,000 principal amount of First Mortgage Bonds, Series N, 7.56%, due
December 31, 2007, $5,000,000 principal amount of which was outstanding as
of December 1, 2000; and

     WHEREAS, the Company was organized for stated purposes which encompass
the stated purposes of the Corporation in order that the Company could
acquire from the Corporation substantially all of the Mortgaged Property (as
such term is defined in the Indenture) as an entirety and to operate the
same; and

     WHEREAS, the Corporation, the Company and the Trustee entered into an
eighth supplemental indenture to the Indenture, dated as of July 1, 1984
(hereinafter sometimes referred to as the "ORIGINAL EIGHTH SUPPLEMENTAL
INDENTURE"), providing for the succession and substitution of the Company to
and for the Corporation with the same effect as if the Company had been named
in the Indenture as the mortgagor, and providing for the assumption by the
Company of, and the release and discharge of the Corporation from, all
liability and obligation on and with respect to the bonds and coupons issued
under the Indenture and all the terms, covenants and conditions of the
Indenture; and

     WHEREAS, the Corporation, the Company and the Trustee executed a certain
corrected eighth supplemental indenture to the Indenture, dated as of July 1,
1984 (hereinafter sometimes referred to as the "CORRECTED EIGHTH SUPPLEMENTAL
INDENTURE"), which supplements and corrects certain descriptions of Mortgaged
Property set forth in the Indenture (the Original Eighth Supplemental
Indenture and the Corrected Eighth Supplemental Indenture being hereinafter
sometimes referred to collectively as the "EIGHTH SUPPLEMENTAL INDENTURE");
and

     WHEREAS, the Corporation has conveyed and transferred substantially all
the Mortgaged Property as an entirety, subject to the lien of the Indenture,
to the Company; and

     WHEREAS, the Company has assumed and agreed that it will promptly pay or
cause to be paid, the principal of and any premium which may be due and
payable on and the interest on all the Bonds issued under the Original
Indenture and all indentures supplemental thereto, and has agreed to perform,
observe and fulfill, duly and punctually, all the terms, covenants and
conditions of the Original Indenture and all indentures supplemental thereto
stated therein to be

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performed, observed or fulfilled by the Corporation, and the Corporation has
been released and discharged from all liability and obligation on and with
respect to the Bonds and coupons issued under the Indenture and all terms,
covenants and conditions of the Indenture and the Trustee has executed and
delivered to the Company an instrument of partial defeasance dated April 4,
1986 pursuant to Article II of the Eighth Supplemental Indenture; and

     WHEREAS, the Company proposes to issue and sell $20,000,000 principal
amount of a new series of bonds to be designated as First Mortgage Bonds,
Series O, 8.17%, to be issued under and secured by the Original Indenture, as
supplemented; and

     WHEREAS, the Company, pursuant to the provisions of the Original
Indenture, has duly resolved and determined to make, execute and deliver to
the Trustee this fifteenth supplemental indenture (hereinafter sometimes
referred to as the "FIFTEENTH SUPPLEMENTAL INDENTURE") for the purpose of
providing for the creation of said First Mortgage Bonds, Series O, 8.17%, to
be issued under and secured by the Original Indenture (the Original
Indenture, the First Supplemental Indenture, the Second Supplemental
Indenture, the Third Supplemental Indenture, the Fourth Supplemental
Indenture, the Fifth Supplemental Indenture, the Sixth Supplemental
Indenture, the Seventh Supplemental Indenture, the Eighth Supplemental
Indenture, the Ninth Supplemental Indenture, the Tenth Supplemental
Indenture, the Eleventh Supplemental Indenture, the Twelfth Supplemental
Indenture, the Thirteenth Supplemental Indenture, the Fourteenth Supplemental
Indenture, this Fifteenth Supplemental Indenture and all indentures
supplemental to the Original Indenture hereafter executed, being hereinafter
sometimes called the "MORTGAGE"); and

     WHEREAS, all things necessary to make $20,000,000 principal amount of
such First Mortgage Bonds, Series O, 8.17%, when duly executed by the Company
and authenticated and delivered by the Trustee, the valid, binding and legal
obligations of the Company entitled to the benefits and security of the
Mortgage, and to make this Fifteenth Supplemental Indenture a valid, binding
and legal instrument in accordance with its terms, have been done and
performed; and

     WHEREAS, the issuance of said First Mortgage Bonds, Series O, 8.17%, as
herein provided, has been in all respects duly authorized.

     NOW, THEREFORE, THIS INDENTURE  WITNESSETH THAT ARTESIAN WATER COMPANY,
INC., in consideration of the premises and of the acceptance by the Trustee
of the trusts hereby created and of the purchase and acceptance of the First
Mortgage Bonds, Series O, 8.17%, by the holders and registered owners thereof
and of One Dollar to the Company duly paid by the Trustee at or before the
ensealing and delivery of these presents, for itself and its successors,
intending to be legally bound hereby, does hereby ratify and confirm its
mortgage and pledge to the Trustee of all property described in the Original
Indenture, the First Supplemental Indenture, the Second Supplemental
Indenture, the Third Supplemental Indenture, the Fourth Supplemental
Indenture, the Fifth Supplemental Indenture, the Eighth Supplemental
Indenture, and the Thirteenth Supplemental Indenture (except such thereof as
may heretofore have been released from the lien of the Mortgage in accordance
with the terms thereof) and has granted, bargained, sold, released, conveyed,
assigned, transferred, mortgaged, pledged, set over and confirmed, and by
these presents does grant, bargain, sell, release, convey, assign, transfer,
mortgage, pledge, set over and confirm, unto Wilmington Trust Company, as
Trustee, and to its successors in the trust,

                                      -4-
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and their and each of their assigns forever, all and singular the pieces or
parcels of land described on Exhibit A attached hereto.

     TOGETHER with all and singular the tenements, hereditaments and
appurtenances belonging or in any wise appertaining to the aforesaid property
and rights or any part thereof, with the reversion and reversions, remainder
and remainders, and to the extent permitted by law, all tolls, rents,
revenues, issues, income, product and profits thereof, and all the estate,
right, title, interest and claim whatsoever, at law as well as in equity,
that the Company now has or may hereafter acquire in and to the aforesaid
premises, property and rights and every part and parcel thereof;

     SAVING AND EXCEPTING, HOWEVER, from the property hereby mortgaged and
pledged all of the property of every kind and type saved and excepted from
the Original Indenture, by the terms thereof;

     SUBJECT, HOWEVER, to the exceptions, reservations and matters of the
kind and type recited in the Original Indenture;

     TO HAVE AND TO HOLD all said premises, property and rights granted,
bargained, sold, released, conveyed, transferred, assigned, mortgaged,
pledged, set over and confirmed by the Company as aforesaid or intended so to
be unto the Trustee and its successors in the trust and their assigns
forever;

     IN TRUST, NEVERTHELESS, upon the terms and trusts set forth in the
Original Indenture for the equal and proportionate benefit and security of
those who shall hold or own the bonds and coupons issued and to be issued
under the Indenture, or any of them, without preference of any of said bonds
and coupons over any others thereof by reason of priority in the time of the
issue or negotiation thereof or by reason of the date or maturity thereof, or
for any other reason whatsoever; subject, however, to the provisions with
respect to extended, pledged and transferred coupons contained in Section
4.02 of the Original Indenture.

     AND THIS INDENTURE FURTHER WITNESSETH THAT, in consideration of the
premises and of such acceptance or purchase of the First Mortgage Bonds,
Series O, 8.17%, by the holders or registered owners thereof, and of said sum
of One Dollar to the Company duly paid by the Trustee at or before the
ensealing and delivery of these presents, the Company, for itself and its
successors, intending to be legally bound hereby, does hereby covenant to and
agree with the Trustee and its successors in the trust, for the benefit of
those who shall hold or own such bonds, or any of them, as follows:

                                   ARTICLE I

                      FIRST MORTGAGE BONDS, SERIES O, 8.17%

     SECTION 1.1.  DESIGNATION AND AMOUNT.  A Series of bonds to be issued
under the Original Indenture as heretofore supplemented and as supplemented
hereby and secured thereby is hereby

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created which shall be designated as, and shall be distinguished from the
bonds of all other series by the title, "First Mortgage Bonds, Series O,
8.17%," elsewhere herein sometimes referred to as the "BONDS OF SERIES O."

     The aggregate principal amount of the Bonds of Series O shall not exceed
$20,000,000.

     SECTION 1.2.  BOND TERMS.  (a) GENERAL. The Bonds of Series O shall be
dated the date of their authentication and shall bear interest from such
date, except as otherwise provided for bonds issued upon subsequent exchanges
and transfers by Section 2.06 of the Original Indenture, shall mature on and
be due December 29, 2020, and shall bear interest at the rate of eight and
seventeen-hundredths percent (8.17%) per annum, payable monthly on the
twenty-ninth day of each month in each year beginning January 29, 2001
(PROVIDED that the monthly payment for any February having only twenty-eight
days shall be payable on the twenty-eighth day of such month), until the
Company's obligation with respect to the payment of such principal shall be
discharged.

     The Bonds of Series O shall be issuable as registered bonds without
coupons in the denominations of Five Hundred Thousand Dollars ($500,000) and
any multiple thereof, numbered OR1 and upwards.

     Unless otherwise agreed to in writing by the Company and the holders of
the Bonds of Series O, the principal of, premium (if any) and interest on,
the Bonds of Series O shall be payable at the principal office of the Trustee
in the City of Wilmington, Delaware, or, if there be a successor trustee, at
at its principal office, in coin or currency of the United States of America
that at the time of payment is legal tender for the payment of public and
private debts.

     (b)  OPTIONAL REDEMPTION.  The Company may, at its option, upon notice as
provided below, redeem at any time all, or from time to time any part of, the
Bonds of Series O, in an amount not less than 5% of the aggregate principal
amount of the Bonds of Series O then outstanding in the case of a partial
redemption, at a redemption price equal to the principal amount thereof to be
redeemed, plus the interest accrued thereon to the date fixed for redemption,
plus a premium equal to the Make-Whole Amount determined for the redemption
date with respect to such principal amount. The Company will furnish to the
Trustee and to each holder of the Bonds of Series O written notice of each
optional redemption under this Section 1.2 not less than 30 days and not more
than 60 days prior to the date fixed for redemption. Each such notice shall
specify such date, the aggregate principal amount of the Bonds of Series O to
be redeemed on such date, the principal amount of each of the Bonds of Series
O held by such holder to be redeemed on such date (determined as hereinafter
provided in this Section 1.2(b)) and the interest to be paid on the
redemption date with respect to such principal amount being redeemed, and
shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such redemption
(calculated as if the date of such notice were the date of redemption),
setting forth the details of such computation. Two Business Days prior to
such redemption, the Company shall deliver to each holder of the Bonds of
Series O, a certificate of a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the date of redemption.

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     As used herein, the term "MAKE-WHOLE AMOUNT" means, with respect to any
Bond of Series O, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Bond over the amount of such Called Principal, PROVIDED
that the Make-Whole Amount may in no event be less than zero. For the
purposes of determining the Make-Whole Amount, the following terms have the
following meanings:

          "CALLED PRINCIPAL" means, with respect to any Bond of Series O, the
     principal of such Bond that is to be redeemed or has become or is declared
     to be immediately due and payable, as the context requires.

          "DISCOUNTED VALUE" means, with respect to the Called Principal of
     any Bonds of Series O, the amount obtained by discounting all Remaining
     Scheduled Payments with respect to such Called Principal from their
     respective scheduled due dates to the Settlement Date with respect to such
     Called Principal, in accordance with accepted financial practice and at a
     discount factor (applied on the same periodic basis as that on which
     interest on the Bonds of Series O is payable) equal to the Reinvestment
     Yield with respect to such Called Principal.

          "REINVESTMENT YIELD" means, with respect to the Called Principal of
     any Bond of Series O, 0.50% over the yield to maturity implied by (i) the
     yields reported, as of 10:00 A.M. (New York City time) on the second
     Business Day preceding the Settlement Date with respect to such Called
     Principal, on the display designated as "Page PX1" of the Bloomberg
     Financial Markets Services Screen (or if not available, any other national
     recognized trading screen reporting on-in trading in the U.S. Treasury
     securities) for actively traded U.S. Treasury securities having a maturity
     equal to the Remaining Life to Maturity of such Called Principal as of
     such Settlement Date, or (ii) if such yields are not reported as of such
     time or the yields reported as of such time are not ascertainable, the
     Treasury Constant Maturity Series Yields reported, for the latest day for
     which such yields have been so reported as of the second Business Day
     preceding the Settlement Date with respect to such Called Principal, in
     Federal Reserve Statistical Release H.15 (519) (or any comparable successor
     publication) for actively traded U.S. Treasury securities having a constant
     maturity equal to the Remaining Life to Maturity of such Called Principal
     as of such Settlement Date. Such implied yield will be determined, if
     necessary, by (a) converting U.S. Treasury bill quotations to bond-
     equivalent yields in accordance with accepted financial practice and
     (b) interpolating linearly between (1) the actively traded U.S. Treasury
     security with the maturity closest to and greater than the Remaining Life
     to Maturity and (2) the actively traded U.S. Treasury security with the
     maturity closest to and less than the Remaining Life to Maturity.

          "REMAINING LIFE TO MATURITY" means, with respect to any Called
     Principal, the number of years (calculated to the nearest one-twelfth year)
     that will elapse between the Settlement Date with respect to such Called
     Principal and the scheduled maturity date of the Bonds of Series O.

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          "REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
     Principal of any Bond of Series O, all payments of such Called Principal
     and interest thereon that would be due after the Settlement Date with
     respect to such Called Principal if no payment of such Called Principal
     were made prior to its scheduled due date, PROVIDED that if such
     Settlement Date is not a date on which interest payments are due to be
     made under the terms of the Bonds of Series O, then the amount of the next
     succeeding scheduled interest payment will be reduced by the amount of
     interest accrued to such Settlement Date and required to be paid on such
     Settlement Date.

          "SETTLEMENT DATE" means, with respect to the Called Principal of
     any Bond of Series O, the date on which such Called Principal is to be
     redeemed or has become or is declared to be immediately due and payable,
     as the context requires.

     In the case of any partial redemption of the Bonds of Series O described
above, the principal amount of the Bonds of Series O to be redeemed shall be
allocated among the holders of all such Bonds outstanding, in proportion to
their respective holding of such Bonds as nearly as may be practicable and as
further provided in Section 5.03 of the Original Indenture.

     (c) SPECIAL REDEMPTIONS. In accordance with the provisions of Section
6.07 of the Original Indenture, in the event that either (i) all or
substantially all the property of the Company at the time subject to the lien
of the Indenture as a first mortgage lien thereon or (ii) all or
substantially all of the property of the Company at the time subject to the
lien of the indenture as a first mortgage lien thereon that is used or useful
in connection with the business of the Company as a water company or as a
water utility shall be released from the lien of the Indenture under the
provisions of Section 6.03 or Section 6.06 of the Original Indenture, then
all of the Bonds then outstanding including the Bonds of Series O are to be
redeemed. In the event such release shall be under the provisions of Section
6.03 of the Original Indenture, the Bonds of Series O shall be redeemable at
a redemption price equal to the principal amount thereof, together with the
Make-Whole Amount determined as provided above and interest accrued to the
date fixed for redemption. In the event such release shall be under the
provisions of Section 6.06 of the Original Indenture, the Bonds of Series O
shall be redeemable at the principal amount thereof, together with interest
accrued to the date fixed for redemption. Except for a redemption resulting
from a release under the provisions of Section 6.06 of the Original Indenture
as described in the immediately preceding paragraph, any redemption of the
Bonds of Series O required under the Indenture shall be at a redemption price
equal to the principal amount thereof to be redeemed, together with interest
accrued thereon to the date fixed for redemption plus a premium equal to the
Make-Whole Amount determined (as provided above) two (2) Business Days prior
to the date fixed for redemption. The Company will furnish notice to the
Trustee and to each holder of the Bonds of Series O in the same manner set
forth above in the case of an optional redemption of Bonds of Series O.

     The principal of the Bonds of Series O may be declared or may become due
prior to their maturity dates, in the manner and with the effect and subject
to the conditions provided in the Original Indenture upon the occurrence of
an Event of Default as in the Original Indenture provided, and upon the
principal of the Bonds of Series O becoming so due, a premium shall be
payable to the holder of the Bonds of Series O as liquidated damages equal
to the Make-Whole

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Amount determined as set forth above as if the Bonds of Series O were being
redeemed on the date the principal of the Bonds of Series O shall become so
due.

     (d) MISCELLANEOUS. The Bonds of Series O shall be registrable,
transferable, and exchangeable as provided in Article II of the Original
Indenture; PROVIDED that Bonds of Series O shall not be issued as coupon
Bonds.

     SECTION 1.3  FORM OF BOND. The text of the registered Bonds of Series O
and of the authentication certificate of the Trustee upon said Bonds shall
be, respectively, substantially as follows:

                 FORM OF REGISTERED BOND OF SERIES O WITHOUT COUPONS

No. OR___                                                             $_______

                             ARTESIAN WATER COMPANY, INC.

                         FIRST MORTGAGE BONDS, SERIES O, 8.17%

                               DUE DECEMBER 29, 2020

     ARTESIAN WATER COMPANY, INC., a corporation organized and existing
under the laws of the State of Delaware (hereinafter called the "COMPANY,"
which term shall include any successor corporation as defined in the
Indenture hereinafter referred to), for value received, hereby promises to
pay to ____________ or registered assigns, on the twenty-ninth day of
December, 2020, the sum of ________. Dollars in coin or currency of the
United States of America that at the time of payment is legal tender for the
payment of public and private debts, and to pay in like coin or currency
interest thereon to the registered owner hereof, from the date hereof, at the
rate of eight and seventeen-hundredths percent (8.17%) per annum (computed
on the basis of a 360-day year of twelve 30-day months), monthly, on the
twenty-ninth day of each month in each year beginning January 29, 2001
(PROVIDED that the monthly payment for any February having only twenty-eight
days shall be payable on the twenty-eighth day of such month), until the
Company's obligation with respect to the payment of such principal shall be
discharged. Overdue installments of principal or interest shall bear interest
at the rate of nine and seventeen-hundredths percent (9.17%) per annum.
Unless otherwise agreed to in writing by the Company and the holders of the
Bonds of Series O, payments of principal, premium (if any) and interest are
to be made at the principal office of the Trustee in the City of Wilmington,
Delaware, or, if there be a successor trustee, at its principal office.

     This bond is one of an authorized issue of bonds of the Company known as
its First Mortgage Bonds (herein called the "BONDS"), not limited in
aggregate principal amount except as provided in the Indenture hereinafter
mentioned, all issued and to be issued in one or more series under and equally
secured by an Indenture of Mortgage (herein called the "INDENTURE"), dated as
of July 1, 1961, executed by Artesian Resources Corporation (then named
Artesian Water Company), a corporation organized and existing under the laws
of the State of Delaware

                                       -9-

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(hereinafter called the "CORPORATION") and by Wilmington Trust Company, as
trustee (herein called the "TRUSTEE"). The indenture has heretofore been
supplemented by fifteen supplemental indentures, including an Eighth
Supplemental Indenture dated as of July 1, 1984, pursuant to which the Company
assumed all of the obligations of the Corporation under the Indenture and by a
Fifteenth Supplemental Indenture dated as of December 1, 2000 (hereinafter
called the "FIFTEENTH SUPPLEMENTAL INDENTURE"). Reference is hereby made to such
Indenture as so supplemented for a description of the property mortgaged and
pledged, the nature and extent of the security, the terms and conditions upon
which the Bonds are and are to be issued and secured and the rights of the
holders or registered owners thereof and of the Trustee in respect of such
security. As provided in the Indenture, said Bonds may be issued in one or more
series for various principal sums, may bear different dates and mature at
different times, may bear interest at different rates and may otherwise vary as
in the Indenture provided or permitted. This bond is one of the bonds described
in the Fifteenth Supplemental Indenture and designated therein as "FIRST
MORTGAGE BONDS, SERIES O, 8.17%" (hereinafter called the "BONDS OF SERIES O").
To the extent permitted by, and as provided in, the Indenture, modifications or
alterations of the Indenture, or of an indenture supplemental thereto, and of
the rights and obligations of the Company and of the rights of the holders of
the Bonds and coupons issued and to be issued hereunder, may be made with the
consent of the Company by an affirmative vote of the holders of not less than
sixty-six, and two-thirds percent (66-2/3%) in principal amount of the Bonds
then outstanding under the Indenture and entitled to vote and affected by such
modification or alteration, at a meeting of bondholders called and held as
provided in the Indenture, and, in case one or more but less then all of the
series of the Bonds then outstanding under the Indenture and entitled to vote
would be affected by the modification or alteration differently from or without
affecting the Bonds of any of the other series, by an affirmative vote of the
holders of not less than sixty-six and two-thirds percent (66 2/3%) in principal
amount of the Bonds of each series so affected, or in either case by the written
consent of the holders of such percentages of Bonds; PROVIDED, HOWEVER, that no
such modification or alteration may be made that would extend the maturity of,
or reduce the principal amount of, or reduce the rate of, or extend the time of
payment of interest on, or reduce any premium payable upon any redemption of,
this bond, or modify the terms of payment of principal or interest, or reduce
the percentage required for the taking of any such action, without the express
consent of the holder hereof.

         No reference herein to the Indenture or to any indenture supplemental
thereto and no provision of this bond or of the Indenture or of any indenture
supplemental thereto shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium (if any) and
interest on this bond at the time and place and at the rate and in the coin or
currency herein prescribed.

         The Company may, at its option, upon notice as provided below,
redeem at any time all, or from time to time any part of, the Bonds of Series
O, in an amount not less than 5% of the aggregate principal amount of the
Bonds of Series O then outstanding in the case of a partial redemption, at a
redemption price equal to the principal amount thereof to be redeemed, plus
the interest accrued thereon to the date fixed for redemption, plus a premium
equal to the Make-Whole Amount determined for the redemption date with
respect to such principal amount. The Company will furnish to the Trustee and
to each holder of the Bonds of Series O written notice of each such optional
redemption not less than 30 days and not more than 60 days prior to the

                                      -10-

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date fixed for redemption. Each such notice shall specify such date, the
aggregate principal amount of the Bonds of Series O to be redeemed on such
date, the principal amount of each of the Bonds of Series O held by such
holder to be redeemed on such date (determined in accordance with Section 1.2
of the Fifteenth Supplemental Indenture) and the interest to be paid on the
redemption date with respect to such principal amount being redeemed, and
shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such redemption
(calculated as if the date of such notice were the date of redemption),
setting forth the details of such computation. Two Business Days prior to
such redemption, the Company shall deliver to each holder of the Bonds of
Series O), a certificate of a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the date of redemption.

         As used herein, the term "MAKE-WHOLE AMOUNT" means, with respect to
any Bond of Series O, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Bond over the amount of such Called Principal,
PROVIDED that the Make-Whole Amount may in no event be less than zero. For
the purposes of determining the Make-Whole Amount, the following terms have
the following meanings:

                  "CALLED PRINCIPAL" means, with respect to any Bond of Series
         O, the principal of such Bond that is to be redeemed or has become or
         is declared to be immediately due and payable, as the context requires.

                  "DISCOUNTED VALUE" means, with respect to the Called Principal
         of any Bonds of Series O, the amount obtained by discounting all
         Remaining Scheduled Payments with respect to such Called Principal from
         their respective scheduled due dates to the Settlement Date with
         respect to such Called Principal, in accordance with accepted financial
         practice and at a discount factor (applied on the same periodic basis
         as that on which interest on the Bonds of Series O is payable) equal to
         the Reinvestment Yield with respect to such Called Principal.

                  "REINVESTMENT YIELD" means, with respect to the Called
         Principal of any Bond of Series O, 0.50% over the yield to maturity
         implied by (i) the yields reported, as of 10:00 A.M. (New York City
         time) on the second Business Day preceding the Settlement Date with
         respect to such Called Principal, on the display designated as "Page
         PX1" of the Bloomberg Financial Markets Services Screen (or if not
         available, any other national recognized trading screen reporting
         on-in trading in the U.S. Treasury securities) for actively traded
         U.S. Treasury securities having a maturity equal to the Remaining
         Life to Maturity of such Called Principal as of such Settlement
         Date, or (ii) if such yields are not reported as of such time or the
         yields reported as of such time are not ascertainable, the Treasury
         Constant Maturity Series Yields reported, for the latest day for
         which such yields have been so reported as of the second Business
         Day preceding the Settlement Date with respect to such Called
         Principal, in Federal Reserve Statistical Release H.15 (519) (or any
         comparable successor publication) for actively traded U.S. Treasury
         securities having a constant maturity equal to the Remaining Life to
         Maturity of such Called Principal as of such Settlement Date. Such
         implied yield will be determined, if

                                      -11-

<Page>

         necessary, by (a) converting U.S. Treasury bill quotations to
         bond-equivalent yields in accordance with accepted financial
         practice and (b) interpolating linearly between (1) the actively traded
         U.S. Treasury security with the maturity closest to and greater than
         the Remaining Life to Maturity and (2) the actively traded U.S.
         Treasury security with the maturity closest to and less than the
         Remaining Life to Maturity.

                  "REMAINING LIFE TO MATURITY" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) that will elapse between the Settlement Date with respect to such
         Called Principal and the scheduled maturity date of the Bonds of Series
         O.

                  "REMAINING SCHEDULED PAYMENTS" means, with respect to the
         Called Principal of any Bond of Series O, all payments of such Called
         Principal and interest thereon that would be due after the Settlement
         Date with respect to such Called Principal if no payment of such Called
         Principal were made prior to its scheduled due date, PROVIDED that if
         such Settlement Date is not a date on which interest payments are due
         to be made under the terms of the Bonds of Series O, then the amount of
         the next succeeding scheduled interest payment will be reduced by the
         amount of interest accrued to such Settlement Date and required to be
         paid on such Settlement Date.

                  "SETTLEMENT DATE" means, with respect to the Called Principal
         of any Bond of Series O, the date on which such Called Principal is to
         be redeemed or has become or is declared to be immediately due and
         payable, as the context requires.

         In the event that either (i) all or substantially all the property of
the Company at the time subject to the lien of the Indenture as a first mortgage
lien thereon or (ii) all or substantially all the property of the Company at the
time subject to the lien of the Indenture as a first mortgage lien thereon that
is used or useful in connection with the business of the Company as a water
company or as a water utility, shall be released from the lien of the Indenture
pursuant to the provisions of Section 6.03 or Section 6.06 thereof, as provided
in Section 6.07 of the Indenture all Bonds then outstanding including Bonds of
Series O are to be redeemed. In the event such release shall be under the
provisions of Section 6.03 of the Indenture, the Bonds of Series O shall be
redeemable at a redemption price equal to the principal amount thereof, together
with the Make-Whole Amount determined as provided in the following paragraph and
interest accrued to the date fixed for redemption. In the event such release
shall be under the provisions of Section 6.06 of the Indenture, the bonds of
Series O shall be redeemable at the principal amount thereof, together with
interest accrued to the date fixed for redemption, in the manner and upon the
terms provided in the Indenture. Except for a redemption resulting from a
release under the provisions of Section 6.06 of the Indenture as described in
the immediately preceding paragraph, any other redemption of the Bonds of Series
O required under the Indenture shall be at a redemption price equal to the
principal amount thereof to be redeemed, together with interest accrued thereon
to the date fixed for redemption plus a premium equal to the Make-Whole Amount
determined as provided above two (2) Business Days prior to the date fixed for
redemption. The Company will furnish notice to the Trustee and to each holder of
the Bonds of Series O in the same manner set forth above in the case of an
optional redemption.

                                      -12-

<Page>

     The principal of this bond may be declared or may become due prior to
its maturity date, in the manner and with the effect and subject to the
conditions provided in the Indenture, upon the occurrence of an Event of
Default as in the Indenture provided, and upon the principal of this bond
becoming so due, a premium shall be payable to the holder of this bond as
liquidated damages equal to the Make-Whole Amount determined as set forth
above as if this bond were being redeemed on the date the principal on this
bond shall become so due.

     This bond is transferable by the registered owner hereof, in person or
by duly authorized attorney, on books of the Company to be kept for that
purpose at the principal office of the Trustee in the City of Wilmington,
Delaware, or, if there be a successor trustee, at its principal office, upon
surrender hereof at such office for cancellation and upon presentation of a
written instrument of transfer duly executed, and thereupon the Company shall
issue in the name of the transferee or transferees, and the Trustee shall
authenticate and deliver, a new registered Bond or Bonds of Series O, in an
authorized denomination or denominations, of a like aggregate principal
amount; and the registered owner of any registered Bond or Bonds of Series O
may surrender the same as aforesaid at said office in exchange for a like
aggregate principal amount of bonds of like form of other authorized
denominations, all upon payment of the charges and subject to the terms and
conditions specified in the Indenture.

     The Company and the Trustee may deem and treat the person in whose name
this bond shall at the time be registered on the books of the Company as the
absolute owner hereof for all purposes whatsoever (except as otherwise
provided in Article XIV of the Indenture with respect to bondholders'
meetings and consent); and payment of or on account of the principal of,
premium (if any) and interest on this bond shall be made only to or upon the
order in writing of such registered owner hereof; and all such payments shall
be valid and effectual to satisfy and discharge the liability upon this bond
to the extent of the sum or sums so paid.

     No recourse under or upon any obligation, covenant or agreement
contained in the Indenture or in any indenture supplemental thereto, or in
any Bond or coupon thereby secured, or because of any indebtedness thereby
secured, shall be had against any incorporator or against any past, present
or future stockholder, officer or director, as such, of the Company or of any
successor corporation, either directly or through the Company or any
successor corporation under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal or
equitable proceeding or otherwise; it being expressly agreed and understood
that the Indenture, any indenture supplemental thereto and the obligations
thereby secured, are solely corporate obligations, and that no personal
liability whatever shall attach to, or be incurred by, such incorporators,
stockholders, officers or directors, as such, of the Company or of any
successor corporation or any of them, because of the incurring of the
indebtedness thereby authorized, or under or by reason of any of the
obligations, covenants or agreements, expressed or implied, contained in the
Indenture or in any indenture supplemental thereto or in any of the Bonds or
coupons thereby secured.

     This bond shall not be entitled to any benefit under the Indenture or
any indenture supplemental thereto, and shall not become valid or obligatory
for any purpose until Wilmington Trust Company, as Trustee under the
Indenture, or a successor trustee thereunder, shall have signed the form of
authentication certificate endorsed hereon.

                                     -13-

<Page>

     IN WITNESS WHEREOF, ARTESIAN WATER COMPANY, INC., has caused this bond
to be signed in its name by its President or a Vice President and its
corporate seal (or a facsimile thereof) to be hereto affixed and attested by
its Secretary or an Assistant Secretary, and this bond to be dated
____________, 2000.

                                       ARTESIAN WATER COMPANY, INC.

                                       By:____________________________________
                                                        President

Attest:

____________________________________
             Secretary

                 FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE
                            FOR BONDS OF SERIES O

                     TRUSTEE'S AUTHENTICATION CERTIFICATE

     This bond is one of the bonds, of the series designated therein,
described in the within-mentioned Indenture.

                                       WILMINGTON TRUST COMPANY, as Trustee,

                                       By:____________________________________
                                                   Authorized Officer

     SECTION 1.4  CHANGE IN CONTROL.  The Company hereby covenants and agrees
that, without the prior written consent of the holders of not less than
sixty-six and two-thirds percent (66-2/3%) in principal amount of the Bonds
of Series O then outstanding, so long as any of the Bonds of Series O are
outstanding:

     (a)  NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT.  The Company will,
within five Business Days after any Responsible Officer has knowledge of the
occurrence of any Change in Control or Control Event, give written notice of
such Change in Control or Control Event to each holder of Bonds of Series O.
In the case that a Change in Control has occurred, such notice shall contain
and constitute an offer to redeem Bonds of Series O as described in
subparagraph (b) of this Section 1.4 and shall be accompanied by the
certificate described in subparagraph (e) of this Section 1.4.

                                     -14-

<Page>

     (b)  OFFER TO REDEEM BONDS OF SERIES O.  The offer to redeem Bonds of
Series O contemplated by subparagraph (a) of this Section 1.4 shall be an
offer to redeem, in accordance with and subject to this Section 1.4(b), all,
but not less than all, the Bonds of Series O held by each holder on a date
specified in such offer (the "PROPOSED REDEMPTION DATE") that is not less
than 30 days and not more than 120 days after the date of such offer (if the
Proposed Redemption Date shall not be specified in such offer, the Proposed
Redemption Date shall be the 45th day after the date of such offer).

     (c)  ACCEPTANCE.  A holder of Bonds of Series O may accept the offer to
redeem made pursuant to this Section 1.4 by causing a notice of such
acceptance to be delivered to the Company at least 15 days prior to the
Proposed Redemption Date. A failure by a holder of Bonds of Series O to
respond to an offer to redeem made pursuant to this Section 1.4 shall be
deemed to constitute a rejection of such offer by such holder.

     (d)  REDEMPTION.  Redemption of the Bonds of Series O to be redeem
pursuant to this Section 1.4 shall be at 100% of the principal amount of
such Bonds of Series O together with interest on such Bonds accrued to the
date of redemption. The Bonds of Series O shall be made on the Proposed
Redemption Date.

     (e)  OFFICER'S CERTIFICATE.  Each offer to redeem the Bonds of Series O
pursuant to this Section 1.4 shall be accompanied by a certificate, executed
by a Senior Financial Officer of the Company and dated the date of such
offer, specifying: (i) the Proposed Redemption Date; (ii) that such offer is
made pursuant to this Section 1.4; (iii) the principal amount of each such
Bond offered to be redeemed; (iv) the interest that would be due on each such
Bond offered to be redeemed, accrued to the Proposed Redemption Date; (iv)
that the conditions of this Section 1.4 have been fulfilled; and (vi) in
reasonable detail, the nature and date of the Change in Control.

     (f)  "CHANGE IN CONTROL" DEFINED.  "CHANGE IN CONTROL" means (i) the
failure of the Taylor Family to hold in the aggregate at least 50% of the
shares of the Corporation's Class B common stock outstanding or (ii) the
failure of the Corporation to own at least 51% of the Voting Stock of the
Company where the term "Voting Stock" shall mean securities of any class or
classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).

     (g)  "CONTROL EVENT" DEFINED.  "CONTROL EVENT" means:

          (i)     the execution by the Corporation or by the Company or any of
     its Subsidiaries or Affiliates of any agreement or letter of intent with
     respect to any proposed transaction or event or series of transactions or
     events which, individually or in the aggregate, may reasonably be expected
     to result in a Change in Control,

          (ii)    the execution of any written agreement which, when fully
     performed by the parties thereto, would result in a Change in Control, or

          (iii)   the making of any written offer by any person (as such term
     is used in section 13(d) and section 14(d)(2) of the Exchange Act as in
     effect on the Closing Date)

                                     -15-

<Page>

      or related persons constituting a group (as such term is used in Rule
      13d-5 under the Exchange Act as in effect on the Closing Date) to the
      holders of the common stock of the Corporation or the Company, which
      offer, if accepted by the requisite number of holders, would result in
      a Change in Control.

      (h)   "TAYLOR FAMILY" DEFINED.  "TAYLOR FAMILY" means Hilda Taylor,
Dian C. Taylor, William H. Taylor, II and John Eisenbrey, Jr., their heirs
or any trusts for the exclusive benefit of such persons and their
siblings, spouses and lineal descendants.

      SECTION 1.5. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything contained herein
or in the Bonds to the contrary notwithstanding, any payment of principal of or
Make-Whole Amount or interest on any Bond that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day.

                                    ARTICLE II

                             COVENANTS OF THE COMPANY

      The Company hereby covenants and agrees that, without the prior written
consent of the holders of not less than sixty-six and two-thirds percent
(66-2/3%) in principal amount of the Bonds of Series O then outstanding, so long
as any of the Bonds of Series O are outstanding:

      SECTION 2.1. COMPLIANCE WITH LAW. The Company will and will cause each of
its Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

      SECTION 2.2. COMPLIANCE WITH AGREEMENTS. The Company will and will cause
each of its Subsidiaries to comply with all agreements, indentures, mortgages
and other instruments to which each of them is a party, in each case to the
extent necessary to ensure that noncompliance with such agreements, indentures,
mortgages and other instruments could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

      SECTION 2.3. SERIES O DIVIDEND RESTRICTION. No cash dividends shall be
declared or paid, directly or indirectly, on any shares of common stock of the
Company, nor shall any shares of common stock of the Company be purchased,
retired, or otherwise acquired by the Company, if immediately after such
declaration, payment or acquisition, the Aggregate Capital of the Company and
its Subsidiaries, on a consolidated basis, would be less than $30,500,000. In
determining the Aggregate Capital of the Company and its Subsidiaries for the
purpose of this

                                     -16-
<Page>

Section 2.3, any write-up of assets, or write-down or write-off
of the excess over original cost of property made on the books of the Company
subsequent to December 31, 1999 shall be disregarded.

      SECTION 2.4. RESTRICTIONS ON FUNDED INDEBTEDNESS. The Company shall not
incur, assume, guarantee or in any other manner become liable, with respect to
any Funded Indebtedness, or permit any Subsidiary to incur any Funded
Indebtedness, if immediately thereafter, the total amount of Funded Indebtedness
then outstanding, would exceed 66-2/3% of the Total Permanent Capital, as
hereinafter defined, of the Company and its consolidated Subsidiaries.

      The term "FUNDED INDEBTEDNESS" shall mean all bonds, debentures and other
evidence of Indebtedness of the Company and its Subsidiaries, secured or
unsecured, for money borrowed, but excluding (i) Indebtedness maturing on demand
or within one year from the date incurred and not renewable or extendable at the
option of the debtor, (ii) Indebtedness of the Company to any Wholly-Owned
Subsidiary and any Indebtedness of a Wholly-Owned Subsidiary to the Company, and
(iii) Indebtedness that has been called for redemption and for the payment of
which monies have been irrevocably deposited with a trustee. Funded Indebtedness
shall include the portion of bonds, notes or other Indebtedness maturing, or
required to be redeemed within one year from the date as of which Funded
Indebtedness is being determined.

      The term "TOTAL PERMANENT CAPITAL" shall mean, with respect to the Company
and its Subsidiaries: the sum of (i) the par or stated value of all outstanding
capital stock of the Company and all paid-in premiums thereon; (ii) all surplus,
including capital and earned surplus but not including surplus from any
revaluation of the Company's assets after December 31, 1996; (iii) the minority
interest (if any) in consolidated Subsidiaries, but not including any earned
surplus of Subsidiaries prior to the date of acquisition of such Subsidiaries;
and (iv) Funded Indebtedness of the Company and such Subsidiaries.

      In all other respects, the terms Funded Indebtedness and Total Permanent
Capital shall be computed as they would be for a consolidated balance sheet of
the Company and its Subsidiaries on the applicable date, excluding all
intercompany items, and generally in accordance with generally accepted
accounting principles; PROVIDED that for the purpose of computations under this
Section 2.4, capitalized lease obligations shall be excluded from Funded
Indebtedness.

      SECTION 2.5. ADDITIONAL RESTRICTIONS ON FUNDED INDEBTEDNESS. In
addition to the circumstances under which a Net Earnings Certificate is
required to be delivered to the Trustee under the terms of Sections 3.08 or
3.09 of the Original Indenture in connection with the issuance of Bonds by
the Company pursuant to either such Section, the Company shall not incur,
assume, guaranty or in any other manner become liable with respect to any
Funded Indebtedness unless the ratio of (i) Net Earnings of the Company for
the most recently ended period of four consecutive fiscal quarters of the
Company to (ii) the Pro Forma Interest Expense of the Company for such period
is at least equal to or greater than 2.00 to 1.00.

                                     -17-
<Page>

      SECTION 2.6. RESTRICTIONS ON GUARANTIES. The Company will not guarantee,
assume, or otherwise become obligated or liable with respect to the Indebtedness
or other obligations of any Person other than in the ordinary course of
business.

      SECTION 2.7. TRANSACTIONS WITH AFFILIATES. The Company will not, and
will not permit any Subsidiary to, engage in any Material group of related
transactions (including, without limitation, the purchase, sale to or
exchange of properties with, or the rendering of any service) with any
Affiliate except in the ordinary course and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary in all
material respects as terms that could be obtained at the time in a comparable
arms' length transaction with a Person not an Affiliate. For purposes of this
Section 2.7, an "AFFILIATE" of any corporation shall mean any Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with such corporation; and a Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract
or otherwise.

      SECTION 2.8. MERGER, CONSOLIDATION, ETC. The Company will not consolidate
with or merge with or into any other corporation or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to any Person, EXCEPT the Company may merge with another
corporation if (a) the Company is the survivor of such merger and (b)
immediately after giving effect to such merger (i) no Default or Event of
Default would exist and (ii) the Company would be permitted by the provisions of
Sections 2.4 and 2.5 hereof to incur at least $1.00 of additional Funded
Indebtedness owing to a Person other than a Subsidiary of the successor
corporation.

      SECTION 2.9. SALE OF ASSETS. The Company will not sell, transfer, lease,
enter into any contract for the sale, transfer, lease of, or otherwise dispose
of any of its assets, except in the ordinary course of business.

      SECTION 2.10.     INVESTMENTS.  The Company will not, and will not
permit any Subsidiary to, make any Investments, other than:

            (a)   Investments of the Company existing as of the Closing
      Date;

            (b) Investments in commercial paper maturing not in excess of twelve
      months from the date of issuance and rated "A-1" or better by Standard &
      Poor's Ratings Group ("S&P") or "P-1" or better by Moody's Investors
      Service, Inc. ("MOODY'S") on such date;

            (c) Investments in direct obligations of the United States of
      America or any agency or instrumentality of the United States of America,
      the payment or guarantee of which constitutes a full faith and credit
      obligation of the United States of America, in either case, maturing not
      in excess of twelve months from the date of acquisition thereof;

                                     -18-
<Page>

          (d) Investments in repurchase agreements of any bank or trust
     company incorporated under the laws of the United States or any state
     thereof and fully secured by a pledge of obligations issued or fully and
     unconditionally guaranteed by the United States government maturing not
     in excess of twelve months from the date of acquisition thereof;

          (e) Investments in certificates of deposit maturing not in excess
     of twelve months from the date of issuance thereof, from North American
     commercial banks rated A1 or better by S&P and A+ or better by Moody's;

          (f) Investments in stock or other voting securities not described
     in the foregoing clauses (a) through (e) which are issued by
     corporations or entities engaged in the water and wastewater utility
     business and that are incorporated or organized under the laws of the
     United States or any state thereof; PROVIDED that prior to or as a
     result of such Investment the Company holds not less than 75% of the
     voting securities of such entity; and

          (g) Investments of the Company not described in the foregoing
     clauses (a) through (f) and issued by corporations or entities
     incorporated or organized under the laws of the United States or any
     state thereof; PROVIDED that the aggregate amount of all such
     Investments shall not at any time exceed $1,000,000; and

     In valuing any Investments for the purpose of applying the limitations
set forth in this Section 2.10, such Investments shall be taken at the
original cost thereof, without allowance for any subsequent write-offs or
appreciation or depreciation therein, but less any amount repaid or recovered
on account of capital or principal.

                                  ARTICLE III

                               EVENTS OF DEFAULT

     SECTION 3.1. AMENDMENT OF EVENTS OF DEFAULT. Clauses (a) through (g) of
Section 8.01 containing the Events of Default under the Indenture are each
hereby amended and restated as follows and three additional Events of Default
are added as clauses (h), (i) and (j) to Section 8.01 and read as follows:

          (a) default shall be made in the payment of the principal of or any
     premium which may be due and payable on any Bond hereby secured, when
     the same shall become payable, whether at maturity or otherwise; or

          (b) default shall be made in the payment of any interest on any
     Bond hereby secured, and such default shall continue for five (5)
     Business Days; or

                                     -19-

<Page>

          (c) default shall be made in the payment, discharge or satisfaction
     of any sinking, improvement, maintenance, renewal, replacement,
     depreciation, purchase or similar fund and such default shall continue
     for thirty (30) days; or

          (d) default shall be made by the Company in the due observance or
     performance of any of the covenants, agreements or conditions on its
     part in this Indenture or in any supplemental indenture contained and
     such default shall continue for fifteen (15) Business Days after written
     notice to the Company shall have been delivered by the Trustee electing
     to treat such event as an Event of Default, which notice may be given
     by the Trustee in its discretion, and shall be given at the written
     request of the holders or registered owners of not less than a majority
     in principal amount of the Bonds then outstanding; or

          (e) the Company or any Subsidiary shall be adjudicated a bankrupt,
     or shall institute proceedings for voluntary bankruptcy, or shall make
     an assignment for the benefit of its creditors; or

          (f) the Company or any Subsidiary shall admit in writing its
     inability to pay its debts generally as they mature, or shall institute
     proceedings for reorganization under any Federal bankruptcy law or other
     similar law, and the Trustee shall give written notice to the Company
     electing to treat such event as an Event of Default, which notice may
     be given by the Trustee, in its discretion, and shall be given at the
     written request of the holders or registered owners of not less than
     ten percent (10%) in principal amount of the bonds hereby secured and
     then outstanding; or

          (g) a receiver, trustee or custodian of the Company or any
     Subsidiary, or of the Mortgaged Property as, or substantially as, an
     entirety, shall be appointed, or a decree or order shall be entered
     equivalent to the determination that proceedings for reorganization,
     arrangement, adjustment, composition, liquidation, dissolution or any
     similar relief with respect to the Company or Subsidiary, as the case
     may be, have been properly instituted, otherwise than by the Company or
     Subsidiary, as the case may be, under any present or future Federal
     bankruptcy law or other similar State or Federal law, and such
     appointment, decree or order shall not be vacated within sixty (60)
     days, or such longer period as may be required to permit the Company or
     Subsidiary, as the case may be, to complete the prosecution of any appeal
     from such appointment, decree or order which it shall at the time be
     prosecuting in good faith and with due diligence, after written notice
     to the Company by the Trustee electing to treat such event as an Event
     of Default, which notice may be given by the Trustee in its discretion,
     and shall be given at the written request of the holders or registered
     owners of not less than a majority in principal amount of the Bonds
     hereby secured and then outstanding; or

          (h) any representation or warranty made in writing by or on behalf
     of the Company or by any officer of the Company in any supplemental
     indenture, or any bond purchase agreement entered into by the Company in
     connection with the sale of any Bonds or in any other writing furnished
     in connection with the transactions contemplated

                                     -20-

<Page>

     in connection therewith proves to have been false or incorrect in any
     Material respect on the date as of which made; or

          (i) (A) the Company shall be in default (as principal or as
     guarantor or other surety) in the payment of any principal of or premium
     or make-whole amount or interest on any Indebtedness that is
     outstanding in an aggregate principal amount of at least $500,000 beyond
     any period of grace provided with respect thereto, or (B) the Company
     shall be in default in the performance of or compliance with any term of
     any Indebtedness in an aggregate outstanding principal amount of at
     least $500,000 or of any mortgage, indenture or other agreement relating
     to any Indebtedness or any other condition exists, and as a consequence
     of such default or condition such Indebtedness has become, or has been
     declared (or one or more Persons are entitled to declare such
     Indebtedness to be), due and payable before its stated maturity or
     before its regularly scheduled dates of payment; or

          (j) a final judgment or judgments for the payment of money
     aggregating in excess of $500,000 are rendered against one or more of
     the Company and its Subsidiaries and which judgments are not, within 45
     days after entry thereof, bonded, paid, satisfied, discharged or stayed
     pending appeal, or are not paid, satisfied or otherwise discharged
     within 45 days after the expiration of such stay; or

          (k) if (i) any Plan shall fail to satisfy the minimum funding
     standards of ERISA or the Code for any plan year or part thereof or a
     waiver of such standards or extension of any amortization period is
     sought or granted under section 412 of the Code, (ii) a notice of intent
     to terminate any Plan shall have been or is reasonably expected to be
     filed with the PBGC or the PBGC shall have instituted proceedings under
     ERISA section 4042 to terminate or appoint a trustee to administer any
     Plan or the PBGC shall have notified the Company or any ERISA Affiliate
     that a Plan may become a subject of any such proceedings, (iii) the
     aggregate "amount of unfunded benefit liabilities" (within the meaning
     of section 4001(a)(18) of ERISA) under all Plans, determined in
     accordance with Title IV of ERISA, shall exceed $500,000, (iv) the
     Company or any ERISA Affiliate shall have incurred or is reasonably
     expected to incur any liability pursuant to Title I or IV of ERISA or
     the penalty or excise tax provisions of the Code relating to employee
     benefit plans, (v) the Company or any ERISA Affiliate withdraws from any
     Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or
     amends any employee welfare benefit plan that provides post-employment
     welfare benefits in a manner that would increase the liability of the
     Company or any Subsidiary thereunder; and any such event or events
     described in clauses (i) through (vi) above, either individually or
     together with any other such event or events, could reasonably be
     expected to have a Material Adverse Effect.

     As used in Section 3(k), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.

                                     -21-

<Page>

                                  ARTICLE IV

                                 DEFINITIONS

     The following terms shall have the following meanings as used herein:

     "AFFILIATE" shall have the meaning set forth in Section 2.7.

     "AGGREGATE CAPITAL" shall mean, with respect to the Company and its
Subsidiaries, on a consolidated basis, the sum attributable to its common
stock, surplus and retained earnings.

     "BOND PURCHASE AGREEMENT" shall mean that Bond Purchase Agreement dated
as of December 1, 2000 between the Company and the Purchaser named therein.

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in Delaware or New York are required or
authorized to be closed.

     "CLOSING DATE" means the date of execution and delivery by the Company
of the Fifteenth Supplemental Indenture.

     "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

     "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.

     "ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

     "GUARANTY" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any Indebtedness, or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

          (a) to purchase such Indebtedness or obligation or any property
     constituting security therefor;

                                      -22-

<Page>

          (b) to advance or supply funds (i) for the purchase or payment of
     such Indebtedness or obligation, or (ii) to maintain any working capital
     or other balance sheet condition or any income statement condition of
     any other Person or otherwise to advance or make available funds for the
     purchase or payment of such Indebtedness or obligation;

          (c) to lease properties or to purchase properties or services
     primarily for the purpose of assuring the owner of such Indebtedness or
     obligation of the ability of any other Person to make payment of the
     Indebtedness or obligation; or

          (d) otherwise to assure the owner of such Indebtedness or
     obligation against loss in respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor
under any Guaranty, the Indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.

     "INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,

          (a) its liabilities for borrowed money;

          (b) its liabilities for the deferred purchase price of property
     acquired by such Person (excluding accounts payable arising in the
     ordinary course of business but including all liabilities created or
     arising under any conditional sale or other title retention agreement
     with respect to any such property);

          (c) all liabilities appearing on its balance sheet in accordance
     with GAAP in respect of capitalized lease obligations;

          (d) all liabilities for borrowed money secured by any lien with
     respect to any property owned by such Person (whether or not it has
     assumed or otherwise become liable for such liabilities); and

          (e) any Guaranty of such Person with respect to liabilities of a
     type described in any of clauses (a) through (d) hereof.

     "INTEREST EXPENSE" shall mean, for any period of four fiscal quarters,
the sum of (i) all interest for such period in respect of Indebtedness of the
Company (including interest on capitalized lease obligations) and (ii) all
debt discount and expense amortized for such period.

     "INVESTMENT" means any investment made in cash or by delivery of
property, by the Company or any of its Subsidiaries (i) in any Person,
whether by acquisition of stock, Indebtedness or other obligation or security
or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in
any property.

     "MATERIAL" shall mean material in relation to the business, operations,
affairs, financial condition, assets, or properties of the Company and its
Subsidiaries taken as a whole.

                                      -23-

<Page>

     "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the business, operations, affairs, financial condition, assets or properties
of the Company and its Subsidiaries taken as a whole, or (b) the ability of
the Company to perform its obligations under this Agreement, the Bond
Purchase Agreement and the Bonds, or (c) the validity or enforceability of
this Agreement, the Bond Purchase Agreement or the Bonds.

     "MULTIEMPLOYER PLAN" shall mean any Plan this is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).

     "NET EARNINGS" shall mean, for any period of four fiscal quarters, an
amount determined as follows: the sum of the operating revenues and net
non-operating revenues for such period (excluding all profits realized or
losses sustained from the sale or other disposition of capital assets or from
the acquisition, sale or other disposition of securities or stock of the
Company) less all operating expenses, but not including in operating expenses
interest charges, amortization, payments to any sinking, purchase or
analogous fund for the retirement of bonds or stock, or any income or excess
profits taxes.

     "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.

     "PERSON" shall mean, an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

     "PLAN" shall mean "employee benefit plan" (as defined in section 3(3)
of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may
have any liability.

     "PRO FORMA INTEREST EXPENSE" for any period of four fiscal quarters
means the Interest Expense for such period adjusted on a pro forma basis for
purposes of Section 2.5 to include Interest Expenses on Indebtedness incurred
prior to or to be incurred on the date of determination and to exclude
Interest Expense on Indebtedness to be retired prior to or concurrently with
the issuance of such Indebtedness.

     "RESPONSIBLE OFFICER" shall mean any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of
the relevant portion of this Agreement.

     "SENIOR FINANCIAL OFFICER" shall mean the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.

     "SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons

                                      -24-

<Page>

performing similar functions) of such entity, and any partnership or joint
venture if more than a 50% interest in the profits or capital thereof is
owned by such Person or one or more of its Subsidiaries or such Person and
one or more of its Subsidiaries (unless such partnership can and does
ordinarily take major business actions without the prior approval of such
Person or one or more of its Subsidiaries). Unless the context otherwise
clearly requires, any reference to a "Subsidiary" is a reference to a
Subsidiary of the Company.

     "WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interests (except directors' qualifying
shares) and voting interests of which are owned by any one or more of the
Company and the Company's other Wholly-Owned Subsidiaries at such time.

                                   ARTICLE V

                                  THE TRUSTEE

     SECTION 5.1.  TRUSTEE ACCEPTANCE.  The Trustee hereby accepts the trust
hereby declared and provided and agrees to perform the same upon the terms
set forth in the Original Indenture as further supplemented by this Fifteenth
Supplemental Indenture and upon the additional terms and conditions that the
Trustee shall not be responsible in any manner whatsoever for or in respect
of the validity or sufficiency of this Fifteenth Supplemental Indenture or
the due execution hereof by the Company or for or in respect of the recitals
contained herein, all of which recitals are made by the Company solely.

                                   ARTICLE VI

                                 MISCELLANEOUS

     SECTION 6.1.  INCORPORATION OF ORIGINAL INDENTURE TERMS.  This
instrument shall be construed as an Indenture supplemental to the Original
Indenture, and shall form a part thereof. The Original Indenture as
heretofore supplemented by the First Supplemental Indenture, the Second
Supplemental Indenture, the Third Supplemental Indenture, the Fourth
Supplemental Indenture, the Fifth Supplemental Indenture, the Sixth
Supplemental Indenture, the Seventh Supplemental Indenture, the Eighth
Supplemental Indenture, the Ninth Supplemental Indenture, the Tenth
Supplemental Indenture, the Eleventh Supplemental Indenture, the Twelfth
Supplemental Indenture, the Thirteenth Supplemental Indenture, the Fourteenth
Supplemental Indenture and as further supplemented by this Fifteenth
Supplemental Indenture is hereby ratified and confirmed. Terms defined in the
Original Indenture that are used herein and not otherwise defined herein are
used as defined in the Original Indenture.

     SECTION 6.2.  COUNTERPARTS.  This Fifteenth Supplemental Indenture may
be simultaneously executed in any number of counterparts, each of which when
so executed shall be deemed to be an original; but such counterparts shall
together constitute but one and the same instrument.

                                     -25-

<Page>

     IN WITNESS WHEREOF, ARTESIAN WATER COMPANY, INC. has caused these
presents to be signed in its corporate name by its President or one of its
Vice Presidents and sealed with its corporate seal, attested by its Secretary
or one of its Assistant Secretaries, and WILMINGTON TRUST COMPANY, as Trustee
has caused these presents to be signed in its corporate name by one of its
Vice Presidents and sealed with its corporate seal, attested by one of its
Assistant Secretaries, all as of the day and year first above written.

                                       ARTESIAN WATER COMPANY, INC.

                                       By: /s/ Dian C. Taylor
                                          ------------------------------------
                                                  President

[SEAL]

Attest:

/s/ [ILLEGIBLE]
-------------------------------
         Secretary

                                       WILMINGTON TRUST COMPANY, as Trustee

                                       By: /s/ [ILLEGIBLE]
                                          ------------------------------------
                                            Asst Vice President

[SEAL]

Attest:

/s/ [ILLEGIBLE]
-------------------------------
   Assistant Secretary

                                     -26-

<Page>

STATE OF DELAWARE    )
                     )SS.:
COUNTY OF NEW CASTLE )

     On this, the 27th day of December, 2000, before me, the undersigned,
notary public, personally appeared Dian C. Taylor, who acknowledged to be the
President of Artesian Water Company, Inc., a corporation organized under the
laws of the State of Delaware, and that as such officer, being authorized to
do so, executed the foregoing Fifteenth Supplemental Indenture for the
purposes therein contained by signing the name of Artesian Water Company,
Inc. as President.

     IN WITNESS WHEREOF, I hereunto set my hand and official seal.

        /s/ James A. Straight, Notary Public
                               Wilmington, New Castle County
                               My Commission Expires 2/7/03

[SEAL]

<Page>

STATE OF DELAWARE    )
                     )SS.:
COUNTY OF NEW CASTLE )

     On this, the 27th day of December, 2000, before me, the undersigned,
notary public, personally appeared [ILLEGIBLE], who acknowledged to be a
Vice President of Wilmington Trust Company, a corporation organized under the
laws of the State of Delaware, and that as such officer, being authorized to
do so, executed the foregoing Fifteenth Supplemental Indenture for the
purposes therein contained by signing the name of Wilmington Trust Company
as Vice President.

     I certify that I am not an officer or director of said trust company.

     IN WITNESS WHEREOF, I hereunto set my hand and official seal.

        /s/ [ILLEGIBLE], Notary Public
                         Wilmington, New Castle County
                         My Commission Expires

[SEAL]

<Page>

                              ADDITIONAL LAND

The legal description for additional pieces or parcels of land is as follows:

                                 EXHIBIT A
                    (to Fifteenth Supplemental Indenture)

<Page>

                                 EXHIBIT A

                             NEW CASTLE COUNTY

                            St. George's Hundred

All of the following described real estate situate in St. George's Hundred,
New Castle County and the State of Delaware:

                                  Parcel 1

Tax Parcel No. (Part of) 13-014.00-001
(DAVIS PROPERTY/BOYDS CORNER ROAD)

     All that certain lot, piece of parcel of land, situate in St. George's
Hundred, New Castle County, State of Delaware, being a portion of lands of
Leola B. Davis as shown on the Record Minor Subdivision Plan, Property of
Leola B. Davis, as prepared by Woodin, Wentling and Associates, Inc., dated
October 13, 1995, last revised May 2, 1997, and recorded July 7, 1997 in the
Office of the Recorder of Deeds in and for New Castle County, State of
Delaware, in Microfilm Number 13245, said parcel of land being more
particularly bounded and described as follows, to whit:

     Being at an iron pit set at the easterly corner of the lands herein
being described, said corner being a new common corner with remaining lands
of Leola B. Davis and at a point in the division line with Parcel "A,"
subdivision of Augustine Creek (microfilm number 12521) and being further
located from the northwesterly side of the new right of way line of Boyds
Corner Road (a/k/a Pole Bridge Road), at variable widths, established by the
subdivision of Augustine Creek, along the common property line of lands nor
or formerly of George M. Davis, in part, remaining lands of Leola B. Davis,
in part, and Parcel "A", Augustine Creek, North 30 degrees 35 minutes 06
seconds West, 889.12 feet to the point and place of the Beginning; Thence
from said point and place of Beginning, along the new division line of lands
of Leola B. Davis, by the five (5) following described courses and distances:
(1) South 59 degrees 24 minutes 55 seconds West, 260.00 feet to a common
corner, (2) North 79 degrees 35 minutes 05 seconds West, 127.28 feet to a
common corner, (3) North 30 degrees 35 minutes 05 seconds West, 120.00 feet
to a common corner, (4) North 14 degrees 24 minutes 55 seconds East, 127.28
feet to a common corner, and (5) North 59 degrees 24 minutes 55 seconds East,
260.00 feet to an iron pin set in the division line with Lot #9, subdivision
of Augustine Creek; Thence along the division line with the Lot #9, in part,
Lot #8, in part and Parcel "A", in part all of the subdivision of Augustine
Creek, South 30 degrees 35 minutes 06 seconds East, 300.00 feet to the iron
pin set at the point and place of Beginning. Containing within said described
metes and bounds, 2.22 acres of land, be the same, more or less.

     Together with all rights, title and interest, legal and equitable, in
subterranean waters accessible from the herein described land, including but
not limited to the ownership, appropriation, use, diversion and extraction of
such subterranean waters.

<Page>

     Together with the 30' wide utilities and access easement as dated by the
Record Minor Subdivision Plan, Property of Leola B. Davis, in the Office of
the Recorder of Deeds in and for New Castle County, Delaware, at Microfilm
number 13245.

     Under and Subject to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware, including but not limited to the following:

     1.    Water Service agreement dated May 16, 1994, of record in the
           Office aforesaid at Deed Record Book 1868, Page 0121. Tax
           Parcel No. 13-014-00-001.

     2.    Restrictions established by the Record Minor Subdivision Plan,
           Property of Leola B. Davis of record in the Office aforesaid at
           Microfilm Number 13245.

     Being a part of the same lands and premises which Susie C. Stapleford
and Norman B. Stapleford, her husband, by Deed dated February 20, 1945, of
record in the Office of the Recorder of Deeds in and for New Castle County,
Delaware, at Deed Book V, Volume 44, Page 416, granted and conveyed into unto
William Harvey Davis and Leola Davis, his wife, in fee. And being so thereof
seized the said William Harvey Davis departed this life intestate on January
5, 1983, leaving his wife (Leola B. Davis), as surviving tenant by the
entireties to whom the property did pass by operation of law (See Register of
Willis File No. 87936).

                                   Parcel 2

Tax Parcel No. (Part of) 13-009.00-057
(LESTER PROPERTY/RICHLAND PARTNERSHIP)

ALL those two lots, pieces or parcels of land situate in St. Georges Hundred,
New Castle County, State of Delaware, and known as Lot 5A and Lot 5B, on the
plan of Richland Partnership, and of Record in the Office of the Recorder of
Deeds in and for New Castle County in Microfilm Number 13224, and being more
particularly bounded and described by Clifton L. Bakhsh, Jr., Inc.,
Middletown, Delaware, as follows to wit:

DESCRIPTION OF LOT 5A (TRACT I):

     BEGINNING at a point, said point being located the following eleven (11)
courses and distances from the intersection of the northeasterly side of U.S.
Route 13 (width varies) with the centerline of Port Penn Road (60' W):
(1) South 67 degrees 40 minutes 13 seconds East, 1616.74 feet to a point;
(2) South 05 degrees 23 minutes 41 seconds West, 40.45 feet to a point;
(3) South 67 degrees 40 minutes 13 seconds East, 15.68 feet to a point;
(4) South 05 degrees 23 minutes 41 seconds East, 2413.68 feet to a point;
(5) South 82 degrees 26 minutes 33 seconds East, 750.73 feet to a point;
(6) South 18 degrees 16 minutes 38 seconds East, 540.13 feet to a point;
(7) South 38 degrees 52 minutes 19 seconds East, 635.02 feet to a point;
(8) South 55 degrees 57 minutes 58 seconds East, 526.17 feet to a point;
(9) South 02 degrees 00 minutes 58 seconds East, 238.55 feet to a point;
(10) North 87 degrees 59 minutes 02 seconds East, 125.00 feet to a point;
(11) South 02

                                       A-2

<Page>

degrees 00 minutes 58 seconds East, 714.71 feet to the point of beginning.
Thence from the point of beginning, along lines of lands now or formerly of
Parcel 5, the following two (2) courses and distances: (1) North 87 degrees
59 minutes 02 seconds East, 109.93 feet to a point; (2) South 02 degrees 00
minutes 58 seconds East, 284.14 feet to a point, a corner for lands now or
formerly of Alvah A. Price and wife. Thence by the same, and along Augustine
Creek, South 36 degrees 05 minutes 09 seconds West, 20.16 feet to a point, a
corner for Parcel 5. Thence by the same, the following three (3) courses and
distances: (1) South 87 degrees 59 minutes 02 seconds West, 287.56 feet to a
point; (2) North 02 degrees 00 minutes 58 seconds West, 300.00 feet to a
point; (3) North 87 degrees 58 minutes 02 seconds East, 190.07 feet to the
first mentioned point or place of Beginning.

     Containing within said metes and bounds 2.0639 +/- acres.

DESCRIPTION OF LOT 5B (TRACT II):

     BEGINNING at a point, said point being located the following eight (8)
courses and distances from the intersection of the northeasterly side of U.S.
Route 13 (width varies) with the centerline of Port Penn Road (60' W): (1)
South 67 degrees 40 minutes 13 seconds East, 1616.74 feet to a point; (2)
South 05 degrees 23 minutes 41 seconds East, 40.45 feet to a point; (3) South
67 degrees 40 minutes 13 seconds East, 15.68 feet to a point; (4) South 05
degrees 23 minutes 41 seconds East, 2413.68 feet to a point; (5) South 82
degrees 26 minutes 33 seconds East, 750.73 feet to a point; (6) South 18
degrees 16 minutes 38 seconds East, 540.13 feet to a point; (7) South 38
degrees 52 minutes 19 seconds East, 635.02 feet to a point; (8) South 55
degrees 57 minutes 58 seconds East, 526.17 feet to the point of beginning.
Thence from the point of beginning, along lines of Parcel 5, the following
five (5) courses and distances: (1) North 02 degrees 00 minutes 58 seconds
West, 61.45 feet to a point; (2) North 87 degrees 59 minutes 02 seconds East,
300.00 feet to a point; (3) South 02 degrees 00 minutes 58 seconds East,
300.00 feet to a point; (4) South 87 degrees 59 minutes 02 seconds West,
300.00 feet to a point; (5) North 02 degrees 00 minutes 58 seconds West,
238.55 feet to the first mentioned point or place of beginning.

     Containing within said metes and bounds 2.0661 +/- acres.

     UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware.

     BEING part of the same lands and premises which Richard H. Lester, Sr.,
by Deed dated December 29, 1992, of record in the Office of the Recorder of
Deeds in and for New Castle County, Delaware, at Deed Record Book 1450, Page
0185, granted and conveyed unto Richland Partnership, a general partnership
of New Castle County and State of Delaware, party of the first part hereto,
in fee.

                                      A-3
<Page>

                              New Castle Hundred

All of the following described real estate situate in New Castle Hundred, New
Castle County and the State of Delaware:

                                   Parcel 1

Tax Parcel No. (Part of) 10-39.00-028
(MOORE WELL SITE/ROUTE 40 AND ROUTE 7)

                ALL that certain lot, piece or parcel of land, comprised of
PARCELS 1, 2, 3 and 4, situate in New Castle Hundred, New Castle County,
State of Delaware and shown on a Record Utility Re-subdivision Plan prepared
by McBride & Ziegler, Inc., Professional Land Surveyors, Dated December 2,
1975 in the Office of the Recorder of Deeds in and for New Castle County
under Microfilm No. 4034, and which Record Utility Resubdivision Plan
supersedes a Record Utility Plan recorded on November 20, 1975, in the Office
of the Recorder of Deeds in and for New Castle County under Microfilm No.
3098, and more particularly described as follows:

        BEGINNING at a point in the northwesterly Right-of-Way limit of the
Penn Central Railroad (Delaware Division), and which point of Beginning can
be located by the three (3) following described courses and distances from
the intersection of the southeasterly Right-of-Way limit of U.S. Route 40
(at 150 feet wide) with the centerline of Delaware Route 7 (at 60 feet wide):
(1) North 62 degrees 01 minute 59 seconds East along the southeasterly
Right-of-Way limit of U.S. Route 40, a distance of 1202.23 feet to an iron
pipe found at a corner for lands now or formerly of Laura M. Groff, (2) South
52 degrees 57 minutes 11 seconds East along the southwesterly boundary of
lands now or formerly of Laura M. Groff 1485.36 feet to an iron pipe found in
the northwesterly Right-of-Way limit of the Penn Central Railroad, and (3)
South 64 degrees 28 minutes 21 seconds West along the northwesterly
Right-of-Way limit of the Penn Central Railroad, 800.11 feet to the point of
Beginning; Thence South 64 degrees 28 minutes 21 seconds West along the
northwesterly Right-of-Way limit of the Penn Central Railroad 50.0 feet to a
point; Thence North 25 degrees 31 minutes 39 seconds West 34.98 feet to a
point; Thence South 61 degrees 24 minutes 10 seconds West 326.47 feet to a
point; Thence South 58 degrees 32 minutes 35 seconds West 169.41 feet to a
point in the northwesterly Right-of-Way limit of the Penn Central Railroad;
Thence South 64 degrees 28 minutes 21 seconds West along the northwesterly
Right-of-Way limit of the Penn Central Railroad 466.50 feet to a monument set
at a corner for lands now or formerly of the Board of Education (Newark
Special School District); Thence North 18 degrees 17 minutes 36 seconds West
along the easterly boundary of last mentioned owner 744.76 feet to a point;
Thence North 71 degrees 42 minutes 24 seconds East 50.0 feet to a point;
Thence South 18 degrees 17 minutes 36 seconds East 100.0 feet to a point;
Thence South 71 degrees 42 minutes 24 seconds West 35.0 feet to a point;
Thence South 18 degrees 17 minutes 36 seconds East 627.74 feet to a point;
Thence North 64 degrees 28 minutes 21 seconds East 448.70 feet to a point;
Thence North 58 degrees 32 minutes 35 seconds East 169.0 feet to a point;
Thence North 61 degrees 24 minutes 10 second East 327.65 feet

                                     A-4

<Page>

to a point; Thence North 64 degrees 28 minutes 21 seconds East 50.0 feet to a
point; Thence South 25 degrees 31 minutes 39 seconds East 50.0 feet to the
point of Beginning.

        UNDER AND SUBJECT, FURTHER, to all covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware including, but not limited to, the following:

        (1)   Declaration of Restrictions dated January 8, 1987, by
              Forty/Seven Partners, L.P., of record in the Office aforesaid
              in Deed Book 533, Page 340, as amended by Amendment to
              Declaration of Restrictions dated February 24, 1987, of record
              in the Office aforesaid in Deed Book 534, Page 054.
        (2)   Agreement between Charles B. Moore and Elizabeth V. Moore and
              Delmarva Power & Light Company dated April 5, 1967, of record
              in the Office aforesaid in Deed Record T, Volume 78, Page 463.
        (3)   Utility Easement Agreement dated October 19, 1987, between
              Forty/Seven Partners, L.P. and Delmarva Power & Light Company
              of record in the Office aforesaid in Deed Book 703, Page 115.
        (4)   Declaration of Cross Easements dated August 14, 1991, by
              Forty/Seven Partners, L.P., of record in the Office aforesaid
              in Deed Book 1220, Page 0061.

        BEING a part of the same lands and premises which Myrtle Davis, by
Deed dated July 7, 1944, of record in the Office of the Recorder of Deeds in
and for New Castle County, Delaware, in Deed Record P, Volume 44, Page 08,
granted and conveyed unto Charles B. Moore and Elizabeth Violette Moore, his
wife, in fee. Subsequently, the said Charles B. Moore did depart this life on
or about January 6, 1984, leaving Elizabeth Violette Moore, hi wife, as
surviving tenant by the entirety. Subsequently, the said Elizabeth Violette
Moore (also known as E. Violette Moore) did depart this life on or about
August 21, 1984, leaving a Will filed with the Register of Wills in and for
New Castle County, Delaware, in File No. 84571 wherein at Article Five she
did nominate, constitute and appoint Thomas D. Whittington, Jr., as Executor
of her Estate.

        AND the said David W. Moore hereby joins in this Deed to grant,
convey and quitclaim any interest he may have in the herein described
premises. Although there is no Deed of conveyance in his name, on information
and belief he may hold an interest in two (2) acres of the said property,
which interest is not recorded and which interest may or may not be reflected
in any writing.

                              Mill Creek Hundred

                                   Parcel 1

All of the following described real estate situate in Mill Creek Hundred,
New Castle County and the State of Delaware:

Tax Parcel No. (Part of) 08-007.40-124
(HOCKESSIN ASSOCIATES/EASEMENT)

                                     A-5

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        ALL those certain interests in the following described land (the
"Easement Parcel") consisting of the right to use for water wells and access
thereto in, to and over the Easement Parcel together with the fee interest in
any improvements owned by Grantor thereon, situate in Mill Creek Hundred,
New Castle County and State of Delaware, as shown as a portion of Lot 2 on a
Record Minor Subdivision Plan, HOCKESSIN CENTER dated February 7, 1977, as
recorded in the Office of the Recorder of Deeds in and for New Castle County
on July 14, 1977, in Microfilm #4521, as prepared by Howard L. Robertson,
Inc., Professional Engineers and Surveyors, and being more particularly
bounded and described as follows, to wit:

        BEGINNING at a point in the northwesterly side of Yorklyn Road (at 60
feet wide), a corner for Lots 1 and 2, said point of Beginning being distant
North 77 degrees 07 minutes 42 seconds East, 147.19 feet measured along the
said northwesterly side of Yorklyn Road from the southeasterly end of a
diagonal connecting line connecting the said northwesterly side of Yorklyn
Road with the northeasterly side of the New Lancaster Turnpike (at 100 feet
wide); thence from said point of Beginning by the division line between Lots
1 and 2, the following two courses and distances: (1) North 22 degrees 56
minutes 33 seconds West, 152.35 feet to a point; (2) South 77 degrees 07
minutes 42 seconds West, 10.16 feet to a point; thence through Lot 2, the
following ten courses and distances: (1) North 22 degrees 56 minutes 33
seconds West, 54.83 feet to a point; (2) North 75 degrees 21 minutes 38
seconds West, 1.60 feet to a point; (3) South 14 degrees 38 minutes 22
seconds West, 40.00 feet to a point; (4) North 75 degrees 21 minutes 38
seconds West, 50.00 feet to a point; (5) North 14 degrees 38 minutes 22
seconds East, 40.00 feet to a point; (6) North 75 degrees 21 minutes 38
seconds West, 117.81 feet to a point; (7) North 14 degrees 38 minutes 22
seconds East, 50.00 feet to a point; (8) South 75 degrees 21 minutes 38
seconds East, 50.00 feet to a point; (9) South 14 degrees 38 minutes 22
seconds West, 30.00 feet to a point; (10) South 75 degrees 21 minutes 38
seconds East, 129.28 feet to a point in line of lands, now or formerly, of
Paul C. Waters, Jr.; thence thereby South 22 degrees 56 minutes 33 seconds
East, 220.60 feet to a point in the aforementioned northwesterly side of
Yorklyn Road; thence thereby South 77 degrees 07 minutes 42 seconds West,
10.16 feet to the place of Beginning.

        UNDER AND SUBJECT to all applicable covenants, conditions,
easements, rights-of-way, reservations, restrictions, and agreements of
record in the Office of the Recorder of Deeds in and for New Castle County
and State of Delaware, including but not limited to the following:

        Utility Easement Agreement between Delmarva Power & Light Company and
        Brandywine Valley Realty of record in the Office aforesaid in Deed
        Record R, Volume 90, Page 789.

        BEING the same rights which Irving O. Thomas, A. Dean Alpine,
Clifford L. Anzilotti, Dominic M. Gioffre and Alfred M. Brown, all trading as
Hockessin Associates, a Delaware general partnership, by Deed dated June 6,
1994, of record in the Office of the Recorder of Deeds in and for New Castle
County, Delaware, in Deed Book 1858, Page 0146, granted and conveyed unto
Hockessin Associates, L.L.C., a Delaware Limited Liability Company, party of
the first part hereto

                                     A-6

<Page>

                           Appoquinimink Hundred

All of the following described real estate situate in Appoquinimink Hundred,
New Castle County and the State of Delaware.

                                   Parcel 1

Tax Parcel No. 14-003.00-069
(THOMAS LANDING ROAD/ROUTE 9)

      ALL that certain lot, piece or parcel of land situate in Appoquinimink
Hundred, New Castle County, State of Delaware, and known as Lot 1 on the Plan
of P. Lloyd and David E. Sheats Subdivision, and of Record in the Office of
the Recorder of Deeds in and for New Castle County in Microfilm Number 12786,
recorded March 18, 1996, and being more particularly bounded and described by
Clifton L. Bakhsh, Jr., Inc., Middletown, Delaware, as follows, to wit:

      BEGINNING at a point on the southeasterly side of Thomas Landing Road,
a.k.a. Route 9, (40 feet from centerline) and on the southerly side of a 20
feet wide Sanitary Sewer Easement, said point being a corner of the property
being herein described and in line of Lot 22, Thomas Cove (Microfilm No.
12596). Thence from the point of Beginning and along line of Lot 22, Thomas
Cove, South 06 degrees 41 minutes 14 seconds East, 279.34 feet to a point a
corner for remaining lands of P. Lloyd and David E. Sheats. Thence by the
same and crossing a 150 feet wide Delmarva Power & Light Company Easement,
the following two (2) courses and distances: (1) South 48 degrees 36 minutes
42 seconds West, 311.25 feet to a point; (2) North 41 degrees 23 minutes 18
seconds West, 300.00 feet to a point on the southeasterly side of Thomas
Landing Road, a.k.a. Route 9 (40 feet from centerline). Thence by the same
along the southeasterly side of Thomas Landing Road, a.k.a. Route 9, and
partially along the southeasterly side of a 20 feet wide Sanitary Sewer
Easement created prior to the recording of Microfilm Number 12786, North 48
degrees 36 minutes 42 seconds East, 310.00 feet to a point on the southerly
side of Thomas Landing Road. Thence by the same and entirely along the
southeasterly side of said easement the following two (2) courses and
distances: (1) By the arc of a circle curving to the right, 96.07 feet
(Radius=170 feet), Chord North 64 degrees 48 minutes 07 seconds East, 94.80
feet to a point; (2) North 80 degrees 59 minutes 31 seconds East, 81.98 feet
to the first mentioned point or place of Beginning. Containing within said
metes and bounds 2.7249+/- acres.

      UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware including but not limited to the following:

      1.  Easement to Delmarva Power & Light Company of record in Deed Record
          K, Volume 78, Page 652.

                                       A-7

<Page>

      2.  Encroachment/License Agreement of record in Deed Book 2003,
          Page 0117.

      3.  Water Service Agreement of record in Deed Book 1868, Page 0117.

      BEING part of the same lands and premises which Lambert R. Seemans and
Betty B. Seemans, husband and wife, and Edith M. Blood and Harvey A. Blood,
wife and husband, by Deed dated December 17, 1980, of record in the Office of
the Recorder of Deeds in and for New Castle County, Delaware, at Deed
Record B, Volume 113, Page 46, granted and conveyed unto P. Lloyd Sheats and
David E. Sheats, parties of the first part hereto, in fee.

                                Pencader Hundred

All of the following described real estate situate in Pencader Hundred, New
Castle County and the State of Delaware:

Tax Parcel No. 11-057.00-010
(CARTER PROPERTY)

      ALL that lot, piece or parcel of land situate in Pencader Hundred, New
Castle County, State of Delaware, and known as Lot 3, on the plan of lands of
Charles M. & Suzanne K. Carter, shown as Lot 3 on the Record Minor
Subdivision Plan for Lands of Charles M. & Suzanne K. Carter of record in the
Office of the Recorder of Deeds in and for New Castle County, Delaware, at
Microfilm Number 14121 and being more particularly bounded and described by
Clifton L. Bakhsh, Jr., Inc., Middletown, Delaware, as follows, to wit:

      BEGINNING at a point on the southerly side of Bethel Church Road (30
feet from centerline) said point being located the following two (2) courses
and distances from the boundary line separating other lands of Charles M. and
Suzanne K. Carter from lands of Norman and Phyllis Wallis: (1) South 17
degrees 07 minutes 57 seconds West, 190 feet to a point; (2) South 72 degrees
52 minutes 39 seconds East, 405.27 feet to the point of beginning. Thence
from the point of Beginning, along the southerly side of Bethel Church Road,
South 72 degrees 52 minutes 39 seconds East, 300.00 feet to a point. Thence
by the following three (3) courses and distances separating this lot from
other lands of Charles M. and Suzanne K. Carter: (1) South 17 degrees 07
minutes 21 seconds West, 300.00 feet to a point; (2) North 72 degrees 52
minutes 39 seconds West 300.00 feet to a point; (3) North 17 degrees 07
minutes 21 seconds East, 300 feet to the first mentioned point or place of
Beginning. Containing within said metes and bounds 2.0661 acres.

      TOGETHER WITH all of the Grantors' right, title and interest, legal and
equitable in subterranean waters accessible from the parcel, including but
not limited to the ownership, appropriation, use, diversion and extraction of
such subterranean waters.

      UNDER AND SUBJECT, FURTHER, to all covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware including, but not limited to, the following:

                                       A-8

<Page>

      (1)  Utility Right of Way Agreement of record in the Office aforesaid
           in Deed Record H, Volume 46, Page 136.

      (2)  Right of Way agreement of record in the Office aforesaid in Deed
           Record V, Volume 78, Page 185.

      (3)  Test Drilling Agreement of record in the Office aforesaid in Deed
           Book 2359, Page 0021.

      (4)  Water Service Agreement of record in the Office aforesaid in Deed
           Book 2359, Page 0024.

      BEING a part of the same lands and premises which Lilla Viola Carter by
Deed dated April 15, 1983, of record in the Office of the Recorder of Deeds
in and for New Castle County, Delaware, in Deed Record V, Volume 121, Page
200, granted and conveyed unto Charles M. Carter and Suzanne K. Carter, his
wife, parties of the first part hereto, in fee.

      Catherine M. Carter, Phyllis C. Wallis and Paul H. Carter join in
this Deed to grant, convey, remise, release and forever quitclaim unto the
party of the second part any interest they or any of them may have in and to
the said land herein conveyed.

                                  KENT COUNTY

                             North Murderkill Hundred

All of the following described real estate situate in North Murderkill
Hundred, Kent County and the State of Delaware:

                                   Parcel 1

Tax Parcel No. NM-00-105.00-01-13.00-000 (part of)
(PLAINDEALING ROAD)

      ALL that certain tract, piece or parcel of land, with the improvements
thereon, situate in North Murderkill Hundred, Kent County and State of
Delaware, lying near but not abutting Plaindealing Road, more particularly
bounded and described as follows, to wit:

      On the Southeast by lands now or formerly of Thomas More Academy (Deed
Record D-203-282); On the Southwest by lands now or formerly of Mercer A.
Short and Nancy M. Short, his wife (Deed Record I-33-265); On the Northwest
and Northeast by lands now or formerly of Del-Homes, Inc. (residue of Deed
Record O-53-212). Being more particularly described according to a plan
prepared by Gerald A. Donovan Associates, Inc. dated May 12, 1997, reference
CL 94-07-05 (9407tank.dwg) said plan being recorded in the Office of the
Recorder of Deeds in and for Kent

                                       A-9

<Page>

County and State of Delaware in plot book 41 at page 82 on May 12, 1996. The
aforesaid plan being an integral part hereof as follows:

      BEGINNING at a point in line of lands of aforementioned Thomas More
Academy at a corner for lands of aforementioned Del-Homes, Inc. Said point
being located when measured from the intersection of the Northerly line of
Plaindealing Road with the Westerly line of Thomas More Drive the following
two (2) courses and distances: (A) North 23 degrees 19 minutes 25 seconds
West a distance of 1001.25 feet to a point at a corner for said lands of
Thomas More Academy. Thence continuing with said lands of Thomas More Academy
and lands of Del-Homes, Inc.; (B) South 66 degrees 40 minutes 35 seconds West
a distance of 1039.95 feet to the point and place of Beginning. Thence from
said beginning point and continuing with said lands of Thomas More Academy:
(1) south 66 degrees 40 minutes 35 seconds West a distance of 152.92 feet to
a capped iron pin, at a corner for said lands of Thomas More Academy in line
of lands of aforementioned Short. Thence with said lands of Short: (2) North
34 degrees 31 minutes 47 seconds West a distance of 137.79 feet to a point at
a corner for lands of said Short at a corner for lands of aforementioned
Del-Homes, Inc. Thence with said lands of Del-Homes, Inc. the following two
(2) courses and distances: (3) North 54 degrees 04 minutes 42 seconds East a
distance of 150.04 feet to a point; (4) South 34 degrees 31 minutes 47
seconds East a distance of 171.15 feet to the point and place of Beginning.
Containing within the above described courses and distances an area of
23.171+/- square feet or 0.5319+/- acres.

      TOGETHER WITH a 20' wide Access and Water Line Easement to be
recorded simultaneously herewith.

      UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for Kent County and State of Delaware.

      BEING the same lands and premises which Ernest H. Mensing, also known
as Ernest H. Mensing, Jr., by Deed dated August 25, 1993, of record in the
Office of the Recorder of Deeds in and for New Castle County, Delaware, at
Deed Record O, Volume 053, Page 212, granted and conveyed unto Del-Homes,
Inc., a Delaware corporation, party of the first part hereto, in fee.

                                 SUSSEX COUNTY

                               Baltimore Hundred

All of the following described real estate situate in Baltimore Hundred,
Sussex County and the State of Delaware:

                                    Parcel 1

Tax Parcel 1-34 9.00 715.00.
(CEDAR LANDING - aka Whiteshaven)

                                       A-10

<Page>

      All that certain lot, piece or parcel of land, situate, lying and being
in the development known as "CEDAR LANDING," Baltimore Hundred, Sussex County
and State of Delaware, being known as designated as OUTLOT B, SECTION I, as
shown on a certain plot of lots entitled, "CEDAR LANDING," Baltimore Hundred,
Sussex County and State of Delaware, dated January 22, 1987 and revised
August 19, 1988, prepared by Land Tech, Inc., Registered Surveyors, which
said plot was filed for record in the Office of the Recorder of Deeds, in and
for Sussex County, at Georgetown, Delaware, on September 12, 1988, in Plot
Book 40, Pages 169-171, reference thereto being had, will more fully and at
large appear.

      Together with and benefitted by an easement for ingress and egress over
a portion of Outlot A, being a strip of land ten feet (10') in overall width
from County Road 357 to Outlot B, located ten feet (10') from and parallel
with the Northerly boundary line of outlot A, as set forth in the Deed of
Hocker Farm dated December 2, 1988 and filed for record in the Office
aforesaid, in Deed Book 1615, page 178.

      Subject to all drainage and/or utility easements as set forth on the
Plot of Cedar Landing, Sections I, II, and III, filed for record in the
Offices of the Recorder of Deeds, aforesaid, in Plot Book 40, pages 169-171.

      The Above Lot of Land is subject to the "Amended Declaration of
Covenants, Conditions and Restrictions", dated July 8, 1988, as Sussex
County, at Georgetown, Delaware, in Deed Book 1579, page 253, and as Amended
by an Amendment to Declaration of Covenants, Conditions, and Restrictions,
filed for record in the Office aforesaid, in Deed Book 1592, page 51, and are
made a part hereof by express reference thereto, as fully and as effectively
as though incorporated herein,

      Being part of the same land conveyed unto White Haven Water Company by
a Deed from Hocker Farm Limited Partnership, dated June 11, 1997, and filed
for record in the Office of the Recorder of Deeds, in and for Sussex County,
at Georgetown, Delaware, in Deed Book 2207, Page 329. Thereafter, the said
White Haven Water Company did merge with Artesian Water Company, Inc.

                                       A-11

<Page>

                                    RECORDATION

      Recorded in the office of the Recorder of Deeds, in and for New Castle
County and State of Delaware, in Mortgage Record ________, Volume ______,
Page _____, on the ____ day of December, 2000.EXHIBIT 10.1
                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of May 1, 2002, by and among Motient Corporation, a Delaware
corporation (the "Company"), Prospect Street High Income Portfolio Inc., Pam
Capital Funding L.P., Highland Legacy Limited, Pamco Cayman Ltd., Prospect
Street Income Shares, Inc., and Morgan Stanley Investment Management
(collectively, the "Stockholders").

                  WHEREAS, the Company proposes to issue and deliver shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock") to
the Stockholders pursuant to the Amended Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code (the "Plan"), confirmed by order of the United
States Bankruptcy Court for the Eastern District of Virginia, Alexandria
Division, entered on April 26, 2002, in In re Motient Corporation et al (Case
Nos. 02-80125, 02-80128 and 02-80129-RGM).

                  WHEREAS, in connection with and pursuant to the Plan, the
Company has agreed to grant to the Stockholders the registration rights
described in Section 1 hereof (the "Registration Rights") with respect to the
Registrable Shares (as defined in Section 1 hereof).

                  Now, Therefore, in consideration of the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

Section 1.        Registration Rights.
                  -------------------

                  For purposes of this Agreement, "Registrable Shares" means (i)
the shares of Common Stock issued to the Stockholders pursuant to or in
connection with the Plan and (ii) any other shares of Common Stock issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for, or in replacement of, all such shares of Common Stock described in
the immediately preceding clause (i); provided, that a Registrable Share ceases
to be a Registrable Share when (A) it has been registered and sold under the
Securities Act of 1933, as amended (the "Securities Act"), (B) it is sold or
transferred in accordance with the requirements of Rule 144 (or similar
provisions then in effect) promulgated by the Securities and Exchange Commission
("SEC") under the Securities Act ("Rule 144") or (C) it is eligible to be sold
or transferred under Rule 144 without holding period or volume limitations.

1.1           Shelf Registration.
              ------------------

(a) Shelf Registration Statement. The Company agrees (subject to Section 1.2
hereof), as soon as possible but in all events within five (5) business days
after the effective date of the Plan (the "Effective Date"), to file, without
any request or any other action on the part of the Stockholders, with the SEC a
registration statement for an offering to be made on a continuous basis pursuant
to Rule 415 under the Securities Act (the "Shelf Registration"), covering all of
the Registrable Shares (the "Registration Statement"; and the related prospectus
(including any preliminary prospectus) is referred to as the "Prospectus");
provided, that the Stockholders shall have provided the information required to
be provided to the Company pursuant to Section 1.5(b) hereof. The Registration
Statement and Prospectus (and any other form or document required to be filed in
connection with the exercise of the Registration Rights) shall be on the
appropriate form, reasonably satisfactory to the Stockholders or, in the case of
an underwritten offering, reasonably satisfactory to the Stockholders and the
underwriter, and shall otherwise comply as to form in all material respects with
the requirements of the Securities Act and the rules and regulations promulgated
thereunder, permitting registration of such Registrable Shares for resale by
each Stockholder in the manner or manners designated by it. The Company agrees
(subject to Section 1.2 hereof) to use its reasonable best efforts to cause the
Registration Statement to be declared effective by the SEC as soon as
practicable after filing it and will notify each Stockholder when such
Registration Statement has become effective. The Company agrees (subject to
Section 1.2 hereof) to use its reasonable best efforts to keep the Registration
Statement effective (including the preparation and filing of any amendments and
supplements necessary for that purpose) during the period from the date that the
Registration Statement is declared effective by the SEC until the earlier of (i)
the date on which the Stockholders shall have sold all of the Registrable Shares
and (ii) the date on which all of the Registrable Shares are eligible to be sold
or transferred under Rule 144 without holding period or volume limitations (such
period, the "Effective Period"). Upon seeking to offer and sell its Registrable
Shares pursuant to the Registration Statement, each Stockholder agrees to
provide in a timely manner information regarding the proposed distribution by
such Stockholder of the Registrable Shares and such other information reasonably
requested by the Company in connection with the preparation of and for the
inclusion in the Registration Statement. The Company agrees to provide to each
Stockholder the number of copies of the final Prospectus and any amendments or
supplements thereto as are reasonably requested by such Stockholder. The Company
shall promptly notify the Stockholders of any threatened stop order by the SEC
or if the Registration Statement ceases to be effective for any reason at any
time during the Effective Period (other than because of the sale of all of the
securities registered thereunder or as permitted by Section 1.2 hereof), and the
Company shall use its reasonable best efforts and take all reasonable actions
required to prevent the entry of such stop order or to obtain the prompt
withdrawal of any order suspending the effectiveness thereof.

(b) Offerings and Sales. At any time and from time to time during the Effective
Period, subject to the restrictions set forth in Sections 1.1(c), 1.2 and 4
hereof, each Stockholder may exercise its Registration Rights hereunder with
respect to such Registrable Shares.

(c) Limitations on Registration Rights. If a Stockholder wishes to sell
Registrable Shares, such Stockholder shall deliver to the designated
representative of the Company a written notice (a "Shelf Resale Notice") of such
Stockholder's good faith present intention to sell, transfer or otherwise
dispose of some or all of such Stockholder's Registrable Shares, and the number
of Registrable Shares such Stockholder proposes to sell, transfer or otherwise
dispose of. Upon receipt of each Shelf Resale Notice, the Company shall, as soon
as practicable but in no event more than two business days after receipt of such
Shelf Resale Notice, either (i) provide a Materiality Notice pursuant to Section
1.2 of this Agreement or (ii) give written notice (a "Company Shelf Response")
to the Stockholder who gave such Shelf Resale Notice that the prospectus
relating to the Registration Statement is current and that the Registrable
Shares covered by the Shelf Resale Notice may be resold within ten business days
after receipt of such Company Shelf Response. If the Company does not respond
within such two business days, it shall be deemed to have given a Company Shelf
Response. All notices pursuant to this Section 1.1(c) shall be provided by
facsimile or electronic mail delivery and confirmed by direct telephonic
communication with the designated representative. Any Stockholder who receives
or is deemed to have received a Company Shelf Response pursuant to the foregoing
shall then have ten business days after receipt of such Company Shelf Response
in which to sell, transfer or otherwise dispose of the shares subject to the
Shelf Resale Notice. In the event that a Stockholder receives a Materiality
Notice pursuant to this Section 1.1(c), the rights and obligations of the
parties hereto with respect to such Materiality Notice shall be governed by the
provisions of Section 1.2 of this Agreement.

1.2 Suspension of Initial Filing or Offering. The Company may determine at any
time that the initial filing of the Registration Statement pursuant to Section
1.1(a), or the offers and sales by Stockholders under the Registration Statement
or otherwise during the Effective Period, shall be suspended if (i) a
negotiation or consummation of a transaction by the Company or its subsidiaries
is pending or an event has occurred, which negotiation, consummation or event
would, in the Company's reasonable judgment, based upon the advice of counsel,
require additional disclosure by the Company in the Registration Statement of
material information which the Company has a bona fide business purpose for
keeping confidential, and the nondisclosure of which in the Registration
Statement would reasonably be expected to cause the Registration Statement to
fail to comply with applicable disclosure requirements or obtaining any
financial statements relating to an acquisition or business combination required
to be included in the Registration Statement would be impracticable, or (ii) the
offering of such Registrable Shares would, in the Company's reasonable judgment,
based upon the written advice of its underwriter, adversely affect a pending or
proposed underwritten public offering or Rule 144A offering of the Common Stock
or other securities by the Company. Immediately upon making such a
determination, the Company shall give written notice (which shall include a
certificate of the Chief Executive Officer or President of the Company as to the
nature of such determination) to each Stockholder (a "Materiality Notice"), upon
receipt of which each Stockholder agrees, subject to the provisions of this
Section 1.2, that it will immediately discontinue offers and sales of the
Registrable Shares under the Registration Statement or otherwise until (x) in
the case of a Materiality Notice delivered pursuant to clause (i) above, such
Stockholder receives copies of a supplemented or amended Prospectus that
corrects the misstatement(s) or omission(s) referred to above and receives
notice that any post-effective amendment has become effective or (y) in the case
of a Materiality Notice delivered pursuant to clause (ii) above, such
Stockholder receives a subsequent notice from the Company that revokes or
otherwise withdraws such Materiality Notice; provided, that the Company may
delay filing, suspend or withdraw the Registration Statement and such offers and
sales pursuant to clause (i) above, for no more than two (2) business days after
the abandonment or consummation of any of the foregoing negotiations,
transactions or events (or if such negotiations are consummated, then as soon as
practicable to obtain the required financial statements, if any) or, in any
event, for no more than thirty (30) days after delivery of the Materiality
Notice pursuant to clauses (i) or (ii) above, at any one time (and the Company
shall not be entitled to require the Stockholders to delay or discontinue offers
and sales pursuant to this Section 1.2 for more than two occasions during any
twelve (12) month period and not for more than thirty (30) days at a time); and
provided further, that in the case of clause (ii), each Stockholder will be
bound by, and hereby agrees to enter into, the same lockup agreement as is
required for all affiliates of the Company by the underwriter of such offering;
provided that no Stockholder shall be required to be bound by or enter into any
lockup agreement for more than a total of ninety (90) days in any twelve month
period. If so directed by the Company, each Stockholder will deliver to the
Company all copies of the Prospectus covering the Registrable Shares current at
the time of receipt of a Materiality Notice.

1.3           Piggy-Back Registration Rights.
              ------------------------------

(a) If the Company proposes to file a registration statement under the
Securities Act with respect to an offering by the Company for its own account or
for the account of any holder of any class of equity security of the Company or
security convertible into or exchangeable for any class of equity security of
the Company (other than a registration statement on Form S-4 or S-8 (or any
substitute form that may be adopted by the SEC), or registrations solely in
connection with employee stock options or other employee benefit plans, or a
registration statement filed in connection with an exchange offer or offering of
securities to the Company's existing securityholders, then the Company shall
give written notice of such proposed filing to the Stockholders as soon as
practicable (but in no event less than thirty (30) days before the anticipated
filing date), and such notice shall offer such Stockholders the opportunity to
register such number and type of shares of Registrable Shares as each such
Stockholder may request ("Piggy-Back Registration"). The Company shall use its
reasonable best efforts to cause the managing underwriter or underwriters of a
proposed underwritten offering to permit the Registrable Shares requested to be
included in a Piggy-Back Registration to be included on the same terms and
conditions as any similar securities of the Company included therein and to
permit the sale or other disposition of such Registrable Shares in accordance
with the intended method of distribution thereof. No registration effected under
this Section 1.3, and no failure to effect a registration under this Section
1.3, shall relieve the Company of its obligations pursuant to Section 1.1, and
no failure to effect a registration under this Section 1.3 and no failure to
complete the sale of shares in connection therewith shall relieve the Company of
any other obligation under this Agreement (including, without limitation, the
Company's obligations under Sections 1.4 and 2.1).

(b) Notwithstanding anything contained herein, if the managing underwriter or
underwriters of an offering described in the foregoing paragraph (a) deliver a
written opinion to the Stockholders requesting inclusion in such offering that
(i) the size of the offering that the Stockholders, the Company and any other
persons intend to make or (ii) the kind of securities that the Stockholders, the
Company and any other persons intend to include in such offering are such that
the success of the offering would be materially and adversely affected by
inclusion of the Registrable Shares requested to be included, then

                           (A) if the size of the offering is the basis of such
underwriter's opinion, the Company will include the securities in the
registration in the following order of priority: (1) first, all securities the
Company proposes to sell, (2) second, allocated pro rata with respect to all the
Registrable Shares requested to be included in the registration and the
securities that the holder for whom the Company is effecting the registration
proposes to sell, and (3) third, any other securities (provided they are of the
same class as the securities sold by the Company) requested to be included,
allocated among the holders of such securities in such proportions as the
Company and those holders may agree; and

                           (B) if the combination of securities to be offered is
the basis of such underwriter's opinion, then the Stockholders shall not have
any registration rights pursuant to this Section 1.3 with respect to such
offering;

provided that notwithstanding paragraph (A) above, if the Company receives a
written opinion (the "Second Opinion") within five (5) days of the date that the
Stockholders receive the written opinion from the managing underwriter(s)
pursuant to clause (i) of this paragraph (b)) of a national underwriter (the
"Second Underwriter"), with a reputation comparable to that of the managing
underwriter(s) of the offering, that the inclusion of the Registrable Shares to
be excluded pursuant to paragraph (A) above (the "Excluded Shares") would not
materially and adversely affect the success of the offering, then Company shall
be required to either (i) cause the managing underwriter(s) to include the
Excluded Shares in the offering, or (ii) select the Second Underwriter as the
managing underwriter for the offering; provided further that if the Company
selects the Second Underwriter and the Second Underwriter at any time thereafter
notifies the Company that it cannot consummate the offering on substantially the
same terms as originally proposed by the managing underwriter(s), then Company
shall have the right to replace the Second Underwriter with another underwriter,
in which case, all of the terms of this Section 4.2(b) shall apply again as if
the offering were another offering.

(c) The Stockholders included within such Piggy-Back Registration may withdraw
all or any part of the Registrable Shares from such Piggy-Back Registration at
any time (before but not after the effective date of such Registration
Statement), by delivering written notice of such withdrawal request to the
Company.

(d) If the Company shall determine for any reason (x) not to register or (y) to
delay a registration which includes Registrable Shares pursuant to this Section
1.3, the Company may, at its election, give written notice of such determination
to the Stockholders and, thereupon (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable Shares
in connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith), and (ii) in the case of a delay
in registering, shall be permitted to delay registering any Registrable Shares
for the same period as the delay in registering such other shares.

1.4 Expenses. The Company shall pay all expenses incident to the performance by
it of its registration obligations under this Section 1 (the "Registration
Expenses"), regardless of whether a Registration Statement becomes effective,
including, without limitation, (i) all SEC registration and filing fees and
expenses incurred in connection with the preparation, printing and distribution
of the Registration Statement and Prospectus and any other document or amendment
thereto and the mailing and delivery of copies thereof to the dealers, the
Stockholders or the underwriters, (ii) fees and disbursements of the Company,
including, without limitation, fees and disbursements of counsel for the
Company, independent public accountants (including the expenses of any comfort
letters required under this Agreement) and other experts of the Company, (iii)
fees and expenses in connection with the qualification of Registrable Shares for
offering and sale under state securities laws (including fees and expenses
incurred in connection with blue sky qualifications of the Registrable Shares),
(iv) fees and expenses incident to any filing with the National Association of
Securities Dealers, Inc. ("NASD") or securing any required review by NASD of the
terms of the sale of Registrable Shares to be disposed of, (v) all fees and
expenses incurred in connection with the listing of Registrable Shares on each
securities exchange or quotation system on which the Common Stock is then
listed, (vi) reasonable fees and expenses of one counsel for the Stockholders
and (vii) internal expenses of the Company (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties). The Stockholders shall be responsible for the payment of its
allocated pro rata share of any underwriting discounts and fees, brokerage and
sales commissions, and any transfer taxes relating to the sale or disposition of
the Registrable Shares.

1.5           Registration Procedures.
              -----------------------

(a) If and whenever the Company is required to effect the registration under the
Securities Act of Registrable Shares as provided in this Agreement, the Company
will, as expeditiously as possible:

(i)      use its reasonable best efforts to register or qualify the Registrable
         Shares by the time the applicable Registration Statement is declared
         effective by the SEC under all applicable state securities or "blue
         sky" laws of such jurisdictions as the Stockholders or managing
         underwriter shall reasonably request in writing, to keep each such
         registration or qualification effective during the Effective Period,
         and to do any and all other acts and things which may be reasonably
         necessary or advisable to enable the Stockholders to consummate the
         disposition in each such jurisdiction of the Registrable Shares owned
         by such Stockholders; provided, that the Company shall not be required
         to (x) qualify generally to do business
                                            --------
         in any jurisdiction or to register as a broker or dealer in any
         jurisdiction where it would not otherwise be required to qualify but
         for this Section 1.5, (y) subject itself to taxation in any such
         jurisdiction, or (z) submit to the general service of process in any
         such jurisdiction;

(ii)     prepare and file with the SEC such amendments and supplements to the
         Registration Statement and the Prospectus as may be (x) necessary to
         keep the Registration Statement effective and to comply with the
         provisions of the Securities Act with respect to the disposition of all
         Registrable Shares until such time as all Registrable Shares have been
         disposed of in accordance with the intended methods of disposition by
         the Stockholder set forth in the Registration Statement or (y)
         reasonably requested by the Stockholders or any underwriter of the
         Registrable Shares;

(iii)    furnish to each Stockholder and, as the case may be, underwriter, such
         number of conformed copies of the Registration Statement and of each
         such amendment and supplement thereto (in each case including all
         exhibits), such number of copies of the Prospectus included in the
         Registration Statement (including each preliminary prospectus), in
         conformity with the requirements of the Securities Act, such documents
         incorporated by reference in the Registration Statement or Prospectus,
         and such other documents as each Stockholder or underwriter may
         reasonably request;

(iv)     cause the Registrable Shares to be listed on any national securities
         exchange or quotation system, if the listing of such securities is then
         permitted under the rules of such exchange or quotation system;

(v)      enter into customary agreements and take such other actions as are
         reasonably required in order to expedite or facilitate the disposition
         of such Registrable Shares;

(vi)     notify each Stockholder in writing promptly upon (A) the happening of
         any event as a result of which a Prospectus included in a Registration
         Statement, as then in effect, includes an untrue statement of a
         material fact or omits to state any material fact necessary to make the
         statements therein, in the light of the circumstances under which they
         were made, not misleading, and, subject to the provisions of Section
         1.2 hereof, at the request of a Stockholder prepare and furnish to
         such Stockholder as many copies of a supplement to or an amendment of
         such Prospectus as such Stockholder reasonably requests so that, as
         thereafter delivered to the purchasers of such Registrable Shares, such
         Prospectus shall not include an untrue statement of a material fact or
         omit to state a material fact necessary to make the statements therein,
         in light of the circumstances under which they were made, not
         misleading; (B) the receipt by the Company of any notification with
         respect to any comments by the SEC with respect to such Registration
         Statement or Prospectus or any amendment or supplement thereto or any
         request by the SEC for the amending or supplementing thereof or for
         additional information with respect thereto; (C) the receipt by the
         Company of any notification with respect to the issuance by the SEC of
         any stop order suspending the effectiveness of such Registration
         Statement or Prospectus or any amendment or supplement thereto or the
         initiation or threatening of any proceeding for that purpose; and (D)
         the receipt by the Company of any notification with respect to the
         suspension of the qualification of such Registrable Shares for sale in
         any jurisdiction or the initiation or threatening of any proceeding for
         such purposes;

(vii)    the Company will, at least five (5) business days prior to filing a
         Registration Statement or Prospectus or any amendment or supplement
         thereto, furnish to each Stockholder and each underwriter, if any, of
         the Registrable Shares covered by such Registration Statement copies of
         such Registration Statement as proposed to be filed, and thereafter
         furnish to such Stockholder and underwriter, if any, such number of
         copies of such Registration Statement, each amendment and supplement
         thereto (in each case including all exhibits thereto and documents
         incorporated by reference therein that are specifically requested to be
         provided), the Prospectus included in such Registration Statement
         (including each preliminary prospectus)and such other documents as such
         Stockholder or underwriter may reasonably request in order to
         facilitate the disposition of the Registrable Shares owned by such
         Stockholder;

(viii)   use its reasonable best efforts to cause the Registrable Shares to be
         registered with or approved by such other governmental agencies or
         authorities as may be necessary by virtue of the business and
         operations of the Company to enable the Stockholders holding the
         Registrable Shares to consummate the disposition of the Registrable
         Shares;

(ix)     subject to the execution of customary confidentiality agreements in
         form and substance reasonably satisfactory to the Company, make
         available upon reasonable notice and during normal business hours, for
         inspection by the Stockholders holding such Registrable Shares, any
         underwriter participating in any disposition pursuant to such
         Registration Statement and any attorney, accountant or other agent
         retained by such Stockholders or underwriter (collectively, the
         "Inspectors"), all pertinent financial and other records, pertinent
         corporate documents and properties of the Company (collectively, the
         "Records"), as shall be reasonably necessary to enable them to exercise
         their due diligence responsibility, and cause the Company's officers,
         directors and employees to supply all information (together with the
         Records, the "Information") reasonably requested by any such Inspector
         in connection with such Registration Statement. Any of the Information
         which the Company determines in good faith to be confidential, and of
         which determination the Inspectors are so notified, shall not be
         disclosed by the Inspectors unless (A) the disclosure of such
         Information is necessary to avoid or correct a misstatement or omission
         in the Registration Statement, (B) the release of such Information is
         ordered pursuant to a subpoena or other order from a court of competent
         jurisdiction or (C) such Information has been made generally available
         to the public; the Stockholders holding such Registrable Shares agree
         that they will, upon learning that disclosure of such Information is
         sought in a court of competent jurisdiction, give notice to the Company
         and allow the Company, at the Company's expense, to undertake
         appropriate action to prevent disclosure of the Information deemed
         confidential;

(x)      if an underwritten offering or otherwise reasonably necessary, use its
         reasonable best efforts to obtain from its independent certified public
         accountants "cold comfort" letters in customary form and at customary
         times and covering matters of the type customarily covered by cold
         comfort letters;

(xi)     if an underwritten offering or otherwise reasonably necessary, use its
         reasonable best efforts to obtain from its counsel an opinion or
         opinions in customary form naming the Stockholders holding such
         Registrable Shares as additional addressees or parties who may rely
         thereon;

(xii)    provide a transfer agent and registrar (which may be the same entity
         and which may be the Company) for such Registrable Shares;

(xiii)   issue to any underwriter to which the Stockholders holding such
         Registrable Shares may sell shares in such offering certificates
         evidencing such Registrable Shares;

(xiv)    make available for reasonable inspection by, or give reasonable access
         to, each Stockholder and any attorney, accountant or other agent
         retained by such Stockholder, all pertinent financial and other records
         and pertinent corporate documents and properties of the Company, and
         cause the Company's officers, directors and employees to supply all
         information reasonably requested by any Stockholder or any other person
         in connection with the offering thereunder; and

(xv)     otherwise use its reasonable best efforts to comply with all applicable
         rules and regulations of the SEC.

(b) The Company may require each Stockholder, upon selling Registrable Shares as
to which any registration is being effected, to furnish the Company with such
information in writing regarding such Stockholder and the distribution of such
securities as required to be included in the Registration Statement or
Prospectus (or preliminary prospectus) included therein as the Company may from
time to time reasonably request. No Stockholder may include any of its
Registrable Shares in the Registration Statement pursuant to this Agreement
unless and until such Stockholder furnishes to the Company such information in
writing. Each Stockholder agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Stockholder not materially misleading.

Section 2.        Indemnification.
                  ---------------

2.1 Indemnification by the Company. The Company agrees to indemnify and hold
harmless each Stockholder in any offering or sale of Registrable Shares, each
person (if any) who participates as an underwriter in any offering and sale of
Registrable Shares, and each person, if any, who controls such Stockholder or
such underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and their respective directors, trustees, officers, partners, agents,
employees and affiliates as follows:

(a) against any and all loss, liability, claim, damage and expense (including
reasonable legal fees and expenses) and action or proceeding (whether commenced
or threatened) whatsoever (collectively, "Losses"), as incurred, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Prospectus or Registration Statement (or any amendment or
supplement thereto) pursuant to which the Registrable Shares were registered
under the Securities Act, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus (or any
amendment or supplement thereto), including all documents incorporated therein
by reference, or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading;

(b) against any and all Losses, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, if such settlement is effected with the written
consent of the Company (which consent will not be unreasonably withheld); and

(c) against any and all expense whatsoever, as incurred (including reasonable
fees and disbursements of counsel), reasonably incurred in investigating,
preparing or defending against any Losses or any litigation, or investigation or
proceeding by any governmental agency or body, commenced or threatened, in each
case whether or not a party, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (a) or (b) above;
provided, that the indemnity provided pursuant to this Section 2.1 does not
apply to any indemnified party with respect to any Losses or expenses to the
extent arising out of (i) any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by such indemnified party for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto), or (ii) such indemnified party's failure to
deliver an amended or supplemental Prospectus if such Losses would not have
arisen had such delivery occurred.

2.2 Indemnification by each Stockholder. Each Stockholder (and each permitted
assignee of such Stockholder) agrees, severally and not jointly, to indemnify
and hold harmless the Company, each person (if any) who participates as an
underwriter in any offering and sale of Registrable Shares and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and their respective directors, trustees,
officers, partners, agents, employees and affiliates, as follows:

(a) against any and all Losses whatsoever, as incurred, arising out of or based
upon any untrue statement or alleged untrue statement of a material fact and
contained in any Prospectus or Registration Statement (or any amendment or
supplement thereto) pursuant to which the Registrable Shares were registered
under the Securities Act, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus, including all
documents incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading;

(b) against any and all Losses whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is effected with
the written consent of the Stockholder (which consent will not be unreasonably
withheld);

(c) against any and all expense whatsoever, as incurred (including reasonable
fees and disbursements of counsel), reasonably incurred in investigating,
preparing or defending against any Losses or any litigation, investigation or
proceeding by any governmental agency or body, commenced or threatened, in each
case whether or not a party, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (a) or (b) above;
and

(d) notwithstanding the provisions of subparagraphs (a), (b) and (c) above, the
indemnity provided pursuant to this Section 2.2 shall only apply with respect to
any Losses to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Stockholder expressly
for use in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto). Notwithstanding the
provisions of this Section 2.2 or any other provision of this Agreement, none of
any Stockholder nor any permitted assignee shall be required to indemnify the
Company or any other indemnified party hereunder with respect to any amount in
excess of the amount of the total proceeds to such Stockholder or such permitted
assignee, as the case may be, from sales of the Registrable Shares of such
Stockholder under the Registration Statement with respect to such offering.

2.3 Conduct of Indemnification Proceedings. The indemnified party shall give
prompt notice to the indemnifying party of any action or proceeding commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify the indemnifying party shall not relieve it from any liability which
it may have under the indemnity agreement provided in Section 2.1 or 2.2 above,
unless and to the extent it did not otherwise learn of such action and the lack
of notice by the indemnified party results in the forfeiture by the indemnifying
party of substantial rights and defenses. If the indemnifying party so elects
within a reasonable time after receipt of such notice, the indemnifying party
may assume the defense of such action or proceeding at such indemnifying party's
own expense with counsel chosen by the indemnifying party and approved by the
indemnified party, which approval shall not be unreasonably withheld; provided,
that the indemnifying party will not settle any such action or proceeding
without the written consent of the indemnified party (which consent will not be
unreasonably withheld) unless, as a condition to such settlement, the
indemnifying party secures the unconditional release of the indemnified party;
and provided further that if the indemnified party reasonably determines that a
conflict of interest exists where it is advisable for the indemnified party to
be represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to it which are different from or in addition to those
available to the indemnifying party, then the indemnifying party shall not be
entitled to assume such defense and the indemnified party shall be entitled to
separate counsel at the indemnifying party's expense. If the indemnifying party
is not entitled to assume the defense of such action or proceeding as a result
of the proviso to the preceding sentence, the indemnifying party's counsel shall
be entitled to conduct the indemnifying party's defense and counsel for the
indemnified party shall be entitled to conduct the defense of the indemnified
party, it being understood that both such counsel will cooperate with each other
to conduct the defense of such action or proceeding as efficiently as possible.
If the indemnifying party is not so entitled to assume the defense of such
action or does not assume such defense, after having received the notice
referred to in the first sentence of this paragraph, the indemnifying party will
pay the reasonable fees and expenses of counsel for the indemnified party. In
such event, however, the indemnifying party will not be liable for any
settlement effected without the written consent of the indemnifying party (which
consent will not be unreasonably withheld). Except as expressly stated herein,
if an indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, the indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
party incurred thereafter in connection with such action or proceeding.

2.4 Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section 2 is
unavailable to an indemnified party, the indemnifying party shall contribute to
the aggregate Losses of the nature contemplated by such indemnity agreement
incurred by any indemnified party, (i) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and the
indemnified parties on the other, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative fault
of but also the relative benefits to the Company on the one hand and each
Stockholder on the other, in connection with the statements or omissions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative benefits to the indemnifying party and the indemnified party shall
be determined by reference to, among other things, the total proceeds received
by the indemnifying party and the indemnified party in connection with the
offering to which such Losses relate. The relative fault of the indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether the action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, the indemnifying
party or the indemnified party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action.

                  The parties hereto agree that it would not be just or
equitable if contribution pursuant to this Section 2.4 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 2.4, each Stockholder
shall not be required to contribute any amount in excess of the amount of the
total net proceeds to such Stockholder from sales of the Registrable Shares of
the Stockholder under the Registration Statement.

                  Notwithstanding the foregoing, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 2.4, each person, if
any, who controls an indemnified party within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as such indemnified
party, and each director of the Company, each officer of the Company who signed
a Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act shall have the same
rights to contribution as the Company. The Stockholders' obligations under this
Section 2.4 are several and not joint and shall, at all times, be subject to the
limitations set forth in Section 2.2(d) hereof.

                  The indemnity agreements contained in this Section 2 shall be
in addition to any other rights (indemnification, contribution or otherwise)
which any indemnified party may have pursuant to law or contract and shall
remain operative and in full force and effect regardless of any investigation
made or omitted by or on behalf of any indemnified party and shall survive the
transfer of any Registrable Shares by a Stockholder.

Section 3.        Rule 144 Compliance.
                  -------------------

                  The Company covenants that it will use its reasonable best
efforts to timely file the reports required to be filed by the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended, so as to
enable each Stockholder to sell Registrable Shares pursuant to Rule 144. In
connection with any sale, transfer or other disposition by a Stockholder of any
Registrable Shares pursuant to Rule 144, the Company shall cooperate with such
Stockholder to facilitate the timely preparation and delivery of certificates
representing Registrable Shares to be sold and not bearing any Securities Act
legend, and enable certificates for such Registrable Shares to be for such
number of shares and registered in such names as such Stockholder may reasonably
request at least ten (10) business days prior to any sale of Registrable Shares
hereunder.

Section 4.        Miscellaneous.
                  -------------

4.1 Integration; Amendment. This Agreement constitutes the entire agreement
among the parties hereto with respect to the matters set forth herein and
supersedes and renders of no force and effect all prior oral or written
agreements, commitments and understandings among the parties with respect to the
matters set forth herein. Except as otherwise expressly provided in this
Agreement, no amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by the Company
and each Stockholder.

4.2 Waivers. No waiver by a party hereto shall be effective unless made in a
written instrument duly executed by the party against whom such waiver is sought
to be enforced, and only to the extent set forth in such instrument. Neither the
waiver by any of the parties hereto of a breach or a default under any of the
provisions of this Agreement, nor the failure of any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder shall thereafter be construed as a
waiver of any subsequent breach or default of a similar nature, or as a waiver
of any such provisions, rights or privileges hereunder.

4.3 Successors and Assigns; Third Party Beneficiaries. Each Stockholder may
assign its rights hereunder to any transferee of Registrable Shares; provided,
however, that such transferee shall, as a condition to the effectiveness of such
assignment, be required to execute a counterpart to this Agreement agreeing to
be treated as a Stockholder, whereupon such transferee shall have the benefits
of and shall be subject to the restrictions contained in this Agreement as if
such transferee was originally included in the definition of a Stockholder and
had originally been a party hereto. The Company may not assign any of its rights
or delegate any of its duties under this Agreement without the prior written
consent of the designated representative of the Stockholders, provided that as a
condition to any merger, reorganization or consolidation of the Company with any
person (as defined in the Securities Act) in which the holders of Common Stock
receive securities of any other person (the "Successor Issuer") the Company
shall assign all of its rights, and delegate all of its obligations under this
Agreement to such Successor Issuer in which event the Successor Issuer will
agree in writing to become the "Company" for all purposes of this Agreement. Any
purported assignment, merger, reorganization or consolidation in violation of
this Section shall be void. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person other than the Stockholders
(who shall be third party beneficiaries of this Agreement entitled to the
benefit of, and enforce, its terms) and the Company and their respective
successors, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. This Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the Stockholders and the Company and their respective successors, and
for the benefit of no other Person. No purchaser of Common Stock from a
Stockholder (other than another Stockholder) shall be deemed to be a successor
or assignee by reason merely of such purchase.

4.4           Benefits of Registration Rights.  The Stockholders may severally
              -------------------------------
or jointly exercise the Registration Rights hereunder in such proportion as they
shall agree among themselves.

4.5 Notices; Designated Representative. Except as otherwise provided in this
Agreement, notices and other communications required by this Agreement shall be
in writing and delivered by hand against receipt or sent by recognized overnight
delivery service or by certified or registered mail, postage prepaid, with
return receipt requested or by confirmed facsimile or confirmed electronic mail
transmission, properly addressed to the addresses of the parties set forth on
the signature pages hereto or to such other address(es) as the respective
parties hereto shall from time to time designate to the other(s) in writing. The
designated representative of the Company shall initially be its General Counsel
or such other person as the Company shall from time to time designate to the
Stockholders in writing.

4.6 Specific Performance. The parties hereto acknowledge that the obligations
undertaken by them hereunder are unique and that there would be no adequate
remedy at law if any party fails to perform any of its obligations hereunder,
and accordingly agree that each party, in addition to any other remedy to which
it may be entitled at law or in equity, shall be entitled to (i) compel specific
performance of the obligations, covenants and agreements of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement and (ii) obtain preliminary injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of this Agreement in
any court of the United States or any State thereof having jurisdiction.

4.7           No Conflict of Rights. The Company shall not grant any
              ---------------------
registration rights which conflict with the Registration Rights.

4.8 Governing Law. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).

4.9 Headings. Section and subsection headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.

4.10 Pronouns. All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine, neuter, singular or plural, as the identity of the
person or entity may require.

4.11 Execution in Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signature of or on behalf of each party appears on each counterpart,
but it shall be sufficient that the signature of or on behalf of each party
appears on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in any proof of this
Agreement to produce or account for more than a number of counterparts
containing the respective signatures of or on behalf of all of the parties.

4.12 Severability. If fulfillment of any provision of this Agreement, at the
time such fulfillment shall be due, shall transcend the limit of validity
prescribed by law, then the obligation to be fulfilled shall be reduced to the
limit of such validity; and if any clause or provision contained in this
Agreement operates or would operate to invalidate this Agreement, in whole or in
part, then such clause or provision only shall be held ineffective, as though
not herein contained, and the remainder of this Agreement shall remain operative
and in full force and effect.

4.13 Effectiveness of Agreement; Termination. This Agreement shall not become
effective until the Effective Date, at which time this Agreement shall take full
force and effect, and shall terminate on the date that all Registrable Shares
cease to be a Registrable Share, except that the provisions of Section 2 shall
survive indefinitely.

                  [remainder of page intentionally left blank]

<PAGE>

                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date first hereinabove set
forth.

                                            MOTIENT CORPORATION

                                            By:/s/ Walter V. Purnell, Jr.
                                               --------------------------
                                               Walter V. Purnell, Jr.
                                               President and Chief
                                                 Executive Officer

                                           Address for Notices:
                                           10802 Parkridge Blvd.
                                           Reston, VA  20191-5416

<PAGE>

                                           PROSPECT STREET HIGH INCOME
                                           PORTFOLIO INC.

                                           By:/s/ R. Joseph Dougherty
                                              -----------------------
                                               Name:  R. Joseph Dougherty
                                               Title: Senior Vice President,
                                                       Secretary

                                           Address for Notices:
                                           Highland Capital Management, L.P.
                                           1300 Two Galleria Tower
                                           13455 Noel Rd. LC #45
                                           Dallas, TX  75240
                                           Phone: 972-628-4123
                                           Fax: 972-628-4160

                                           PAM CAPITAL FUNDING L.P.
                                           By: Highland Capital Management, L.P.
                                                  as Collateral Manager

                                           By:/s/ Mark K. Okada
                                              ---------------------
                                              Name:  Mark K. Okada, CFA
                                              Title: Executive Vice President,
                                                     Highland Capital
                                                      Management, L.P.

                                           Address for Notices:
                                           Highland Capital Management, L.P.
                                           1300 Two Galleria Tower
                                           13455 Noel Rd. LC #45
                                           Dallas, TX  75240
                                           Phone: 972-628-4123
                                           Fax: 972-628-4160

                                           HIGHLAND LEGACY LIMITED
                                           By: Highland Capital Management, L.P.
                                                  as Collateral Manager

                                           By:/s/ Mark K. Okada
                                              --------------------
                                              Name:   Mark K. Okada, CFA
                                              Title:  Executive Vice President,
                                                      Highland Capital
                                                       Management, L.P.

                                           Address for Notices:
                                           Highland Capital Management, L.P.
                                           1300 Two Galleria Tower
                                           13455 Noel Rd. LC #45
                                           Dallas, TX  75240
                                           Phone: 972-628-4123
                                           Fax: 972-628-4160

                                           PAMCO CAYMAN LTD.
                                           By: Highland Capital Management, L.P.
                                                  as Collateral Manager

                                           By:/s/ Mark K. Okada
                                             ---------------------
                                             Name:   Mark K. Okada, CFA
                                             Title:  Executive Vice President,
                                                     Highland Capital
                                                      Management, L.P.

                                           Address for Notices:
                                           Highland Capital Management, L.P.
                                           1300 Two Galleria Tower
                                           13455 Noel Rd. LC #45
                                           Dallas, TX  75240
                                           Phone: 972-628-4123
                                           Fax: 972-628-4160

                                           PROSPECT STREET INCOME SHARES, INC.
                                           By: Highland Capital Management, L.P.
                                                  as Collateral Manager

                                           By:/s/ Mark K. Okada
                                             ---------------------

                                             Name:   Mark K. Okada, CFA
                                             Title:  Executive Vice President,
                                                     Highland Capital
                                                      Management, L.P.

                                           Address for Notices:
                                           Highland Capital Management, L.P.
                                           1300 Two Galleria Tower
                                           13455 Noel Rd. LC #45
                                           Dallas, TX  75240
                                           Phone: 972-628-4123
                                           Fax: 972-628-4160

                                           MORGAN STANLEY INVESTMENT MANAGEMENT

                                           By:/s/ Deanna L. Loughnane
                                              --------------------------
                                              Name:  Deanna L. Loughnane
                                              Title: Executive Director

                                           Address for Notices:
                                           1 Tower Bridge
                                           100 Front Street
                                           West Conshohocken, PA 19428

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