Document:

exv10w1

 

Exhibit 10.1

CATALYTICA ENERGY SYSTEMS, INC.

301 West Warner Road, Suite 132

Tempe, AZ 85284-2961

May 8, 2007

Robert Zack

301 West Warner Road, Suite 132

Tempe, AZ 85284-2961

Re: Your Amended and Restated Employment Agreement dated March 23, 2007

Dear Mr. Zack:

This letter is intended to amend certain tax provisions and to clarify and confirm our mutual
understanding concerning certain aspects of your Amended and Restated Employment Agreement (the
“Employment Agreement”) entered into by and between you and Catalytica Energy Systems, Inc. (the
“Company”) dated March 23, 2007.

The Company is entering into that certain Contribution and Merger Agreement by and among the
Company, Renegy Holdings, Inc. (“Holdings”), Snowflake Acquisition Corporation, Renegy, LLC, Renegy
Trucking, LLC, Snowflake White Mountain Power, LLC, Robert M. Worsley, Christi M. Worsley and the
Robert M. Worsley and Christi M. Worsley Revocable Trust (the “CMA”). In connection with the
transactions contemplated under the CMA (the “Merger”), your Employment Agreement will be assumed
by Holdings effective as of the Closing (as defined in the CMA).

By signing this letter, you expressly acknowledge that your Employment Agreement will be
assumed by Holdings as of the Closing of the Merger, and that the Merger constitutes a Change of
Control (as defined in the Employment Agreement) entitling you to the Change of Control Retention
Payments (as defined in the Employment Agreement) set forth therein (subject to the requirement of
your continued employment with Holdings through the date of each such retention payment). You also
expressly acknowledge that the assumption of your Employment Agreement by Holdings does not entitle
you to receive any severance benefits described in your Employment Agreement for an Involuntary
Termination (as defined in the Employment Agreement). Of course, you nevertheless may be entitled
to receive severance benefits in accordance with your Employment Agreement if your employment with
Holdings is terminated after the Merger (and while the Employment Agreement remains in effect) and
the termination at that time constitutes an Involuntary Termination. For purposes of clarity,
payments of any Change of Control Retention Payments to you pursuant to the terms of the Employment
Agreement will in no way affect, impair or diminish your eligibility to receive any Target
Bonus pursuant to, in accordance with and otherwise subject to the terms of the Employment
Agreement.

 

 

 

Section 10(e) of your Employment Agreement is amended to replace the existing definition of
Involuntary Termination with the following:

“(e) Involuntary Termination. “Involuntary Termination” shall mean a material
negative change in Employee’s employment by any of the following: (i) without the Employee’s
express written consent, the significant reduction of the Employee’s duties, authority or
responsibilities, relative to the Employee’s duties, authority or responsibilities as in
effect immediately prior to such reduction, or the assignment to Employee of such reduced
duties, authority or responsibilities; provided, however, that so long as Employee’s title,
duties, authority and responsibility are at the level of Chief Financial Officer or greater,
whether at the Company or at an acquirer following a Change of Control, then that will not
constitute an Involuntary Termination under this clause (i), (ii) without the Employee’s
express written consent, a substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location) available to the Employee
immediately prior to such reduction; (iii) a reduction by the Company in the base salary or
target bonus of the Employee as in effect immediately prior to such reduction; (iv) a
material reduction by the Company in the kind or level of employee benefits to which the
Employee was entitled immediately prior to such reduction with the result that the
Employee’s overall benefits package is significantly reduced; (v) the relocation of the
Employee to a facility or a location more than twenty-five (25) miles from the Employee’s
then present location, without the Employee’s express written consent; (vi) any purported
termination of the Employee by the Company that is not effected for Disability or for Cause,
or, during the Change of Control Period only, any purported termination for which the
grounds relied upon are not valid; (vii) the failure of the Company to obtain the assumption
of this Agreement by any successors contemplated in Section 11(a) below; (viii) requiring
Employee to work outside of Arizona on more than 50% of the business days in any 90
consecutive day period or (viii) during the Change of Control Period only, any act or set of
facts or circumstances that would, under California case law or statute constitute a
constructive termination of the Employee. However, with respect to any Non-Change of
Control Severance Termination, an Involuntary Termination shall not be deemed to have
occurred unless Employee provides written notice to the Company describing the nature of the
event that he believes forms the basis for Involuntary Termination and the Company does not
cure such event within ten (10) days following receipt of such notice.”

In additions, the following new Section 14 is added to your Employment Agreement:

“14. Code Section 409A. Notwithstanding any provisions of this Agreement to the
contrary, if Employee is a “specified employee” within the meaning of Section 409A of the
Code and any temporary, proposed or final regulations thereunder (together, “Section 409A”)
at the time of Employee’s termination, and any severance payments (including any benefits
which provide for a “deferral of compensation” within the meaning of

 

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Section 409A) to be made to Employee pursuant to this Agreement will not be paid or provided
in full by March 15 of the year following the year in which Employee’s “separation from
service” (within the meaning of Section 409A) occurs, then only that portion of such
severance payments up to the 409A Limit (as defined below) may be made within the first six
months following Employee’s separation from service in accordance with the applicable
payment schedule. Any portion of such severance payments in excess of the 409A Limit shall
accrue and, to the extent such severance payments would otherwise have been payable within
the first six (6) months following Employee’s separation from service, will become payable
the date that is six (6) months and one (1) day following the date of Employee’s separation
from service. All subsequent severance payments, if any, will be payable as provided in
this Agreement. For purposes of this Agreement, the “409A Limit” means the lesser of:

(a) two (2) times the Employee’s annualized compensation based upon the Employee’s annual
rate of pay (the determination of Employee’s annual rate of pay for this purpose shall be as
determined in accordance with Section 409A if additional guidance is released after the date
of this Agreement or, if no such guidance is released, Employee’s annual rate of pay shall
be deemed to be Employee’s annual base salary); and

(b) two (2) times the maximum amount that may be taken into account under a qualified plan
pursuant to Section 401(a)(17) for the year in which the Employee has a separation from
service.

The intent of this Agreement is for all payments made hereunder to comply with the
requirements of Section 409A; to the extent any terms of this Agreement are ambiguous, such
terms shall be interpreted in accordance with such intent.”

Except as described in the above amendments, this letter does not change your Employment
Agreement in any way. This instrument may be executed in several counterparts, each of which shall
be deemed to be an original, but all of which together will constitute one and the same instrument.

Signature page follows.

 

3

 

Please confirm your understanding and agreement to the above by signing in the place indicated
below.

	 	 	 	 	 
	 	Very truly yours,

CATALYTICA ENERGY SYSTEMS, INC.

 	 
	 	/s/Ricardo B. Levy
 	 
	 	Name:  	Ricardo B. Levy 	 
	 	Title:  	Director, Chairman 	 
	 

Agreed and Accepted:

/s/ Robert W. Zack     

Robert W. Zack

 

Signature Page to Employment Agreement Side LetterFiled by Bowne Pure Compliance

 

EXHIBIT 4.1

Prepared by and Return to:

Mary T. Tomich, Esq.

Dilworth Paxson LLP

1735 Market Street

Philadelphia, PA 19103

215-575-7000

 

 

FORTY-FIRST SUPPLEMENTAL

INDENTURE

DATED AS OF JANUARY 1, 2007

TO

INDENTURE OF MORTGAGE

DATED AS OF JANUARY 1, 1941

 

AQUA PENNSYLVANIA, INC.

TO

J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION

 

 

 

 

THIS FORTY-FIRST SUPPLEMENTAL INDENTURE dated as of January 1, 2007, by and between AQUA
PENNSYLVANIA, INC. (f/k/a Pennsylvania Suburban Water Company), a corporation duly organized and
existing under the laws of the Commonwealth of Pennsylvania (the “Company”) as successor by merger
to the Philadelphia Suburban Water Company (the “Original Company”), party of the first part, and
J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association (the “Trustee”),
party of the second part.

WHEREAS, the Original Company heretofore duly executed and delivered to The Pennsylvania
Company for Insurances on Lives and Granting Annuities, as trustee, an Indenture of Mortgage dated
as of January 1, 1941 (the “Original Indenture”), which by reference is hereby made a part hereof,
and in and by the Original Indenture the Original Company conveyed and mortgaged to such trustee
certain property therein described, to secure the payment of its bonds to be generally known as its
“First Mortgage Bonds” and to be issued under the Original Indenture in one or more series as
therein provided; and

WHEREAS, through a series of mergers, changes of names and successions, J.P. Morgan Trust
Company, National Association became the successor trustee; such mergers, changes of name and
successions not involving any change in the title, powers, rights or duties of the trustee, as
trustee under the Original Indenture as supplemented at the respective dates thereof; and

WHEREAS, the Original Company duly executed and delivered to the Trustee thirty-four
supplemental indentures supplemental to the Original Indenture, and the Company duly executed and
delivered to the Trustee six supplemental indentures to the Original Indenture so as to subject
certain additional property to the lien of the Original Indenture and to provide for the creation
of additional series of bonds; and

WHEREAS, pursuant to an Agreement and Plan of Merger and Reorganization dated December 20,
2001, and effective on January 1, 2002, the Original Company agreed to merge, in conjunction with
its affiliated corporations, Consumers Pennsylvania Water Company — Shenango Valley Division,
Consumers Pennsylvania Water Company — Roaring Creek Division, Consumers Pennsylvania Water
Company — Susquehanna Division, Waymart Water Company, Fawn Lake Forrest Water Company, Western
Utilities, Inc., and Northeastern Utilities, Inc. (such affiliates referred to hereinafter as the
“Merging Entities”) with and into the Company; and

WHEREAS, pursuant to the Thirty-Fifth Supplemental Indenture dated as of January 1, 2002 (the
“Thirty-Fifth Supplemental Indenture”), the Company agreed to assume the obligations of the
Original Company under the Original Indenture and all supplements thereto; and

WHEREAS, the Company and its predecessor have issued under the Original Indenture, as
supplemented at the respective dates of issue, forty-eight series of First Mortgage Bonds
designated, respectively, as set forth in the following table, the Original or Supplemental
Indenture creating each series and the principal amount of bonds thereof issued being indicated
opposite the designation of such series:

 

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	Designation	 	Indenture	 	Amount	 
	3 1/4% Series due 1971
	 	Original	 	$	16,375,000	 
	9 5/8% Series due 1975
	 	Thirteenth Supplemental	 	 	10,000,000	 
	9.15% Series due 1977
	 	Fourteenth Supplemental	 	 	10,000,000	 
	3% Series due 1978
	 	First Supplemental	 	 	2,000,000	 
	3 3/8% Series due 1982
	 	Second Supplemental	 	 	4,000,000	 
	3.90% Series due 1983
	 	Third Supplemental	 	 	5,000,000	 
	3 1/2% Series due 1986
	 	Fourth Supplemental	 	 	6,000,000	 
	4 1/2% Series due 1987
	 	Fifth Supplemental	 	 	4,000,000	 
	4 1/8% Series due 1988
	 	Sixth Supplemental	 	 	4,000,000	 
	5% Series due 1989
	 	Seventh Supplemental	 	 	4,000,000	 
	4 5/8% Series due 1991
	 	Eighth Supplemental	 	 	3,000,000	 
	4.70% Series due 1992
	 	Ninth Supplemental	 	 	3,000,000	 
	6 7/8% Series due 1993
	 	Twelfth Supplemental	 	 	4,500,000	 
	4.55% Series due 1994
	 	Tenth Supplemental	 	 	4,000,000	 
	10 1/8% Series due 1995
	 	Sixteenth Supplemental	 	 	10,000,000	 
	5 1/2% Series due 1996
	 	Eleventh Supplemental	 	 	4,000,000	 
	7 7/8% Series due 1997
	 	Fifteenth Supplemental	 	 	5,000,000	 
	8.44% Series due 1997
	 	Twenty-Third Supplemental	 	 	12,000,000	 
	9.20% Series due 2001
	 	Seventeenth Supplemental	 	 	7,000,000	 
	8.40% Series due 2002
	 	Eighteenth Supplemental	 	 	10,000,000	 
	5.95% Series due 2002
	 	Twenty-Seventh Supplemental	 	 	4,000,000	 
	12.45% Series due 2003
	 	Twentieth Supplemental	 	 	10,000,000	 
	13% Series due 2005
	 	Twenty-First Supplemental	 	 	8,000,000	 
	10.65% Series due 2006
	 	Twenty-Second Supplemental	 	 	10,000,000	 
	9.89% Series due 2008
	 	Twenty-Fourth Supplemental	 	 	5,000,000	 
	7.15% Series due 2008
	 	Twenty-Eighth Supplemental	 	 	22,000,000	 
	9.12% Series due 2010
	 	Twenty-Fifth Supplemental	 	 	20,000,000	 
	8 7/8% Series due 2010
	 	Nineteenth Supplemental	 	 	8,000,000	 
	6.50% Series due 2010
	 	Twenty-Seventh Supplemental	 	 	3,200,000	 
	9.17% Series due 2011
	 	Twenty-Sixth Supplemental	 	 	5,000,000	 
	9.93% Series due 2013
	 	Twenty-Fourth Supplemental	 	 	5,000,000	 
	9.97% Series due 2018
	 	Twenty-Fourth Supplemental	 	 	5,000,000	 
	9.17% Series due 2021
	 	Twenty-Sixth Supplemental	 	 	8,000,000	 
	9.29% Series due 2026
	 	Twenty-Sixth Supplemental	 	 	12,000,000	 
	1995 Medium Term Note
Series
	 	Twenty-Ninth Supplemental	 	 	77,000,000	 
	6.35% Series due 2025
	 	Thirtieth Supplemental	 	 	22,000,000	 
	1997 Medium Term Note Series
	 	Thirty-First Supplemental	 	 	65,000,000	 
	6.75% Subseries A due 2007
	 	 	 	 	10,000,000	 
	6.30% Subseries B due 2002
	 	 	 	 	10,000,000	 
	6.14% Subseries C due 2008
	 	 	 	 	10,000,000	 
	5.80% Subseries D due 2003
	 	 	 	 	10,000,000	 
	5.85% Subseries E due 2004
	 	 	 	 	10,000,000	 

 

2

 

	 	 	 	 	 	 	 
	Designation	 	Indenture	 	Amount	 
	6.00% Subseries F due 2004
	 	 	 	 	15,000,000	 
	6.00% Series due 2029
	 	Thirty-Second Supplemental	 	 	25,000,000	 
	1999 Medium Term Note
Series
	 	Thirty-Third Supplemental	 	 	222,334,480	 
	7.40% Subseries A due 2005
	 	 	 	 	15,000,000	 
	7.40% Subseries B due 2005
	 	 	 	 	11,000,000	 
	6.21% Subseries C due 2011
	 	 	 	 	15,000,000	 
	9.53% Subseries D due 2019
	 	 	 	 	4,000,000	 
	6.375% Subseries E due 2023
	 	 	 	 	14,000,000	 
	8.26% Subseries F due 2022
	 	 	 	 	1,500,000	 
	9.50% Subseries G due 2006
	 	 	 	 	1,440,000	 
	9.22% Subseries H due 2019
	 	 	 	 	2,534,480	 
	8.32% Subseries I due 2022
	 	 	 	 	3,500,000	 
	8.14% Subseries J due 2025
	 	 	 	 	4,000,000	 
	6.00% Subseries K due 2030
	 	 	 	 	18,360,000	 
	5.93% Subseries L due 2012
	 	 	 	 	25,000,000	 
	2.65% Subseries M due 2006
	 	 	 	 	5,000,000	 
	3.461% Subseries N due 2007
	 	 	 	 	12,000,000	 
	5.08% Subseries O due 2015
	 	 	 	 	20,000,000	 
	5.17% Subseries P due 2017
	 	 	 	 	7,000,000	 
	5.751% Subseries Q due 2019
	 	 	 	 	15,000,000	 
	5.751% Subseries R due 2019
	 	 	 	 	5,000,000	 
	6.06% Subseries S due 2027
	 	 	 	 	15,000,000	 
	6.06% Subseries T due 2027
	 	 	 	 	5,000,000	 
	5.98% Subseries U due 2028
	 	 	 	 	3,000,000	 
	5.35% Series due 2031
	 	Thirty-Fourth Supplemental	 	 	30,000,000	 
	5.55% Series due 2032
	 	Thirty-Sixth Supplemental	 	 	25,000,000	 
	3.75% Series due 2010
	 	Thirty-Seventh Supplemental	 	 	3,200,000	 
	5.15% Series due 2032
	 	Thirty Seventh Supplemental	 	 	25,000,000	 
	5.05% Series due 2039
	 	Thirty-Eighth Supplemental	 	 	14,000,000	 
	5.00% Series due 2036
	 	Thirty-Ninth Supplemental	 	 	21,770,000	 
	5.00% Series due 2037
	 	Thirty-Ninth Supplemental	 	 	24,165,000	 
	5.00% Series due 2038
	 	Thirty-Ninth Supplemental	 	 	25,375,000	 
	5.00% Series due 2035
	 	Fortieth Supplemental	 	 	24,675,000	 

WHEREAS, the bonds of each of said series that are presently outstanding are listed on
Exhibit A attached hereto and made a part hereof; and

WHEREAS, in order to secure the lien of the Original Indenture on the properties of the
Original Company and the Company, the Original Indenture and the first forty supplemental
indentures supplemental to the Original Indenture were duly recorded in the Commonwealth of
Pennsylvania on the dates and in the office for the Recording of Deeds for the counties and in the
Mortgage Books at the pages indicated in Exhibit B hereto; and

 

3

 

WHEREAS, in addition to the property described in the Original Indenture and the First through
Fortieth Supplemental Indentures thereto, the Company has acquired certain
other property and desires to confirm the lien of the Original Indenture thereon and in order
to confirm such lien shall cause this Forty-First supplemental Indenture, with a true and correct
copy of the Original Indenture attached hereto as Exhibit D (redacted to delete property
descriptions for counties in which such Original Indenture has already been recorded), to be
recorded in the office for the Recording of Deeds for the counties of Crawford and Lehigh; and

WHEREAS, the lien of the Original Indenture, as supplemented, has been perfected as a security
interest under the Pennsylvania Uniform Commercial Code by filing a financing statement in the
office of the Secretary of the Commonwealth; and

WHEREAS, the Company proposes to create under the Original Indenture, as supplemented by this
Forty-first Supplemental Indenture, two series of bonds to be designated “First Mortgage Bonds,
5.00% Series due 2040” (herein referred to as the “5.00% Series due 2040”) to be limited in
aggregate principal amount to $23,915,000, to bear interest at the rate of 5.00% per annum, and to
mature on February 1, 2040, and “First Mortgage Bonds, 5.00% Series due 2041” (herein referred to
as the “5.00% Series due 2041”) to be limited in aggregate principal amount to $23,915,000, to bear
interest at the rate of 5.00% per annum, and to mature on February 1, 2041, each series to be
issued only as registered bonds without coupons and to be dated the date of delivery thereof; and

WHEREAS, in order to finance the costs of numerous acquisitions, constructions, modifications,
expansions, installations and replacements of the Company’s water distribution, treatment and
related operating systems located in the Counties of Chester, Bucks, Delaware and Montgomery in
Pennsylvania and that are part of the Company’s system for the distribution of water to its
customers and related financing costs, which are to be financed under a Financing Agreement dated
as of January 1, 2007 (the “Financing Agreement”) between the Company and the Chester County
Industrial Development Authority, a Pennsylvania body politic and corporate (the “Authority”), and
which are described in Exhibit A thereto (which facilities, less any deletions therefrom
and together with any additions, improvements and modifications thereto and substitutions therefore
made in accordance with the provisions of the Financing Agreement are referred to as the
“Facilities”), the Company has requested the Authority to issue a new series of bonds to be known
as the Authority’s Water Facilities Revenue Bonds (Aqua Pennsylvania, Inc. Project), Series A of
2007 the aggregate principal amount of $47,830,000 (the “Authority Bonds”); and

WHEREAS, the Company proposes to issue the Bonds under the provisions of Article IV of the
Original Indenture, and will comply with the provisions thereof as well as with other provisions of
the Original Indenture and indentures supplemental thereto in connection with the issuance of
additional bonds so that it will be entitled to procure the authentication and delivery of the
Bonds; and

WHEREAS, the Authority Bonds are to be issued under a Trust Indenture, dated as of January 1,
2007 (the “Authority Indenture”), between the Authority and U.S. Bank National Association, as
trustee (the “Authority Trustee”); and

 

4

 

WHEREAS, the proceeds of the Authority Bonds are to be loaned to the Company pursuant to the
terms of the Financing Agreement and the Bonds are to be issued by
the Company to secure the obligation of the Company to pay to or for the account of the
Authority an amount equal to the principal of, redemption premium, if any, and interest on the
Authority Bonds pursuant to the Financing Agreement; and

WHEREAS, the right, title and interest of the Authority in and to the Financing Agreement and
the payments thereunder and the security for such payments are to be assigned by the Authority to
the Authority Trustee, and the Bonds are to be delivered by the Company on behalf of the Authority
directly to the Authority Trustee, as assignee of the Authority, as security for the payment of the
principal of, redemption premium, if any, and interest on, the Authority Bonds; and

WHEREAS, Article XVIII of the Original Indenture provides that the Company, when authorized by
resolution of its Board of Directors, may with the Trustee enter into an indenture supplemental to
the Original Indenture, which thereafter shall form a part of the Original Indenture, for the
purposes, inter alia, of subjecting to the lien of the Original Indenture additional property, of
defining the covenants and provisions applicable to any bonds of any series other than the 3 1/4%
Series due 1971, of adding to the covenants and agreements of the Company contained in the Original
Indenture other covenants and agreements thereafter to be observed by the Company, of surrendering
any right or power in the Original Indenture reserved to or conferred upon the Company, and of
making such provisions in regard to matters or questions arising under the Original Indenture as
may be necessary or desirable and not inconsistent therewith; and

WHEREAS, the Company, by proper corporate action, has duly authorized the creation of the
5.00% Series due 2040 and the 5.00% Series due 2041 (to be issued in accordance with the terms and
provisions of the Original Indenture and indentures supplemental thereto, including this
Forty-first Supplemental Indenture, and to be secured by said Original Indenture and indentures
supplemental thereto, including this Forty-first Supplemental Indenture) and has further duly
authorized the execution, delivery and recording of this Forty-first Supplemental Indenture setting
forth the terms and provisions of the 5.00% Series due 2040 and the 5.00% Series due 2041 insofar
as said terms and provisions are not set forth in said Original Indenture; and

WHEREAS, the Bonds and the Trustee’s certificate upon said Bonds are to be substantially in
the following form, the proper amount, names of registered owners and numbers to be inserted
therein, and such appropriate insertions, omissions and changes to be made therein as may be
required or permitted by this Indenture to conform to any pertinent law or usage:

[Form of 5.00% Series due 2040]

 

			
	No. R-1
	 	$23,915,000

AQUA PENNSYLVANIA, INC.

(Incorporated under the Laws of the Commonwealth

of Pennsylvania)

First Mortgage Bond, 5.00% Series Due 2040

 

5

 

Aqua Pennsylvania, Inc. (f/k/a known as Pennsylvania Suburban Water Company, successor by
merger to Philadelphia Suburban Water Company), a corporation organized and existing under the laws
of the Commonwealth of Pennsylvania (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 Chester County Industrial Development Authority or its registered
assigns, on the 1st day of February, 2040, at the designated office of J.P. Morgan Trust Company,
National Association (hereinafter called the “Trustee”) in Philadelphia, Pennsylvania, the sum of
Twenty-three Million Nine Hundred Fifteen Thousand Dollars in such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of public and private
debts and to pay interest thereon to the registered owner hereof by draft or check of the Trustee
mailed to such registered owner from the interest payment date next preceding the date of the
authentication of this Bond (or if this Bond is authenticated after a Record Date as defined below
and on or before the succeeding interest payment date, from such succeeding interest payment date,
or if this Bond is authenticated on or prior to August 1, 2007, from the date hereof) until the
principal hereof shall become due and payable, at the rate of five percent (5.00%) per annum,
payable semiannually in like coin or currency on the first day of February and the first day of
August in each year, commencing August 1, 2007 and to pay interest on overdue principal (including
any overdue required or optional prepayment of principal) and premium, if any, and, to the extent
legally enforceable, on any overdue installment of interest at a rate of 5.00% per annum after
maturity whether by acceleration or otherwise until paid.

The interest so payable will (except as otherwise provided in the Forty-first Supplemental
Indenture referred to herein) be calculated on the basis of a 360-day year of twelve 30-day months
and be paid to the person in whose name this Bond (or a Bond or Bonds in exchange for which this
Bond was issued) is registered at the close of business on the fifteenth day of the calendar month
next preceding the month in which the interest payment date occurs whether or not such day is a
business day (a “Record Date”) and principal, premium, if any, and interest on this Bond shall be
paid in accordance with written payment instructions of the registered owner delivered to the
Trustee on or before such record date.

This Bond is one of a duly authorized issue of bonds of the Company known as its First
Mortgage Bonds, issued and to be issued without limitation as to aggregate principal amount except
as set forth in the Indenture hereinafter mentioned in one or more series and equally secured
(except insofar as a sinking fund or other similar fund established in accordance with the
provisions of the Indenture may afford additional security for the bonds of any specific series) by
an Indenture of Mortgage (herein called the “Indenture”) dated as of January 1, 1941, executed by
the Philadelphia Suburban Water Company (now Aqua Pennsylvania, Inc., f/k/a Pennsylvania Suburban
Water Company, as successor by merger) to The Pennsylvania Company for Insurances on Lives and
Granting Annuities (succeeded as trustee by J.P. Morgan Trust Company, National Association), as
Trustee (the “Trustee”), to which Indenture and all indentures supplemental thereto reference is
hereby made for a description of the property mortgaged and pledged, the nature and extent of the
security, the rights of the holders and registered owners of the bonds and of the Trustee in
respect of such security, and the terms and conditions under which the bonds are and are to be
secured and may be issued under the Indenture; but neither the foregoing reference to the Indenture
nor any provision of this Bond or of the Indenture or of any indenture supplemental thereto shall
affect or impair the obligation of

 

6

 

the Company, which is absolute and unconditional, to pay at the stated or accelerated maturity
herein and in the Indenture provided, the principal of and premium, if any, and interest on this
Bond as herein provided. As provided in the Indenture, the bonds may be issued in series for
various principal amounts, 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 an indenture supplemental to said Indenture known as the
“Forty-first Supplemental Indenture” dated as of January 1, 2007, and designated therein as “First
Mortgage Bonds, 5.00% Series due 2040” (the “Bonds”).

Concurrently herewith the Company is issuing is “First Mortgage Bonds, 5.00% Series due 2041”
in the aggregate principal amount of $23,915,000 (the “5.00% Series due 2041”) and, together with
the 5.00% Series due 2040, the “2007 Bonds”).

To the extent permitted by and as provided in the Indenture, modifications or alterations of
the Indenture, or of any indenture supplemental thereto, and of the rights and obligations of the
Company and of the holders and registered owners of bonds issued and to be issued thereunder may be
made with the consent of the Company by an affirmative vote of the holders and registered owners of
not less than 75% in principal amount of bonds then outstanding under the Indenture and entitled to
vote, at a meeting of the bondholders called and held as provided in the Indenture, and, in case
one or more but less than all of the series of bonds then outstanding under the Indenture are so
affected, by an affirmative vote of the holders and registered owners of not less than 75% in
principal amount of bonds of any series then outstanding under the Indenture and entitled to vote
on and affected by such modification or alteration, or by the written consent of the holders and
registered owners of such percentages of bonds; provided, however, that no such modification or
alteration shall be made which shall reduce the percentage of bonds the consent of the holders or
registered owners of which is required for any such modification or alteration or which shall
affect the terms of payment of the principal of or interest on the bonds, or permit the creation by
the Company of any lien prior to or on a parity with the lien of the Indenture with respect to any
property subject to the lien of the Indenture as a first mortgage lien thereon, or which shall
affect the rights of the holders or registered owners of less than all of the bonds of any series
affected thereby.

The Bonds have been issued by the Company to secure the obligation of the Company to pay to or
for the account of the Authority (defined below) an amount equal to the principal, premium, if any,
of, and interest on, the Authority Bonds (defined below) pursuant to the Financing Agreement (the
“Financing Agreement”) dated as of January 1, 2007 between the Chester County Industrial
Development Authority, a Pennsylvania body politic and corporate (the “Authority”), and the
Company, which Authority Bonds are being issued to finance the costs of numerous constructions,
modifications, expansions, installations and replacements of the Company’s water distribution,
treatment and related operating systems located in the Counties of Chester, Bucks, Delaware and
Montgomery in Pennsylvania and that are part of the Company’s system for the distribution of water
to its customers and related financing costs which are to be financed under the Financing Agreement
and which are described in Exhibit A thereto (which facilities, less any deletions
therefrom and together with any additions, improvements and modifications thereto and substitutions
therefor made in accordance with the provisions of the Financing Agreement are referred to as the
“Facilities”). The Facilities are to be financed through the sale of the Authority’s Water
Facilities Revenue Bonds (Aqua Pennsylvania, Inc. Project), Series A of 2007, in the aggregate principal amount of $47,830,000 (the “Authority
Bonds”).

 

7

 

The Authority Bonds are to be issued under a Trust Indenture, dated as of January 1, 2007 (the
“Authority Indenture”) between the Authority and U.S. Bank National Association, as trustee (the
“Authority Trustee”). The right, title and interest of the Authority in and to the Financing
Agreement and the payments thereunder and the security for such payments have been assigned by the
Authority to the Authority Trustee, and the Bonds have been delivered by the Company on behalf of
the Authority directly to the Authority Trustee, as assignee, as security for the payment of the
principal of, and premium, if any, and interest on, the Authority Bonds. The Authority Trustee may
not sell, assign or otherwise transfer the Bonds except for a transfer of the entire outstanding
principal amount thereof to its successor as trustee under the Authority Indenture, which successor
and each subsequent successor shall hold such Authority Bonds subject to the same restriction on
transfer.

In the event any Authority Bonds shall be purchased by the Company and cancelled pursuant to
the Authority Indenture, Bonds corresponding in principal amount to the Authority Bonds so
purchased and cancelled shall be deemed to be paid in full, and in the event and to the extent the
principal of, and premium, if any, or interest on, any Authority Bonds is paid out of funds held by
the Authority Trustee other than payments on Bonds, the corresponding payment of the principal of
and premium, if any, or interest on, an aggregate principal amount of Bonds shall be deemed to have
been satisfied.

In the event this Bond shall be deemed to have been paid in full, this Bond shall be
surrendered to the Trustee for cancellation. In the event this Bond shall be deemed to have been
paid in part, this Bond shall be presented to the Trustee for notation hereon of the payment of the
portion of the principal hereof so deemed to have been paid.

The Bonds are redeemable only as follows:

(a) The Bonds are subject to redemption prior to maturity, at the option of the Company, on or
after February 1, 2017, in whole or in part, at a redemption price of 100% of the principal amount
of the Bonds to be redeemed, plus interest accrued thereon to the date fixed for redemption.

(b) The Bonds are also subject to redemption at the direction of the Company, in whole, at any
time prior to maturity, at a redemption price of 100% of the principal amount of the bonds to be
redeemed, plus interest accrued thereon to the date fixed for redemption, at any time the Authority
Bonds are subject to extraordinary optional redemption pursuant to Section 7.01(a)(ii) of the
Authority Indenture.

(c) The Bonds are also subject to special mandatory redemption at the direction of the
Company, in part, prior to maturity, at a redemption price of 100% of the principal amount of the
bonds to be redeemed, plus interest accrued thereon to the date fixed for redemption, at such time
and in such amount as the Authority Bonds are subject to special mandatory redemption pursuant to
Section 7.01(a)(iii) of the Authority Indenture.

 

8

 

(d) The Bonds are also subject to mandatory redemption by the Company in whole if the Trustee
shall receive a written demand from the Authority Trustee for redemption of all such Bonds held by
the Authority Trustee stating that an “Event of Default” as defined in Section 9.01(a) of the
Authority Indenture has occurred and is continuing and that payment of the principal of the
Authority Bonds has been accelerated pursuant to Section 9.01(b) of the Authority Indenture,
provided that at the time of notice of such redemption as provided in Section 2 of Article V of the
Original Indenture (i) said written demand shall not have been withdrawn by the Authority Trustee,
and (ii) no event of default under Section 1 of Article XI of the Original Indenture shall have
occurred and be continuing.

If this Bond or any portion hereof is called for redemption and payment thereof is duly
provided for as specified in the Indenture, interest shall cease to accrue hereon or on such
portion, as the case may be, from and after the date fixed for redemption.

The principal hereof may be declared or may become due prior to its maturity date on the
conditions, in the manner and with the effect set forth in the Indenture upon the happening of an
event of default, as in the Indenture provided; subject, however, to the right, under certain
circumstances, of the registered owners of a majority in principal amount of Bonds outstanding to
annul such declaration.

This Bond is transferable by the registered owner hereof in person or by attorney duly
authorized in writing, on books of the Company to be kept for that purpose at the designated
office of the Trustee in Philadelphia, Pennsylvania upon surrender hereof for cancellation at such
office 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 Bond or Bonds in authorized denominations, of equal aggregate
unpaid principal amount. Any such transfer or exchange shall be subject to the terms and conditions
and to the payment of the charges specified in the Indenture.

The Company and the Trustee may deem and treat the registered owner of this Bond as the
absolute owner hereof for the purpose of receiving payment of or on account of the principal hereof
and the interest hereon, and for all other purposes, and shall not be affected by any notice to the
contrary.

No recourse shall be had for the payment of the principal of or interest on this Bond or for
any claim based hereon or otherwise in respect hereof or of the Indenture or of any indenture
supplemental thereto against any incorporator or any past, present or future stockholder, officer
or director of the Company or of any predecessor or successor corporation, as such, either directly
or through the Company or through any such predecessor or successor corporation or through any
receiver or trustee in bankruptcy, by virtue of any constitutional provision, statute or rule of
law or equity, or by the enforcement of any assessment or penalty or otherwise; all such liability
being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly
waived and released by every holder or registered owner hereof, as more fully provided in the
Indenture.

This Bond shall not be entitled to any benefit under the Indenture or any indenture
supplemental thereto, or become valid or obligatory for any purpose, until J.P. Morgan Trust
Company, National Association, as Trustee under the Indenture, or a successor trustee
thereunder, shall have signed the certificate of authentication endorsed hereon.

 

9

 

IN WITNESS WHEREOF, Aqua Pennsylvania, Inc. has caused this Bond to be signed by its President
or a Vice President and its corporate seal to be hereto affixed and attested by its Secretary or an
Assistant Secretary, and this Bond to be dated January 16, 2007.

	 	 	 	 	 	 	 
	Attest:	 	 	 	AQUA PENNSYLVANIA, INC.
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	(Assistant) Secretary

	 	 	 	 	 	Vice President and Treasurer

(Form of Trustee’s Certificate)

This Bond is one of the Bonds, of the series designated therein, referred to in the
within-mentioned Forty-first Supplemental Indenture.

	 	 	 	 	 	 	 
	 	 	 	 	J.P. MORGAN TRUST COMPANY,
	 	 	 	 	NATIONAL ASSOCIATION
	 	 	 	 	as Trustee
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	The Bank of New York
	 

	 	 	 	 	 	Attorney-in-fact
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 	 	 	 	Authorized Signer

[Form of 5.00% Series due 2041]

 

			
	No. R-1
	 	$23,915,000

AQUA PENNSYLVANIA, INC.

(Incorporated under the Laws of the Commonwealth

of Pennsylvania)

First Mortgage Bond, 5.00% Series Due 2041

 

10

 

Aqua Pennsylvania, Inc. (f/k/a known as Pennsylvania Suburban Water Company, successor by
merger to Philadelphia Suburban Water Company), a corporation organized and existing under the laws
of the Commonwealth of Pennsylvania (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 Chester County Industrial
Development Authority or its registered assigns, on the 1st day of February, 2041, at the
designated office of J.P. Morgan Trust Company, National Association (hereinafter called the
“Trustee”) in Philadelphia, Pennsylvania, the sum of Twenty-three Million Nine Hundred Fifteen
Thousand Dollars in such coin or currency of the United States of America as at the time of payment
is legal tender for the payment of public and private debts and to pay interest thereon to the
registered owner hereof by draft or check of the Trustee mailed to such registered owner from the
interest payment date next preceding the date of the authentication of this Bond (or if this Bond
is authenticated after a Record Date as defined below and on or before the succeeding interest
payment date, from such succeeding interest payment date, or if this Bond is authenticated on or
prior to August 1, 2007, from the date hereof) until the principal hereof shall become due and
payable, at the rate of five percent (5.00%) per annum, payable semiannually in like coin or
currency on the first day of February and the first day of August in each year, commencing August
1, 2007 and to pay interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and, to the extent legally enforceable, on any
overdue installment of interest at a rate of 5.00% per annum after maturity whether by acceleration
or otherwise until paid.

The interest so payable will (except as otherwise provided in the Forty-first Supplemental
Indenture referred to herein) be calculated on the basis of a 360-day year of twelve 30-day months
and be paid to the person in whose name this Bond (or a Bond or Bonds in exchange for which this
Bond was issued) is registered at the close of business on the fifteenth day of the calendar month
next preceding the month in which the interest payment date occurs whether or not such day is a
business day (a “Record Date”) and principal, premium, if any, and interest on this Bond shall be
paid in accordance with written payment instructions of the registered owner delivered to the
Trustee on or before such record date.

This Bond is one of a duly authorized issue of bonds of the Company known as its First
Mortgage Bonds, issued and to be issued without limitation as to aggregate principal amount except
as set forth in the Indenture hereinafter mentioned in one or more series and equally secured
(except insofar as a sinking fund or other similar fund established in accordance with the
provisions of the Indenture may afford additional security for the bonds of any specific series) by
an Indenture of Mortgage (herein called the “Indenture”) dated as of January 1, 1941, executed by
the Philadelphia Suburban Water Company (now Aqua Pennsylvania, Inc., f/k/a Pennsylvania Suburban
Water Company, as successor by merger) to The Pennsylvania Company for Insurances on Lives and
Granting Annuities (succeeded as trustee by J.P. Morgan Trust Company, National Association), as
Trustee (the “Trustee”), to which Indenture and all indentures supplemental thereto reference is
hereby made for a description of the property mortgaged and pledged, the nature and extent of the
security, the rights of the holders and registered owners of the bonds and of the Trustee in
respect of such security, and the terms and conditions under which the bonds are and are to be
secured and may be issued under the Indenture; but neither the foregoing reference to the Indenture
nor any provision of this Bond or of the Indenture or of any indenture supplemental thereto shall
affect or impair the obligation of the Company, which is absolute and unconditional, to pay at the
stated or accelerated maturity herein and in the Indenture provided, the principal of and premium,
if any, and interest on this Bond as herein provided. As provided in the Indenture, the bonds may
be issued in series for

 

11

 

various principal amounts, 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 an indenture supplemental to said Indenture known as the
“Forty-first Supplemental Indenture” dated as of January 1, 2007, and designated therein as “First
Mortgage Bonds, 5.00% Series due 2041” (the “Bonds”).

Concurrently herewith the Company is issuing is “First Mortgage Bonds, 5.00% Series due 2040”
in the aggregate principal amount of $23,915,000 (the “5.00% Series due 2040”) and, together with
the 5.00% Series due 2041, the “2007 Bonds”).

To the extent permitted by and as provided in the Indenture, modifications or alterations of
the Indenture, or of any indenture supplemental thereto, and of the rights and obligations of the
Company and of the holders and registered owners of bonds issued and to be issued thereunder may be
made with the consent of the Company by an affirmative vote of the holders and registered owners of
not less than 75% in principal amount of bonds then outstanding under the Indenture and entitled to
vote, at a meeting of the bondholders called and held as provided in the Indenture, and, in case
one or more but less than all of the series of bonds then outstanding under the Indenture are so
affected, by an affirmative vote of the holders and registered owners of not less than 75% in
principal amount of bonds of any series then outstanding under the Indenture and entitled to vote
on and affected by such modification or alteration, or by the written consent of the holders and
registered owners of such percentages of bonds; provided, however, that no such modification or
alteration shall be made which shall reduce the percentage of bonds the consent of the holders or
registered owners of which is required for any such modification or alteration or which shall
affect the terms of payment of the principal of or interest on the bonds, or permit the creation by
the Company of any lien prior to or on a parity with the lien of the Indenture with respect to any
property subject to the lien of the Indenture as a first mortgage lien thereon, or which shall
affect the rights of the holders or registered owners of less than all of the bonds of any series
affected thereby.

The Bonds have been issued by the Company to secure the obligation of the Company to pay to or
for the account of the Authority (defined below) an amount equal to the principal, premium, if any,
of, and interest on, the Authority Bonds (defined below) pursuant to the Financing Agreement (the
“Financing Agreement”) dated as of January 1, 2007 between the Chester County Industrial
Development Authority, a Pennsylvania body politic and corporate (the “Authority”), and the
Company, which Authority Bonds are being issued to finance the costs of numerous constructions,
modifications, expansions, installations and replacements of the Company’s water distribution,
treatment and related operating systems located in the Counties of Chester, Bucks, Delaware and
Montgomery in Pennsylvania and that are part of the Company’s system for the distribution of water
to its customers and related financing costs which are to be financed under the Financing Agreement
and which are described in Exhibit A thereto (which facilities, less any deletions
therefrom and together with any additions, improvements and modifications thereto and substitutions
therefor made in accordance with the provisions of the Financing Agreement are referred to as the
“Facilities”). The Facilities are to be financed through the sale of the Authority’s Water
Facilities Revenue Bonds (Aqua Pennsylvania, Inc. Project), Series A of 2007, in the aggregate
principal amount of $47,830,000 (the “Authority Bonds”).

 

12

 

The Authority Bonds are to be issued under a Trust Indenture, dated as of January 1, 2007 (the
“Authority Indenture”) between the Authority and U.S. Bank National Association, as trustee (the
“Authority Trustee”). The right, title and interest of the Authority in and to the Financing
Agreement and the payments thereunder and the security for such payments have been assigned by the
Authority to the Authority Trustee, and the Bonds have been delivered by the Company on behalf of
the Authority directly to the Authority Trustee, as assignee, as security for the payment of the
principal of, and premium, if any, and interest on, the Authority Bonds. The Authority Trustee may
not sell, assign or otherwise transfer the Bonds except for a transfer of the entire outstanding
principal amount thereof to its successor as trustee under the Authority Indenture, which successor
and each subsequent successor shall hold such Authority Bonds subject to the same restriction on
transfer.

In the event any Authority Bonds shall be purchased by the Company and cancelled pursuant to
the Authority Indenture, Bonds corresponding in principal amount to the Authority Bonds so
purchased and cancelled shall be deemed to be paid in full, and in the event and to the extent the
principal of, and premium, if any, or interest on, any Authority Bonds is paid out of funds held by
the Authority Trustee other than payments on Bonds, the corresponding payment of the principal of
and premium, if any, or interest on, an aggregate principal amount of Bonds shall be deemed to have
been satisfied.

In the event this Bond shall be deemed to have been paid in full, this Bond shall be
surrendered to the Trustee for cancellation. In the event this Bond shall be deemed to have been
paid in part, this Bond shall be presented to the Trustee for notation hereon of the payment of the
portion of the principal hereof so deemed to have been paid.

The Bonds are redeemable only as follows:

(e) The Bonds are subject to redemption prior to maturity, at the option of the Company, on or
after February 1, 2017, in whole or in part, at a redemption price of 100% of the principal amount
of the Bonds to be redeemed, plus interest accrued thereon to the date fixed for redemption.

(f) The Bonds are also subject to redemption at the direction of the Company, in whole, at any
time prior to maturity, at a redemption price of 100% of the principal amount of the bonds to be
redeemed, plus interest accrued thereon to the date fixed for redemption, at any time the Authority
Bonds are subject to extraordinary optional redemption pursuant to Section 7.01(a)(ii) of the
Authority Indenture.

(g) The Bonds are also subject to special mandatory redemption at the direction of the
Company, in part, prior to maturity, at a redemption price of 100% of the principal amount of the
bonds to be redeemed, plus interest accrued thereon to the date fixed for redemption, at such time
and in such amount as the Authority Bonds are subject to special mandatory redemption pursuant to
Section 7.01(a)(iii) of the Authority Indenture.

 

13

 

(h) The Bonds are also subject to mandatory redemption by the Company in whole if the Trustee
shall receive a written demand from the Authority Trustee for redemption of all such Bonds held by
the Authority Trustee stating that an “Event of Default” as defined in Section
9.01(a) of the Authority Indenture has occurred and is continuing and that payment of the
principal of the Authority Bonds has been accelerated pursuant to Section 9.01(b) of the Authority
Indenture, provided that at the time of notice of such redemption as provided in Section 2 of
Article V of the Original Indenture (i) said written demand shall not have been withdrawn by the
Authority Trustee, and (ii) no event of default under Section 1 of Article XI of the Original
Indenture shall have occurred and be continuing.

If this Bond or any portion hereof is called for redemption and payment thereof is duly
provided for as specified in the Indenture, interest shall cease to accrue hereon or on such
portion, as the case may be, from and after the date fixed for redemption.

The principal hereof may be declared or may become due prior to its maturity date on the
conditions, in the manner and with the effect set forth in the Indenture upon the happening of an
event of default, as in the Indenture provided; subject, however, to the right, under certain
circumstances, of the registered owners of a majority in principal amount of Bonds outstanding to
annul such declaration.

This Bond is transferable by the registered owner hereof in person or by attorney duly
authorized in writing, on books of the Company to be kept for that purpose at the designated
office of the Trustee in Philadelphia, Pennsylvania upon surrender hereof for cancellation at such
office 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 Bond or Bonds in authorized denominations, of equal aggregate
unpaid principal amount. Any such transfer or exchange shall be subject to the terms and conditions
and to the payment of the charges specified in the Indenture.

The Company and the Trustee may deem and treat the registered owner of this Bond as the
absolute owner hereof for the purpose of receiving payment of or on account of the principal hereof
and the interest hereon, and for all other purposes, and shall not be affected by any notice to the
contrary.

No recourse shall be had for the payment of the principal of or interest on this Bond or for
any claim based hereon or otherwise in respect hereof or of the Indenture or of any indenture
supplemental thereto against any incorporator or any past, present or future stockholder, officer
or director of the Company or of any predecessor or successor corporation, as such, either directly
or through the Company or through any such predecessor or successor corporation or through any
receiver or trustee in bankruptcy, by virtue of any constitutional provision, statute or rule of
law or equity, or by the enforcement of any assessment or penalty or otherwise; all such liability
being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly
waived and released by every holder or registered owner hereof, as more fully provided in the
Indenture.

This Bond shall not be entitled to any benefit under the Indenture or any indenture
supplemental thereto, or become valid or obligatory for any purpose, until J.P. Morgan Trust
Company, National Association, as Trustee under the Indenture, or a successor trustee thereunder,
shall have signed the certificate of authentication endorsed hereon.

 

14

 

IN WITNESS WHEREOF, Aqua Pennsylvania, Inc. has caused this Bond to be signed by its President
or a Vice President and its corporate seal to be hereto affixed and attested by its Secretary or an
Assistant Secretary, and this Bond to be dated January 16, 2007.

	 	 	 	 	 	 	 
	Attest:	 	 	 	AQUA PENNSYLVANIA, INC.
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	(Assistant) Secretary

	 	 	 	 	 	Vice President and Treasurer

(Form of Trustee’s Certificate)

This Bond is one of the Bonds, of the series designated therein, referred to in the
within-mentioned Forty-first Supplemental Indenture.

	 	 	 	 	 	 	 
	 	 	 	 	J.P. MORGAN TRUST COMPANY,
	 	 	 	 	NATIONAL ASSOCIATION
	 	 	 	 	as Trustee
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	The Bank of New York
	 

	 	 	 	 	 	Attorney-in-fact
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 	 	 	 	Authorized Signer

and;

WHEREAS, all acts and things necessary to make the Bonds, when executed by the Company and
authenticated and delivered by the Trustee as in this Forty-first Supplemental Indenture provided
and issued by the Company, valid, binding and legal obligations of the Company, and this
Forty-first Supplemental Indenture a valid and enforceable supplement to said Original Indenture,
have been done, performed and fulfilled, and the execution of this Forty-first Supplemental
Indenture has been in all respects duly authorized; and

NOW, THEREFORE, THIS FORTY-FIRST SUPPLEMENTAL INDENTURE WITNESSETH: That, in order to secure
the payment of the principal and interest of all bonds issued under the Original Indenture and all
indentures supplemental thereto, according to their tenor and effect, and according to the terms of
the Original Indenture and of any indenture supplemental thereto, and to secure the performance of
the covenants and obligations in said bonds and in the Original Indenture and any indenture
supplemental thereto respectively contained, and to provide for the proper issuing, conveying and
confirming unto the Trustee, its successors in said trust and its and their assigns forever, upon
the trusts and for the purposes expressed in the Original Indenture and in any indenture
supplemental thereto, all and singular the estates, property and franchises of the Company thereby
mortgaged or intended so to be, the

 

15

 

Company, for and in consideration of the premises and of the sum of One Dollar ($1.00) in hand
paid by the Trustee to the Company upon the execution and delivery of this Forty-first Supplemental
Indenture, receipt whereof is hereby acknowledged, and of other good and valuable consideration,
and intending to be legally bound, has granted, bargained, sold, aliened, enfeoffed, released and
confirmed and by these presents does grant, bargain, sell, alien, enfeoff, release and confirm unto
J.P. Morgan Trust Company, National Association, as Trustee, and to its successors in said trust
and its and their assigns forever:

All and singular the premises, property, assets, rights and franchises of the Company, whether
now or hereafter owned, constructed or acquired, of whatever character and wherever situated
(except as herein expressly excepted), including among other things the following, but reference to
or enumeration of any particular kinds, classes, or items of property shall not be deemed to
exclude from the operation and effect of the Original Indenture or any indenture supplemental
thereto any kind, class or item not so referred to or enumerated:

I.

REAL ESTATE AND WATER RIGHTS.

The real estate described in the deeds from the grantors named in Exhibit C hereto,
dated and recorded as therein set forth, and any other real estate and water rights acquired since
the date of the Fortieth Supplemental Indenture.

II.

BUILDINGS AND EQUIPMENT.

All mains, pipes, pipe lines, service pipes, buildings, improvements, standpipes, reservoirs,
wells, flumes, sluices, canals, basins, cribs, machinery, conduits, hydrants, water works, plants
and systems, tanks, shops, structures, purification systems, pumping stations, fixtures, engines,
boilers, pumps, meters and equipment which are now owned or may hereafter be acquired by the
Company (except as herein expressly excepted), including all improvements, additions and extensions
appurtenant to any real or fixed property now or hereafter subject to the lien of the Original
Indenture or any indenture supplemental thereto which are used or useful in connection with the
business of the Company as a water company or as a water utility, whether any of the foregoing
property is now owned or may hereafter be acquired by the Company.

It is hereby declared by the Company that all property of the kinds described in the next
preceding paragraph, whether now owned or hereafter acquired, has been or is or will be owned or
acquired with the intention of using the same in carrying on the business or branches of the
business of the Company, and it is hereby declared that it is the intention of the Company that all
thereof (except property hereinafter specifically excepted) shall be subject to the lien of the
Original Indenture.

It is agreed by the Company that so far as may be permitted by law, tangible personal property
now owned or hereafter acquired by the Company, except such as is hereafter expressly excepted from
the lien hereof, shall be deemed to be and construed as fixtures and appurtenances to the real
property of the Company.

 

16

 

III.

FRANCHISES AND RIGHTS OF WAY.

All the corporate and other franchises of the Company, all water and flowage rights, riparian
rights, easements and rights of way, and all permits, licenses, rights, grants, privileges and
immunities, and all renewals, extensions, additions or modifications of any of the foregoing,
whether the same or any thereof, or any renewals, extensions, additions or modifications thereof,
are now owned or may hereafter be acquired, owned, held, or enjoyed by the Company.

IV.

AFTER ACQUIRED PROPERTY.

All real and fixed property and all other property of the character hereinabove described
which the Company may hereafter acquire.

TOGETHER WITH all and singular the tenements, hereditaments and appurtenances belonging or in
any way appertaining to the aforesaid property or any part thereof, with the reversion and
reversions, remainder and remainders, 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, which the Company now has or may hereafter acquire in and to the aforesaid premises,
property, rights and franchises and every part and parcel thereof.

EXCEPTING AND RESERVING, HOWEVER, certain premises, not used or useful in the supplying of
water by the Company, expressly excepted and reserved from the lien of the Original Indenture and
not subject to the terms thereof.

AND ALSO SAVING AND EXCEPTING from the property hereby mortgaged and pledged, all of the
following property (whether now owned by the Company or hereafter acquired by it): All bills, notes
and accounts receivable, cash on hand and in banks, contracts, choses in action and leases to
others (as distinct from the property leased and without limiting any rights of the Trustee with
respect thereto under any of the provisions of the Original Indenture or of any indenture
supplemental thereto), all bonds, obligations, evidences of indebtedness, shares of stock and other
securities, and certificates or evidences of interest therein, all automobiles, motor trucks, and
other like automobile equipment and all furniture, and all equipment, materials, goods, merchandise
and supplies acquired for the purpose of sale in the ordinary course of business or for consumption
in the operation of any properties of the Company other than any of the foregoing which may be
specifically transferred or assigned to or pledged or deposited with the Trustee hereunder or
required by the provisions of the Original Indenture or any indenture supplemental thereto so to
be; provided, however, that if, upon the happening of a completed default, as specified in Section
1 of Article XI of the Original Indenture, the Trustee or any receiver appointed hereunder shall
enter upon and take possession of the mortgaged property, the Trustee or any such receiver may, to
the extent permitted by law, at the same time likewise take possession of any and all of the
property described in this paragraph then on hand and any and all other property of the Company
then on hand, not
described or referred to in the foregoing granting clauses, which is used or useful in
connection with the business of the Company as a water company or as a water utility, and use and
administer the same to the same extent as if such property were part of the mortgaged property,
unless and until such completed default shall be remedied or waived and possession of the mortgaged
property restored to the Company, its successors or assigns.

 

17

 

SUBJECT, HOWEVER, to the exceptions, reservations and matters hereinabove and in the Original
Indenture recited, to releases executed since the date of the Original Indenture in accordance with
the provisions thereof, to existing leases, to easements and rights of way for pole lines and
electric transmission lines and other similar encumbrances and restrictions which the Company
hereby certifies, in its judgment, do not impair the use of said property by the Company in its
business, to liens existing on or claims against, and rights in and relating to, real estate
acquired for right-of-way purposes, to taxes and assessments not delinquent, to alleys, streets and
highways that may run across or encroach upon said lands, to liens, if any, incidental to
construction, and to Permitted Liens, as defined in the Original Indenture; and, with respect to
any property which the Company may hereafter acquire, to all terms, conditions, agreements,
covenants, exceptions and reservations expressed or provided in such deeds and other instruments,
respectively, under and by virtue of which the Company shall hereafter acquire the same and to any
and all liens existing thereon at the time of such acquisition.

TO HAVE AND TO HOLD, all and singular the property, rights, privileges and franchises hereby
conveyed, transferred or pledged or intended so to be unto the Trustee and its successors in the
trust heretofore and hereby created, and its and their assigns forever.

IN TRUST NEVERTHELESS, for the equal pro rata benefit and security of each and every entity
who may be or become the holders of bonds and coupons secured by the Original Indenture or by any
indenture supplemental thereto, or both, without preference, priority or distinction as to lien or
otherwise of any bond or coupon over or from any other bond or coupon, so that each and every of
said bonds and coupons issued or to be issued, of whatsoever series, shall have the same right,
lien and privilege under the Original Indenture and all indentures supplemental thereto and shall
be equally secured hereby and thereby, with the same effect as if said bonds and coupons had all
been made, issued and negotiated simultaneously on the date thereof; subject, however, to the
provisions with reference to extended, transferred or pledged coupons and claims for interest
contained in the Original Indenture and subject to any sinking or improvement fund or maintenance
deposit provisions, or both, for the benefit of any particular series of bonds.

IT IS HEREBY COVENANTED, DECLARED AND AGREED, by and between the parties hereto, that all such
bonds and coupons are to be authenticated, delivered and issued, and that all property subject or
to become subject hereto is to be held subject to the further covenants, conditions, uses and
trusts hereinafter set forth, and the Company, for itself and its successors and assigns, does
hereby covenant and agree to and with the Trustee and its successor or successors in said trust,
for the benefit of those who shall hold said bonds and coupons, or any of them, issued under this
Indenture or any indenture supplemental hereto, or both, as follows:

 

18

 

ARTICLE I.

Form, Authentication and Delivery of the Bonds; Redemption Provisions

SECTION 1. There shall be a forty-ninth series of bonds, limited in aggregate principal amount
to $23,915,000 designated as “Aqua Pennsylvania, Inc., First Mortgage Bonds, 5.00% Series due 2040”
and a fiftieth series of bonds, limited in aggregate principal amount to $23,915,000 designated as
“Aqua Pennsylvania, Inc., First Mortgage Bonds, 5.00% Series due 2041”.

Interest on the Bonds shall be payable semiannually on February 1 and August 1 of each year
(each an “interest payment date”), commencing August 1, 2007. Each Bond shall be dated the date of
its authentication and shall bear interest from the interest payment date next preceding the date
of the authentication of such Bond (or if such Bond is authenticated after a Record Date as defined
below and on or before the succeeding interest payment date, from such succeeding interest payment
date, or if such Bond is authenticated on or prior to the record date for the first interest
payment date for the Bonds, in which case it shall bear interest from the date of original issuance
of the Bonds); provided, however, that, if at the time of authentication of any Bond, interest on
the predecessor Bond of such Bond is in default, such Bond shall bear interest from the date to
which interest has been paid, or, if no interest has been paid, from the date of original issuance
thereof. The 5.00% Series due 2040 shall be stated to mature (subject to the right of earlier
redemption at the prices and dates and upon the terms and conditions hereinafter set forth) on
February 1, 2040 and shall bear interest at the rate of 5.00%. The 5.00% Series due 2041 shall be
stated to mature (subject to the right of earlier redemption at the prices and dates and upon the
terms and conditions hereinafter set forth) on February 1, 2041 and shall bear interest at the rate
of 5.00%.

The Bonds of each series shall be issuable only as registered bonds without coupons, shall be
in the form hereinabove recited, in the denomination of Five Thousand Dollars ($5,000) or any
integral multiple thereof, shall be lettered “R-1” and shall bear such numbers as the Company may
reasonably require.

The principal of, and interest on the Bonds shall be payable at the designated office of the
trustee in Philadelphia, Pennsylvania, and shall be payable, along with interest on the Bonds, in
such coin or currency of the United States of America as at the time of payment is legal tender for
the payment of public and private debts; each installment of interest shall be paid by check to the
order of the person entitled thereto, mailed to such person’s address as the same appears on the
books maintained for such purpose by or on behalf of the Company, or by bank wire transfer of
immediately available funds pursuant to instructions and conditions incorporated in an agreement
between such person and the Trustee or the Company.

The person in whose name any Bond is registered at the close of business on any Record Date
(as hereinafter defined) with respect to any interest payment date shall be entitled to receive the
interest payable on such interest payment date notwithstanding the cancellation of such Bond upon
any transfer or exchange subsequent to the Record Date and prior to such interest payment date;
provided, however, that if and to the extent the Company shall default in the payment of the
interest due on such interest payment date, such defaulted interest shall be paid to the persons in
whose names outstanding Bonds are registered at the close of business on a subsequent Record Date
established by notice given by mail by or on behalf of the Company to the holders of Bonds not less
than fifteen days preceding such subsequent Record Date, such Record Date to be not less than ten
days preceding the date of payment of such defaulted interest.

 

19

 

The term “Record Date” with respect to any regular interest payment date shall mean the
fifteenth day of the calendar month next preceding the month in which such interest payment date
occurs.

The Bonds are being issued by the Company to secure the obligation of the Company to pay to or
for the account of the Authority an amount equal to the principal of, at maturity or earlier
redemption, and interest on, the Authority Bonds pursuant to the Financing Agreement. The Authority
Bonds are being sold to finance the Facilities.

The Authority Bonds are to be issued under the Authority Indenture and the right, title and
interest of the Authority in and to the Financing Agreement and the payments thereunder and the
security for such payments have been assigned by the Authority to the Authority Trustee, and the
Bonds are to be delivered by the Company on behalf of the Authority directly to the Authority
Trustee, as assignee, as security for the payment of the principal of, at maturity or earlier
redemption, and premium, if any, and interest on, the Authority Bonds. The Authority Trustee may
not sell, assign or otherwise transfer the Bonds except for a transfer of the entire outstanding
principal amount thereof to its successor as Trustee under the Authority Indenture, which successor
and each subsequent successor shall hold the Bonds subject to the same restriction on transfer.

The text of the Bonds and of the certificate of the Trustee upon such Bonds shall be,
respectively, substantially of the tenor and effect hereinbefore recited.

Exchange of any Bonds shall be effected in accordance with the applicable provisions of
Sections 7, 8 and 9 of Article II of the Original Indenture.

SECTION 2. The Bonds are redeemable only as follows:

(a) The 5.00% Series due 2040 are subject to redemption prior to maturity on or after February
1, 2017 by the Company, to the extent that the Authority Bonds are called for redemption under
Section 7.01(a)(i) of the Authority Indenture, and then out of moneys deposited with or held by the
Trustee for such purpose, as a whole or in part, at any time in the manner described below, at the
redemption price of one hundred percent (100%) of the principal amount to be redeemed, plus
interest accrued thereon to the date fixed for redemption;

(b) The 5.00% Series due 2041 are subject to redemption prior to maturity on or after February
1, 2017 by the Company, to the extent that the Authority Bonds are called for redemption under
Section 7.01(a)(i) of the Authority Indenture, and then out of moneys deposited with or held by the
Trustee for such purpose, as a whole or in part, at any time in the manner described below, at the
redemption price of one hundred percent (100%) of the principal amount to be redeemed, plus
interest accrued thereon to the date fixed for redemption;

(c) The 5.00% Series due 2040 are subject to redemption at the direction of the Company, in
whole, at any time prior to maturity, at a redemption price of 100% of the principal amount to be
redeemed, plus interest accrued thereon to the date fixed for redemption, at any time the Authority
Bonds maturing February 1, 2040 are subject to extraordinary optional redemption pursuant to
Section 7.01(a)(ii) of the Authority Indenture;

 

20

 

(d) The 5.00% Series due 2041 are subject to redemption at the direction of the Company, in
whole, at any time prior to maturity, at a redemption price of 100% of the principal amount to be
redeemed, plus interest accrued thereon to the date fixed for redemption, at any time the Authority
Bonds maturing February 1, 2041 are subject to extraordinary optional redemption pursuant to
Section 7.01(a)(ii) of the Authority Indenture;

(e) The 5.00% Series due 2040 are also subject to special mandatory redemption at the
direction of the Company, in part, prior to maturity, at a redemption price of 100% of the
principal amount of the bonds to be redeemed, plus interest accrued thereon to the date fixed for
redemption, at such time and in such amount as the Authority Bonds maturing February 1, 2040 are
subject to special mandatory redemption pursuant to Section 7.01(a)(iii) of the Authority
Indenture.

(f) The 5.00% Series due 2041 are also subject to special mandatory redemption at the
direction of the Company, in part, prior to maturity, at a redemption price of 100% of the
principal amount of the bonds to be redeemed, plus interest accrued thereon to the date fixed for
redemption, at such time and in such amount as the Authority Bonds maturing February 1, 2041 are
subject to special mandatory redemption pursuant to Section 7.01(a)(iii) of the Authority
Indenture.

(g) The 5.00% Series due 2040 and the 5.00% Series due 2041 are also subject to mandatory
redemption by the Company in whole if the Trustee shall receive a written demand from the Authority
Trustee for redemption of all such Bonds held by the Authority Trustee stating that an “Event of
Default” as defined in Section 9.01(a) of the Authority Indenture has occurred and is continuing
and that payment of the principal of the Authority Bonds has been accelerated pursuant to Section
9.01(b) of the Authority Indenture, provided that at the time of notice of such redemption as
provided in Section 2 of Article V of the Original Indenture (i) said written demand shall not have
been withdrawn by the Authority Trustee, and (ii) no event of default under Section 1 of Article XI
of the Original Indenture shall have occurred and be continuing.

SECTION 3. Any redemption of the Bonds shall be effected in accordance with the provisions of
Article V of the Original Indenture.

SECTION 4. In the event any Authority Bonds shall be purchased by the Company, surrendered by
the Company to the Authority Trustee for cancellation and cancelled by the Authority Trustee, Bonds
corresponding in principal amount to the Authority Bonds so purchased, surrendered and cancelled
shall be deemed to have been paid in full.

SECTION 5. In the event and to the extent the principal of and premium, if any, or interest
on, any Authority Bonds is paid out of funds held by the Authority Trustee other than payments of
Bonds, the corresponding payment of the principal of, and premium, if any, or interest on, an
aggregate principal amount of Bonds equal to the aggregate principal amount of such Authority Bonds
shall be deemed to have been satisfied.

 

21

 

SECTION 6. All Bonds deemed to have been paid in full as provided in Section 4 and 5 of this
Article I of this Forty-first Supplemental Indenture shall be surrendered to the
Trustee for cancellation, and the Trustee shall forthwith cancel the same and, in accordance
with applicable laws and regulations and the Trustee’s policies and procedures, and on the written
request of the Company, deliver the same to the Company. In case part of an outstanding Bond shall
be deemed to have been partially paid as provided in said Section 4 or Section 5, upon presentation
of such Bond at the designated office of the Trustee, the Trustee shall make a notation thereon of
the payment of the portion of the principal amount of such Bond so deemed to have been paid unless
the registered owner shall elect to surrender such Bond to the Trustee, in which case the Company
shall execute and the Trustee shall authenticate and deliver, without charge to the registered
owner, Bonds in such authorized denominations as shall be specified by the registered owner for the
unpaid balance of the principal amount of such outstanding Bond.

SECTION 7. The 5.00% Series due 2040 in the aggregate principal amount of $23,915,000 and the
5.00% Series due 2041 in the aggregate principal amount of $23,915,000 may be issued under the
provisions of Article IV of the Original Indenture and may forthwith be executed by the Company and
delivered to the Trustee and shall be authenticated by the Trustee and delivered to or upon the
order of the Company, upon receipt by the Trustee of the resolutions, certificates, opinions or
other instruments or all of the foregoing required to be delivered upon the issue of bonds pursuant
to the provisions of the Original Indenture.

ARTICLE II.

Maintenance or Improvement Deposit.

SECTION 1. The Company covenants that it will deposit with the Trustee on or before the March
1 next occurring after the bonds of the 9.89% Series due 2008 cease to be outstanding, or on or
before the March 1 next occurring after the bonds of the 9.93% Series due 2013 cease to be
outstanding, or on or before the next March 1 next occurring after the bonds of the 9.97% Series
due 2018 cease to be outstanding, or on or before the March 1 next occurring after the bonds of the
9.12% Series due 2010 cease to be outstanding, or on or before the March 1 next occurring after the
bonds of the 9.29% Series due 2026 cease to be outstanding, or on or before the March 1 next
occurring after the bonds of the 9.17% Series due 2021 cease to be outstanding, or on or before the
next March 1 next occurring after the bonds of the 9.17% Series due 2011 cease to be outstanding,
or on or before the March 1 next occurring after the bonds of the 7.15% Series due 2008 cease to be
outstanding, or on or before the March 1 next occurring after the bonds of any of the Subseries of
the 1995 Medium Term Note Series issued under the Twenty-Ninth Supplemental Indenture (consisting
of the 7.72% Subseries A due 2025 and the 6.89% Subseries C due 2015) shall cease to be
outstanding, or on or before the March 1 next occurring after the bonds of any of the Subseries of
the 1997 Medium Term Note Series issued under the Thirty-First Supplemental Indenture (consisting
of the 6.75% Subseries A due 2007 and the 6.14% Subseries C due 2008) cease to be outstanding, or
on or before March 1 next occurring after the bonds of 6.00% Series due 2029 cease to be
outstanding, or on or before March 1 next occurring after the bonds of any of the Subseries of the
1999 Medium Term Note Series issued under the Thirty-Third Supplemental Indenture (consisting of
the 6.21% Series due 2011, the 9.53% Subseries D due 2019, the 8.26% Subseries F due 2022, the
9.22% Subseries H due 2019, the 8.32% Subseries I due 2022, the 8.14% Subseries J due 2025, the
6.00% Subseries K due 2030, the 5.93% Subseries L due 2012, the 3.461% Subseries N due 2007, the
5.08% Subseries O due 2015, the 5.17% Subseries P due 2017, the 5.751% Subseries Q due 2019, the
5.751% Subseries R due 2019, the 6.06% Subseries S due 2027, the 6.06% Subseries T due 2027

 

22

 

and the 5.98% Subseries U due 2028) cease to be outstanding, or on or before March 1 next
occurring after the bonds of the 5.35% Series due 2031 cease to be outstanding, or on or before
March 1 next occurring after the bonds of the 5.55% Series due 2032 cease to be outstanding, or on
or before March 1 next occurring after the bonds of the 3.75% Series due 2010 cease to be
outstanding, or on or before March 1 next occurring after the bonds of the 5.15% Series due 2032
cease to be outstanding, or on or before March 1 next occurring after the bonds of the 5.05% Series
due 2039 cease to be outstanding, or on or before March 1 next occurring after the bonds of the
5.00% Series due 2036 cease to be outstanding, or on or before March 1 next occurring after the
bonds of the 5.00% Series due 2037 cease to be outstanding, or on or before March 1 next occurring
after the bonds of the 5.00% Series due 2038 cease to be outstanding, or on or before March 1 next
occurring after the bonds of the 5.00% Series due 2035 cease to be outstanding, whichever is
latest, an amount in cash (the “Maintenance or Improvement Deposit”) equal to 9% of the Gross
Operating Revenues of the Company during the preceding calendar year less, to the extent that the
Company desires to take such credits, the following:

(a) the amount actually expended for maintenance during such calendar year; and

(b) the Cost or Fair Value, whichever is less, of Permanent Additions acquired during such
calendar year which at the time of taking such credit constitute Available Permanent Additions; and

(c) the unapplied balance, or any part thereof, of the Cost or Fair Value, whichever is less,
of Available Permanent Additions acquired by the Company during the five calendar years preceding
such calendar year and specified in the Officers’ Certificates delivered to the Trustee pursuant to
Section 2 of this Article, but only to the extent that the Permanent Additions with respect to
which such Cost or Fair Value was determined shall at the time of taking such credit constitute
Available Permanent Additions.

SECTION 2. The Company covenants that it will on or before March 1 in each year, beginning
with the first deposit made with the Trustee under the provisions of Section 1 of this Article, as
long as any of the Bonds are outstanding, deliver to the Trustee the following:

(a) An Officers’ Certificate, which shall state:

(i) The amount of the Gross Operating Revenues for the preceding calendar year;

(ii) 9% of such Gross Operating Revenues;

(iii) The amount actually expended by the Company for maintenance during such calendar
year;

(iv) The amount set forth in subparagraph (xii) of each Officers’ Certificate delivered
to the Trustee pursuant to the provisions of this Section during the preceding five calendar
years (specifying each such Officers’ Certificate), after deducting from each such amount
the aggregate of (a) the Cost or Fair Value, whichever is less, of all Permanent Additions
represented by such amount which have ceased to be Available Permanent Additions; and (b)
any part of such amount for which the Company has
previously taken credit against any Maintenance or Improvement Deposit (specifying the
Officers’ Certificate in which such credit was taken); and (c) any part of such amount for
which the Company then desires to take credit against the Maintenance or Improvement
Deposit;

 

23

 

(v) An amount which shall be the aggregate of all amounts set forth pursuant to the
provisions of clause (c) of the foregoing subparagraph (iv);

(vi) The Cost or Fair Value, whichever is less, of Available Permanent Additions
acquired by the Company during the preceding calendar year;

(vii) That part of the amount set forth in subparagraph (vi) which the Company desires
to use as a credit against the Maintenance or Improvement Deposit;

(viii) The amount of cash payable to the Trustee under the provisions of Section 1 of
this Article, which shall be the amount by which the amount set forth in subparagraph (ii)
hereof exceeds the sum of the amounts set forth in subparagraphs (iii), (v) and (vii)
hereof;

(ix) The sum of all amounts charged on the books of the Company against any reserve for
retirement or depreciation during the preceding calendar year representing the aggregate of
the Cost when acquired of any part of the Company’s plants and property of the character
described in the granting clauses hereof which has been permanently retired or abandoned;

(x) The aggregate of the amounts set forth in subparagraphs (v) and (vii) hereof;

(xi) The amount by which the amount set forth in subparagraph (x) exceeds the amount
set forth in subparagraph (ix), being the amount required to be deducted from the Cost or
Fair Value of Available Permanent Additions in order to determine a Net Amount of Available
Permanent Additions pursuant to the provisions of Section 9 of Article I of the Original
Indenture;

(xii) The amount set forth in subparagraph (vi) after deducting the amount, if any, set
forth in subparagraph (vii); and

(xiii) That all conditions precedent to the taking of the credit or credits so
requested by the Company have been complied with.

(b) In the event that the Officers’ Certificate delivered to the Trustee pursuant to the
provisions of paragraph (a) of this Section shall state, pursuant to the requirements of
subparagraph (vi), the Cost or Fair Value of Available Permanent Additions acquired by the Company
during the preceding calendar year, the documents specified in paragraphs 2, 3, 5, 6 and 7 of
subdivision (B) of Section 3 of Article IV of the Original Indenture.

(c) An amount in cash equal to the sum set forth in subparagraph (viii) of the Officers’
Certificate provided for in paragraph (a) hereof.

 

24

 

SECTION 3. All cash deposited with the Trustee as part of any Maintenance or Improvement
Deposit provided for in Section 1 of this Article, may, at the option of the Company, be applied to
the purchase of bonds under the provisions of Section 2 of Article X of the Original Indenture or
to the redemption of bonds under the provisions of Section 3 of Article X of the Original Indenture
or may be withdrawn by the Company at any time to reimburse the Company for the cost of a Net
Amount of Available Permanent Additions (excluding, however, from any such Available Permanent
Additions all Permanent Additions included in any certificate delivered to the Trustee for the
purpose of obtaining a credit against any Maintenance or Improvement Deposit provided for in
Section 1 of this Article to the extent that such Permanent Additions have been used for any such
credit). The Trustee shall pay to or upon the written order of the Company all or any part of such
cash upon the receipt by the Trustee of:

(a) A Resolution requesting such payment; and

(b) The documents specified in paragraphs 2, 5, 6 and 7 of subdivision (B) of Section 3 of
Article IV of the Original Indenture, with such modifications, additions and omissions as may be
appropriate in the light of the purposes for which they are used.

ARTICLE III.

Covenants of the Company.

SECTION 1. The Company hereby covenants and agrees with the Trustee, for the benefit of the
Trustee and all the present and future holders of the Bonds, that the Company will pay the
principal of, and premium, if any, and interest on, all bonds issued or to be issued as aforesaid
under and secured by the Original Indenture as hereby supplemented, as well as all bonds which may
be hereafter issued in exchange or substitution therefor, and will perform and fulfill all of the
terms, covenants and conditions of the Original Indenture and of this Forty-first Supplemental
Indenture with respect to the additional bonds to be issued under the Original Indenture as hereby
supplemented.

SECTION 2. The Company covenants and agrees that so long as any of the Bonds are outstanding
(a) the Company will not make any Stock Payment if, after giving effect thereto, its retained
earnings, computed in accordance with generally accepted accounting principles consistently
applied, will be less than the sum of (i) Excluded Earnings, if any, since December 31, 2006, and
(ii) $20,000,000; (b) Stock Payments made more than 40 days after the commencement, and prior to
the expiration, of any Restricted Period shall not exceed 65% of the Company’s Net Income during
such Restricted Period; and (c) the Company will not authorize a Stock Payment if there has
occurred and is continuing an event of default under subsections (a) and (b) of Section 1 of
Article XI of the Original Indenture.

For the purposes of this Section 2 the following terms shall have the following meanings:

“Capitalization” shall mean the sum of (i) the aggregate principal amount of all Debt at the
time outstanding, (ii) the aggregate par or stated value of all capital stock of the Company of all
classes at the time outstanding, (iii) premium on capital stock, (iv) capital surplus, and (v)
retained earnings.

 

25

 

“Debt” means (i) all indebtedness, whether or not represented by bonds, debentures, notes or
other securities, for the repayment of money borrowed, (ii) all deferred indebtedness for the
payment of the purchase price of property or assets purchased (but Debt shall not be deemed to
include customer advances for construction or any bonds issued under the Indenture which are not
Outstanding Bonds), (iii) leases which have been or, in accordance with generally accepted
accounting principles, should be recorded as capital leases and (iv) guarantees of the obligations
of another of the nature described in clauses (i), (ii) or (iii) which have been or, in accordance
with generally accepted accounting principles, should be recorded as debt.

“Determination Date” shall mean the last day of each calendar quarter. Any calculation with
respect to any Determination Date shall be based on the Company’s balance sheet as of such date.

“Excluded Earnings” shall mean 35% of the Company’s Net Income during any Restricted Period.

“Net Income” for any particular Restricted Period shall mean the amount of net income properly
attributable to the conduct of the business of the Company for such period, as determined in
accordance with generally accepted accounting principles consistently applied, after payment of or
provision for taxes on income for such period.

“Outstanding Bonds” shall mean bonds which are outstanding within the meaning indicated in
Section 20 of Article I of the Original Indenture except that, in addition to the bonds referred to
in clauses (a), (b) and (c) of said Section 20, said term shall not include bonds for the
retirement of which sufficient funds have been deposited with the Trustee with irrevocable
instructions to apply such funds to the retirement of such bonds at a specified time, which may be
either the maturity thereof or a specified redemption date, whether or not notice of redemption
shall have been given.

“Restricted Period” shall mean a period commencing on any Determination Date on which the
total Debt of the Company is, or as the result of any Stock Payment then declared or set aside and
to be made thereafter will be, more than 70% of Capitalization, and continuing until the third
consecutive Determination Date on which the total Debt of the Company does not exceed 70% of
Capitalization.

“Stock Payment” shall mean any payment in cash or property (other than stock of the Company)
to any holder of shares of any class of capital stock of the Company as such holder, whether by
dividend or upon the purchase, redemption, conversion or other acquisition of such shares, or
otherwise.

SECTION 3. The Company covenants and agrees that so long as any of the Bonds are outstanding,
neither the Company nor any subsidiary of the Company will, directly or indirectly, lend or in any
manner extend its credit to, or indemnify, or make any donation or capital contribution to, or
purchase any security of, any corporation which directly or indirectly controls the Company, or any
subsidiary or affiliate (other than an affiliate which is a subsidiary of the Company) of any such
corporation.

 

26

 

ARTICLE IV.

The Trustee.

SECTION 1. The Trustee hereby accepts the trust hereby declared and provided, and agrees to
perform the same upon the terms and conditions in the Original Indenture, as supplemented by this
Forty-first Supplemental Indenture.

SECTION 2. Subject to the provisions of Article XIII of the Original Indenture, the Trustee
may execute any of the trusts or powers hereof and perform any of its duties by or through and
consult with attorneys, agents, officers or employees selected by the Trustee in its sole
discretion. The Trustee shall be entitled to advice of counsel concerning all matters of trusts
hereof and the duties hereunder and may in all cases pay such reasonable compensation to all such
attorneys, agents, officers and employees as may reasonably be employed in connection with the
trusts hereof. The Trustee may act or refrain from acting and rely upon and be free from all
liability for so relying upon the opinion or advice of any attorney (who may be the attorney or
attorneys for the Company). The Trustee may act and rely on written opinions of experts employed by
the Trustee and such advice shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Trustee hereunder in good faith and in reliance
thereon. The Trustee shall not be responsible for any loss or damage resulting from any action or
non-action in good faith taken in reliance upon such opinion or advice. The Trustee shall not be
bound to confirm, verify or make any investigation into the facts or matters stated in any
financial or other statements, resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order or other paper or document furnished pursuant to the
terms hereof.

SECTION 3. Before the Trustee shall be required to foreclose on, or to take control or
possession of, the real property or leasehold interest (the “Premises”) which may be the subject of
any mortgage or mortgages for which the Trustee is mortgagee in connection with the issuance of the
Bonds, the Trustee shall be indemnified and held harmless by the holders and/or beneficial owners
of the Bonds from and against any and all expense, loss, or liability that may be suffered by the
Trustee in connection with any spill, leak or release which may have occurred on or invaded the
Premises or any contamination by any Hazardous Substance (hereinafter defined), whether caused by
the Company or any other person or entity, including, but not limited to, (1) any and all
reasonable expenses that the Trustee may incur in complying with any of the Environmental Statutes
(hereinafter defined), (2) any and all reasonable costs that the Trustee may incur in studying or
remedying any spill, leak or release which may have occurred on or invaded the Premises or any
contamination, (3) any and all fines or penalties assessed upon the Trustee by reason of such
contamination, (4) any and all loss of value of the Premises or the improvements thereon by reason
of such contamination, and (5) any and all legal fees and costs reasonably incurred by the Trustee
in connection with any of the foregoing. As used in this Section, contamination by any Hazardous
Substance shall include contamination, arising from the presence, creation, production, collection,
treatment, disposal, discharge, release, storage, transport or transfer of any Hazardous Substance
at or from the Premises or any improvements thereon. As used in this Section, the term “Hazardous
Substance” shall mean petroleum hydrocarbons or any substance which (a) constitutes a hazardous
waste or substance under any applicable federal, state or local law, rule, order or regulation now
or hereafter adopted; (b) constitutes a “hazardous substance” as such term is defined under the

 

27

 

Comprehensive Environmental Response, Compensation and Liability Act, as amended (42 U.S.C.
§9601 et seq.) and the regulations issued thereunder and any comparable state or local law
or regulation; (c) constitutes a “hazardous waste” under the Resource Conservation and Recovery
Act, (42 U.S.C. §6991) and the regulations issued thereunder and any comparable state or local law
or regulation; (d) constitutes a pollutant, contaminant, chemical or industrial, toxic or hazardous
substance or waste as such terms are defined under Federal Clean Water Act, as amended (33 U.S.C.
§1251 et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. §2601 et seq.), or any
comparable state or local laws or regulations; (e) exhibits any of the characteristics enumerated
in 40 C.F.R. Sections 261.20 — 261.24, inclusive; (f) those extremely hazardous substances listed
in Section 302 of the Superfund Amendments and Reauthorization Act of 1986 (Public Law 99-499, 100
Stat. 1613) which are present in threshold planning or reportable quantities as defined under such
act; (g) toxic or hazardous chemical substances which are present in quantities which exceed
exposure standards as those terms are defined under Sections 6 and 8 of the Occupational Safety and
Health Act, as amended (29 U.S.C. §§655 and 657 and 29 C.F.R. Part 1910, subpart 2); and (h) any
asbestos, petroleum-based products or any Hazardous Substance contained within or release from any
underground or aboveground storage tanks. As used in this Section, the term “Environmental
Statutes” shall mean the statutes, laws, rules, orders and regulations referred to in (a) through
(g) inclusive in the preceding sentence.

ARTICLE V.

Miscellaneous.

SECTION 1. This instrument is executed and shall be construed as an indenture supplemental to
the Original Indenture, and shall form a part thereof, and except as hereby supplemented, the
Original Indenture and the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth,
Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth,
Nineteenth, Twentieth, Twenty-First, Twenty-Second, Twenty-Third, Twenty-Fourth, Twenty-Fifth,
Twenty-Sixth, Twenty-Seventh, Twenty-Eighth, Twenty-Ninth, Thirtieth, Thirty-First, Thirty-Second,
Thirty-Third, Thirty-Fourth, Thirty-Fifth, Thirty-Sixth, Thirty-Seventh, Thirty-Eighth,
Thirty-Ninth and Fortieth Supplemental Indentures are hereby confirmed. All references in this
Forty-first Supplemental Indenture to the Original Indenture shall be deemed to refer to the
Original Indenture as heretofore amended and supplemented, and all terms used herein and not
specifically defined herein shall be taken to have the same meaning as in the Original Indenture,
as so amended, except in the cases where the context clearly indicates otherwise.

SECTION 2. Any notices to the Trustee under this Forty-first Supplemental Indenture shall be
delivered to the Trustee by registered or certified mail, hand delivery or other courier or express
delivery service (with receipt confirmed) or by telecopy (with receipt confirmed) at the following
address:

J.P. Morgan Trust Company, National Association

c/o The Bank of New York

Global Corporate Finance

100 Barclay Street

New York, NY 10286

Attention: Francine Kincaid

Telecopy: 212-623-6166

 

28

 

Any change in such address or telecopy number may be made by notice to the Company delivered in the
manner set forth above.

SECTION 3. All recitals in this Forty-first Supplemental Indenture are made by the Company
only and not by the Trustee; and all of the provisions contained in the Original Indenture in
respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable
in respect hereof as fully and with like effect as if set forth herein in full.

SECTION 4. Although this Forty-first Supplemental Indenture is dated as of January 1, 2007 for
convenience and for the purpose of reference, the actual date or dates of execution hereof by the
Company and the Trustee are as indicated by their respective acknowledgments annexed hereto.

SECTION 5. In order to facilitate the recording or filing of this Forty-first Supplemental
Indenture, the same may be simultaneously executed in several counterparts, each of which shall be
deemed to be an original and such counterparts shall together constitute but one and the same
instrument.

SECTION 6. This Forty-first Supplemental Indenture shall become effective for the incurrence
of debt upon delivery to the Trustee by the Company of the certificates required by Articles IV, VI
and VII of the Original Indenture, which shall occur concurrently with or prior to the
authentication of the 5.00% Series due 2040 and the 5.00% Series due 2041. This Forty-first
Supplemental Indenture is effective to evidence the Trustee’s lien on the property described herein
immediately upon execution.

 

29

 

IN WITNESS WHEREOF the parties hereto have caused their corporate seals to be hereunto affixed
and their authorized officers have hereto affixed their signatures, and their authorized officers
have duly attested the execution hereof, as of the day first above written.

	 	 	 	 	 	 	 
	[CORPORATE SEAL]	 	AQUA PENNSYLVANIA, INC.,
	 	 	 	 	as successor by merger to
	 	 	 	 	Philadelphia Suburban Water Company
	 
	 	 	 	 	 	 
	Attest:

	 	          Roy H. Stahl
	 	By:
	 	          Kathy L. Pape
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	Vice President and Treasurer
	 
	 	 	 	 	 	 
	[CORPORATE SEAL]	 	J.P. MORGAN TRUST COMPANY,
	 	 	 	 	NATIONAL ASSOCIATION
	 	 	 	 	as Trustee
	 
	 	 	 	 	 	 
	Attest:

	 	          Laurence O’Brien
	 	By:
	 	The Bank of New York
	 

	 	 	 	 	 	 
	 

	 	Authorized Officer
	 	 	 	Attorney-in-fact
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	          Francine Kincaid
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Francine Kincaid
	 

	 	 	 	Title:
	 	Vice President

 

30

 

EXHIBIT A

OUTSTANDING FIRST MORTGAGE BONDS

 

A-1

 

EXHIBIT B

RECORDING INFORMATION

BUCKS, CHESTER, DELAWARE AND MONTGOMERY COUNTIES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Date of	 	Bucks	 	Chester	 	Delaware	 	Montgomery
	Indenture	 	Recording	 	Book	 	Page	 	Book	 	Page	 	Book	 	Page	 	Book	 	Page
	Original
	 	2/20/41	 	496	 	1	 	H-13.Vol.307	 	20	 	1034	 	1	 	1625	 	1
	First Supplemental
	 	8/26/48	 	632	 	1	 	F-16.Vol.380	 	200	 	1668	 	169	 	2031	 	257
	Second Supplemental
	 	7/1/52	 	768	 	438	 	18.Vol.425	 	186	 	1962	 	376	 	2360	 	517
	Third Supplemental
	 	11/25/53	 	895	 	1	 	18.Vol.442	 	325	 	2052	 	1	 	2493	 	1
	Fourth Supplemental
	 	1/9/56	 	1089	 	155	 	Z-20.Vol.499	 	1	 	2199	 	1	 	2722	 	425
	Fifth Supplemental
	 	3/20/57	 	1181	 	316	 	B-22.Vol.536	 	601	 	2294	 	50	 	2850	 	335
	Sixth Supplemental
	 	5/9/58	 	1254	 	1	 	G-23	 	201	 	2380	 	039	 	2952	 	289
	Seventh Supplemental
	 	9/25/59	 	1332	 	509	 	B-25	 	109	 	2442	 	1	 	3090	 	249
	Eighth Supplemental
	 	5/9/61	 	—	 	—	 	Z-26	 	17	 	2526	 	312	 	—	 	—
	Eighth Supplemental
	 	5/10/61	 	1409	 	225	 	—	 	—	 	—	 	—	 	3249	 	289
	Ninth Supplemental
	 	4/10/62	 	1458	 	372	 	G-28	 	126	 	2581	 	463	 	3307	 	169
	Tenth Supplemental
	 	3/19/64	 	1568	 	1	 	M-30	 	967	 	2976	 	1043	 	3310	 	237
	Eleventh Supplemental
	 	11/4/66	 	1655	 	695	 	Q-32	 	6682	 	762	 	223	 	3549	 	129
	Twelfth Supplemental
	 	1/23/68	 	1691	 	531	 	N-33	 	219	 	2792	 	708	 	3542	 	315
	Thirteenth
Supplemental
	 	7/2/70	 	1763	 	1167	 	D-35	 	80	 	2850	 	301	 	3687	 	23
	Fourteenth
Supplemental
	 	11/5/70	 	1774	 	331	 	K-35	 	713	 	2858	 	3113	 	700	 	548
	Fifteenth Supplemental
	 	12/11/72	 	1869	 	196	 	O-37	 	998	 	2926	 	550	 	3786	 	96
	Sixteenth Supplemental
	 	5/28/75	 	1979	 	14	 	E-44	 	77	 	3005	 	511	 	4010	 	307
	Seventeenth
Supplemental
	 	12/18/77	 	2072	 	683	 	L-51	 	1	 	3072	 	43	 	5002	 	436

 

B-1

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Date of	 	Bucks	 	Chester	 	Delaware	 	Montgomery
	Indenture	 	Recording	 	Book	 	Page	 	Book	 	Page	 	Book	 	Page	 	Book	 	Page
	Eighteenth
Supplemental
	 	4/29/77	 	2082	 	567	 	B-52	 	344	 	3078	 	728	 	5003	 	291
	Nineteenth
Supplemental
	 	6/23/80	 	2303	 	714	 	J-62	 	92	 	3261	 	293	 	5030	 	502
	Twentieth Supplemental
	 	8/2/83	 	2487	 	370	 	D-72	 	1	 	96	 	810	 	5662	 	1045
	Twenty-First
Supplemental
	 	8/27/85	 	2690	 	806	 	54	 	550	 	—	 	—	 	5864	 	1347
	Twenty-First
Supplemental
	 	8/28/85	 	—	 	—	 	—	 	—	 	264	 	159	 	—	 	—
	Twenty-Second
Supplemental
	 	4/22/86	 	2774	 	160	 	263	 	275	 	326	 	592	 	5944	 	360
	Twenty-Third
Supplemental
	 	4/1/87	 	2960	 	693	 	—	 	—	 	—	 	—	 	—	 	—
	Twenty-Third
Supplemental
	 	4/2/87	 	—	 	—	 	680	 	337	 	447	 	1807	 	6115	 	602
	Twenty-Fourth
Supplemental
	 	7/25/88	 	3199	 	1095	 	1224	 	389	 	0593	 	0585	 	6324	 	143
	Twenty-Fifth
Supplemental
	 	1/12/90	 	0136	 	0250	 	1848	 	205	 	731	 	1571	 	6538	 	376
	Twenty-Sixth
Supplemental
	 	11/8/91	 	369	 	2190	 	2660	 	205	 	894	 	2241	 	6780	 	891
	Twenty-Seventh
Supplemental
	 	6/29/92	 	0487	 	1829	 	3055	 	182	 	0969	 	2023	 	6918	 	302
	Twenty-Eighth
Supplemental
	 	4/22/93	 	0652	 	1335	 	3542	 	1542	 	1081	 	0852	 	7112	 	0539
	Twenty-Ninth
Supplemental
	 	3/30/95	 	1045	 	1872	 	3875	 	1368	 	1349	 	0829	 	7561	 	1155
	Thirtieth Supplemental
	 	8/30/95	 	1111	 	0798	 	3932	 	0471	 	1393	 	2255	 	7631	 	0689
	Thirty-First
Supplemental
	 	7/11/97	 	1421	 	2196	 	4201	 	2133	 	1607	 	138	 	7968	 	779
	Thirty-Second
Supplemental
	 	10/6/99	 	1939	 	421	 	4646	 	642	 	1936	 	1207	 	8548	 	1067

 

B-2

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Date of	 	Bucks	 	Chester	 	Delaware	 	Montgomery
	Indenture	 	Recording	 	Book	 	Page	 	Book	 	Page	 	Book	 	Page	 	Book	 	Page
	Thirty-Third
Supplemental
	 	11/30/99	 	1970	 	1573	 	4675	 	1272	 	1936	 	1207	 	8548	 	1067
	Thirty-Fourth
Supplemental
	 	10/31/01	 	2471	 	1207	 	5101	 	2142	 	2288	 	0174	 	9225	 	761
	Thirty-Fifth
Supplemental
	 	1/10/02	 	2541	 	765	 	5152	 	818	 	2329	 	1019	 	9314	 	1079
	Thirty-Sixth
Supplemental
	 	6/5/02	 	2731	 	1881	 	5296	 	356	 	2448	 	1862	 	9593	 	1416
	Thirty-Seventh Supplemental
	 	 	 	 	 	 	 	12/31/02	 	 	 	12/31/02	 	 	 	12/30/02	 	 
	 
	 	12/27/02	 	3036	 	1425	 	B-5514	 	1552	 	02631	 	0294	 	10018	 	0204
	Thirty-Eighth Supplemental
	 	 	 	 	 	 	 	11/23/04	 	 	 	11/22/04	 	 	 	11/22/04	 	 
	 
	 	11/9/04	 	4196	 	1557	 	B-6342	 	800	 	B-3348	 	1698	 	B-00020	 	0237
	Thirty-Ninth Supplemental
	 	 	 	 	 	1471	 	5/19/05	 	1375	 	 	 	0939	 	 	 	0688
	 
	 	5/18/05	 	4441	 	#2005066104	 	6496	 	#10534807	 	03487	 	32005044507	 	0020	 	2005069126
	Fortieth Supplemental
	 	12/27/05	 	4768	 	1853	 	12/23/05	 	897	 	12/23/05	 	2206	 	12/29/05	 	1156
	 
	 	 	 	 	 	 	 	6720	 	#10608829	 	03687	 	#2005123053	 	11689	 	 

BERKS COUNTY

	 	 	 	 	 	 	 
	Indenture	 	Date of Recording	 	Book	 	Page
	Original
	 	8/16/99	 	3113	 	707
	Thirty-Second Supplemental
	 	10/6/99	 	3132	 	1510
	Thirty-Third Supplemental
	 	11/30/99	 	3149	 	1260
	Thirty-Fourth Supplemental
	 	10/31/01	 	3421	 	896
	Thirty-Fifth Supplemental
	 	1/10/02	 	3461	 	417
	Thirty-Sixth Supplemental
	 	6/4/02	 	3544	 	1357

 

B-3

 

	 	 	 	 	 	 	 
	Indenture	 	Date of Recording	 	Book	 	Page
	Thirty-Seventh
Supplemental
	 	12/30/02	 	3664	 	0001
	Thirty-Eighth Supplemental
	 	11/30/04	 	4197	 	988
	Thirty-Ninth Supplemental
	 	5/18/05	 	04583	 	1017
	Fortieth Supplemental
	 	02/09/06	 	04782	 	1916

BRADFORD, COLUMBIA, LAWRENCE, MERCER, NORTHUMBERLAND, PIKE, SCHUYLKILL AND WAYNE COUNTIES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BRADFORD	 	COLUMBIA	 	LAWRENCE	 	MERCER
	 	 	Date of	 	Instrument	 	Date of	 	Instrument	 	Date of	 	 	 	 	 	Date of	 	Instrument
	Indenture	 	Recording	 	No.	 	Recording	 	No.	 	Recording	 	Book	 	Page	 	Recording	 	No.
	Thirty-Fifth
Supplemental
	 	12/21/01	 	200115497	 	 	 	 	 	 	 	1688	 	744	 	 	 	 
	Thirty-Sixth
Supplemental
	 	07/04/02	 	200207151	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Thirty-Seventh
Supplemental
	 	12/30/02	 	200216472	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Thirty-Eighth
Supplemental
	 	11/22/04	 	200415112	 	11/30/04	 	200413567	 	11/24/04	 	1992	 	0291	 	11/24/04	 	2004020435
	Thirty-Ninth Supplemental
	 	 	 	 	 	 	 	 	 	 	 	 	 	200	 	 	 	 
	 
	 	5/16/05	 	200504827	 	5/18/05	 	200505042	 	5/16/2005	 	2032	 	#005488	 	5/13/05	 	2005-7340
	Fortieth Supplemental
	 	 	 	 	 	 	 	 	 	 	 	 	 	0934	 	 	 	2005-
	 
	 	12/23/05	 	200594992	 	12/23/05	 	200513981	 	12/27/05	 	2088	 	#015325	 	12/27/05	 	00020320

 

B-4

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	NORTHUMBERLAND	 	PIKE	 	SCHUYLKILL	 	WAYNE
	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 
	Indenture	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page
	Thirty-Fifth
Supplemental
	 	 	 	1404	 	246	 	 	 	1909	 	2328	 	 	 	1413	 	1	 	 	 	1911	 	1
	Thirty-Sixth
Supplemental
	 	 	 	1445	 	028	 	 	 	 	 	 	 	 	 	1584	 	0259	 	 	 	 	 	 
	Thirty-Seventh
Supplemental
	 	12/30/02	 	1500	 	911	 	12/30/02	 	1959	 	2447	 	12/27/02	 	2022	 	1006	 	12/30/02	 	2136	 	148
	Thirty-Eighth
Supplemental
	 	11/22/04	 	1714	 	748	 	11/23/04	 	2081	 	1757	 	11/24/04	 	2126	 	569	 	11/23/04	 	2658	 	252
	Thirty-Ninth Supplemental
	 	 	 	 	 	50	 	 	 	 	 	2201	 	 	 	 	 	1871-1919	 	 	 	Vol.	 	1
	 
	 	5/18/05	 	1761	 	#200509076	 	5/17/05	 	2109	 	#200500008491	 	5/18/05	 	2150	 	#200500010263	 	5/16/05	 	2769	 	#200500004960
	Fortieth
Supplemental
	 	12/2705	 	1828	 	571	 	12/27/05	 	2151	 	1334	 	12/23/05	 	2184	 	875	 	12/27/05	 	2944	 	243

ADAMS, CARBON, CUMBERLAND, FOREST, JUNIATA, LACKAWANNA, LUZERNE, MONROE, NORTHAMPTION, SNYDER,
SUSQUEHANNA AND WYOMING COUNTIES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ADAMS	 	CARBON	 	CUMBERLAND	 	FOREST
	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 
	Indenture	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page
	Thirty-Eighth
Supplemental
	 	11/23/04	 	3781	 	1	 	11/30/04	 	200416309	 	 	 	11/22/04	 	2004047145	 	 	 	11/29/04	 	231	 	306
	Thirty-Ninth Supplemental
	 	 	 	 	 	 	 	 	 	 	 	689	 	 	 	 	 	 	 	 	 	 	 	345
	 
	 	5/19/05	 	3970	 	54	 	5/18/05	 	1330	 	#200505926	 	5/13/05	 	1907	 	0247	 	5/16/05	 	234	 	#478
	Fortieth
Supplemental
	 	12/28/05	 	4261	 	162	 	12/27/05	 	1408	 	576	 	12/27/05	 	1935	 	3233	 	12/27/05	 	0238	 	0304

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	JUNIATA	 	LACKAWANNA	 	LUZERNE	 	MONROE
	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 
	Indenture	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page	 	Recording	 	Book	 	Page
	Thirty-Eighth
Supplemental
	 	11/22/04	 	345	 	1047	 	11/29/04	 	#200441665	 	 	 	11/23/04	 	3004	 	294775	 	11/24/04	 	2208	 	7674
	Thirty-Ninth Supplemental
	 	 	 	 	 	0049	 	 	 	 	 	 	 	 	 	 	 	117727	 	 	 	 	 	8444
	 
	 	5/13/05	 	354	 	#2005-1512	 	5/16/05	 	#200512642	 	 	 	5/17/05	 	3005	 	#5637329	 	5/18/05	 	2225	 	#200521128
	Fortieth
Supplemental
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

B-5

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	NORTHAMPTON	 	SNYDER	 	SUSQUEHANNA	 	WYOMING
	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 	 	Date of	 	 	 	 
	Indenture	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page	 	Rec.	 	Book	 	Page
	Thirty-Eighth Supplemental
	 	11/22/04	 	2004-1	 	452932	 	11/24/04	 	631	 	0001	 	11/24/04	 	200411624	 	 	 	11/24/04	 	0513	 	0774
	Thirty-Ninth Supplemental
	 	 	 	 	 	182906	 	 	 	 	 	135	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	5/17/05	 	2005-1	 	#2005026917	 	5/17/05	 	650	 	#2005028880	 	5/16/05	 	#200504384	 	 	 	5/18/05	 	0522	 	1289
	Fortieth Supplemental
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Instrument	 	 	 	 	 	0536	 	 
	 
	 	12/23/05	 	2005-1	 	521563	 	12/27/05	 	677	 	684	 	12/22/05	 	#200512620	 	n/a	 	12/22/05	 	#2005004922	 	0748

 

B-6

 

EXHIBIT C

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Company's	 	 	 	 	 	 	 	 
	County and	 	Real Estate	 	Date of	 	 	 	Recorded	 	Tax Parcel
	Grantor	 	Index No.	 	Deed	 	Book	 	Page	 	I.D. Number
	 

	 	 
	 	 
	 	 
	 	 
	 	 

NONE

 

C-1

 

EXHIBIT D

Original Indenture

(attached to Forty-First Supplemental Indenture to be recorded in Crawford County

and Lehigh County only; redacted to delete property descriptions for counties

in which the Original Indenture has already been recorded)

 

C-2

 

J.P. Morgan Trust Company, National Association, Mortgagee and Trustee named in the foregoing
Forty-first Supplemental Indenture, hereby certifies that its precise name and the post office
address are as follows:

J.P. Morgan Trust Company, National Association

c/o The Bank of New York

Global Corporate Finance

100 Barclay Street

New York, NY 10286

Attention: Francine Kincaid

Telecopy: 212-623-6166

	 	 	 	 	 	 	 
	 	 	 	 	J.P. MORGAN TRUST COMPANY,
	 	 	 	 	NATIONAL ASSOCIATION
	 	 	 	 	as Trustee
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	The Bank of New York
	 

	 	 	 	 	 	Attorney-in-fact
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Francine Kincaid
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Francine Kincaid
	 

	 	 	 	Title:
	 	Vice President

 

 

 

COMMONWEALTH OF PENNSYLVANIA

COUNTY OF MONTGOMERY

On the _3rd___day of January, 2007, before me, the Subscriber, a Notary Public for the
Commonwealth of Pennsylvania, personally appeared Kathy L. Pape, who acknowledged herself to be the
Vice President and Treasurer of Aqua Pennsylvania, Inc., a corporation, and that she as such Vice
President and Treasurer, being authorized to do so, executed the foregoing Forty-first Supplemental
Indenture as and for the act and deed of said corporation and for the uses and purposes therein
mentioned, by signing the name of the corporation by herself as such officer.

In Witness Whereof I hereunto set my hand and official seal.

[NOTARIAL SEAL]

	 	 	 
	 

	 	Maria Gordiany
	 

	 	 

 

 

 

STATE OF NEW YORK

COUNTY OF NEW YORK

On the _3rd___day of January, 2007 before me, the Subscriber, a Notary Public for the State
of New York, personally appeared Francine Kincaid, who acknowledged herself to be a Vice President
of The Bank of New York, a New York banking corporation, and that she as such Vice President, being
authorized to do so, executed the foregoing Forty-first Supplemental Indenture as and for the act
and deed of said New York banking corporation and for the uses and purposes therein mentioned by
signing the name of said New York banking corporation by herself as such officer.

In Witness Whereof I hereunto set my hand and official seal.

[NOTARIAL SEAL]

	 	 	 
	 

	 	Gerold Picard
	 

	 	 

 

 

 

STATE OF NEW YORK

COUNTY OF NEW YORK

On this, the ___9th___day of January, 2007, before me ___Gerold Picard___, the undersigned
officer, personally appeared Francine Kincaid, known to me (or satisfactorily proven) to be the
person whose name is subscribed as attorney in fact for J.P. Morgan Trust Company, National
Association, and acknowledged that she executed the same as the act of her principal for the
purposes therein contained.

In Witness Whereof I hereunto set my hand and official seal.

[NOTARIAL SEAL]

	 	 	 
	 

	 	Gerold Picard
	 

	 	 

 

 

 

Power of Attorney

This POWER OF ATTORNEY (this “Power of Attorney”) is made as of October 1, 2006, by
J.P. Morgan Trust Company, National Association. (“JPM”) in favor of The Bank of New York
(“BNY”).

WHEREAS, JP Morgan Chase & Co. and The Bank of New York Company, Inc. have entered into that
certain Amended and Restated Purchase and Assumption Agreement, amended and restated as of October
1, 2006 (as it may be amended from time to time, the “Purchase Agreement”), which provides
for the sale of the Corporate Trust Business by JPM to BNY and, in connection therewith, the
entering into of a Servicing Agreement, dated as of the date hereof, which provides for the terms
and conditions upon which BNY will perform as agent of JPM all delegable duties of JPM in a
Corporate Trust Capacity under any Serviced Agreement;

WHEREAS, THIS Power Of Attorney is being entered into in connection with the Servicing
Agreement and capitalized terms used in this Power of Attorney without definitions will have the
meanings assigned to them in the Servicing Agreement.

NOW, THEREFORE, subject to the terms and conditions of the Servicing Agreement, the parties
hereto agree as follows:

JPM appoints BNY its true and lawful attorney-in-fact to take all Specified Actions, and any
other actions, and to execute documents or others papers in JPM’s place and stead, in each case to
the fullest extent of BNY’s capacity as Servicer with respect to a Serviced Appointment (other than
a London Trustee Appointment).

“Specified Action” means any action (including any determination to take no action)
with respect to a Serviced Appointment requiring or permitting the exercise of judgment in
connection with decisions between or among alternative courses of action, which may include,
without limitation, determinations with respect to the following:

1. the release or subordination of any lien on assets pledged to secure any Securities;

2. the sale or other disposition of any assets underlying or pledged to secure any Securities;

 

 

 

3. the creation or imposition of any encumbrance (other than encumbrances created by the
Corporate Trust Agreements) upon any assets underlying or pledged to secure any Securities;

4. the acceptance of any substitute collateral pledged for or assets underlying any
Securities;

5. the acceptance of any substitute credit enhancement or liquidity facility (such as a
replacement letter of credit, replacement standby bond purchase agreements or a reserve fund to be
substituted for a letter of credit) for any Securitites;

6. the removal of any trustee, custodian or servicer or any agent of a trustee, issuer,
seller, servicer, depositor or any other Person that is a party to any Corporate Trust Agreement
(whether or not for cause) or to determine whether there is sufficient cause to remove any such
Person;

7. any waiver, amendment or modification of the terms of any Corporate Trust Agreement;

8. any defeasance of obligations in respect of any Securities;

9. any early termination of any Corporate Trust Agreement;

10. any plan of liquidation of a grantor or pass-through trust or other issuer of Securities;

11. the approval of the amount or kind of indemnity given or security pledged, for the benefit
of JPM (such as indemnity or security required to be given or pledged by Securityholders in
connection with such Securityholders’ request that JOM, as the named fiduciary, take extraordinary
actions under a Corporate Trust Agreement);

12. the release of any documents from any custody arrangement established for the direct or
indirect benefit of Securityholders (not including any such release that can be accomplished
pursuant to a power of attorney that has been granted by JPM (other than the power of attorney
granted to BNY herein) or any release of documents that can be accomplished pursuant to standing
arrangements, such as a form of request for release that can be evaluated objectively on its face
for sufficiency and does not require an exercise of discretion);

13. taking any action requiring the exercise of discretion (either in carrying out the action
or in deciding whether to take the action) that is requested by a party to the Corporate Trust
Agreements or any Securityholder(s) that is not required to be taken under the terms of the
Corporate Trust Agreements;

 

 

 

14. taking any other action related to a default or the sending of default notices to issuers
or Securityholders; other than an Event of Default (pursuant to which BNY and its Subsidiaries
shall act only in accordance with Sections 3.2(g) and 5.3 of the Servicing Agreement);

15. the execution of documentation in connection with New Appointments; or

16. taking any other action of a nature similar to any of the foregoing.

The parties hereto agree that this Power of Attorney shall terminate with respect to a
particular Serviced Appointment at such time as BNY is no longer acting as Servicer under the
Servicing Agreement with respect to such Serviced Appointment.

[Signature pages to follow.]

 

 

 

IN WITNESS WHEREOF, the party below has executed this Power of Attorney by its duly authorized
corporate officers as of the date first above written.

	 	 	 	 	 	 	 
	 	 	J.P. MORGAN TRUST COMPANY NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	 	 	By:	 	GAIL M. INABA
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Gail M. Inaba
	 
	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Senior Vice President

STATE OF NEW YORK   )

COUNTY OF NEW YORK   )ss.:

On this 9th of January, 2007, before me personally cam Gail M. Inaba known to me to
be the individual described in and who executed the foregoing instrument and she duly acknowledged
and verified to me that the execution thereof was her act and deed/the act and deed of the entity
identified therein.

	 	 	 
	 

	 	Eui Sun Lisa
	 

	 	 
	 
	 	 
	 

	 	Notary Public

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