8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 15, 2004

THE YORK WATER COMPANY

(Exact Name of Registrant Specified in Charter)

Pennsylvania	0-690	23-1242500
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

130 East Market Street York, Pennsylvania	17401
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (717) 845-3601

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

TABLE OF CONTENTS

	Item 5. Other Events.
	Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
SIGNATURE
Exhibit Index
UNDERWRITING AGREEMENT
AGREEMENT BETWEEN YORK AND BRUCE C. MCINTOSH
AGREEMENT BETWEEN YORK AND JEFFREY R. HINES, P.E.
AGREEMENT BETWEEN YORK AND DUANE R. CLOSE
AGREEMENT BETWEEN YORK AND JEFFREY S. OSMAN
AGREEMENT BETWEEN YORK AND KATHLEEN M. MILLER
AGREEMENT BETWEEN YORK AND VERNON L. BRACEY
FORM OF SUPPLEMENTAL RETIREMENT PLAN
FORM OF DEFERRED COMPENSATION AGREEMENT

Item 5. Other Events.

     On May 27, 2004, The York Water Company, a Pennsylvania corporation (the “Company”), filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (Registration No. 333-115937) (the “Registration Statement”). The Company filed Amendment No. 1 to the Registration Statement on July 9, 2004. The Commission declared the Registration Statement effective on July 15, 2004. On July 15, 2004, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) relating to the offering of up to 477,250 shares (including an option to purchase up to 62,250 shares) of its common stock, without par value (the “Shares”). On July 16, 2004, the Company filed with the Commission a Prospectus Supplement to the Registration Statement pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, relating to the offering of the Shares. The Underwriting Agreement is attached to this Current Report on Form 8-K as Exhibit 1.1 and is hereby incorporated into such Registration Statement by reference.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits. The following exhibits are incorporated by reference into the Company’s Registration Statement:

Exhibit Number	Exhibit Title
1.1	Underwriting Agreement, dated July 15, 2004, between The York Water Company and Janney Montgomery Scott LLC.
10.1	Agreement, made as of January 26, 1999, between The York Water Company and Bruce C. McIntosh.
10.2	Agreement, made as of January 26, 1999, between The York Water Company and Jeffrey R. Hines, P.E.
10.3	Agreement, made as of January 26, 1999, between The York Water Company and Duane R. Close.
10.4	Agreement, made as of December 18, 2003, between The York Water Company and Jeffrey S. Osman.
10.5	Agreement, made as of December 15, 2003, between The York Water Company and Kathleen M. Miller.
10.6	Agreement, made as of December 15, 2003, between The York Water Company and Vernon L. Bracey.

- 2 -

Exhibit Number	Exhibit Title
10.7	Form of Supplemental Retirement Plan by and between The York Water Company and each of the individuals listed on Schedule 10.7 thereto, which plans are identical in all material respects except as indicated in Schedule 10.7.
10.8	Form of Deferred Compensation Agreement by and between The York Water Company and each of the individuals listed on Schedule 10.8 thereto, which agreements are identical in all material respects except as indicated in Schedule 10.8.

- 3 -

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

THE YORK WATER COMPANY                 (Registrant)
By:	/s/ Kathleen M. Miller
	Kathleen M. Miller
	Chief Financial Officer

Dated: July 16, 2004

- 4 -

Exhibit Index

Exhibit Number	Exhibit Title
1.1	Underwriting Agreement, dated July 15, 2004, between The York Water Company and Janney Montgomery Scott LLC.
10.1	Agreement, made as of January 26, 1999, between The York Water Company and Bruce C. McIntosh.
10.2	Agreement, made as of January 26, 1999, between The York Water Company and Jeffrey R. Hines, P.E.
10.3	Agreement, made as of January 26, 1999, between The York Water Company and Duane R. Close.
10.4	Agreement, made as of December 18, 2003, between The York Water Company and Jeffrey S. Osman.
10.5	Agreement, made as of December 15, 2003, between The York Water Company and Kathleen M. Miller.
10.6	Agreement, made as of December 15, 2003, between The York Water Company and Vernon L. Bracey.
10.7	Form of Supplemental Retirement Plan by and between The York Water Company and each of the individuals listed on Schedule 10.7 thereto, which plans are identical in all material respects except as indicated in Schedule 10.7.
10.8	Form of Deferred Compensation Agreement by and between The York Water Company and each of the individuals listed on Schedule 10.8 thereto, which agreements are identical in all material respects except as indicated in Schedule 10.8.

- 5 -

EX-1.1

                                                                     EXHIBIT 1.1


                                 415,000 SHARES

                             THE YORK WATER COMPANY

                                  COMMON STOCK

                               -------------------

                             UNDERWRITING AGREEMENT

                               -------------------



                                                      Philadelphia, Pennsylvania
                                                                   July 15, 2004

JANNEY MONTGOMERY SCOTT LLC
1801 Market Street
Philadelphia, PA  19103

Ladies and Gentlemen:

            The York Water Company, a Pennsylvania corporation ("York Water"),
proposes, subject to the terms and conditions stated herein, to sell to Janney
Montgomery Scott LLC (the "Underwriter"), an aggregate of 415,000 shares of York
Water's Common Stock, no par value per share ("Common Stock"). The Common Stock
to be sold to the Underwriter by York Water is referred to herein as the "Firm
Shares." The Firm Shares shall be offered to the public at a public offering
price of $17.80 per Firm Share (the "Offering Price").

            In order to cover over-allotments in the sale of the Firm Shares,
the Underwriter may, at its election and subject to the terms and conditions
stated herein, purchase up to 62,250 additional shares of Common Stock from York
Water. Such 62,250 additional shares of Common Stock are referred to herein as
the "Optional Shares." If any Optional Shares are purchased, the Optional Shares
shall be purchased for offering to the public at the Offering Price and in
accordance with the terms and conditions set forth herein. The Firm Shares and
the Optional Shares are referred to collectively herein as the "Shares."

            In consideration of the mutual agreements contained herein, York
Water and the Underwriter, intending to be legally bound, hereby confirm their
agreement as follows:

      1. REPRESENTATIONS AND WARRANTIES OF YORK WATER. York Water represents and
warrants to, and agrees with, the Underwriter that:

                                       1

            (a) York Water has prepared, in conformity with the requirements of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Regulations") of the Securities and Exchange Commission (the
"SEC") thereunder and has filed with the SEC a registration statement on Form
S-3 (File No. 333-115937) and one or more amendments thereto for the purpose of
registering the Shares under the Act. Copies of such registration statement and
any amendments thereto, and all forms of the related prospectus contained
therein, have been delivered to the Underwriter. Any preliminary prospectus
included in such registration statement or filed with the SEC pursuant to Rule
424(a) of the Regulations, as of its date, is hereinafter called a "Preliminary
Prospectus." The various parts of such registration statement, including all
exhibits thereto and the information contained in the form of the final
prospectus filed with the SEC pursuant to Rule 424(b) of the Regulations in
accordance with Section 5(a) of this Agreement and deemed by virtue of Rule 424
of the Regulations to be part of the registration statement at the time it was
declared effective, each as amended at the time the registration statement
became effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A of the
Regulations and the Current Report on Form 8-K in the form mutually agreed to
by York Water and the Underwriter to be filed on July 16, 2004, are hereinafter
collectively called the "Registration Statement." The final prospectus in the
form included in the Registration Statement or first filed with the SEC pursuant
to Rule 424(b) of the Regulations and any amendments or supplements thereto,
including the information (if any) deemed to be part of that prospectus at the
time of effectiveness pursuant to Rule 430A of the Regulations, as of its date,
is hereinafter called the "Prospectus." All references to the Registration
Statement, the Preliminary Prospectus and the Prospectus include all documents
incorporated therein by reference as of the effective date of the Registration
Statement or as of the date of the Preliminary Prospectus or Prospectus, as the
case may be. If York Water has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the Act
(the "Rule 462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.

            (b) The Registration Statement has become effective under the Act,
and the SEC has not issued any stop order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of the Preliminary
Prospectus, nor has the SEC instituted or threatened to institute proceedings
with respect to such an order. No stop order suspending the sale of the Shares
in any jurisdiction designated by the Underwriter as provided for in Section
5(f) hereof has been issued, and no proceedings for that purpose have been
instituted or threatened. York Water has complied in all material respects with
all requests of the SEC, or requests of which York Water has been advised of any
state or foreign securities commission in a state or foreign jurisdiction
designated by the Underwriter as provided for in Section 5(f) hereof, for
additional information to be included in the Registration Statement, any
Preliminary Prospectus or the Prospectus. Each Preliminary Prospectus, at the
time of filing thereof, conformed in all material respects to all the
requirements of the Act and the Regulations in all material respects and did not
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Registration Statement, on the date on which it was declared
effective by the SEC (the "Effective Date") and when any post-effective
amendment thereof shall become effective, and the Prospectus, at the time it is
filed with the SEC including, if applicable, pursuant to Rule 424(b), and on the
Closing Date (as defined in Section 4 hereof) and any Option


                                       2

Closing Date (as defined in Section 5(b) hereof), conformed and will conform in
all material respects to all the requirements of the Act and the Regulations,
and did not and will not, as of such dates, include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The two preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Preliminary Prospectus or the Prospectus based upon written
information furnished to York Water by or on behalf of the Underwriter for use
therein.

            (c) The documents incorporated by reference into the Prospectus
pursuant to Item 12 of Form S-3 under the Act, at the time they were filed with
the SEC, did not contain any untrue statement of material fact or omit to state
a material fact required to be stated therein, or necessary to make the
statements therein not misleading.

            (d) There are no legal or governmental proceedings pending or, to
the knowledge of York Water, threatened to which York Water is a party or to
which any of the properties of York Water are subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not described or
filed.

            (e) York Water is a corporation duly organized, validly subsisting
and in good standing under the laws of the Commonwealth of Pennsylvania, with
all necessary corporate power and authority, to own or lease and operate its
properties and to conduct its current business as described in the Prospectus,
and to execute, deliver and perform this Agreement. York Water is not qualified
as a foreign corporation in any jurisdiction and is not required to be so
qualified in order to operate its business as now conducted or currently
proposed to be conducted.

            (f) Except for 25,310 shares of common stock of Columbia Water
Company, York Water does not own any stock or other interest whatsoever, whether
equity or debt, in any corporation, limited liability company, partnership or
other entity.

            (g) This Agreement has been duly authorized, executed and delivered
by York Water and constitutes its legal, valid and binding obligation,
enforceable against York Water in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and subject to
applicability of general principles of equity and except as rights to indemnity
and contribution may be limited by federal and state securities laws or
principles of public policy.

            (h) The execution, delivery and performance of this Agreement and
the transactions contemplated herein, do not and will not, with or without the
giving of notice or the lapse of time, or both, (i) conflict with any term or
provision of York Water's Articles of Incorporation or Bylaws; (ii) result in a
breach of, constitute a default under, result in the termination or modification
of, result in the creation or imposition of any lien, security interest, charge
or encumbrance upon any of the properties of York Water or require any payment
by York Water or impose any liability on York Water pursuant to, any contract,
indenture, mortgage, deed of trust, commitment or other agreement or instrument
to which York Water is a


                                       3

party or by which any of its properties are bound or affected other than this
Agreement; (iii) assuming compliance with Blue Sky laws and the rules of the
National Association of Securities Dealers, Inc. (the "NASD") applicable to the
offer and sale of the Shares, violate any law, rule, regulation, judgment, order
or decree of any government or governmental agency, instrumentality or court,
domestic or foreign, having jurisdiction over York Water or any of its
respective properties or businesses; or (iv) result in a breach, termination or
lapse of York Water's corporate power and authority to own or lease and operate
its respective properties and conduct its respective business, except, in the
case of clauses (ii), (iii) and (iv) above, as would not have a material adverse
effect on the management, assets, properties, condition (financial or
otherwise), shareholders' equity or results of operations of the business
(collectively, the "Business Conditions") of York Water.

            (i) As of March 31, 2004, York Water had the capitalization set
forth in the Prospectus under the caption "Capitalization" and would have had,
taking into account the issuance of the Firm Shares on the Closing Date, the as
adjusted capitalization set forth therein. On the Effective Date, the Closing
Date and any Option Closing Date, there will be no options or warrants or other
outstanding rights to purchase, agreements or obligations to issue or agreements
or other rights to convert or exchange any obligation or security into, capital
stock of York Water or securities convertible into or exchangeable for capital
stock of York Water, except as described in the Prospectus.

            (j) The currently outstanding shares of York Water's capital stock
have been duly authorized and are validly issued, fully paid and non-assessable,
and none of such outstanding shares of York Water's capital stock has been
issued in violation of any preemptive rights of any security holder of York
Water. The holders of the outstanding shares of York Water's capital stock are
not subject to personal liability solely by reason of being such holders. All
previous offers and sales of the outstanding shares of York Water's capital
stock, whether described in the Registration Statement or otherwise, were made
in conformity with applicable federal, state and foreign securities laws. The
authorized capital stock of York Water, including, without limitation, the
outstanding Common Stock and the Shares, conform or will conform in all material
respects with the descriptions thereof in the Prospectus, and such descriptions
conform in all material respects with the instruments defining the same.

            (k) There are no contracts, agreements or understandings between
York Water and any person granting such person the right to require York Water
to file a registration statement under the Act with respect to any securities of
York Water owned or to be owned by such person or to require York Water to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by York Water under the Act.

            (l) The Shares have been duly and validly authorized, and, when
issued and delivered against payment therefor as contemplated by this Agreement,
will be validly issued, fully paid and non-assessable, and the holders thereof
will not be subject to personal liability solely by reason of being such
holders. The certificates representing the Shares are in proper legal form
under, and conform in all respects to the requirements of, the Pennsylvania
Business Corporation Law of 1988, as amended (the "PBCL"). Neither the filing of
the Registration Statement nor the offering or sale of Shares as contemplated by
this Agreement gives any


                                       4

security holder of York Water any rights for or relating to the registration of
any Common Stock or any other capital stock of York Water or any rights to
convert or have redeemed or otherwise receive anything of value with respect to
any other security of York Water.

            (m) No consent, approval, authorization, order, registration,
license or permit of, or filing or registration with, any court, government,
governmental agency, instrumentality or other regulatory body or official is
required for the valid and legal execution, delivery and performance by York
Water of this Agreement and the consummation of the transactions contemplated
hereby or described in the Prospectus, except such as may be required for the
registration of the Shares under the Act or to list the Shares on the Nasdaq
National Market, filings under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and for compliance with the applicable state securities or
Blue Sky laws or the Bylaws, rules and other pronouncements of the NASD.

            (n) The Common Stock (including the Shares) is registered pursuant
to Section 12(g) of the Exchange Act. The issued and outstanding shares of
Common Stock are included for quotation on the Nasdaq National Market. Neither
York Water nor, to York Water's knowledge, any other person has taken any action
designed to cause, or likely to result in, the termination of the registration
of the Common Stock under the Exchange Act. York Water has not received any
notification that the SEC or the NASD is contemplating terminating such
registration or inclusion.

            (o) The statements in the Registration Statement and Prospectus,
insofar as they are descriptions of or references to contracts, agreements or
other documents, are accurate in all material respects and present or summarize
fairly, in all material respects, the information required to be disclosed under
the Act or the Regulations, and there are no contracts, agreements or other
documents, instruments or transactions of any character required to be described
or referred to in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that have not been so described, referred
to or filed.

            (p) Each contract or other instrument (however characterized or
described) to which York Water is a party or by which any of its properties or
businesses is bound or affected and which is material to the conduct of York
Water's business has been duly and validly executed by York Water and, to the
knowledge of York Water, has been duly and validly executed by the other parties
thereto. To the knowledge of York Water, each such contract or other instrument
is in full force and effect. York Water has not received written notice from the
other parties to such contracts of their intent to suspend or terminate the
services being provided thereunder. To the knowledge of York Water, no other
party is in default under any such contract or other instrument, and no event
has occurred that, with the lapse of time or the giving of notice, or both,
would constitute a default under any such contract or other instrument, except
for defaults that would not have a material adverse effect on the Business
Conditions of York Water. All necessary consents under such contracts or other
instruments to the disclosure in the Prospectus with respect thereto have been
obtained.

            (q) The financial statements of York Water (including the notes
thereto) filed as part of or incorporated by reference in, the Prospectus and
the Registration Statement present fairly, in all material respects, the
financial position of York Water as of the respective dates


                                       5

thereof, and the results of operations and cash flows of York Water for the
periods indicated therein, and have been prepared in conformity with generally
accepted accounting principles, except as described therein. The financial
information included in the Prospectus under the captions "Prospectus Summary -
Summary Financial Information," "Selected Financial Data," and "Capitalization"
presents fairly the information shown therein and has been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement.

            (r) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, there has not been (i) any material adverse change, or development
involving a prospective material adverse change, in the Business Conditions of
York Water; (ii) any material adverse change, loss, reduction, termination or
non renewal of any contract to which York Water is a party which is material to
the conduct of York Water's business; (iii) any transaction entered into by York
Water not in the ordinary course of its business that is material to York Water;
(iv) any dividend or distribution of any kind declared, paid or made by York
Water on its capital stock, except for and to the extent described in the
Prospectus; (v) any liabilities or obligations, direct or indirect, incurred by
York Water that are material to York Water; (vi) any change in the
capitalization of York Water; or (vii) any change in the indebtedness of York
Water that is material to York Water. York Water has no contingent liabilities
or obligations that are material and that are not expressly disclosed in the
Prospectus.

            (s) York Water has not distributed, and will not distribute, any
offering material in connection with the offering and sale of the Shares other
than the Registration Statement, a Preliminary Prospectus, the Prospectus and
other material, if any, permitted by the Act and the Regulations. Neither York
Water nor, to York Water's knowledge, any of its officers, directors or
affiliates has (i) taken, nor shall York Water or such persons take, directly or
indirectly, any action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Common
Stock, or (ii) since the filing of the Registration Statement (A) sold, bid for,
purchased or paid anyone any compensation for soliciting purchases of, the
Shares or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of York Water.

            (t) York Water has filed with the appropriate federal, state and
local governmental agencies, and all foreign countries and political
subdivisions thereof, all material tax returns that are required to be filed or
have duly obtained extensions of time for the filing thereof and have paid all
material taxes shown on such returns or otherwise due and all material
assessments received by them to the extent that the same have become due, other
than those which York Water is contesting in good faith. York Water not has
executed or filed with any taxing authority, foreign or domestic, any agreement
extending the period for assessment or collection of any income or other tax and
is not a party to any pending action or proceeding by any foreign or domestic
governmental agency for the assessment or collection of taxes, and no claims for
assessment or collection of taxes have been asserted against York Water that
would materially adversely affect the Business Conditions of York Water.

            (u) Beard Miller Company LLP and Stambaugh Ness, PC, each of which
has given its report on certain financial statements included as part of or
incorporated by reference in


                                       6

the Registration Statement, are firms of independent certified public
accountants as required by the Act and the Regulations.

            (v) York Water is not in violation of, or in default under, any of
the terms or provisions of (i) its Articles of Incorporation or Bylaws or
similar governing instruments, (ii) any indenture, mortgage, deed of trust,
contract, commitment or other agreement or instrument to which it is a party or
by which it or any of its assets or properties is bound or affected, (iii) any
law, rule, regulation, judgment, order or decree of any government or
governmental agency, instrumentality or court, domestic or foreign, having
jurisdiction over it or any of its properties or business, or (iv) any license,
permit, certification, registration, approval, consent or franchise, except with
respect to clauses (ii), (iii) or (iv) above, where any such default would not
reasonably be expected to have a material adverse effect on the Business
Conditions of York Water.

            (w) Except as expressly disclosed in the Prospectus, there are no
claims, actions, suits, protests, proceedings, arbitrations, investigations or
inquiries pending before, or, to York Water's knowledge, threatened or
contemplated by, any governmental agency, instrumentality, court or tribunal,
domestic or foreign, or before any private arbitration tribunal to which York
Water is or may be made a party that could reasonably be expected to affect the
validity of any of the outstanding Common Stock, or that, if determined
adversely to York Water would have a material adverse effect on the Business
Conditions of York Water, nor to York Water's knowledge is there any reasonable
basis for any such claim, action, suit, protest, proceeding, arbitration,
investigation or inquiry. There are no outstanding orders, judgments or decrees
of any court, governmental agency, instrumentality or other tribunal enjoining
York Water from, or requiring York Water to take or refrain from taking, any
action, or to which York Water or their properties, assets or businesses are
bound or subject.

            (x) York Water owns, or possesses adequate rights to use, all
patents, patent applications, trademarks, trademark registrations, applications
for trademark registration, trade names, service marks, licenses, inventions,
copyrights, know-how (including any unpatented and/or unpatentable proprietary
or confidential technology, information, systems, design methodologies and
devices or procedures developed or derived from or for York Water's business),
trade secrets, confidential information, processes and formulations and other
proprietary information necessary for, used in, or proposed to be used in, the
conduct of the business of York Water as described in the Prospectus
(collectively, the "Intellectual Property"), except failures to own or possess
rights to use that would not have a material adverse effect on the Business
Conditions of York Water. To York Water's knowledge, York Water has not
infringed, is not infringing nor has received any notice of conflict with, the
asserted rights of others with respect to the Intellectual Property that,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially adversely affect the Business Conditions of
York Water, and York Water knows of no reasonable basis therefor. To the
knowledge of York Water, no other parties have infringed upon or are in conflict
with any Intellectual Property. York Water is not a party to, or bound by, any
agreement pursuant to which royalties, honorariums or fees are payable by York
Water to any person by reason of the ownership or use of any Intellectual
Property.



                                       7

            (y) York Water has good and marketable title to all property
described in the Prospectus as being owned by it, free and clear of all liens,
security interests, charges or encumbrances and the like, except such as are
expressly described or referred to in the Prospectus or such as do not
materially adversely affect the Business Conditions or the conduct of the
business of York Water as described in the Prospectus. York Water has insured
its property against loss or damage by fire or other casualty, in amounts
reasonably believed by York Water to be adequate, and maintains insurance
against such other risks as management of York Water deems appropriate. All real
and personal property leased by York Water, as described or referred to in the
Prospectus, is held by York Water, under valid leases. The executive offices and
facilities of York Water (the "Premises"), and all operations presently or
formerly conducted thereon by York Water or any predecessors thereof, are now
and, since York Water began to use such Premises, always have been in compliance
with all federal, state and local statutes, ordinances, regulations, rules,
standards and requirements of common law concerning or relating to industrial
hygiene and the protection of health and the environment (collectively, the
"Environmental Laws"), except to the extent that any failure in such compliance
would not materially adversely affect the Business Conditions of York Water. To
the knowledge of York Water, the facilities of York Water produce water of
sufficient quantity to supply the current and planned customers and service
areas of York Water, and are not subject to any restriction on surface water
withdrawal under any federal, state or local law, regulation, rule, order or
permit, except as expressly described in the Prospectus or as provided in the
Commonwealth of Pennsylvania allocation permits and such as do not materially
adversely affect the Business Conditions or the conduct of the business of York
Water as described in the Prospectus. To the knowledge of York Water, there are
no conditions on, about, beneath or arising from the Premises or in close
proximity to the Premises that might give rise to liability, the imposition of a
statutory lien or require a "Response," "Removal" or "Remedial Action," as
defined herein, under any Environmental Law, or affect the quality of the
surface water withdrawn by York Water, and that would materially adversely
affect the Business Conditions of York Water, except as described in the
Prospectus. Except as expressly disclosed in the Prospectus, or which will not
materially adversely affect the Business Conditions of York Water (i) York Water
has not received notice or has knowledge of any claim, demand, investigation,
regulatory action, suit or other action instituted or threatened against York
Water or any portion of the Premises relating to any of the Environmental Laws
and (ii) York Water has not received any notice of material violation, citation,
complaint, order, directive, request for information or response thereto, notice
letter, demand letter or compliance schedule to or from any governmental or
regulatory agency arising out of or in connection with "hazardous substances"
(as defined by applicable Environmental Laws) on, about, beneath, arising from
or generated at the Premises. As used in this subsection, the terms "Response,"
"Removal" and "Remedial Action" shall have the respective meanings assigned to
such terms under Sections 101(23)-101(25) of the Comprehensive Environmental
Response, Compensation and Liability Act, as amended by the Superfund Amendments
and Reauthorization Act, 42 U.S.C. 9601(23)-9601(25).

            (z) York Water maintains a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary in order to permit preparation of
financial statements in accordance with generally accepted accounting principles
and to maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and (iv)
the recorded


                                       8

accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

            (aa) York Water and any Related Employer (which for purposes of this
Paragraph means any entity that with York Water is a member of a controlled
group of corporations within the meaning of Section 414(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), is, individually or collectively,
a trade or business under common control within the meaning of Section 414(c) of
the Code, or is a member of the same affiliated service group within the meaning
of Section 414(m) of the Code) have established, maintain, contribute to, are
required to contribute to, are a party to, or are bound by certain pension,
retirement, profit-sharing plans, deferred compensation, bonus, or other
incentive plans, or medical, vision, dental, or other health plans, or life
insurance or disability plans, or any other employee benefit plans, programs,
arrangements, agreements, or understandings, some of which are subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the
rules and regulations thereunder ("Plans"). Any disclosure regarding the Plans
required under the Act or the Exchange Act has been made in the Prospectus and
the documents incorporated therein. All Plans that are subject to ERISA are in
compliance with ERISA, in all material respects, and, to the extent a Plan is
intended to be tax-qualified within the meaning of Section 401(a) of the Code,
such Plan is in compliance with the Code in all material respects and is the
subject of a current favorable determination letter from the Internal Revenue
Service as to its tax qualification. No Plan is an employee pension benefit plan
that is subject to Part 3 of Subtitle B of Title I of ERISA, a defined benefit
plan subject to Title IV of ERISA, or a multiemployer plan. Neither York Water
nor any Related Employer maintains or has maintained retiree life or retiree
health insurance plans that are employee welfare benefit plans providing for
continuing benefit or coverage for any employee or any beneficiary of any
employee after such employee's termination of employment, except as required by
Section 4980B of the Code and except as disclosed in the Prospectus. No
fiduciary or other party in interest with respect to any of the Plans has caused
any of such Plans to engage in a prohibited transaction as defined in Section
406 of ERISA and Section 4975 of the Code. As used in this subsection, the terms
"defined benefit plan," "employee benefit plan," "employee pension benefit
plan," "employee welfare benefit plan," "fiduciary" and "multiemployer plan"
shall have the respective meanings assigned to such terms in Section 3 of ERISA.

            (bb) No labor dispute exists with York Water's employees, and to
York Water's knowledge, no such labor dispute is threatened. York Water
currently has no knowledge of any existing or threatened labor disturbance by
the employees of any of the principal suppliers, contractors or customers of
York Water that would materially adversely affect the Business Conditions of
York Water.

            (cc) York Water has not incurred any liability for any finder's fees
or similar payments in connection with the transactions contemplated herein
other than as disclosed in the Prospectus.

            (dd) York Water is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds therefor described in the
Prospectus, will not be an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.



                                       9

            (ee) York Water has received all permits, licenses, franchises,
authorizations, registrations, qualifications and approvals (collectively,
"Permits") of governmental or regulatory authorities as may be required to own
its properties and conduct its businesses in the manner described in the
Prospectus subject to such qualifications as may be set forth in the Prospectus,
except for failures to have Permits that would have a material adverse effect on
the Business Conditions of York Water; and York Water has fulfilled and
performed all of their material obligations with respect to such Permits, and no
event has occurred which allows or, after notice or lapse of time or both, would
allow revocation or termination thereof or result in any other material
impairment of the rights of the holder of any such Permit, subject in each case
to such qualifications as may be set forth in the Prospectus except for
revocations, terminations or impairments that would not have a material adverse
effect on the Business Conditions of York Water; and, except as described in the
Prospectus, such Permits contain no restrictions that materially affect the
ability of York Water to conduct its businesses.

            (ff) No transaction has occurred or is proposed between or among
York Water and any of its officers, directors or stockholders or any affiliate
of the foregoing, that is required to be described in and is not described in
the Registration Statement and the Prospectus.

            (gg) Neither York Water nor any officer, director, employee,
partner, agent or other person acting on behalf of York Water has, directly or
indirectly, given or agreed to give any money, property or similar benefit or
consideration to any customer or supplier (including any employee or agent of
any customer or supplier) or official or employee of any agency or
instrumentality of any government (foreign or domestic) or political party or
candidate for office (foreign or domestic) or any other person who was, is or in
the future may be in a position to affect the Business Conditions of York Water
or any actual or proposed business transaction of York Water that (i) could
subject York Water to any liability (including, but not limited to, the payment
of monetary damages) or penalty in any civil, criminal or governmental action or
proceeding that would have a material adverse effect on the Business Conditions
of York Water or (ii) with respect to York Water, or any officer or director
thereof, violates any law, rule or regulation to which York Water is subject.

            Any certificate signed by any officer of York Water in such capacity
and delivered to the Underwriter or to counsel for the Underwriter pursuant to
this Agreement shall be deemed a representation and warranty by York Water as
the case may be, to the Underwriter as to the matters covered thereby.

      2. PURCHASE AND SALE OF FIRM SHARES. On the basis of the representations,
warranties, covenants and agreements contained herein, but subject to the terms
and conditions set forth herein, York Water shall sell the Firm Shares to the
Underwriter and the Underwriter shall purchase the Firm Shares from York Water
on a firm commitment basis at a net offering price of $17.09 per share
(representing the Offering Price less underwriting discounts and commissions of
$0.71 per share). The Underwriter shall offer the Shares to the public as set
forth in the Prospectus.

      3. PAYMENT AND DELIVERY. The Firm Shares shall be issued in the form of
one or more fully registered global securities (the "Global Securities") in
book-entry form in such denominations and registered in the name of the nominee
of The Depository Trust Company


                                       10

("DTC") or in such names as the Underwriter may request upon at least 48 hours'
prior notice to York Water and shall be delivered by or on behalf of York Water
to the Underwriter against payment by the Underwriter on its behalf of the
purchase price therefor by wire transfer of immediately available funds to such
accounts as York Water shall designate in writing (with all costs and expenses
incurred by the Underwriter in connection with such settlement in immediately
available funds, including, but not limited to, interest or cost of funds and
expenses, to be borne by York Water). The closing of the sale and purchase of
the Firm Shares shall be held at the offices of Ballard Spahr Andrews &
Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania for the account
of the Underwriter. Such payment and delivery will be made at 10:00 a.m.,
Philadelphia, Pennsylvania time, on the third business day after the date of
this Agreement or at such other time on the same date as shall be agreed upon by
York Water and the Underwriter. Such time and date are referred to herein as the
"Closing Date."

      4. OPTION TO PURCHASE OPTIONAL SHARES.

            (a) For the purposes of covering any over-allotments in connection
with the distribution and sale of the Firm Shares as contemplated by the
Prospectus, subject to the terms and conditions herein set forth, the
Underwriter is hereby granted an option by York Water to purchase all or any
part of the Optional Shares (the "Over-allotment Option"). The purchase price to
be paid for the Optional Shares shall be as set forth in Section 2 hereof. The
Over-allotment Option granted hereby may be exercised by the Underwriter as to
all or any part of the Optional Shares at any time and from time to time within
30 days after the date of the Prospectus. The Underwriter shall not be under any
obligation to purchase any Optional Shares prior to an exercise of the
Over-allotment Option.

            (b) The Over-allotment Option granted hereby may be exercised by the
Underwriter by giving notice to York Water by a letter sent by registered or
certified mail, postage prepaid, telex, telegraph, telegram or facsimile (such
notice to be effective when received), addressed as provided in Section 12
hereof, setting forth the number of Optional Shares to be purchased, the date
and time for delivery of and payment for the Optional Shares and stating that
the Optional Shares referred to therein are to be used for the purpose of
covering over-allotments in connection with the distribution and sale of the
Firm Shares. If such notice is given at least two full business days prior to
the Closing Date, the date set forth therein for such delivery and payment shall
be not earlier than the Closing Date. If such notice is given after two full
business days prior to the Closing Date, the date set forth therein for such
delivery and payment shall be a date selected by the Underwriter not later than
five full business days after the exercise of the Over-allotment Option. The
date and time set forth in such a notice is referred to herein as an "Option
Closing Date," and a closing held pursuant to such a notice is referred to
herein as an "Option Closing." Upon each exercise of the Over-allotment Option,
and on the basis of the representations, warranties, covenants and agreements
herein contained, and subject to the terms and conditions herein set forth, the
Underwriter shall become obligated to purchase from York Water the number of
Optional Shares specified in each notice of exercise of the Over-allotment
option.

            (c) The Optional Shares shall be issued in the form of one or more
Global Securities in book-entry form in such denominations and registered in the
name of the nominee of DTC or in such names as the Underwriter may request upon
at least 48 hours' prior notice to


                                       11

York Water, and shall be delivered by or on behalf of York Water to the
Underwriter, against payment by the Underwriter on its behalf of the purchase
price therefor by wire transfer of immediately available funds to such accounts
as York Water shall designate in writing (with all costs and expenses incurred
by the Underwriter in connection with such settlement in immediately available
funds, including, but not limited to, interest or cost of funds and expenses, to
be borne by York Water). The closing of the sale and purchase of the Optional
Shares shall be held at the offices of Ballard Spahr Andrews & Ingersoll, LLP,
1735 Market Street, Philadelphia, Pennsylvania for the account of the
Underwriter. Such payment and delivery will be made at 10:00 a.m., Philadelphia,
Pennsylvania time, on the Option Closing Date.

      5. CERTAIN COVENANTS AND AGREEMENTS OF YORK WATER. York Water covenants
and agrees with the Underwriter as follows:

            (a) If Rule 430A of the Regulations is employed, York Water will
timely file the Prospectus pursuant to and in compliance with Rule 424(b) of the
Regulations and will advise the Underwriter of the time and manner of such
filing.

            (b) York Water will not file with the SEC the Prospectus, any
amendment or supplement to the Prospectus or any amendment to the Registration
Statement, unless the Underwriter has received a reasonable period of time to
review any such proposed amendment or supplement and consented to the filing
thereof, such consent not to be unreasonably withheld, and will use its
reasonable best efforts to cause any such amendment to the Registration
Statement to be declared effective as promptly as possible. Upon reasonable
request of the Underwriter or counsel for the Underwriter, York Water will
promptly prepare and file with the SEC, in accordance with the Regulations of
the SEC, any amendments to the Registration Statement or amendments or
supplements to the Prospectus that may be necessary or advisable in connection
with the distribution of the Shares by the Underwriter and will use its
reasonable best efforts to cause any such amendment to the Registration
Statement to be declared effective as promptly as possible. If required, York
Water will file any amendment or supplement to the Prospectus with the SEC in
the manner and within the time period required by Rule 424(b) under the Act.
York Water will advise the Underwriter, promptly after receiving notice thereof,
of the time when the Registration Statement or any amendment thereof has been
filed or declared effective or the Prospectus or any amendment or supplement
thereto has been filed and will provide evidence to the Underwriter of each
filing or effectiveness.

            (c) York Water will promptly advise the Underwriter, and confirm
such advice in writing, (i) when any post-effective amendment to the
Registration Statement is filed with the SEC under Rule 462(c) under the Act or
otherwise, (ii) any Rule 462(b) Registration Statement is filed, (iii) of the
receipt of any comments from the SEC concerning the Registration Statement, (iv)
when any post-effective amendment to the Registration Statement becomes
effective, or when any supplement to the Prospectus or any amended Prospectus
has been filed, (v) of any request of the SEC for amendment or supplementation
of the Registration Statement or Prospectus or for additional information, (vi)
during the period when the Prospectus is required to be delivered under the Act
and Regulations, of the happening of any event as a result of which the
Registration Statement or the Prospectus would include an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading, (vii) during the period noted in clause (vi) above, of
the need to amend the


                                       12

Registration Statement or supplement the Prospectus to comply with the Act,
(viii) of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus, and (ix) of the suspension of
the qualification of any of the Shares for offering or sale in any jurisdiction
in which the Underwriter intends to make such offers or sales, or the initiation
or threatening of any proceedings for any of such purposes known to York Water.
York Water will use its reasonable best efforts to prevent the issuance of any
such stop order or of any order preventing or suspending such use, and if any
such order is issued, to obtain as soon as possible the lifting thereof.

            (d) York Water will deliver to the Underwriter, without charge, from
time to time during the period when delivery of the Prospectus is required under
the Act, such number of copies of the Prospectus (as supplemented or amended) as
the Underwriter may reasonably request. York Water hereby consents to the use of
such copies of the Preliminary Prospectus and the Prospectus for purposes
permitted by the Act, the Regulations and the securities or Blue Sky laws of the
states or foreign jurisdictions in which the Shares are offered by the
Underwriter and by all dealers to whom Shares may be sold, both in connection
with the offering and sale of the Shares and for such period of time thereafter
as the Prospectus is required by the Act to be delivered in connection with
sales by the Underwriter or dealer. If requested by the Underwriter in writing,
York Water will furnish to the Underwriter at least one original signed copy of
the Registration Statement as originally filed and of all amendments and
supplements thereto, whether filed before or after the Effective Date, at least
one copy of all exhibits filed therewith and of all consents and certificates of
experts, and will deliver to the Underwriter such number of conformed copies of
the Registration Statement, including financial statements and exhibits, and all
amendments thereto, as the Underwriter may reasonably request.

            (e) York Water will comply with the Act, the Regulations, the
Exchange Act and the Exchange Act Regulations so as to permit the continuance of
sales of and dealings in the Shares for as long as may be necessary to complete
the distribution of the Shares as contemplated hereby.

            (f) York Water will furnish such information and pay such filing
fees and other expenses as may be required, and otherwise cooperate in the
registration or qualification of the Shares, or exemption therefrom, for
offering and sale by the Underwriter and by dealers under the securities or Blue
Sky laws of such jurisdictions in which the Underwriter determines to offer the
Shares, after consultation with York Water, and will file such consents to
service of process or other documents necessary or appropriate in order to
effect such registration or qualification; provided, however, that no such
qualification shall be required in any jurisdiction where, solely as a result
thereof, York Water would be subject to taxation or qualification as a foreign
corporation doing business in such jurisdiction where it is not now so qualified
or to take any action which would subject it to service of process in suits,
other than those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject. York Water will, from time to time,
prepare and file such statements and reports as are or may be required to
continue such qualification in effect for so long a period as is reasonably
requested by the Underwriter for such offering and sale. York Water will furnish
such information and pay such filing fees and other expenses as may be required,
and otherwise cooperate in the inclusion of the Shares for quotation on the
Nasdaq National Market. York Water will, from time to time,


                                       13

prepare and file such statements and reports as are or may be required to
continue such qualification in effect for a period of three years from the
Effective Date.

            (g) Subject to Section 5(b) hereof, in case of any event (occurring
at any time within the period during which, in the opinion of counsel for the
Underwriter, a prospectus is required to be delivered under the Act or the
Regulations), as a result of which the Prospectus, as then amended or
supplemented, would contain an untrue statement of a material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading, or, if it is necessary at any time to amend the Prospectus to comply
with the Act or the Regulations or any applicable securities or Blue Sky laws,
York Water promptly will prepare and file with the SEC, and any applicable state
and foreign securities commission, an amendment, supplement or document that
will correct such statement or omission or effect such compliance and will
furnish to the Underwriter such number of copies of such amendments, supplements
or documents (in form and substance satisfactory to the Underwriter and counsel
for the Underwriter) as the Underwriter may reasonably request. For purposes of
this Section 5(g), York Water will provide such information to the Underwriter,
the Underwriter's counsel and counsel to York Water as shall be necessary to
enable such persons to consult with York Water with respect to the need to amend
or supplement the Registration Statement or Prospectus or file any document, and
shall furnish to the Underwriter and the Underwriter's counsel such further
information as each may from time to time reasonably request.

            (h) York Water will make generally available to its security holders
not later than 45 days after the end of the period covered thereby, an earnings
statement of York Water (which need not be audited unless required by the Act or
the Regulations) that shall comply with Section 11(a) of the Act and Rule 158
thereunder and cover a period of at least 12 consecutive months beginning not
later than the first day of York Water's fiscal quarter next following the
Effective Date (or, if later, the effective date of the Rule 462(b) Registration
Statement).

            (i) During the course of the distribution of the Shares, York Water
will not and York Water shall use commercially reasonable efforts to cause its
officers and directors not to, (i) take, directly or indirectly, any action
designed to, or that could reasonably be expected to, cause or result in
stabilization or manipulation of the price of the Common Stock or (ii) sell, bid
for, purchase or pay anyone any compensation for soliciting purchases of, the
Shares.

            (j) York Water has caused each person listed on Schedule I hereto to
execute an agreement (a "Lock-up Agreement") in form and substance satisfactory
to the Underwriter and the Underwriter's counsel which provides that from the
date of the Lock-up Agreement and for a period of 90 days from the Effective
Date, such persons will not, subject to certain exceptions, without the prior
written consent of the Underwriter, directly or indirectly, sell, offer or
contract to sell, pledge, grant any option for sale or purchase of, agree to
sell or otherwise dispose of (collectively, "Disposition") any shares of Common
Stock (or any securities convertible into or exercisable or exchangeable for any
shares of Common Stock) or enter into a transaction which would have the same
effect, or enter into any swap, hedge or other arrangement that transfers, in
whole or in part, any of the economic consequences of ownership of Common Stock,
or publicly disclose the intention to make any such Disposition or enter into
any such transaction, swap, hedge or other arrangement. York Water has delivered
such agreements to the Underwriter prior to the date of this Agreement.
Appropriate stop transfer


                                       14

instructions will be issued by York Water to the transfer agent for the Common
Stock and a copy of such instructions will be delivered to the Underwriter.

            (k) As of the date of the Lock-up Agreement and for a period of 90
days after the Effective Date, York Water will not, without the prior written
consent of the Underwriter, issue or make a Disposition of any Common Stock or
any securities convertible into or exercisable or exchangeable for any Common
Stock or enter into a transaction which would have the same effect or enter into
any swap, hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of Common Stock, or publicly disclose the
intention to issue or make any such Disposition or enter into any such
transaction, swap, hedge or other arrangement, except the issuance of Common
Stock under York Water's Dividend Reinvestment Plan and Employee Stock Purchase
Plan.

            (l) For a period of three years from the Effective Date, York Water
will use all reasonable efforts to maintain the listing of the Common Stock
(including, without limitation, the Shares) on the Nasdaq National Market or on
a national securities exchange.

            (m) York Water will use the net proceeds from the sale of the Shares
to be sold by it hereunder substantially in accordance with the description set
forth under the caption "Use of Proceeds" in the Prospectus.

      6. PAYMENT OF FEES AND EXPENSES.

            (a) Whether or not the transactions contemplated by this Agreement
are consummated and regardless of the reason this Agreement is terminated, York
Water will pay or cause to be paid, and bear or cause to be borne, all costs and
expenses incident to the performance of the obligations of York Water under this
Agreement, including: (i) the fees and expenses of the accountants and counsel
for York Water incurred in the preparation of the Registration Statement and any
post-effective amendments thereto (including financial statements and exhibits),
Preliminary Prospectuses and the Prospectus and any amendments or supplements
thereto; (ii) printing and mailing expenses associated with the Registration
Statement and any post-effective amendments thereto, any Preliminary Prospectus,
the Prospectus and this Agreement; (iii) the costs and expenses (other than fees
and expenses of the Underwriter's counsel) incident to the authentication,
issuance, sale and delivery of the Shares to the Underwriter; (iv) the fees,
expenses and other costs of, or incident to, securing any review or approvals by
or from the NASD, (other than the fees and expenses of the Underwriter's
counsel), provided that the aggregate fees and expenses under this clause (iv)
and clause (iii) above shall not exceed $15,000; (v) the filing fees of the SEC;
(vi) the cost of furnishing to the Underwriter copies of the Registration
Statement, Preliminary Prospectuses and Prospectuses as herein provided; (vii)
York Water's travel expenses in connection with meetings with the brokerage
community and institutional investors; (viii) the costs and expenses associated
with settlement in same day funds (including, but not limited to, interest or
cost of funds expenses), if desired by York Water; (ix) any fees or costs
payable to the Nasdaq National Market as a result of the offering; (x) the cost
of preparing, issuing and delivery to the Underwriter of any certificates
evidencing the Shares; (xi) the costs and charges of any transfer agent; (xii)
the reasonable costs of advertising the offering the aggregate of which shall
not exceed $5,000; (xiii) all taxes, if any, on the issuance, delivery and
transfer of the Shares sold by York Water; and (xiv) all other costs


                                       15

and expenses reasonably incident to the performance of York Water's obligations
hereunder that are not otherwise specifically provided for in this Section 8(a);
provided, however, that, except as specifically set forth in Section 8(c)
hereof, the Underwriter shall be responsible for their out-of-pocket expenses,
including those associated with meetings with the brokerage community and
institutional investors, other than York Water's travel expenses, and the fees
and expenses of their counsel for other than with respect to NASD matters.

            (b) On the Closing Date, York Water shall pay the Underwriter a
non-accountable expense allowance in the amount of $45,000.

            (c) If (i) the Underwriter is willing to proceed with the offering,
and the transactions contemplated by this Agreement are not consummated because
York Water elects not to proceed with the offering for any reason or (ii) the
Underwriter terminates this Agreement pursuant to Section 10(a) hereof, then
York Water will reimburse the Underwriter for its accountable out-of-pocket
expenses relating to the offering (including but not limited to the reasonable
fees and disbursements to its counsel); provided, however, such reimbursement
shall not exceed $60,000. The Underwriter shall present an accounting of all
expenses for which reimbursement is claimed hereunder. If this Agreement is
terminated or the offering is not consummated for any reason other than as set
forth in the preceding sentence, York Water will not be obligated to reimburse
the Underwriter for any amounts.

      7. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligation of the
Underwriter to purchase and pay for the Firm Shares that it has agreed to
purchase hereunder on the Closing Date, and to purchase and pay for any Optional
Shares as to which it exercises its right to purchase under Section 4 on an
Option Closing Date, is subject at the date hereof, the Closing Date and any
Option Closing Date to the continuing accuracy and fulfillment of the
representations and warranties of York Water, to the performance by York Water
of its covenants and obligations hereunder, and to the following additional
conditions:

            (a) If required by the Regulations, the Prospectus shall have been
filed with the SEC pursuant to Rule 424(b) of the Regulations within the
applicable time period prescribed for such filing by the Regulations. On or
prior to the Closing Date or any Option Closing Date, as the case may be, no
stop order or other order preventing or suspending the effectiveness of the
Registration Statement (including any document incorporated by reference
therein) or the sale of any of the Shares shall have been issued under the Act
or any state or foreign securities law, and no proceedings for that purpose
shall have been initiated or shall be pending or, to the Underwriter's knowledge
or the knowledge of York Water, shall be contemplated by the SEC or by any
authority in any jurisdiction designated by the Underwriter pursuant to Section
6(f) hereof. Any request on the part of the SEC or any state or foreign
securities authority for additional information shall have been complied with to
the reasonable satisfaction of counsel for the Underwriter.

            (b) The Underwriter shall have received from the Underwriter's
counsel, Ballard Spahr Andrews & Ingersoll, LLP an opinion, dated as of the
Closing Date and any Option Closing Date, as the case may be, and addressed to
the Underwriter, which opinion shall be satisfactory in all respects to the
Underwriter.



                                       16

            (c) The Underwriter shall have received a copy of an executed
Lock-up Agreement from each of the persons listed on Schedule I hereto.

            (d) On the Closing Date and any Option Closing Date, there shall
have been delivered to the Underwriter the opinion of Morgan, Lewis & Bockius
LLP, counsel for York Water, dated as of such date and addressed to the
Underwriter to the effect set forth in Exhibit A hereto or to such effect as is
otherwise reasonably satisfactory to the Underwriter.

            (e) At the Closing Date and any Option Closing Date: (i) the
Registration Statement and any post-effective amendment thereto and the
Prospectus and any amendments or supplements thereto shall comply with the
requirements of the Act and the Regulations in all materials respects, and none
of the Registration Statement or any post-effective amendment thereto or the
Prospectus or any amendments or supplements thereto shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(ii) since the respective dates as of which information is given in the
Registration Statement and any post-effective amendment thereto and the
Prospectus and any amendments or supplements thereto, except as otherwise stated
therein, there shall have been no material adverse change in the Business
Conditions of York Water from that set forth therein; (iii) since the respective
dates as of which information is given in the Registration Statement and the
Prospectus or any amendment or supplement thereto, there shall have been no
event or transaction, contract or agreement entered into by York Water other
than in the ordinary course of business and as set forth in the Registration
Statement or Prospectus, that has not been, but would be required to be, set
forth in the Registration Statement or Prospectus; (iv) since the respective
dates as of which information is given in the Registration Statement and any
post-effective amendment thereto and the Prospectus and any amendments or
supplements thereto, there shall have been no material adverse change, loss,
reduction, termination or non-renewal of any contract to which York Water is a
party, that has not been, but would be required to be set forth in the
Registration Statement or Prospectus; and (v) no action, suit or proceeding at
law or in equity shall be pending or threatened against York Water that would be
required to be set forth in the Prospectus, other than as set forth therein, and
no proceedings shall be pending or threatened against or directly affecting York
Water before or by any federal, state or other commission, board or
administrative agency wherein an unfavorable decision, ruling or finding would
materially adversely affect the Business Conditions of York Water.

            (f) The Underwriter shall have received at the Closing Date and any
Option Closing Date certificates of the Chief Executive Officer and the Chief
Financial Officer of York Water dated, as of the date of the Closing Date or
Option Closing Date, as the case may be, and addressed to the Underwriter to the
effect that (i) the representations and warranties of York Water in this
Agreement are true and correct, as if made at and as of the Closing Date or the
Option Closing Date, as the case may be, and that York Water has complied with
all the agreements, fulfilled all the covenants and satisfied all the conditions
on its part to be performed, fulfilled or satisfied at or prior to the Closing
Date or the Option Closing Date, as the case may be, and (ii) the signers of the
certificate have carefully examined the Registration Statement and the
Prospectus and any amendments or supplements thereto, and the conditions set
forth in Section 9(e) hereof have been satisfied.



                                       17

            (g) On the date of this Agreement and on the Closing Date or any
Option Closing Date, as the case may be, Beard Miller Company LLP shall have
furnished to the Underwriter, at the request of the Company, letters, dated the
respective dates of delivery thereof and addressed to the Underwriters, in form
and substance reasonably satisfactory to the Underwriter, containing statements
and information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus; provided, that the letter delivered on the Closing Date or the
Option Closing Date, as the case may be, shall use a "cut-off" date no more than
five business days prior to such Closing Date or such Option Closing Date, as
the case may be.

            (h) All corporate and other proceedings and other matters incident
to the authorization and validity of this Agreement and the form of the
Registration Statement and Prospectus and all other legal matters related to
this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all respects to counsel to the Underwriter. York Water shall
have furnished to such counsel all documents and information that they shall
have reasonably requested to enable them to pass upon such matters.

            (i) The Shares shall have been authorized for quotation on the
Nasdaq National Market.

            (j) At the Closing Date and any Option Closing Date, the Underwriter
shall have been furnished such additional documents, information and
certificates as they shall have reasonably requested.

            All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Underwriter and the Underwriter's counsel. York
Water shall furnish the Underwriter with such conformed copies of such opinions,
certificates, letters and other documents as it shall reasonably request. If any
condition to the Underwriter's obligations hereunder to be fulfilled prior to or
at the Closing Date or any Option Closing Date, as the case may be, is not
fulfilled, the Underwriter may, terminate this Agreement with respect to the
Closing Date or such Option Closing Date, as applicable, or, if they so elect,
waive any such conditions which have not been fulfilled or extend the time for
their fulfillment. Any such termination shall be without liability of the
Underwriter to York Water.

      8. INDEMNIFICATION AND CONTRIBUTION.

            (a) York Water shall indemnify and hold harmless the Underwriter,
and each person, if any, who controls the Underwriter within the meaning of the
Act, against any and all loss, liability, claim, damage and expense whatsoever,
including, but not limited to, any and all reasonable expenses incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever or in connection with any investigation or
inquiry of, or action or proceeding that may be brought against, the respective
indemnified parties, arising out of or based upon any breach of York Water's
representations and warranties made in this Agreement, any failure of the
documents incorporated by reference into the Prospectus pursuant to Item 12 of
Form S-3 under the Act, at the time they were filed with the


                                       18

SEC, to comply in all material respects with the requirements of the Exchange
Act and the Regulations, or any untrue statements or alleged untrue statements
of material fact contained in any Preliminary Prospectus, the Registration
Statement or any Prospectus, or the omission or alleged omission from either any
such Preliminary Prospectus, Prospectus or the Registration Statement of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing indemnity shall
not apply in respect of any statement or omission made in reliance upon and in
conformity with written information furnished to York Water by the Underwriter
expressly for use in any Preliminary Prospectus, the Registration Statement or
Prospectus, or any amendment or supplement thereto; and further provided,
however, that the indemnification contained in this Section 8(a) with respect to
any Preliminary Prospectus shall not inure to the benefit of the Underwriter (or
to the benefit of any person controlling the Underwriter) on account of any such
loss, claim, liability or expense arising from the sale of the Shares by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus, provided that York Water has
delivered the Prospectus to the Underwriter in requisite quantity on a timely
basis to permit such delivery or sending. The obligations of York Water under
this Section 8(a) will be in addition to any liability York Water may otherwise
have.

            (b) The Underwriter shall indemnify and hold harmless York Water,
each of the directors of York Water, each of the officers of York Water who
shall have signed the Registration Statement, and each other person, if any, who
controls York Water within the meaning of the Act to the same extent as the
foregoing indemnities from York Water to the Underwriter, but only with respect
to any and all loss, liability, claim, damage or expense resulting from
statements or omissions, or alleged statements or omissions, if any, made in any
Preliminary Prospectus, Registration Statement or Prospectus or any amendment or
supplement thereof in reliance upon, and in conformity with written information
furnished to York Water by the Underwriter expressly for use in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment or
supplement thereof. The obligations of the Underwriter under this Section 8(b)
will be in addition to any liability which the Underwriter may otherwise have.

            (c) If any action, inquiry, investigation or proceeding is brought
against any person in respect of which indemnification may be sought pursuant to
Section 8(a) or (b) hereof, such person (hereinafter called the "indemnified
party") shall, promptly after formal notification of, or receipt of service of
process for, such action, inquiry, investigation or proceeding, notify in
writing the party or parties against whom indemnification is to be sought
(hereinafter called the "indemnifying party") of the institution of such action,
inquiry, investigation or proceeding. The indemnifying party, upon the request
of the indemnified party, shall assume the defense of such action, inquiry,
investigation or proceeding, including, without limitation, the employment of
counsel and payment of expenses. No indemnification provided for in this Section
8 shall be available to any indemnified party who shall fail to give such notice
if the indemnifying party does not have knowledge of such action, inquiry,
investigation or proceeding and such indemnifying party has been materially
prejudiced by the failure to give such notice, but the omission to so notify the
indemnifying party shall not relieve the indemnifying party otherwise than under
this Section 8. Such indemnified party shall have the right to employ its or
their own


                                       19

counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action or if the indemnifying party shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense if such action, inquiry, investigation or
proceeding or if such indemnified party or parties shall have been advised by
counsel that there may be a conflict between the positions of the indemnifying
party or parties and of the indemnified party or parties or that there may be
legal defenses available to such indemnified party or parties different from or
in addition to those available to the indemnifying party or parties, in any of
which events the indemnified party or parties shall be entitled to select
counsel to conduct the defense to the extent determined by such counsel to be
necessary to protect the interests of the indemnified party or parties, and the
reasonable fees and expenses of such counsel shall be borne by the indemnifying
party. The indemnifying party shall be responsible for the fees and
disbursements of only one such counsel so engaged by the indemnified party or
parties as a group. Expenses covered by the indemnification in this Section 8,
as the case may be, shall be paid by the indemnifying party as they are incurred
by the indemnified party. In the event that it is determined that the
indemnified party was not entitled to receive payments for expenses pursuant to
this Section 8, the indemnified party shall return all sums that have been paid
pursuant hereto. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified party unless
such settlement includes an unconditional release of such indemnified party from
all liability on any claims that are the subject matter of such action. Anything
in this Section 8 or Section 9 to the contrary notwithstanding an indemnifying
party shall not be liable for any settlement of a claim effected without its
written consent, which consent shall not be unreasonably withheld.

            (d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a) or (b) hereof in respect of any losses, liabilities, claims, damages or
expenses (or actions, inquiries, investigations or proceedings in respect
thereof) referred to therein, except by reason of the failure to give notice as
required in Section 8(c) hereof (provided that the indemnifying party does not
have knowledge of the action, inquiry, investigation or proceeding and to the
extent such party has been materially prejudiced by the failure to give such
notice), then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, liabilities,
claims, damages or expenses (or actions, inquiries, investigations or
proceedings in respect thereof in such proportion as is appropriate to reflect
the relative benefits received by York Water on the one hand and the Underwriter
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of York
Water on the one hand and the Underwriter on the other in connection with the
statements or omissions which resulted in such losses, liabilities, claims or
expenses (or actions, inquiries, investigations or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by York Water on the one hand and the Underwriter on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by


                                       20

York Water bears to the total underwriting discount and commissions received by
the Underwriter, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by York Water on the one hand or the Underwriter on the other hand and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.

            York Water and the Underwriter agree that it would not be just and
equitable if contributions to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above in this Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, liabilities,
claims, damages or expenses (or actions, inquiries, investigations or
proceedings in respect thereof) referred to above in this Section 8(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8(d), (i) the
Underwriter shall not be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by the
Underwriter, and (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

      9. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Date and any Option Closing Date. All such
representations, warranties and agreements of the Underwriter and York Water,
including, without limitation, the indemnity and contribution agreements
contained in Section 8 hereof and the agreements contained in Sections 6, 9 and
10 hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Underwriter or any controlling person,
and shall survive delivery of the Shares and termination of this Agreement,
whether before or after the Closing Date or any Option Closing Date.

      10. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION HEREOF. This
Agreement shall become effective when the parties hereto have executed and
delivered this Agreement. The Underwriter shall have the right to terminate this
Agreement at any time prior to the Closing Date or any Option Closing Date if
any of the following have occurred: (a) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change or any development involving a prospective material
adverse change in or affecting the Business Conditions of York Water, whether or
not arising in the ordinary course of business, that would, in the Underwriter's
opinion, make the offering or delivery of the Shares impracticable; (b) any
outbreak of hostilities or other national or international calamity or crisis or
change in economic, political or financial market conditions if the effect on
the financial markets of the United States of such outbreak, calamity, crisis or
change would, in the Underwriter's opinion, make the offering or delivery of the
Shares impracticable; (c) any suspension or limitation of trading generally in
securities on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market or any setting of minimum prices for


                                       21

trading; (d) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in the Underwriter's opinion materially and
adversely affects or will materially or adversely affect the Business Conditions
of York Water ; (e) declaration of a banking moratorium by the United States,
New York or Pennsylvania authorities; (f) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs that in the Underwriter's opinion has a material adverse effect
on the securities markets in the United States; or (g) trading in any securities
of York Water shall have been suspended or halted by NASD or the SEC.

      11. INFORMATION FURNISHED BY THE UNDERWRITER. The date the Underwriter
expects to deliver the Firm Shares on the cover page, the identity of the
Underwriter set forth on the cover page and in the first paragraph under the
heading "Underwriting," the third paragraph under the caption "Underwriting"
regarding concessions and reallowances, the disclosure with respect to
stabilization activities in the eighth paragraph under the heading
"Underwriting," the ninth paragraph under the heading "Underwriting" regarding
short sales, the tenth paragraph under the heading "Underwriting" regarding
passive market making, the representations of the Underwriter in the eleventh
paragraph under the heading "Underwriting" and the statement regarding
discretionary authority in the twelfth paragraph under the heading
"Underwriting" constitute the only written information furnished by reference or
on behalf of the Underwriter referred to in Sections 1(b) and 8 hereof.

      12. NOTICE. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and, if sent to the Underwriter,
shall be mailed, delivered, telexed, telegrammed, telegraphed or telecopied and
confirmed to Janney Montgomery Scott LLC, 1801 Market Street, Philadelphia,
Pennsylvania 19103, Attention: Mr. William L. Rulon-Miller, facsimile number
(215) 665-6197, with a copy to Ballard Spahr Andrews & Ingersoll, LLP, 1735
Market Street, Philadelphia, Pennsylvania 19103, Attention: Justin P. Klein,
Esquire, facsimile number (215) 864-8999; and if sent to York Water, shall be
mailed, delivered, telexed, telegrammed, telegraphed or telecopied and
confirmed to The York Water Company, 130 East Market Street, York, Pennsylvania
17401, Attention: Jeffrey Osman, facsimile number (717) 852-0058, with a copy
to Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, PA 19103,
Attention: Howard L. Meyers, Esquire, facsimile number (215) 963-5001.

      13. PARTIES. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriter, York Water and the controlling persons,
directors and officers thereof, and their respective successors, assigns, heirs
and legal representatives, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. The terms
"successors" and "assigns" shall not include any purchaser of the Shares merely
because of such purchase.

      14. DEFINITION OF BUSINESS DAY. For purposes of this Agreement, "business
day" means any day on which the Nasdaq National Market is opened for trading.

      15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and all such counterparts will constitute one and the same
instrument.



                                       22

      16. CONSTRUCTION. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applicable to
agreements made and performed entirely within such Commonwealth.








                                       23

            If the foregoing correctly sets forth your understanding of our
agreement, please sign and return to York Water the enclosed duplicate hereof,
whereupon it will become a binding agreement in accordance with its terms.

                                    Very truly yours,

                                    THE YORK WATER COMPANY





                                    By: /s/ Jeffrey S. Osman
                                        ---------------------------
                                    Jeffrey S. Osman
                                    President and Chief Executive Officer



The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

JANNEY MONTGOMERY SCOTT LLC


By:/s/ John Chuff
   ----------------------------------
   Name:  John Chuff
   Title: Executive Vice President and Director
          of Equity Capital Markets



                                       24

                                   SCHEDULE I

Jeffery S. Osman
Kathleen M. Miller
Vernon L. Bracey
Duane R. Close
Jeffrey R. Hines, P.E.
Bruce C. McIntosh
William T. Morris, P.E.
Irvin S. Naylor
Chloe R. Eichelberger
John L. Finlayson
Michael W. Gang
George W. Hodges
George Hay Kain, III
Thomas C. Norris





                                      S-I

                                    EXHIBIT A

                     Matters to be Covered in the Opinion of
                           Morgan, Lewis & Bockius LLP
                             Counsel for York Water

            1. York Water is validly subsisting as a corporation under the laws
of the Commonwealth of Pennsylvania with corporate power and authority to own
its properties and conduct its business as described in the Prospectus.

            2. York Water has authorized and outstanding capital stock as set
forth in the Prospectus and the authorized shares of Common Stock have been duly
authorized. All of the Shares conform to the description thereof contained in
the Prospectus. Certificates for the Shares are in due and proper form under the
PBCL. The Shares have been duly authorized by York Water and will be validly
issued, fully paid and non-assessable when issued and sold by York Water to, and
paid for by, the Underwriter in accordance with the terms of the Underwriting
Agreement,; and no preemptive rights of shareholders, by operation of law, or to
the knowledge of such counsel, by contract exists with respect to any of the
Shares or the issue and sale thereof.

            3. The Registration Statement has become effective under the Act,
and, to our knowledge, no stop order proceedings with respect thereto have been
instituted or are pending or threatened under the Act.

            4. The Registration Statement and the Prospectus and each amendment
or supplement thereto, comply as to form in all material respects with the
requirements of the Act, as applicable, and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the financial
statements, schedules, notes, other financial, accounting or statistical data
and information about internal controls over financial reporting included or
incorporated by reference therein).

            5. The statements set forth under the caption "Description of
Capital Stock" in the Prospectus, insofar as such statements purport to
summarize certain provisions of the articles of incorporation and bylaws of York
Water, provide a fair summary of such provisions in all material respects.

            6. To such counsel's knowledge, there are no contracts, licenses,
agreements, leases or documents of a character that are required to be filed as
exhibits to the Registration Statement, or to be summarized or described in the
Prospectus, which have not been so filed, summarized, or described.

            7. To such counsel's knowledge, there are no legal proceedings
pending or threatened against York Water before or by any federal or state
governmental or regulatory commission, board, body, authority or agency that are
required to be described in the Prospectus and that are not so described as
required.

            8. This Agreement has been duly authorized, executed and delivered
by York Water, and, assuming due execution by the Underwriter, is a valid and
binding obligation of


                                       A-1

York Water enforceable against York Water in accordance with its terms, except
as enforcement of rights to indemnity and contribution thereunder may be limited
by federal or state securities laws or principles of public policy, and subject
to the qualification that the enforceability of obligations of the Company
thereunder may be limited by bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting rights and remedies of creditors generally, and by
general principles of equity. The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated do not and will not
result in a breach of, or constitute a default under (nor constitute any event
that, with notice, lapse of time, or both, would result in any breach of or
default under), or conflict with the provision of the articles of incorporation
or bylaws of York Water, or any provision of any agreement or instrument filed
as an exhibit to, or incorporated by reference in, the Registration Statement.

            9. No consent, authorization, approval or order of or filing with
any federal or state governmental or regulatory commission, board, body,
authority or agency is required to be obtained or made by York Water in
connection with the issuance and sale of the Shares, and the consummation by
York Water of the transactions contemplated by this Agreement, other than such
as have previously been obtained, including, without limitation, registration of
the Shares under the Securities Act and of the Common Stock under the Exchange
Act and the issuance of a Securities Certificate by the Pennsylvania Public
Utility Commission; provided, however, that such counsel need express no opinion
as to (a) state securities or blue sky laws or foreign securities laws of the
various jurisdictions in which the Shares are being offered by the underwriters
thereof, and (b) the approval by the National Association of Securities Dealers
of the terms and conditions of this Agreement.

            10. York Water is not and, after giving effect to the offering and
sale of the Shares, will not be, an "investment company," as such term is
defined in the Investment Company Act of 1940, as amended.

            11. There is no further Pennsylvania governmental approval in the
nature of a franchise for service territory presently necessary in order for
York Water to provide service as a regulated public water utility within the
territory defined by (and subject to the terms of) the Certificates of Public
Convenience which have been issued to York Water by the Pennsylvania Public
Utility Commission. There is no further Pennsylvania governmental approval
required, other than such approval obtained from the Pennsylvania Public Utility
Commission, for York Water to issue and sell the Shares.

            12. The conditions to the use of Form S-3 by the Company have been
satisfied.

            13. Such opinion shall also include a statement to the effect that
such counsel has participated in conferences with officers and other
representatives of York Water, representatives of the Underwriter and its
counsel, and representatives of the independent public accountants of York
Water, at which conferences the contents of the Registration Statement and the
Prospectus were discussed. Although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus, on the
basis of the foregoing and the information disclosed to such counsel, but
without independent check and verification, and relying as to


                                      A-2

materiality on representations and statements of officers and other
representatives of York Water, such counsel will confirm to you that no fact
came to the attention of those lawyers at such firm who have participated in the
preparation of the Registration Statement and the Prospectus that would lead
such counsel to have reason to believe that the Registration Statement, or any
post-effective amendment thereto, as of the time it was declared effective,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus, as of its date and on
the Closing Date or Option Closing Date, as the case may be, contained or
contains any untrue statement of material fact, or omitted or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; except that such counsel need express any belief with respect to the
financial statements, schedules, notes, other financial, accounting or
statistical data or information about internal controls over financial reporting
included in, or incorporated by reference into, the Registration Statement or
the Prospectus.

            The foregoing opinion may be limited to the laws of the United
States and the laws of the Commonwealth of Pennsylvania. Such counsel may rely
as to questions of fact upon the representations of York Water set forth in this
Agreement and upon certificates of officers of York Water and of government
officials, all of which certificates must be satisfactory in form and scope to
counsel for the Underwriter.




                                      A-3

EX-10.1

                                                                    EXHIBIT 10.1


                                    AGREEMENT

            Agreement made as of January 26, 1999, between The York Water
Company, a Pennsylvania corporation (the "Company"), and Bruce C. McIntosh
("Employee").

            WHEREAS, Employee is the Vice President-Human Resources of the
Company and devotes substantially all of his business time and efforts to the
Company's affairs;

            WHEREAS, the Company recognizes that the departure or distraction of
key management personnel would be detrimental to the business of the Company;
and

            WHEREAS, the Board of Directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction;

            WHEREAS, in consideration of Employee's employment with the Company
and his agreement not to compete with the Company as set forth in this
Agreement, the Company agrees that Employee shall receive the compensation set
forth in this Agreement against the adverse financial and career impact on
Employee if his employment with the Company is terminated under certain
circumstances; and

            WHEREAS, the Company wishes to reward the dedication and loyalty of
Employee by providing for certain bonus payments to be made to Employee based
upon Employee's tenure, the Company agrees that Employee shall receive the
payments set forth in this Agreement upon the achievement of certain temporal
milestones.

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:

      1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings specified in this Section unless the context clearly
otherwise requires:

            (a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

            (b) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of securities tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange; (ii) that such Person
or any of such Person's Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including without limitation, pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause (ii) as a
result of an oral or written agreement, arrangement


                                       2

or understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or (iii) that
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to clause (ii)
above) or disposing of any voting securities of the Company; provided, however,
that nothing in this Section 1(b) shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of any securities
acquired through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such acquisition.


            (c) "Board" shall mean the Board of Directors of the Company.

            (d) "Business Combination" shall mean a reorganization, merger or
consolidation of the Company.

            (e) "Cause" shall mean (i) misappropriation of funds or any act of
common law fraud, (ii) habitual insobriety or substance abuse, (iii) conviction
of a felony or any crime involving moral turpitude, (iv) willful misconduct or
gross negligence by Employee in the performance of his duties, (v) the willful
failure of Employee to perform


                                       3

a material function of Employee's duties hereunder, or (vi) Employee engaging in
a conflict of interest or other breach of fiduciary duty.

            (f) "Change of Control" shall mean:

                  (i) Any Person (except the Employee, his Affiliates and
Associates, the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such employee benefit plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner in the aggregate of 50 percent or
more of either (A) the Outstanding Company Common Stock or (B) the Company
Voting Securities , in either case unless a majority of the members of the Board
in office immediately prior to such acquisition determine within five business
days of the receipt of actual notice of such acquisition that the circumstances
do not warrant the implementation of the provisions of this Agreement;

                  (ii) The Incumbent Board ceases for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the beginning of such period whose election or nomination
for election by the Company's shareholders was approved by a vote of at least a
majority of the directors then constituting the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act);


                                       4

                  (iii) Consummation by the Company of a Business Combination,
in each case, with respect to which all or substantially all of the individuals
and entities who were the respective Beneficial Owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
Business Combination are not, following such Business Combination, Beneficial
Owners, directly or indirectly, of more than 50 percent of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be , in any such case unless a
majority of the members of the Board in office immediately prior to such
Business Combination determines at the time of such Business Combination that
the circumstances do not warrant the implementation of the provisions of this
Agreement; or

                  (iv) (A) Consummation of a complete liquidation or dissolution
of the Company or (B) sale or other disposition of all or substantially all of
the assets of the Company other than to a corporation with respect to which,
following such sale or disposition, individuals and entities that are the
Beneficial Owners of more than 50 percent of, respectively, the Outstanding
Company Common Stock and the Company Voting Securities are substantially the
same as the individuals and entities who were the Beneficial Owners,
respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially


                                       5

the same proportion as their ownership of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, immediately prior to such
sale or disposition, in any such case unless a majority of the members of the
Incumbent Board in office immediately prior to such sale or disposition
determines at the time of such sale or disposition that the circumstances do not
warrant the implementation of the provisions of this Agreement.

            (g) "Company Voting Securities" shall mean the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors.

            (h) "Compensation" shall mean the sum of base compensation and
annual bonus compensation payable in cash to the Employee during the twelve
months preceding any date of determination under this Agreement.

            (i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

            (j) "Good Reason Termination" shall mean a Termination of
Employment initiated by Employee following a Change in Control and the
occurrence of one or more of the following events:

                  (i) any failure of the Company to comply with or satisfy any
of the material terms of this Agreement;

                  (ii) any significant reduction by the Company of the
authority, duties or responsibilities of Employee's principal assignment with
the Company or any reduction in Employee's base compensation or annual bonus
compensation opportunity;


                                       6

                  (iii) any removal by the Company of Employee from the
employment grade or officer positions which Employee holds as of the effective
date hereof except in connection with promotions to higher office; or

                  (iv) a transfer of Employee, without his express written
consent, to a location that is more than 50 miles from his principal place of
business immediately preceding the Change of Control.

            (k) "Incumbent Board" shall mean those individuals who, as of any
date of determination under the Agreement, are individuals who have constituted
the Board during the preceding 12-month period.

            (l) "Outstanding Company Common Stock" shall mean the then
outstanding shares of common stock of the Company. \

            (m) "Person" shall mean any natural person, business trust,
corporation, partnership, limited liability company, joint stock company,
proprietorship, association, trust, joint venture, unincorporated association or
any other legal entity of whatever nature.

            (n) "Phase Out Date" shall mean the first day of the calendar month
coincident with or next following Employee's 65th birthday.

            (o) "Subsidiary" shall mean any corporation in which the Company,
directly or indirectly, owns at least a 50 percent interest or an unincorporated
entity of which the Company, directly or indirectly, owns at least 50 percent of
the profits or capital interests.


                                       7

            (p) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.

            (q) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.

      2. Notice of Termination. Any Termination of Employment shall be
communicated by a Notice of Termination in accordance with Section 15 hereof.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which, in the case of a Good Reason Termination by Employee (a) indicates the
specific reasons for the termination, (b) briefly summarizes the facts and
circumstances deemed to provide a basis for termination of Employee's
employment, and (c) if the Termination Date is other than the date of receipt of
such notice, specifies the Termination Date (which date shall not be more than
15 days after the giving of such notice).

      3. Severance Compensation upon Termination; Bonus Payments upon Certain
Circumstances.

            (a) In the event of (i) an involuntary Termination of Employment for
any reason other than Cause or (ii) a Good Reason Termination, in either case
within one year following a Change of Control or six months prior to a Change of
Control, the Company shall pay to Employee, within 15 days after the later of
the Termination Date or the date of the Change of Control, and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-half (50 percent)
multiplied by Employee's Compensation, subject to customary employment taxes and
statutory deductions.


                                       8

            (b) In the event of Employee's voluntary Termination of Employment
for any reason other a Good Reason Termination, within (i) three months after a
Change of Control, the Employee shall not be entitled to any payment; or (ii)
three months and one day to 12 months following a Change of Control, the Company
shall pay to Employee, within 15 days after the Termination Date and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-fourth (25 percent) of
Employee's Compensation, subject to customary employment taxes and statutory
deductions.

            (c) If on the date 12 months and one day following a Change of
Control there has not been a Termination of Employment, Company shall pay to
Employee, within 15 days after such date, a single sum in cash equal to one-half
(50 percent) multiplied by Employee's Compensation, subject to customary
employment taxes and statutory deductions.

            (d) Notwithstanding paragraph (a) or (b) above and without regard to
the fact that payment is to be made in a single sum, until the earlier of the
Phase Out Date or one year after the Termination Date, Employee shall be
entitled to continued coverage under the Company's medical, dental and other
welfare benefit plans at the same level of coverage (and required employee
contributions, if any) as Employee was receiving at the time of his Termination
Date, subject to the Company's right to make changes to such plans for all of
its executive level employees generally and further subject to the Company's
right to provide Employee with cash, on a tax equivalent basis, such that
Employee is able to purchase comparable coverage on his own; provided, however,
that this obligation of the Company shall cease upon Employee's obtaining new
employment


                                       9

that provides Employee with eligibility for comparable medical benefits without
a pre-existing condition limitation; and, provided, further, that such extended
coverage shall be in addition to, and not as a substitute for, Employee's COBRA
rights which shall apply at the end of such extended coverage. All other benefit
plan coverages, retirement benefit accruals and fringe benefit eligibility shall
cease on the Termination Date subject to applicable rights under ERISA and
COBRA.

      4. Other Payments. The payment due under Section 3 hereof shall be in
addition to and not in lieu of any payments or benefits accrued for Employee
through the Termination Date under any plan, policy or program of the Company,
including the Supplemental Retirement Plan and the Deferred Compensation
Agreement, except that no payments shall be due to Employee under any severance
pay plan for the Company's employees.

      5. Enforcement.

            (a) In the event that the Company shall fail or refuse to make
payment of any amounts due Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to an escrow
agent, who shall invest such sum with interest to be paid to the prevailing
party, any amount remaining unpaid under Section 3 or 4. In such event, the
parties shall engage in arbitration in the City of Harrisburg, Pennsylvania, in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the Company and one by Employee,
and the third of whom shall be selected by the other two arbitrators. Any award
entered by the arbitrators shall be final, binding and nonappealable and
judgment


                                       10

may be entered thereon by either party in accordance with applicable law in any
court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify any
provision of this Agreement or to award a remedy for a dispute involving this
Agreement other than a benefit specifically provided under or by virtue of the
Agreement.

            (b) The Company shall pay Employee on demand the amount necessary to
reimburse Employee in full for all reasonable expenses (including reasonable
attorneys' fees and expenses) incurred by Employee in enforcing any of the
obligations of the Company under this Agreement subject to Employee's duty to
repay such sums to the Company in the event that the Employee does not prevail
on any material issue which is the subject of such arbitration. If Employee
prevails on at least one material issue which is the subject of such
arbitration, the Company shall be responsible for all of the fees of the
American Arbitration Association and the arbitrators and any expenses relating
to the conduct of the arbitration (including Employee's reasonable attorneys'
fees and expenses). Otherwise, each party shall be responsible for his or its
own expenses relating to the conduct of the arbitration (including reasonable
attorneys' fees and expenses) and shall equally share the fees of the American
Arbitration Association.

      6. No Mitigation. Employee shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.


                                       11

      7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its Subsidiaries or Affiliates and for which Employee may qualify, from
the date hereof through the Termination Date.


      8. No Set-Off. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against Employee or others.

      9. Taxes. Any payment required under this Agreement shall be subject to
all requirements of law with regard to the withholding of taxes, filing, making
of reports and the like, and the Company shall use its best efforts to satisfy
promptly all such requirements.

      10. Confidential Information. Employee recognizes and acknowledges that,
by reason of his employment by and service to the Company, he has had and will
continue to have access to confidential information of the Company, including,
without limitation, information and knowledge pertaining to products and
services offered, innovations, designs, ideas, plans, trade secrets, proprietary
information, distribution and sales methods and systems, sales and profit
figures, customer and client lists, and relationships between the Company and
its Subsidiaries and Affiliates and other distributors, customers, clients,
suppliers and others who have business dealings with the Company ("Confidential
Information"). Employee acknowledges that such Confidential


                                       12

Information is a valuable and unique asset and covenants that he will not,
either during or after his employment by the Company, disclose or use any such
Confidential Information to any person for any reason whatsoever without the
prior written authorization of the Board, unless such information is in the
public domain through no fault of Employee or except as may be required by law.

11.   Non-Competition.

            (a) During his employment by the Company and for a period of one
year thereafter, Employee will not, unless acting with the prior written consent
of the Board, directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with or use or permit
his name to be used in connection with, any business or enterprise engaged in by
the Company or any of its Affiliates, either during his employment by the
Company or on the Termination Date, as applicable, in the geographic area
comprising the Company's franchised service territory (the "Geographic Area").
It is recognized by Employee that the business of the Company and its Affiliates
and Employee's connection therewith is or will be involved in activity
throughout the Geographic Area, and that more limited geographical limitations
on this non-competition covenant would not be appropriate. Employee also shall
not, directly or indirectly, during such one year period (a) solicit or attempt
to convert any account or customer of the Company or its Affiliates existing on
the Termination Date to another supplier, or (b) following Employee's
employment, solicit or attempt to hire any then employee of the Company or its
Affiliates.


                                       13

            (b) The foregoing restriction shall not be construed to prohibit the
ownership by Employee of less than 5 percent of any class of securities of any
corporation which is engaged in any of the foregoing businesses having a class
of securities registered pursuant to the Exchange Act, provided that such
ownership represents a passive investment and that neither Employee nor any
group of persons including Employee, either directly or indirectly, manages or
exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business, other than exercising his
rights as a shareholder, or seeks to do any of the foregoing.

      12. Equitable Relief.

            (a) Employee acknowledges that the restrictions contained in
Sections 10 and 11 hereof are reasonable and necessary to protect the legitimate
interests of the Company and its Affiliates, that the Company would not have
entered into this Agreement in the absence of such restrictions, and that any
violation of any provision of those Sections will result in irreparable injury
to the Company. Employee represents that his experience and capabilities are
such that the restrictions contained in Section 11 hereof will not prevent
Employee from obtaining employment or otherwise earning a living at the same
general level of economic benefit as anticipated by this Agreement. Employee
further represents and acknowledges that (i) he has been advised by the Company
to consult his own legal counsel in respect of this Agreement, and (ii) that he
has had full opportunity, prior to execution of this Agreement, to review
thoroughly this Agreement and understands its terms and conditions.


                                       14

            (b) Employee agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 10 or 11 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 10 or 11 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, service, or other limitations permitted by
applicable law.

            (c) Employee irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Section 10 or 11 hereof,
including, without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief or other equitable relief, may be
brought in the United States District Court for the Middle District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in York County, Pennsylvania,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Employee may
have to the laying of venue of any such suit, action or proceeding in any such
court. Employee also irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 15 hereof.

            (d) Employee agrees that he will provide, and that the Company may
similarly provide, a copy of Sections 10 and 11 hereof to any business or
enterprise (i)


                                       15

which he may directly or indirectly own, manage, operate, finance, join, control
or participate in the ownership, management, operation, financing, control or
control of, or (ii) with which he may be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise, or
in connection with which he may use or permit his name to be used; provided,
however, that this provision shall not apply in respect of Section 12 hereof
after expiration of the time period set forth therein.

      13. Term of Agreement. The term of this Agreement shall be for five years
commencing on the date hereof and shall automatically be renewed for additional
periods of one year until the Company notifies Employee in writing, at least 90
days in advance of expiration, that this Agreement will not be renewed. If any
notice of non-renewal occurs within two years after a Change of Control, such
notice shall constitute an involuntary Termination of Employment for purposes of
Section 3 above. Notwithstanding anything herein to the contrary, this Agreement
(other than the provisions of Sections 10 through 11 hereof) shall terminate on
the Phase-Out Date or if the employment of Employee by the Company shall
terminate for any reason other than as provided herein.

      14. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be


                                       16

required to perform if no such succession or successions had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used in this
Agreement, the Company shall mean the Company as herein defined and any such
successor or successors to its business and/or assets, jointly and severally.

      15. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:

                  If to the Company, to:

                          The York Water Company
                          130 East Market Street
                          York, PA  17405-7089
                          Attention:  Chairman of the Board

                  If to Employee, to:

                          Bruce C. McIntosh
                          2095 Brandywine Lane
                          York, PA  17404

or to such other names or addresses as the Company or Employee, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Section. Any such notice shall be deemed delivered and effective when
received in the case of personal delivery, five days after deposit, postage
prepaid, with the U.S. Postal Service in the case of registered or certified
mail, or on the next business day in the case of overnight express courier
service.


                                       17

      16. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

      17. Contents of Agreement, Amendment and Assignment.

            (a) This Agreement supersedes all prior agreements, sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by Employee and the Company and only if approved
by the Board. The provisions of this Agreement may provide for payments to
Employee under certain compensation or bonus plans under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this Agreement without further action by the
Company.

            (b) Nothing in this Agreement shall be construed as giving Employee
any right to be retained in the employ of the Company.

            (c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of Employee and the Company hereunder shall
not be assignable in whole or in part.

      18. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable,


                                       18

such invalidity or unenforceability shall not affect any other provisions or
applications of this Agreement which can be given effect without the invalid or
unenforceable provision or application.

      19. Remedies Cumulative; No Waiver. No right conferred upon Employee by
this Agreement is intended to be exclusive of any other right or remedy, and
each and every such right or remedy shall be cumulative and shall be in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity. No delay or omission by Employee in exercising any right, remedy
or power hereunder or existing at law or in equity shall be construed as a
waiver thereof.

      20. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

      21. Employee's Acknowledgment. By executing this Agreement as of the date
first above written, Employee acknowledges that he has no grounds for asserting
that a Good Reason Termination exists as of that date and, therefore, that no
obligation under Section 3 exists at the current time.


                                       19

            IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.

                                         THE YORK WATER COMPANY


/s/ Jeffrey S. Osman                     By: /s/ William T. Morris
- -----------------------------------          ----------------------------------
Witness                                  President and Chief Executive Officer


/s/ Jeffrey S. Osman                     /s/ Bruce C. McIntosh
- -----------------------------------      --------------------------------------
Witness                                  Bruce C. McIntosh


                                       20

EX-10.2

                                                                    EXHIBIT 10.2

                                    AGREEMENT

            Agreement made as of January 26, 1999, between The York Water
Company, a Pennsylvania corporation (the "Company"), and Jeffrey R. Hines, P.E.
("Employee").

            WHEREAS, Employee is the Vice President-Engineering of the Company
and devotes substantially all of his business time and efforts to the Company's
affairs;

            WHEREAS, the Company recognizes that the departure or distraction of
key management personnel would be detrimental to the business of the Company;
and

            WHEREAS, the Board of Directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction;

            WHEREAS, in consideration of Employee's employment with the Company
and his agreement not to compete with the Company as set forth in this
Agreement, the Company agrees that Employee shall receive the compensation set
forth in this Agreement against the adverse financial and career impact on
Employee if his employment with the Company is terminated under certain
circumstances; and

            WHEREAS, the Company wishes to reward the dedication and loyalty of
Employee by providing for certain bonus payments to be made to Employee based
upon Employee's tenure, the Company agrees that Employee shall receive the
payments set forth in this Agreement upon the achievement of certain temporal
milestones.

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:

      1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings specified in this Section unless the context clearly
otherwise requires:

            (a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

            (b) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of securities tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange; (ii) that such Person
or any of such Person's Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including without limitation, pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause (ii) as a
result of an oral or written agreement, arrangement

                                       2

or understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or (iii) that
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to clause (ii)
above) or disposing of any voting securities of the Company; provided, however,
that nothing in this Section 1(b) shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of any securities
acquired through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such acquisition.

            (c) "Board" shall mean the Board of Directors of the Company.

            (d) "Business Combination" shall mean a reorganization, merger or
consolidation of the Company.

            (e) "Cause" shall mean (i) misappropriation of funds or any act of
common law fraud, (ii) habitual insobriety or substance abuse, (iii) conviction
of a felony or any crime involving moral turpitude, (iv) willful misconduct or
gross negligence by Employee in the performance of his duties, (v) the willful
failure of Employee to perform

                                       3

a material function of Employee's duties hereunder, or (vi) Employee engaging in
a conflict of interest or other breach of fiduciary duty.

            (f) "Change of Control" shall mean:

                  (i) Any Person (except the Employee, his Affiliates and
Associates, the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such employee benefit plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner in the aggregate of 50 percent or
more of either (A) the Outstanding Company Common Stock or (B) the Company
Voting Securities , in either case unless a majority of the members of the Board
in office immediately prior to such acquisition determine within five business
days of the receipt of actual notice of such acquisition that the circumstances
do not warrant the implementation of the provisions of this Agreement;

                  (ii) The Incumbent Board ceases for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the beginning of such period whose election or nomination
for election by the Company's shareholders was approved by a vote of at least a
majority of the directors then constituting the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act);

                                       4

                  (iii) Consummation by the Company of a Business Combination,
in each case, with respect to which all or substantially all of the individuals
and entities who were the respective Beneficial Owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
Business Combination are not, following such Business Combination, Beneficial
Owners, directly or indirectly, of more than 50 percent of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be , in any such case unless a
majority of the members of the Board in office immediately prior to such
Business Combination determines at the time of such Business Combination that
the circumstances do not warrant the implementation of the provisions of this
Agreement; or

                  (iv) (A) Consummation of a complete liquidation or dissolution
of the Company or (B) sale or other disposition of all or substantially all of
the assets of the Company other than to a corporation with respect to which,
following such sale or disposition, individuals and entities that are the
Beneficial Owners of more than 50 percent of, respectively, the Outstanding
Company Common Stock and the Company Voting Securities are substantially the
same as the individuals and entities who were the Beneficial Owners,
respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially

                                       5

the same proportion as their ownership of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, immediately prior to such
sale or disposition, in any such case unless a majority of the members of the
Incumbent Board in office immediately prior to such sale or disposition
determines at the time of such sale or disposition that the circumstances do not
warrant the implementation of the provisions of this Agreement.

            (g) "Company Voting Securities" shall mean the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors.

            (h) "Compensation" shall mean the sum of base compensation and
annual bonus compensation payable in cash to the Employee during the twelve
months preceding any date of determination under this Agreement.

            (i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

            (j) "Good Reason Termination" shall mean a Termination of Employment
initiated by Employee following a Change in Control and the occurrence of one or
more of the following events:

                  (i) any failure of the Company to comply with or satisfy any
of the material terms of this Agreement;

                  (ii) any significant reduction by the Company of the
authority, duties or responsibilities of Employee's principal assignment with
the Company or any reduction in Employee's base compensation or annual bonus
compensation opportunity;

                                       6

                  (iii) any removal by the Company of Employee from the
employment grade or officer positions which Employee holds as of the effective
date hereof except in connection with promotions to higher office; or

                  (iv) a transfer of Employee, without his express written
consent, to a location that is more than 50 miles from his principal place of
business immediately preceding the Change of Control.

            (k) "Incumbent Board" shall mean those individuals who, as of any
date of determination under the Agreement, are individuals who have constituted
the Board during the preceding 12-month period.

            (l) "Outstanding Company Common Stock" shall mean the then
outstanding shares of common stock of the Company.

            (m) "Person" shall mean any natural person, business trust,
corporation, partnership, limited liability company, joint stock company,
proprietorship, association, trust, joint venture, unincorporated association or
any other legal entity of whatever nature.

            (n) "Phase Out Date" shall mean the first day of the calendar month
coincident with or next following Employee's 65th birthday.

            (o) "Subsidiary" shall mean any corporation in which the Company,
directly or indirectly, owns at least a 50 percent interest or an unincorporated
entity of which the Company, directly or indirectly, owns at least 50 percent of
the profits or capital interests.

                                       7

            (p) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.

            (q) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.

      2. Notice of Termination. Any Termination of Employment shall be
communicated by a Notice of Termination in accordance with Section 15 hereof.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which, in the case of a Good Reason Termination by Employee (a) indicates the
specific reasons for the termination, (b) briefly summarizes the facts and
circumstances deemed to provide a basis for termination of Employee's
employment, and (c) if the Termination Date is other than the date of receipt of
such notice, specifies the Termination Date (which date shall not be more than
15 days after the giving of such notice).

      3. Severance Compensation upon Termination; Bonus Payments upon Certain
Circumstances.

            (a) In the event of (i) an involuntary Termination of Employment for
any reason other than Cause or (ii) a Good Reason Termination, in either case
within one year following a Change of Control or six months prior to a Change of
Control, the Company shall pay to Employee, within 15 days after the later of
the Termination Date or the date of the Change of Control, and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-half (50 percent)
multiplied by Employee's Compensation, subject to customary employment taxes and
statutory deductions.

                                       8

            (b) In the event of Employee's voluntary Termination of Employment
for any reason other a Good Reason Termination, within (i) three months after a
Change of Control, the Employee shall not be entitled to any payment; or (ii)
three months and one day to 12 months following a Change of Control, the Company
shall pay to Employee, within 15 days after the Termination Date and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-fourth (25 percent) of
Employee's Compensation, subject to customary employment taxes and statutory
deductions.

            (c) If on the date 12 months and one day following a Change of
Control there has not been a Termination of Employment, Company shall pay to
Employee, within 15 days after such date, a single sum in cash equal to one-half
(50 percent) multiplied by Employee's Compensation, subject to customary
employment taxes and statutory deductions.

            (d) Notwithstanding paragraph (a) or (b) above and without regard to
the fact that payment is to be made in a single sum, until the earlier of the
Phase Out Date or one year after the Termination Date, Employee shall be
entitled to continued coverage under the Company's medical, dental and other
welfare benefit plans at the same level of coverage (and required employee
contributions, if any) as Employee was receiving at the time of his Termination
Date, subject to the Company's right to make changes to such plans for all of
its executive level employees generally and further subject to the Company's
right to provide Employee with cash, on a tax equivalent basis, such that
Employee is able to purchase comparable coverage on his own; provided, however,
that this obligation of the Company shall cease upon Employee's obtaining new
employment

                                       9

that provides Employee with eligibility for comparable medical benefits without
a pre-existing condition limitation; and, provided, further, that such extended
coverage shall be in addition to, and not as a substitute for, Employee's COBRA
rights which shall apply at the end of such extended coverage. All other benefit
plan coverages, retirement benefit accruals and fringe benefit eligibility shall
cease on the Termination Date subject to applicable rights under ERISA and
COBRA.

      4. Other Payments. The payment due under Section 3 hereof shall be in
addition to and not in lieu of any payments or benefits accrued for Employee
through the Termination Date under any plan, policy or program of the Company,
including the Supplemental Retirement Plan and the Deferred Compensation
Agreement, except that no payments shall be due to Employee under any severance
pay plan for the Company's employees.

      5. Enforcement.

            (a) In the event that the Company shall fail or refuse to make
payment of any amounts due Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to an escrow
agent, who shall invest such sum with interest to be paid to the prevailing
party, any amount remaining unpaid under Section 3 or 4. In such event, the
parties shall engage in arbitration in the City of Harrisburg, Pennsylvania, in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the Company and one by Employee,
and the third of whom shall be selected by the other two arbitrators. Any award
entered by the arbitrators shall be final, binding and nonappealable and
judgment

                                       10

may be entered thereon by either party in accordance with applicable law in any
court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify any
provision of this Agreement or to award a remedy for a dispute involving this
Agreement other than a benefit specifically provided under or by virtue of the
Agreement.

            (b) The Company shall pay Employee on demand the amount necessary to
reimburse Employee in full for all reasonable expenses (including reasonable
attorneys' fees and expenses) incurred by Employee in enforcing any of the
obligations of the Company under this Agreement subject to Employee's duty to
repay such sums to the Company in the event that the Employee does not prevail
on any material issue which is the subject of such arbitration. If Employee
prevails on at least one material issue which is the subject of such
arbitration, the Company shall be responsible for all of the fees of the
American Arbitration Association and the arbitrators and any expenses relating
to the conduct of the arbitration (including Employee's reasonable attorneys'
fees and expenses). Otherwise, each party shall be responsible for his or its
own expenses relating to the conduct of the arbitration (including reasonable
attorneys' fees and expenses) and shall equally share the fees of the American
Arbitration Association.

      6. No Mitigation. Employee shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.

                                       11

      7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its Subsidiaries or Affiliates and for which Employee may qualify, from
the date hereof through the Termination Date.

      8. No Set-Off. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against Employee or others.

      9. Taxes. Any payment required under this Agreement shall be subject to
all requirements of law with regard to the withholding of taxes, filing, making
of reports and the like, and the Company shall use its best efforts to satisfy
promptly all such requirements.

      10. Confidential Information. Employee recognizes and acknowledges that,
by reason of his employment by and service to the Company, he has had and will
continue to have access to confidential information of the Company, including,
without limitation, information and knowledge pertaining to products and
services offered, innovations, designs, ideas, plans, trade secrets, proprietary
information, distribution and sales methods and systems, sales and profit
figures, customer and client lists, and relationships between the Company and
its Subsidiaries and Affiliates and other distributors, customers, clients,
suppliers and others who have business dealings with the Company ("Confidential
Information"). Employee acknowledges that such Confidential

                                       12

Information is a valuable and unique asset and covenants that he will not,
either during or after his employment by the Company, disclose or use any such
Confidential Information to any person for any reason whatsoever without the
prior written authorization of the Board, unless such information is in the
public domain through no fault of Employee or except as may be required by law.

      11. Non-Competition.

            (a) During his employment by the Company and for a period of one
year thereafter, Employee will not, unless acting with the prior written consent
of the Board, directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with or use or permit
his name to be used in connection with, any business or enterprise engaged in by
the Company or any of its Affiliates, either during his employment by the
Company or on the Termination Date, as applicable, in the geographic area
comprising the Company's franchised service territory (the "Geographic Area").
It is recognized by Employee that the business of the Company and its Affiliates
and Employee's connection therewith is or will be involved in activity
throughout the Geographic Area, and that more limited geographical limitations
on this non-competition covenant would not be appropriate. Employee also shall
not, directly or indirectly, during such one year period (a) solicit or attempt
to convert any account or customer of the Company or its Affiliates existing on
the Termination Date to another supplier, or (b) following Employee's
employment, solicit or attempt to hire any then employee of the Company or its
Affiliates.

                                       13

            (b) The foregoing restriction shall not be construed to prohibit the
ownership by Employee of less than 5 percent of any class of securities of any
corporation which is engaged in any of the foregoing businesses having a class
of securities registered pursuant to the Exchange Act, provided that such
ownership represents a passive investment and that neither Employee nor any
group of persons including Employee, either directly or indirectly, manages or
exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business, other than exercising his
rights as a shareholder, or seeks to do any of the foregoing.

      12. Equitable Relief.

            (a) Employee acknowledges that the restrictions contained in
Sections 10 and 11 hereof are reasonable and necessary to protect the legitimate
interests of the Company and its Affiliates, that the Company would not have
entered into this Agreement in the absence of such restrictions, and that any
violation of any provision of those Sections will result in irreparable injury
to the Company. Employee represents that his experience and capabilities are
such that the restrictions contained in Section 11 hereof will not prevent
Employee from obtaining employment or otherwise earning a living at the same
general level of economic benefit as anticipated by this Agreement. Employee
further represents and acknowledges that (i) he has been advised by the Company
to consult his own legal counsel in respect of this Agreement, and (ii) that he
has had full opportunity, prior to execution of this Agreement, to review
thoroughly this Agreement and understands its terms and conditions.

                                       14

            (b) Employee agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 10 or 11 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 10 or 11 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, service, or other limitations permitted by
applicable law.

            (c) Employee irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Section 10 or 11 hereof,
including, without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief or other equitable relief, may be
brought in the United States District Court for the Middle District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in York County, Pennsylvania,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Employee may
have to the laying of venue of any such suit, action or proceeding in any such
court. Employee also irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 15 hereof.

            (d) Employee agrees that he will provide, and that the Company may
similarly provide, a copy of Sections 10 and 11 hereof to any business or
enterprise (i)

                                       15

which he may directly or indirectly own, manage, operate, finance, join, control
or participate in the ownership, management, operation, financing, control or
control of, or (ii) with which he may be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise, or
in connection with which he may use or permit his name to be used; provided,
however, that this provision shall not apply in respect of Section 12 hereof
after expiration of the time period set forth therein.

      13. Term of Agreement. The term of this Agreement shall be for five years
commencing on the date hereof and shall automatically be renewed for additional
periods of one year until the Company notifies Employee in writing, at least 90
days in advance of expiration, that this Agreement will not be renewed. If any
notice of non-renewal occurs within two years after a Change of Control, such
notice shall constitute an involuntary Termination of Employment for purposes of
Section 3 above. Notwithstanding anything herein to the contrary, this Agreement
(other than the provisions of Sections 10 through 11 hereof) shall terminate on
the Phase-Out Date or if the employment of Employee by the Company shall
terminate for any reason other than as provided herein.

      14. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be

                                       16

required to perform if no such succession or successions had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used in this
Agreement, the Company shall mean the Company as herein defined and any such
successor or successors to its business and/or assets, jointly and severally.

      15. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:

                          If to the Company, to:

                                       The York Water Company
                                       130 East Market Street
                                       York, PA  17405-7089
                                       Attention:  Chairman of the Board

                          If to Employee, to:

                                       Jeffrey R. Hines, P.E.
                                       984 Grantley Road
                                       York, PA  17403

or to such other names or addresses as the Company or Employee, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Section. Any such notice shall be deemed delivered and effective when
received in the case of personal delivery, five days after deposit, postage
prepaid, with the U.S. Postal Service in the case of registered or certified
mail, or on the next business day in the case of overnight express courier
service.

                                       17

      16. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

      17. Contents of Agreement, Amendment and Assignment.

            (a) This Agreement supersedes all prior agreements, sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by Employee and the Company and only if approved
by the Board. The provisions of this Agreement may provide for payments to
Employee under certain compensation or bonus plans under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this Agreement without further action by the
Company.

            (b) Nothing in this Agreement shall be construed as giving Employee
any right to be retained in the employ of the Company.

            (c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of Employee and the Company hereunder shall
not be assignable in whole or in part.

      18. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable,

                                       18

such invalidity or unenforceability shall not affect any other provisions or
applications of this Agreement which can be given effect without the invalid or
unenforceable provision or application.

      19. Remedies Cumulative; No Waiver. No right conferred upon Employee by
this Agreement is intended to be exclusive of any other right or remedy, and
each and every such right or remedy shall be cumulative and shall be in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity. No delay or omission by Employee in exercising any right, remedy
or power hereunder or existing at law or in equity shall be construed as a
waiver thereof.

      20. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

      21. Employee's Acknowledgment. By executing this Agreement as of the date
first above written, Employee acknowledges that he has no grounds for asserting
that a Good Reason Termination exists as of that date and, therefore, that no
obligation under Section 3 exists at the current time.

                                       19

            IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.

                                         THE YORK WATER COMPANY


                                         By:/s/ William T. Morris
- -----------------------------               --------------------------------
Witness                                  President and Chief Executive Officer



                                         /s/ Jeffrey R. Hines
- -----------------------------            --------------------
Witness                                  Jeffrey R. Hines

                                       20

EX-10.3

                                                                    Exhibit 10.3


                                  AGREEMENT

            Agreement made as of January 26, 1999, between The York Water
Company, a Pennsylvania corporation (the "Company"), and Duane R. Close
("Employee").

            WHEREAS, Employee is the Vice President-Operations of the Company
and devotes substantially all of his business time and efforts to the Company's
affairs;

            WHEREAS, the Company recognizes that the departure or distraction of
key management personnel would be detrimental to the business of the Company;
and

            WHEREAS, the Board of Directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction;

            WHEREAS, in consideration of Employee's employment with the Company
and his agreement not to compete with the Company as set forth in this
Agreement, the Company agrees that Employee shall receive the compensation set
forth in this Agreement against the adverse financial and career impact on
Employee if his employment with the Company is terminated under certain
circumstances; and

            WHEREAS, the Company wishes to reward the dedication and loyalty of
Employee by providing for certain bonus payments to be made to Employee based
upon Employee's tenure, the Company agrees that Employee shall receive the
payments set forth in this Agreement upon the achievement of certain temporal
milestones.

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:

      1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings specified in this Section unless the context clearly
otherwise requires:

            (a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

            (b) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of securities tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange; (ii) that such Person
or any of such Person's Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including without limitation, pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause (ii) as a
result of an oral or written agreement, arrangement


                                       2

or understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or (iii) that
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to clause (ii)
above) or disposing of any voting securities of the Company; provided, however,
that nothing in this Section 1(b) shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of any securities
acquired through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such acquisition.

            (c) "Board" shall mean the Board of Directors of the Company.

            (d) "Business Combination" shall mean a reorganization, merger or
consolidation of the Company.

            (e) "Cause" shall mean (i) misappropriation of funds or any act of
common law fraud, (ii) habitual insobriety or substance abuse, (iii) conviction
of a felony or any crime involving moral turpitude, (iv) willful misconduct or
gross negligence by Employee in the performance of his duties, (v) the willful
failure of Employee to perform


                                       3

a material function of Employee's duties hereunder, or (vi) Employee engaging in
a conflict of interest or other breach of fiduciary duty.

            (f) "Change of Control" shall mean:

                  (i) Any Person (except the Employee, his Affiliates and
Associates, the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such employee benefit plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner in the aggregate of 50 percent or
more of either (A) the Outstanding Company Common Stock or (B) the Company
Voting Securities , in either case unless a majority of the members of the Board
in office immediately prior to such acquisition determine within five business
days of the receipt of actual notice of such acquisition that the circumstances
do not warrant the implementation of the provisions of this Agreement;

                  (ii) The Incumbent Board ceases for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the beginning of such period whose election or nomination
for election by the Company's shareholders was approved by a vote of at least a
majority of the directors then constituting the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act);


                                       4

                  (iii) Consummation by the Company of a Business Combination,
in each case, with respect to which all or substantially all of the individuals
and entities who were the respective Beneficial Owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
Business Combination are not, following such Business Combination, Beneficial
Owners, directly or indirectly, of more than 50 percent of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be , in any such case unless a
majority of the members of the Board in office immediately prior to such
Business Combination determines at the time of such Business Combination that
the circumstances do not warrant the implementation of the provisions of this
Agreement; or

                  (iv) (A) Consummation of a complete liquidation or dissolution
of the Company or (B) sale or other disposition of all or substantially all of
the assets of the Company other than to a corporation with respect to which,
following such sale or disposition, individuals and entities that are the
Beneficial Owners of more than 50 percent of, respectively, the Outstanding
Company Common Stock and the Company Voting Securities are substantially the
same as the individuals and entities who were the Beneficial Owners,
respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially


                                       5

the same proportion as their ownership of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, immediately prior to such
sale or disposition, in any such case unless a majority of the members of the
Incumbent Board in office immediately prior to such sale or disposition
determines at the time of such sale or disposition that the circumstances do not
warrant the implementation of the provisions of this Agreement.

            (g) "Company Voting Securities" shall mean the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors.

            (h) "Compensation" shall mean the sum of base compensation and
annual bonus compensation payable in cash to the Employee during the twelve
months preceding any date of determination under this Agreement.

            (i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

            (j) "Good Reason Termination" shall mean a Termination of Employment
initiated by Employee following a Change in Control and the occurrence of one or
more of the following events:


                  (i) any failure of the Company to comply with or satisfy any
of the material terms of this Agreement;

                  (ii) any significant reduction by the Company of the
authority, duties or responsibilities of Employee's principal assignment with
the Company or any reduction in Employee's base compensation or annual bonus
compensation opportunity;


                                       6

                  (iii) any removal by the Company of Employee from the
employment grade or officer positions which Employee holds as of the effective
date hereof except in connection with promotions to higher office; or

                  (iv) a transfer of Employee, without his express written
consent, to a location that is more than 50 miles from his principal place of
business immediately preceding the Change of Control.

            (k) "Incumbent Board" shall mean those individuals who, as of any
date of determination under the Agreement, are individuals who have constituted
the Board during the preceding 12-month period.

            (l) "Outstanding Company Common Stock" shall mean the then
outstanding shares of common stock of the Company.

            (m) "Person" shall mean any natural person, business trust,
corporation, partnership, limited liability company, joint stock company,
proprietorship, association, trust, joint venture, unincorporated association or
any other legal entity of whatever nature.

            (n) "Phase Out Date" shall mean the first day of the calendar month
coincident with or next following Employee's 65th birthday.

            (o) "Subsidiary" shall mean any corporation in which the Company,
directly or indirectly, owns at least a 50 percent interest or an unincorporated
entity of which the Company, directly or indirectly, owns at least 50 percent of
the profits or capital interests.


                                       7

            (p) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.

            (q) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.

      2. Notice of Termination. Any Termination of Employment shall be
communicated by a Notice of Termination in accordance with Section 15 hereof.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which, in the case of a Good Reason Termination by Employee (a) indicates the
specific reasons for the termination, (b) briefly summarizes the facts and
circumstances deemed to provide a basis for termination of Employee's
employment, and (c) if the Termination Date is other than the date of receipt of
such notice, specifies the Termination Date (which date shall not be more than
15 days after the giving of such notice).

      3. Severance Compensation upon Termination; Bonus Payments upon Certain
Circumstances.

            (a) In the event of (i) an involuntary Termination of Employment for
any reason other than Cause or (ii) a Good Reason Termination, in either case
within one year following a Change of Control or six months prior to a Change of
Control, the Company shall pay to Employee, within 15 days after the later of
the Termination Date or the date of the Change of Control, and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-half (50 percent)
multiplied by Employee's Compensation, subject to customary employment taxes and
statutory deductions.


                                       8

            (b) In the event of Employee's voluntary Termination of Employment
for any reason other a Good Reason Termination, within (i) three months after a
Change of Control, the Employee shall not be entitled to any payment; or (ii)
three months and one day to 12 months following a Change of Control, the Company
shall pay to Employee, within 15 days after the Termination Date and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-fourth (25 percent) of
Employee's Compensation, subject to customary employment taxes and statutory
deductions.

            (c) If on the date 12 months and one day following a Change of
Control there has not been a Termination of Employment, Company shall pay to
Employee, within 15 days after such date, a single sum in cash equal to one-half
(50 percent) multiplied by Employee's Compensation, subject to customary
employment taxes and statutory deductions.

            (d) Notwithstanding paragraph (a) or (b) above and without regard to
the fact that payment is to be made in a single sum, until the earlier of the
Phase Out Date or one year after the Termination Date, Employee shall be
entitled to continued coverage under the Company's medical, dental and other
welfare benefit plans at the same level of coverage (and required employee
contributions, if any) as Employee was receiving at the time of his Termination
Date, subject to the Company's right to make changes to such plans for all of
its executive level employees generally and further subject to the Company's
right to provide Employee with cash, on a tax equivalent basis, such that
Employee is able to purchase comparable coverage on his own; provided, however,
that this obligation of the Company shall cease upon Employee's obtaining new
employment


                                       9

that provides Employee with eligibility for comparable medical benefits without
a pre-existing condition limitation; and, provided, further, that such extended
coverage shall be in addition to, and not as a substitute for, Employee's COBRA
rights which shall apply at the end of such extended coverage. All other benefit
plan coverages, retirement benefit accruals and fringe benefit eligibility shall
cease on the Termination Date subject to applicable rights under ERISA and
COBRA.

      4. Other Payments. The payment due under Section 3 hereof shall be in
addition to and not in lieu of any payments or benefits accrued for Employee
through the Termination Date under any plan, policy or program of the Company,
including the Supplemental Retirement Plan and the Deferred Compensation
Agreement, except that no payments shall be due to Employee under any severance
pay plan for the Company's employees.

      5. Enforcement.

            (a) In the event that the Company shall fail or refuse to make
payment of any amounts due Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to an escrow
agent, who shall invest such sum with interest to be paid to the prevailing
party, any amount remaining unpaid under Section 3 or 4. In such event, the
parties shall engage in arbitration in the City of Harrisburg, Pennsylvania, in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the Company and one by Employee,
and the third of whom shall be selected by the other two arbitrators. Any award
entered by the arbitrators shall be final, binding and nonappealable and
judgment


                                       10

may be entered thereon by either party in accordance with applicable
law in any court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify any
provision of this Agreement or to award a remedy for a dispute involving this
Agreement other than a benefit specifically provided under or by virtue of the
Agreement.

            (b) The Company shall pay Employee on demand the amount necessary to
reimburse Employee in full for all reasonable expenses (including reasonable
attorneys' fees and expenses) incurred by Employee in enforcing any of the
obligations of the Company under this Agreement subject to Employee's duty to
repay such sums to the Company in the event that the Employee does not prevail
on any material issue which is the subject of such arbitration. If Employee
prevails on at least one material issue which is the subject of such
arbitration, the Company shall be responsible for all of the fees of the
American Arbitration Association and the arbitrators and any expenses relating
to the conduct of the arbitration (including Employee's reasonable attorneys'
fees and expenses). Otherwise, each party shall be responsible for his or its
own expenses relating to the conduct of the arbitration (including reasonable
attorneys' fees and expenses) and shall equally share the fees of the American
Arbitration Association.

      6. No Mitigation. Employee shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.


                                       11

      7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its Subsidiaries or Affiliates and for which Employee may qualify, from
the date hereof through the Termination Date.

      8. No Set-Off. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against Employee or others.

      9. Taxes. Any payment required under this Agreement shall be subject to
all requirements of law with regard to the withholding of taxes, filing, making
of reports and the like, and the Company shall use its best efforts to satisfy
promptly all such requirements.

      10. Confidential Information. Employee recognizes and acknowledges that,
by reason of his employment by and service to the Company, he has had and will
continue to have access to confidential information of the Company, including,
without limitation, information and knowledge pertaining to products and
services offered, innovations, designs, ideas, plans, trade secrets, proprietary
information, distribution and sales methods and systems, sales and profit
figures, customer and client lists, and relationships between the Company and
its Subsidiaries and Affiliates and other distributors, customers, clients,
suppliers and others who have business dealings with the Company ("Confidential
Information"). Employee acknowledges that such Confidential

                                       12

Information is a valuable and unique asset and covenants that he will not,
either during or after his employment by the Company, disclose or use any such
Confidential Information to any person for any reason whatsoever without the
prior written authorization of the Board, unless such information is in the
public domain through no fault of Employee or except as may be required by law.

      11. Non-Competition.

            (a) During his employment by the Company and for a period of one
year thereafter, Employee will not, unless acting with the prior written consent
of the Board, directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with or use or permit
his name to be used in connection with, any business or enterprise engaged in by
the Company or any of its Affiliates, either during his employment by the
Company or on the Termination Date, as applicable, in the geographic area
comprising the Company's franchised service territory (the "Geographic Area").
It is recognized by Employee that the business of the Company and its Affiliates
and Employee's connection therewith is or will be involved in activity
throughout the Geographic Area, and that more limited geographical limitations
on this non-competition covenant would not be appropriate. Employee also shall
not, directly or indirectly, during such one year period (a) solicit or attempt
to convert any account or customer of the Company or its Affiliates existing on
the Termination Date to another supplier, or (b) following Employee's
employment, solicit or attempt to hire any then employee of the Company or its
Affiliates.


                                       13

            (b) The foregoing restriction shall not be construed to prohibit the
ownership by Employee of less than 5 percent of any class of securities of any
corporation which is engaged in any of the foregoing businesses having a class
of securities registered pursuant to the Exchange Act, provided that such
ownership represents a passive investment and that neither Employee nor any
group of persons including Employee, either directly or indirectly, manages or
exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business, other than exercising his
rights as a shareholder, or seeks to do any of the foregoing.

      12. Equitable Relief.

            (a) Employee acknowledges that the restrictions contained in
Sections 10 and 11 hereof are reasonable and necessary to protect the legitimate
interests of the Company and its Affiliates, that the Company would not have
entered into this Agreement in the absence of such restrictions, and that any
violation of any provision of those Sections will result in irreparable injury
to the Company. Employee represents that his experience and capabilities are
such that the restrictions contained in Section 11 hereof will not prevent
Employee from obtaining employment or otherwise earning a living at the same
general level of economic benefit as anticipated by this Agreement. Employee
further represents and acknowledges that (i) he has been advised by the Company
to consult his own legal counsel in respect of this Agreement, and (ii) that he
has had full opportunity, prior to execution of this Agreement, to review
thoroughly this Agreement and understands its terms and conditions.


                                       14

            (b) Employee agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 10 or 11 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 10 or 11 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, service, or other limitations permitted by
applicable law.

            (c) Employee irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Section 10 or 11 hereof,
including, without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief or other equitable relief, may be
brought in the United States District Court for the Middle District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in York County, Pennsylvania,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Employee may
have to the laying of venue of any such suit, action or proceeding in any such
court. Employee also irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 15 hereof.

            (d) Employee agrees that he will provide, and that the Company may
similarly provide, a copy of Sections 10 and 11 hereof to any business or
enterprise (i)


                                       15

which he may directly or indirectly own, manage, operate, finance, join, control
or participate in the ownership, management, operation, financing, control or
control of, or (ii) with which he may be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise, or
in connection with which he may use or permit his name to be used; provided,
however, that this provision shall not apply in respect of Section 12 hereof
after expiration of the time period set forth therein.

      13. Term of Agreement. The term of this Agreement shall be for five years
commencing on the date hereof and shall automatically be renewed for additional
periods of one year until the Company notifies Employee in writing, at least 90
days in advance of expiration, that this Agreement will not be renewed. If any
notice of non-renewal occurs within two years after a Change of Control, such
notice shall constitute an involuntary Termination of Employment for purposes of
Section 3 above. Notwithstanding anything herein to the contrary, this Agreement
(other than the provisions of Sections 10 through 11 hereof) shall terminate on
the Phase-Out Date or if the employment of Employee by the Company shall
terminate for any reason other than as provided herein.

      14. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be


                                       16

required to perform if no such succession or successions had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used in this
Agreement, the Company shall mean the Company as herein defined and any such
successor or successors to its business and/or assets, jointly and severally.

      15. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:

                   If to the Company, to:

                           The York Water Company
                           130 East Market Street
                           York, PA  17405-7089
                           Attention:  Chairman of the Board

                   If to Employee, to:

                           Duane R. Close
                           1500 Copenhafer Road
                           Dover, PA  17315

or to such other names or addresses as the Company or Employee, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Section. Any such notice shall be deemed delivered and effective when
received in the case of personal delivery, five days after deposit, postage
prepaid, with the U.S. Postal Service in the case of registered or certified
mail, or on the next business day in the case of overnight express courier
service.


                                       17

      16. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

      17. Contents of Agreement, Amendment and Assignment.

            (a) This Agreement supersedes all prior agreements, sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by Employee and the Company and only if approved
by the Board. The provisions of this Agreement may provide for payments to
Employee under certain compensation or bonus plans under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this Agreement without further action by the
Company.

            (b) Nothing in this Agreement shall be construed as giving Employee
any right to be retained in the employ of the Company.

            (c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of Employee and the Company hereunder shall
not be assignable in whole or in part.

      18. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable,


                                       18

such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.


      19. Remedies Cumulative; No Waiver. No right conferred upon Employee by
this Agreement is intended to be exclusive of any other right or remedy, and
each and every such right or remedy shall be cumulative and shall be in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity. No delay or omission by Employee in exercising any right, remedy
or power hereunder or existing at law or in equity shall be construed as a
waiver thereof.

      20. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

      21. Employee's Acknowledgment. By executing this Agreement as of the date
first above written, Employee acknowledges that he has no grounds for asserting
that a Good Reason Termination exists as of that date and, therefore, that no
obligation under Section 3 exists at the current time.


                                       19

            IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.

                                   THE YORK WATER COMPANY


                                   By:/s/ William T. Morris
- --------------------------            ---------------------
Witness                                  President and Chief Executive Officer



                                   /s/ Duane R. Close
- --------------------------         ------------------
Witness                            Duane R. Close


                                       20

EX-10.4

                                                                    Exhibit 10.4

                                    AGREEMENT


            Agreement made as of December 18, 2003, between The York Water
Company, a Pennsylvania corporation (the "Company"), and Jeffrey S. Osman
("Employee").

            WHEREAS, Employee is the President and Chief Executive Officer of
the Company and devotes substantially all of his business time and efforts to
the Company's affairs;

            WHEREAS, the Company recognizes that the departure or distraction of
key management personnel would be detrimental to the business of the Company;
and

            WHEREAS, the Board of Directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction; and

            WHEREAS, in consideration of Employee's employment with the Company
and his agreement not to compete with the Company as set forth in this
Agreement, the Company agrees that Employee shall receive the compensation set
forth in this Agreement against the adverse financial and career impact on
Employee if his employment with the Company is terminated under certain
circumstances;

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:

      1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings specified in this Section unless the context clearly
otherwise requires:

            (a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

            (b) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the

right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for payment, purchase or exchange; (ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act), including
without limitation, pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of any security under this clause (ii) as a result of an
oral or written agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report); or (iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the proviso to
clause (ii) above) or disposing of any voting securities of the Company;
provided, however, that nothing in this Section 1(b) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of 40 days after the date of
such acquisition.

            (c) "Board" shall mean the Board of Directors of the Company.

            (d) "Business Combination" shall mean a reorganization, merger or
consolidation of the Company.

            (e) "Cause" shall mean (1) misappropriation of funds or any act of
common law fraud, (2) habitual insobriety or substance abuse, (3) conviction of
a felony or any crime involving moral turpitude, (4) willful misconduct or gross
negligence by Employee in the performance of his duties, (5) the willful failure
of Employee to perform a material function of Employee's duties hereunder, or
(6) Employee engaging in a conflict of interest or other breach of fiduciary
duty.

            (f) "Change of Control" shall mean:

                  (i) Any Person (except the Employee, his Affiliates and
Associates, the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such employee benefit plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner in the aggregate of 50 percent or
more of either (A) the Outstanding Company Common Stock or (B) the Company



                                       2

Voting Securities, in either case unless a majority of the members of the Board
in office immediately prior to such acquisition determine within five business
days of the receipt of actual notice of such acquisition that the circumstances
do not warrant the implementation of the provisions of this Agreement;

                  (ii) The Incumbent Board ceases for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the beginning of such period whose election or nomination
for election by the Company's shareholders was approved by a vote of at least a
majority of the directors then constituting the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act);

                  (iii) Consummation by the Company of a Business Combination,
in each case, with respect to which all or substantially all of the individuals
and entities who were the respective Beneficial Owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
Business Combination are not, following such Business Combination, Beneficial
Owners, directly or indirectly, of more than 50 percent of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, in any such case unless a
majority of the members of the Board in office immediately prior to such
Business Combination determines at the time of such Business Combination that
the circumstances do not warrant the implementation of the provisions of this
Agreement; or

                  (iv) (A) Consummation of a complete liquidation or dissolution
of the Company or (B) sale or other disposition of all or substantially all of
the assets of the Company other than to a corporation with respect to which,
following such sale or disposition, individuals and entities that are the
Beneficial Owners of more than 50 percent of, respectively, the Outstanding
Company Common Stock and the Company Voting Securities are substantially the
same as the individuals and entities who were the Beneficial Owners,
respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, immediately prior to such sale or
disposition, in any such case unless a majority of the members of the Incumbent
Board in office immediately prior to such sale or disposition determines at the
time of such sale or disposition that the circumstances do not warrant the
implementation of the provisions of this Agreement.

            (g) "Company Voting Securities" shall mean the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors.


                                       3

            (h) "Compensation" shall mean the sum of base compensation and
annual bonus compensation payable in cash to the Employee during the twelve
months preceding any date of determination under this Agreement.

            (i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

            (j) "Good Reason Termination " shall mean a Termination of
Employment initiated by Employee following a Change in Control and the
occurrence of one or more of the following events:

                  (A) any failure of the Company to comply with or satisfy any
of the material terms of this Agreement;

                  (B) any significant reduction by the Company of the authority,
duties or responsibilities of Employee's principal assignment with the Company
or any reduction in Employee's base compensation or annual bonus compensation
opportunity;

                  (C) any removal by the Company of Employee from the employment
grade or officer positions which Employee holds as of the effective date hereof
except in connection with promotions to higher office; or

                  (D) a transfer of Employee, without his express written
consent, to a location that is more than 50 miles from his principal place of
business immediately preceding the Change of Control.

            (k) "Incumbent Board" shall mean those individuals who, as of any
date of determination under the Agreement, are individuals who have constituted
the Board during the preceding 12-month period.

            (l) "Outstanding Company Common Stock" shall mean the then
outstanding shares of common stock of the Company.

            (m) "Person" shall mean any natural person, business trust,
corporation, partnership, limited liability company, joint stock company,
proprietorship, association, trust, joint venture, unincorporated association or
any other legal entity of whatever nature.

            (n) "Phase Out Date" shall mean earlier of (i) the first day of the
calendar month coincident with or next following Employee's 65th birthday or
(ii) the effective date of Employee's voluntary retirement as set forth in a
notice to the Board.

            (o) "Subsidiary" shall mean any corporation in which the Company,
directly or indirectly, owns at least a 50 percent interest or an unincorporated
entity of which the Company, directly or indirectly, owns at least 50 percent of
the profits or capital interests.

            (p) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.


                                       4

            (q) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.

      2. Notice of Termination. Any Termination of Employment shall be
communicated by a Notice of Termination in accordance with Section 16 hereof.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which, in the case of a Good Reason Termination by Employee (i) indicates the
specific reasons for the termination, (ii) briefly summarizes the facts and
circumstances deemed to provide a basis for termination of Employee's
employment, and (iii) if the Termination Date is other than the date of receipt
of such notice, specifies the Termination Date (which date shall not be more
than 15 days after the giving of such notice).

      3. Severance Compensation upon Termination; Bonus Payments upon Certain
Circumstances.


            (a) In the event of (i) an involuntary Termination of Employment for
any reason other than Cause or (ii) a Good Reason Termination, in either case
within two years following a Change of Control or six months prior to a Change
of Control, the Company shall pay to Employee, within 15 days after the later of
the Termination Date or the date of the Change of Control, and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to 2.99 multiplied by
Employee's Compensation (the "Severance Payment"), subject to customary
employment taxes and statutory deductions, of which one-half (50 percent) shall
be compensation for Employee's non-competition covenant contained in Section 12
hereof.

            (b) Notwithstanding paragraph (a) above and without regard to the
fact that payment is to be made in a single sum, until the earlier of the Phase
Out Date or 36 months after the Termination Date, Employee shall be entitled to
continued coverage under the Company's medical, dental and other welfare benefit
plans at the same level of coverage (and required employee contributions, if
any) as Employee was receiving at the time of his Termination Date, subject to
the Company's right to make changes to such plans for all of its executive level
employees generally and further subject to the Company's right to provide
Employee with cash, on a tax equivalent basis, such that Employee is able to
purchase comparable coverage on his own; provided, however, that this obligation
of the Company shall cease upon Employee's obtaining new employment that
provides Employee with eligibility for comparable medical benefits without a
pre-existing condition limitation; and, provided, further, that such extended
coverage shall be in addition to, and not as a substitute for, Employee's COBRA
rights which shall apply at the end of such extended coverage. All other benefit
plan coverages, retirement benefit accruals and fringe benefit eligibility shall
cease on the Termination Date subject to applicable rights under ERISA and
COBRA.

            (c) In the event Employee's Phase Out Date would occur prior to 36
months after the Termination Date, the aggregate cash amount determined as set
forth in paragraph (a) above shall be reduced to an amount equal to such
aggregate cash amount multiplied by a fraction, the numerator of which shall be
the number of days from the Termination Date to Employee's Phase Out Date and
the denominator of which shall be 1095.


                                       5

            (d) If the Severance Payment otherwise to be made under paragraphs
(a) and (c) above would be less than 50 percent of Compensation, and provided
that there has not been a voluntary Termination of Employment by Employee on or
prior to the date of any Change of Control, the Company shall pay to Employee,
within 15 days after the date of any Change of Control, a single sum equal to 50
percent of Compensation, subject to customary employment taxes and statutory
deductions.

      4. Other Payments. The payment due under Section 3 hereof shall be in
addition to and not in lieu of any payments or benefits accrued for Employee
through the Termination Date under any plan, policy or program of the Company,
including the Supplemental Retirement Plan and the Deferred Compensation
Agreement, except that no payments shall be due to Employee under any severance
pay plan for the Company's employees.

      5. Enforcement.


            (a) In the event that the Company shall fail or refuse to make
payment of any amounts due Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to an escrow
agent, who shall invest such sum with interest to be paid to the prevailing
party, any amount remaining unpaid under Section 3 or 4. In such event, the
parties shall engage in arbitration in the City of Harrisburg, Pennsylvania, in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the Company and one by Employee,
and the third of whom shall be selected by the other two arbitrators. Any award
entered by the arbitrators shall be final, binding and nonappealable and
judgment may be entered thereon by either party in accordance with applicable
law in any court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify any
provision of this Agreement or to award a remedy for a dispute involving this
Agreement other than a benefit specifically provided under or by virtue of the
Agreement.

            (b) The Company shall pay Employee on demand the amount necessary to
reimburse Employee in full for all reasonable expenses (including reasonable
attorneys' fees and expenses) incurred by Employee in enforcing any of the
obligations of the Company under this Agreement subject to Employee's duty to
repay such sums to the Company in the event that the Employee does not prevail
on any material issue which is the subject of such arbitration. If Employee
prevails on at least one material issue which is the subject of such
arbitration, the Company shall be responsible for all of the fees of the
American Arbitration Association and the arbitrators and any expenses relating
to the conduct of the arbitration (including Employee's reasonable attorneys'
fees and expenses). Otherwise, each party shall be responsible for his or its
own expenses relating to the conduct of the arbitration (including reasonable
attorneys' fees and expenses) and shall equally share the fees of the American
Arbitration Association.

      6. No Mitigation. Employee shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.


                                       6

      7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its Subsidiaries or Affiliates and for which Employee may qualify, from
the date hereof through the Termination Date; provided, however, that Employee
hereby waives Employee's right to receive any payments under any severance pay
plan or similar program applicable to other employees of the Company.

      8. No Set-Off. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against Employee or others.

      9. Taxes. Any payment required under this Agreement shall be subject to
all requirements of law with regard to the withholding of taxes, filing, making
of reports and the like, and the Company shall use its best efforts to satisfy
promptly all such requirements.

      10. Certain Reduction of Payments.

            (a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would constitute an "excess parachute payment" within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), and that it would be economically advantageous to Employee to
reduce the Payment to avoid or to reduce the taxation of excess parachute
payments under Section 4999 of the Code, the aggregate present value of amounts
payable or distributable to or for the benefit of Employee pursuant to this
Agreement (such payments or distributions pursuant to this Agreement are
hereinafter referred to as "Agreement Payments") shall be reduced (but not below
zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed
in present value which maximizes the aggregate present value of Agreement
Payments without causing any Payment to be subject to the taxation under Section
4999 of the Code. For purposes of this Section 10, present value shall be
determined in accordance with Section 280G(d)(4) of the Code. The Company agrees
that it shall use its best efforts to obtain a vote of more than 75 percent of
its shareholders, pursuant to the requirements of Section 280G(b)(5)(B) of the
Code, in order to preclude the limitations of this Section from applying;
provided, however, that nothing contained herein shall result in the Company
being required to pay any taxes imposed on Employee by reason of the provisions
of Section 4999 of the Code.

            (b) All determinations to be made under this Section 10 shall be
made by KPMG Peat Marwick LLP (or the Company's independent public accountant
immediately prior to the Change of Control if other than KPMG Peat Marwick LLP
(the "Accounting Firm")), which firm shall provide its determinations and any
supporting calculations both to the Company and Employee within 10 days of the
Termination Date. Any such determination by the Accounting Firm shall be binding
upon the Company and Employee. Within five days after this determination, the
Company shall pay (or cause to be paid) or distribute (or cause to be
distributed) to or for the benefit of Employee such amounts as are then due to
Employee under this Agreement.


                                       7

            (c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments, as the case may be, will have
been made by the Company which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the Company could have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. Within two years after the Termination of
Employment, the Accounting Firm shall review the determination made by it
pursuant to the preceding paragraph. In the event that the Accounting Firm
determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to Employee which Employee shall repay to the
Company together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code (the "Federal Rate"); provided, however, that no
amount shall be payable by Employee to the Company if and to the extent such
payment would not reduce the amount which is subject to taxation under Section
4999 of the Code. In the event that the Accounting Firm determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of Employee together with interest at the Federal
Rate.

            (d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm from any and all claims, damages and expenses resulting from or
relating to its determinations pursuant to subsections (b) and (c) above, except
for claims, damages or expenses resulting from the gross negligence or willful
misconduct of the Accounting Firm.

      11. Confidential Information. Employee recognizes and acknowledges that,
by reason of his employment by and service to the Company, he has had and will
continue to have access to confidential information of the Company, including,
without limitation, information and knowledge pertaining to products and
services offered, innovations, designs, ideas, plans, trade secrets, proprietary
information, distribution and sales methods and systems, sales and profit
figures, customer and client lists, and relationships between the Company and
its Subsidiaries and Affiliates and other distributors, customers, clients,
suppliers and others who have business dealings with the Company ("Confidential
Information"). Employee acknowledges that such Confidential Information is a
valuable and unique asset and covenants that he will not, either during or after
his employment by the Company, disclose or use any such Confidential Information
to any person for any reason whatsoever without the prior written authorization
of the Board, unless such information is in the public domain through no fault
of Employee or except as may be required by law.

      12. Non-Competition.


            (a) During his employment by the Company and for a period of one
year thereafter, Employee will not, unless acting with the prior written consent
of the Board, directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with or use or permit
his name to be used in connection with, any business or enterprise engaged in by
the Company or any of its Affiliates, either during his employment by the
Company or on the Termination Date,

                                       8

as applicable, in the geographic area comprising the Company's franchised
service territory (the "Geographic Area"). It is recognized by Employee that the
business of the Company and its Affiliates and Employee's connection therewith
is or will be involved in activity throughout the Geographic Area, and that more
limited geographical limitations on this non-competition covenant would not be
appropriate. Employee also shall not, directly or indirectly, during such one
year period (a) solicit or attempt to convert any account or customer of the
Company or its Affiliates existing on the Termination Date to another supplier,
or (b) following Employee's employment, solicit or attempt to hire any then
employee of the Company or its Affiliates.

            (b) The foregoing restriction shall not be construed to prohibit the
ownership by Employee of less than five percent of any class of securities of
any corporation which is engaged in any of the foregoing businesses having a
class of securities registered pursuant to the Exchange Act, provided that such
ownership represents a passive investment and that neither Employee nor any
group of persons including Employee, either directly or indirectly, manages or
exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business, other than exercising his
rights as a shareholder, or seeks to do any of the foregoing.

            (c) If Employee fails to abide by any of the restrictions contained
in this Section 12 the Company shall deliver a written notice (the "Notice") to
Employee which shall set forth the nature of Employee's breach of this Section
12. If within 30 days of receipt of such notice, Employee has not ceased and
desisted the conduct set forth in the Notice, the Company, in addition to any
other remedy available to it, shall be entitled to liquidated damages in an
amount equal to one-half (50 percent) of the Severance Payment.

      13. Equitable Relief.


            (a) Employee acknowledges that the restrictions contained in
Sections 11 and 12 hereof are reasonable and necessary to protect the legitimate
interests of the Company and its Affiliates, that the Company would not have
entered into this Agreement in the absence of such restrictions, and that any
violation of any provision of those Sections will result in irreparable injury
to the Company. Employee represents that his experience and capabilities are
such that the restrictions contained in Section 12 hereof will not prevent
Employee from obtaining employment or otherwise earning a living at the same
general level of economic benefit as anticipated by this Agreement. Employee
further represents and acknowledges that (i) he has been advised by the Company
to consult his own legal counsel in respect of this Agreement, and (ii) that he
has had full opportunity, prior to execution of this Agreement, to review
thoroughly this Agreement and understands its terms and conditions.

            (b) Employee agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 11 or 12 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 11 or 12 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be



                                       9

deemed reformed in such jurisdiction to the maximum time, geographic, service,
or other limitations permitted by applicable law.

            (c) Employee irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Section 11 or 12 hereof,
including, without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief or other equitable relief, may be
brought in the United States District Court for the Middle District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in York County, Pennsylvania,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Employee may
have to the laying of venue of any such suit, action or proceeding in any such
court. Employee also irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 16 hereof.

            (d) Employee agrees that he will provide, and that the Company may
similarly provide, a copy of Sections 11 and 12 hereof to any business or
enterprise (i) which he may directly or indirectly own, manage, operate,
finance, join, control or participate in the ownership, management, operation,
financing, control or control of, or (ii) with which he may be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise, or in connection with which he may use or permit his
name to be used; provided, however, that this provision shall not apply in
respect of Section 13 hereof after expiration of the time period set forth
therein.

      14. Term of Agreement. The term of this Agreement shall be for five years
commencing on the date hereof and shall automatically be renewed for additional
periods of one year until the Company notifies Employee in writing, at least 90
days in advance of expiration, that this Agreement will not be renewed. If any
notice of non-renewal occurs within two years after a Change of Control, such
notice shall constitute an involuntary Termination of Employment for purposes of
Section 3 above.

      15. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement. As used in this Agreement, the Company shall mean
the Company as herein defined and any such successor or successors to its
business and/or assets, jointly and severally.

      16. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:


                                       10

                 If to the Company, to:

                              The York Water Company
                              130 East Market Street
                              York, PA  17405-7089
                              Attention:  Chairman of the Board

                 If to Employee, to:

                              Jeffrey S. Osman
                              825 Florida Avenue
                              York, PA  17404

or to such other names or addresses as the Company or Employee, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Section. Any such notice shall be deemed delivered and effective when
received in the case of personal delivery, five days after deposit, postage
prepaid, with the U.S. Postal Service in the case of registered or certified
mail, or on the next business day in the case of overnight express courier
service.

      17. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

      18. Contents of Agreement, Amendment and Assignment.


            (a) This Agreement supersedes all prior agreements, sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by Employee and the Company and only if approved
by the Board. The provisions of this Agreement may provide for payments to
Employee under certain compensation or bonus plans under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this Agreement without further action by the
Company.

            (b) Nothing in this Agreement shall be construed as giving Employee
any right to be retained in the employ of the Company.

            (c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of Employee and the Company hereunder shall
not be assignable in whole or in part.

      19. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.


                                       11

      20. Remedies Cumulative; No Waiver. No right conferred upon Employee by
this Agreement is intended to be exclusive of any other right or remedy, and
each and every such right or remedy shall be cumulative and shall be in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity. No delay or omission by Employee in exercising any right, remedy
or power hereunder or existing at law or in equity shall be construed as a
waiver thereof.

      21. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

      22. Employee's Acknowledgment. By executing this Agreement as of the date
first above written, Employee acknowledges that he has no grounds for asserting
that a Good Reason Termination exists as of that date and, therefore, that no
obligation under Section 3 exists at the current time.


                                       12

            IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.


                                                   THE YORK WATER COMPANY


                                                   By:/s/ William T. Morris
- ------------------------------------                  -----------------
Witness                                               Chairman of the Board



                                                   /s/ Jeffrey S. Osman
- ------------------------------------               --------------------
Witness                                            Jeffrey S. Osman


                                       13

EX-10.5

                                                                    Exhibit 10.5


                                    AGREEMENT


            Agreement made as of December 15, 2003, between The York Water
Company, a Pennsylvania corporation (the "Company"), and Kathleen M. Miller
("Employee").
            WHEREAS, Employee is the Chief Financial Officer of the Company and
devotes substantially all of his business time and efforts to the Company's
affairs;
            WHEREAS, the Company recognizes that the departure or distraction of
key management personnel would be detrimental to the business of the Company;
and
            WHEREAS, the Board of Directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction;
            WHEREAS, in consideration of Employee's employment with the Company
and his agreement not to compete with the Company as set forth in this
Agreement, the Company agrees that Employee shall receive the compensation set
forth in this Agreement against the adverse financial and career impact on
Employee if his employment with the Company is terminated under certain
circumstances; and
            WHEREAS, the Company wishes to reward the dedication and loyalty of
Employee by providing for certain bonus payments to be made to Employee based
upon Employee's tenure, the Company agrees that Employee shall receive the
payments set forth in this Agreement upon the achievement of certain temporal
milestones.

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:

      1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings specified in this Section unless the context clearly
otherwise requires:

            (a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

            (b)   A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of securities tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange; (ii) that such Person
or any of such Person's Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including without limitation, pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause (ii) as a
result of an oral or written agreement, arrangement


                                       2

or understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or (iii) that
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to clause (ii)
above) or disposing of any voting securities of the Company; provided, however,
that nothing in this Section 1(b) shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of any securities
acquired through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such acquisition.

            (c)   "Board" shall mean the Board of Directors of the Company.

            (d)   "Business Combination" shall mean a reorganization, merger or
consolidation of the Company.

            (e)   "Cause" shall mean (i) misappropriation of funds or any act of
common law fraud, (ii) habitual insobriety or substance abuse, (iii) conviction
of a felony or any crime involving moral turpitude, (iv) willful misconduct or
gross negligence by Employee in the performance of his duties, (v) the willful
failure of Employee to perform


                                       3

a material function of Employee's duties hereunder, or (vi) Employee engaging in
a conflict of interest or other breach of fiduciary duty.

            (f)   "Change of Control" shall mean:

                  (i)   Any Person (except the Employee, his Affiliates and
Associates, the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such employee benefit plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner in the aggregate of 50 percent or
more of either (A) the Outstanding Company Common Stock or (B) the Company
Voting Securities , in either case unless a majority of the members of the Board
in office immediately prior to such acquisition determine within five business
days of the receipt of actual notice of such acquisition that the circumstances
do not warrant the implementation of the provisions of this Agreement;

                  (ii)  The Incumbent Board ceases for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the beginning of such period whose election or nomination
for election by the Company's shareholders was approved by a vote of at least a
majority of the directors then constituting the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act);


                                       4

                  (iii) Consummation by the Company of a Business Combination,
in each case, with respect to which all or substantially all of the individuals
and entities who were the respective Beneficial Owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
Business Combination are not, following such Business Combination, Beneficial
Owners, directly or indirectly, of more than 50 percent of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be , in any such case unless a
majority of the members of the Board in office immediately prior to such
Business Combination determines at the time of such Business Combination that
the circumstances do not warrant the implementation of the provisions of this
Agreement; or

                  (iv)  (A) Consummation of a complete liquidation or
dissolution of the Company or (B) sale or other disposition of all or
substantially all of the assets of the Company other than to a corporation with
respect to which, following such sale or disposition, individuals and entities
that are the Beneficial Owners of more than 50 percent of, respectively, the
Outstanding Company Common Stock and the Company Voting Securities are
substantially the same as the individuals and entities who were the Beneficial
Owners, respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially


                                       5

the same proportion as their ownership of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, immediately prior to such
sale or disposition, in any such case unless a majority of the members of the
Incumbent Board in office immediately prior to such sale or disposition
determines at the time of such sale or disposition that the circumstances do not
warrant the implementation of the provisions of this Agreement.

            (g)   "Company Voting Securities" shall mean the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors.

            (h)   "Compensation" shall mean the sum of base compensation and
annual bonus compensation payable in cash to the Employee during the twelve
months preceding any date of determination under this Agreement.

            (i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

            (j)   "Good Reason Termination" shall mean a Termination of
Employment initiated by Employee following a Change in Control and the
occurrence of one or more of the following events:

                  (i)   any failure of the Company to comply with or satisfy any
of the material terms of this Agreement;

                  (ii)  any significant reduction by the Company of the
authority, duties or responsibilities of Employee's principal assignment with
the Company or any reduction in Employee's base compensation or annual bonus
compensation opportunity;


                                       6

                  (iii) any removal by the Company of Employee from the
employment grade or officer positions which Employee holds as of the effective
date hereof except in connection with promotions to higher office; or

                  (iv)  a transfer of Employee, without his express written
consent, to a location that is more than 50 miles from his principal place of
business immediately preceding the Change of Control.

            (k)   "Incumbent Board" shall mean those individuals who, as of any
date of determination under the Agreement, are individuals who have constituted
the Board during the preceding 12-month period.

            (l)   "Outstanding Company Common Stock" shall mean the then
outstanding shares of common stock of the Company.

            (m)   "Person" shall mean any natural person, business trust,
corporation, partnership, limited liability company, joint stock company,
proprietorship, association, trust, joint venture, unincorporated association or
any other legal entity of whatever nature.

            (n)   "Phase Out Date" shall mean the first day of the calendar
month coincident with or next following Employee's 65th birthday.

            (o)   "Subsidiary" shall mean any corporation in which the Company,
directly or indirectly, owns at least a 50 percent interest or an unincorporated
entity of which the Company, directly or indirectly, owns at least 50 percent of
the profits or capital interests.


                                       7

            (p)   "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.

            (q)   "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.

      2.    Notice of Termination. Any Termination of Employment shall be
communicated by a Notice of Termination in accordance with Section 15 hereof.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which, in the case of a Good Reason Termination by Employee (a) indicates the
specific reasons for the termination, (b) briefly summarizes the facts and
circumstances deemed to provide a basis for termination of Employee's
employment, and (c) if the Termination Date is other than the date of receipt of
such notice, specifies the Termination Date (which date shall not be more than
15 days after the giving of such notice).

      3.    Severance Compensation upon Termination; Bonus Payments upon Certain
Circumstances.

            (a)   In the event of (i) an involuntary Termination of Employment
for any reason other than Cause or (ii) a Good Reason Termination, in either
case within one year following a Change of Control or six months prior to a
Change of Control, the Company shall pay to Employee, within 15 days after the
later of the Termination Date or the date of the Change of Control, and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-half (50 percent)
multiplied by Employee's Compensation, subject to customary employment taxes and
statutory deductions.


                                       8

            (b)   In the event of Employee's voluntary Termination of Employment
for any reason other a Good Reason Termination, within (i) three months after a
Change of Control, the Employee shall not be entitled to any payment; or (ii)
three months and one day to 12 months following a Change of Control, the Company
shall pay to Employee, within 15 days after the Termination Date and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-fourth (25 percent) of
Employee's Compensation, subject to customary employment taxes and statutory
deductions.

            (c)   If on the date 12 months and one day following a Change of
Control there has not been a Termination of Employment, Company shall pay to
Employee, within 15 days after such date, a single sum in cash equal to one-half
(50 percent) multiplied by Employee's Compensation, subject to customary
employment taxes and statutory deductions.

            (d)   Notwithstanding paragraph (a) or (b) above and without regard
to the fact that payment is to be made in a single sum, until the earlier of the
Phase Out Date or one year after the Termination Date, Employee shall be
entitled to continued coverage under the Company's medical, dental and other
welfare benefit plans at the same level of coverage (and required employee
contributions, if any) as Employee was receiving at the time of his Termination
Date, subject to the Company's right to make changes to such plans for all of
its executive level employees generally and further subject to the Company's
right to provide Employee with cash, on a tax equivalent basis, such that
Employee is able to purchase comparable coverage on his own; provided, however,
that this obligation of the Company shall cease upon Employee's obtaining new
employment


                                       9

that provides Employee with eligibility for comparable medical benefits without
a pre-existing condition limitation; and, provided, further, that such extended
coverage shall be in addition to, and not as a substitute for, Employee's COBRA
rights which shall apply at the end of such extended coverage. All other benefit
plan coverages, retirement benefit accruals and fringe benefit eligibility shall
cease on the Termination Date subject to applicable rights under ERISA and
COBRA.

      4.    Other Payments. The payment due under Section 3 hereof shall be in
addition to and not in lieu of any payments or benefits accrued for Employee
through the Termination Date under any plan, policy or program of the Company,
including the Supplemental Retirement Plan and the Deferred Compensation
Agreement, except that no payments shall be due to Employee under any severance
pay plan for the Company's employees.

      5.    Enforcement.

            (a)   In the event that the Company shall fail or refuse to make
payment of any amounts due Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to an escrow
agent, who shall invest such sum with interest to be paid to the prevailing
party, any amount remaining unpaid under Section 3 or 4. In such event, the
parties shall engage in arbitration in the City of Harrisburg, Pennsylvania, in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the Company and one by Employee,
and the third of whom shall be selected by the other two arbitrators. Any award
entered by the arbitrators shall be final, binding and nonappealable and
judgment


                                       10

may be entered thereon by either party in accordance with applicable law in any
court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify any
provision of this Agreement or to award a remedy for a dispute involving this
Agreement other than a benefit specifically provided under or by virtue of the
Agreement.

            (b)   The Company shall pay Employee on demand the amount necessary
to reimburse Employee in full for all reasonable expenses (including reasonable
attorneys' fees and expenses) incurred by Employee in enforcing any of the
obligations of the Company under this Agreement subject to Employee's duty to
repay such sums to the Company in the event that the Employee does not prevail
on any material issue which is the subject of such arbitration. If Employee
prevails on at least one material issue which is the subject of such
arbitration, the Company shall be responsible for all of the fees of the
American Arbitration Association and the arbitrators and any expenses relating
to the conduct of the arbitration (including Employee's reasonable attorneys'
fees and expenses). Otherwise, each party shall be responsible for his or its
own expenses relating to the conduct of the arbitration (including reasonable
attorneys' fees and expenses) and shall equally share the fees of the American
Arbitration Association.

      6.    No Mitigation. Employee shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.


                                       11

      7.    Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Employee's continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its Subsidiaries or Affiliates and for which Employee may qualify, from
the date hereof through the Termination Date.

      8.    No Set-Off. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against Employee or others.

      9.    Taxes. Any payment required under this Agreement shall be subject
to all requirements of law with regard to the withholding of taxes, filing,
making of reports and the like, and the Company shall use its best efforts to
satisfy promptly all such requirements.

      10.   Confidential Information. Employee recognizes and acknowledges that,
by reason of his employment by and service to the Company, he has had and will
continue to have access to confidential information of the Company, including,
without limitation, information and knowledge pertaining to products and
services offered, innovations, designs, ideas, plans, trade secrets, proprietary
information, distribution and sales methods and systems, sales and profit
figures, customer and client lists, and relationships between the Company and
its Subsidiaries and Affiliates and other distributors, customers, clients,
suppliers and others who have business dealings with the Company ("Confidential
Information"). Employee acknowledges that such Confidential


                                       12

Information is a valuable and unique asset and covenants that he will not,
either during or after his employment by the Company, disclose or use any such
Confidential Information to any person for any reason whatsoever without the
prior written authorization of the Board, unless such information is in the
public domain through no fault of Employee or except as may be required by law.

      11.   Non-Competition.

            (a)   During his employment by the Company and for a period of one
year thereafter, Employee will not, unless acting with the prior written consent
of the Board, directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with or use or permit
his name to be used in connection with, any business or enterprise engaged in by
the Company or any of its Affiliates, either during his employment by the
Company or on the Termination Date, as applicable, in the geographic area
comprising the Company's franchised service territory (the "Geographic Area").
It is recognized by Employee that the business of the Company and its Affiliates
and Employee's connection therewith is or will be involved in activity
throughout the Geographic Area, and that more limited geographical limitations
on this non-competition covenant would not be appropriate. Employee also shall
not, directly or indirectly, during such one year period (a) solicit or attempt
to convert any account or customer of the Company or its Affiliates existing on
the Termination Date to another supplier, or (b) following Employee's
employment, solicit or attempt to hire any then employee of the Company or its
Affiliates.


                                       13

            (b)   The foregoing restriction shall not be construed to prohibit
the ownership by Employee of less than 5 percent of any class of securities of
any corporation which is engaged in any of the foregoing businesses having a
class of securities registered pursuant to the Exchange Act, provided that such
ownership represents a passive investment and that neither Employee nor any
group of persons including Employee, either directly or indirectly, manages or
exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business, other than exercising his
rights as a shareholder, or seeks to do any of the foregoing.

      12.   Equitable Relief.

            (a)   Employee acknowledges that the restrictions contained in
Sections 10 and 11 hereof are reasonable and necessary to protect the legitimate
interests of the Company and its Affiliates, that the Company would not have
entered into this Agreement in the absence of such restrictions, and that any
violation of any provision of those Sections will result in irreparable injury
to the Company. Employee represents that his experience and capabilities are
such that the restrictions contained in Section 11 hereof will not prevent
Employee from obtaining employment or otherwise earning a living at the same
general level of economic benefit as anticipated by this Agreement. Employee
further represents and acknowledges that (i) he has been advised by the Company
to consult his own legal counsel in respect of this Agreement, and (ii) that he
has had full opportunity, prior to execution of this Agreement, to review
thoroughly this Agreement and understands its terms and conditions.


                                       14

            (b)   Employee agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 10 or 11 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 10 or 11 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, service, or other limitations permitted by
applicable law.

            (c)   Employee irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Section 10 or 11 hereof,
including, without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief or other equitable relief, may be
brought in the United States District Court for the Middle District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in York County, Pennsylvania,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Employee may
have to the laying of venue of any such suit, action or proceeding in any such
court. Employee also irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 15 hereof.

            (d)   Employee agrees that he will provide, and that the Company may
similarly provide, a copy of Sections 10 and 11 hereof to any business or
enterprise (i)


                                       15

which he may directly or indirectly own, manage, operate, finance, join, control
or participate in the ownership, management, operation, financing, control or
control of, or (ii) with which he may be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise, or
in connection with which he may use or permit his name to be used; provided,
however, that this provision shall not apply in respect of Section 12 hereof
after expiration of the time period set forth therein.

      13.   Term of Agreement. The term of this Agreement shall be for five
years commencing on the date hereof and shall automatically be renewed for
additional periods of one year until the Company notifies Employee in writing,
at least 90 days in advance of expiration, that this Agreement will not be
renewed. If any notice of non-renewal occurs within two years after a Change of
Control, such notice shall constitute an involuntary Termination of Employment
for purposes of Section 3 above. Notwithstanding anything herein to the
contrary, this Agreement (other than the provisions of Sections 10 through 11
hereof) shall terminate on the Phase-Out Date or if the employment of Employee
by the Company shall terminate for any reason other than as provided herein.

      14.   Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be


                                       16

required to perform if no such succession or successions had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used in this
Agreement, the Company shall mean the Company as herein defined and any such
successor or successors to its business and/or assets, jointly and severally.

      15.   Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:


                If to the Company, to:

                             The York Water Company
                             130 East Market Street
                             York, PA 17405-7089
                             Attention:  Chairman of the Board

                If to Employee, to:

                             Kathleen M. Miller
                             2157 Rillian Lane
                             York, PA  17404

or to such other names or addresses as the Company or Employee, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Section. Any such notice shall be deemed delivered and effective when
received in the case of personal delivery, five days after deposit, postage
prepaid, with the U.S. Postal Service in the case of registered or certified
mail, or on the next business day in the case of overnight express courier
service.


                                       17

      16.   Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect
to any conflict of laws provisions.

      17.   Contents of Agreement, Amendment and Assignment.

            (a)   This Agreement supersedes all prior agreements, sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by Employee and the Company and only if approved
by the Board. The provisions of this Agreement may provide for payments to
Employee under certain compensation or bonus plans under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this Agreement without further action by the
Company.


            (b)   Nothing in this Agreement shall be construed as giving
Employee any right to be retained in the employ of the Company.

            (c)   All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of Employee and the Company hereunder shall
not be assignable in whole or in part.

      18.   Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable,


                                       18

such invalidity or unenforceability shall not affect any other provisions or
applications of this Agreement which can be given effect without the invalid or
unenforceable provision or application. 19. Remedies Cumulative; No Waiver. No
right conferred upon Employee by this Agreement is intended to be exclusive of
any other right or remedy, and each and every such right or remedy shall be
cumulative and shall be in addition to any other right or remedy given hereunder
or now or hereafter existing at law or in equity. No delay or omission by
Employee in exercising any right, remedy or power hereunder or existing at law
or in equity shall be construed as a waiver thereof.

      20.   Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

      21.   Employee's Acknowledgment. By executing this Agreement as of the
date first above written, Employee acknowledges that he has no grounds for
asserting that a Good Reason Termination exists as of that date and, therefore,
that no obligation under Section 3 exists at the current time.


                                       19

            IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.

                                         THE YORK WATER COMPANY


                                         By:/s/ Jeffrey S. Osman
- ------------------------                    -----------------------------
Witness                                  President and Chief Executive Officer



                                         /s/ Kathleen M. Miller
- ------------------------                 ----------------------
Witness                                  Kathleen M. Miller



                                       20

EX-10.6

                                                                    Exhibit 10.6

                                    AGREEMENT

            Agreement made as of December 15, 2003, between The York Water
Company, a Pennsylvania corporation (the "Company"), and Vernon L. Bracey
("Employee").

            WHEREAS, Employee is the Vice President - Customer Service of the
Company and devotes substantially all of his business time and efforts to the
Company's affairs;

            WHEREAS, the Company recognizes that the departure or distraction of
key management personnel would be detrimental to the business of the Company;
and

            WHEREAS, the Board of Directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction;

            WHEREAS, in consideration of Employee's employment with the Company
and his agreement not to compete with the Company as set forth in this
Agreement, the Company agrees that Employee shall receive the compensation set
forth in this Agreement against the adverse financial and career impact on
Employee if his employment with the Company is terminated under certain
circumstances; and

            WHEREAS, the Company wishes to reward the dedication and loyalty of
Employee by providing for certain bonus payments to be made to Employee based
upon Employee's tenure, the Company agrees that Employee shall receive the
payments set forth in this Agreement upon the achievement of certain temporal
milestones.

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:

      1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings specified in this Section unless the context clearly
otherwise requires:

            (a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

            (b) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of securities tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange; (ii) that such Person
or any of such Person's Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including without limitation, pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause (ii) as a
result of an oral or written agreement, arrangement


                                       2

or understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or (iii) that
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to clause (ii)
above) or disposing of any voting securities of the Company; provided, however,
that nothing in this Section 1(b) shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of any securities
acquired through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such acquisition.

            (c) "Board" shall mean the Board of Directors of the Company.

            (d) "Business Combination" shall mean a reorganization, merger or
consolidation of the Company.

            (e) "Cause" shall mean (i) misappropriation of funds or any act of
common law fraud, (ii) habitual insobriety or substance abuse, (iii) conviction
of a felony or any crime involving moral turpitude, (iv) willful misconduct or
gross negligence by Employee in the performance of his duties, (v) the willful
failure of Employee to perform


                                       3

a material function of Employee's duties hereunder, or (vi) Employee engaging in
a conflict of interest or other breach of fiduciary duty.

            (f) "Change of Control" shall mean:

                  (i) Any Person (except the Employee, his Affiliates and
Associates, the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such employee benefit plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner in the aggregate of 50 percent or
more of either (A) the Outstanding Company Common Stock or (B) the Company
Voting Securities , in either case unless a majority of the members of the Board
in office immediately prior to such acquisition determine within five business
days of the receipt of actual notice of such acquisition that the circumstances
do not warrant the implementation of the provisions of this Agreement;

                  (ii) The Incumbent Board ceases for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the beginning of such period whose election or nomination
for election by the Company's shareholders was approved by a vote of at least a
majority of the directors then constituting the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act);


                                       4

                  (iii) Consummation by the Company of a Business Combination,
in each case, with respect to which all or substantially all of the individuals
and entities who were the respective Beneficial Owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
Business Combination are not, following such Business Combination, Beneficial
Owners, directly or indirectly, of more than 50 percent of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be , in any such case unless a
majority of the members of the Board in office immediately prior to such
Business Combination determines at the time of such Business Combination that
the circumstances do not warrant the implementation of the provisions of this
Agreement; or

                  (iv) (A) Consummation of a complete liquidation or dissolution
of the Company or (B) sale or other disposition of all or substantially all of
the assets of the Company other than to a corporation with respect to which,
following such sale or disposition, individuals and entities that are the
Beneficial Owners of more than 50 percent of, respectively, the Outstanding
Company Common Stock and the Company Voting Securities are substantially the
same as the individuals and entities who were the Beneficial Owners,
respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially


                                       5

the same proportion as their ownership of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, immediately prior to such
sale or disposition, in any such case unless a majority of the members of the
Incumbent Board in office immediately prior to such sale or disposition
determines at the time of such sale or disposition that the circumstances do not
warrant the implementation of the provisions of this Agreement.

            (g) "Company Voting Securities" shall mean the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors.

            (h) "Compensation" shall mean the sum of base compensation and
annual bonus compensation payable in cash to the Employee during the twelve
months preceding any date of determination under this Agreement.

            (i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

            (j) "Good Reason Termination" shall mean a Termination of Employment
initiated by Employee following a Change in Control and the occurrence of one or
more of the following events:

                  (i) any failure of the Company to comply with or satisfy any
of the material terms of this Agreement;

                  (ii) any significant reduction by the Company of the
authority, duties or responsibilities of Employee's principal assignment with
the Company or any reduction in Employee's base compensation or annual bonus
compensation opportunity;


                                       6

                  (iii) any removal by the Company of Employee from the
employment grade or officer positions which Employee holds as of the effective
date hereof except in connection with promotions to higher office; or

                  (iv) a transfer of Employee, without his express written
consent, to a location that is more than 50 miles from his principal place of
business immediately preceding the Change of Control.

            (k) "Incumbent Board" shall mean those individuals who, as of any
date of determination under the Agreement, are individuals who have constituted
the Board during the preceding 12-month period.

            (l) "Outstanding Company Common Stock" shall mean the then
outstanding shares of common stock of the Company.

            (m) "Person" shall mean any natural person, business trust,
corporation, partnership, limited liability company, joint stock company,
proprietorship, association, trust, joint venture, unincorporated association or
any other legal entity of whatever nature.

            (n) "Phase Out Date" shall mean the first day of the calendar month
coincident with or next following Employee's 65th birthday.

            (o) "Subsidiary" shall mean any corporation in which the Company,
directly or indirectly, owns at least a 50 percent interest or an unincorporated
entity of which the Company, directly or indirectly, owns at least 50 percent of
the profits or capital interests.


                                       7

            (p) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.

            (q) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.

      2. Notice of Termination. Any Termination of Employment shall be
communicated by a Notice of Termination in accordance with Section 15 hereof.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which, in the case of a Good Reason Termination by Employee (a) indicates the
specific reasons for the termination, (b) briefly summarizes the facts and
circumstances deemed to provide a basis for termination of Employee's
employment, and (c) if the Termination Date is other than the date of receipt of
such notice, specifies the Termination Date (which date shall not be more than
15 days after the giving of such notice).

      3. Severance Compensation upon Termination; Bonus Payments upon Certain
Circumstances.

            (a) In the event of (i) an involuntary Termination of Employment for
any reason other than Cause or (ii) a Good Reason Termination, in either case
within one year following a Change of Control or six months prior to a Change of
Control, the Company shall pay to Employee, within 15 days after the later of
the Termination Date or the date of the Change of Control, and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-half (50 percent)
multiplied by Employee's Compensation, subject to customary employment taxes and
statutory deductions.


                                       8

            (b) In the event of Employee's voluntary Termination of Employment
for any reason other a Good Reason Termination, within (i) three months after a
Change of Control, the Employee shall not be entitled to any payment; or (ii)
three months and one day to 12 months following a Change of Control, the Company
shall pay to Employee, within 15 days after the Termination Date and upon the
execution of a release in form and substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash equal to one-fourth (25 percent) of
Employee's Compensation, subject to customary employment taxes and statutory
deductions.

            (c) If on the date 12 months and one day following a Change of
Control there has not been a Termination of Employment, Company shall pay to
Employee, within 15 days after such date, a single sum in cash equal to one-half
(50 percent) multiplied by Employee's Compensation, subject to customary
employment taxes and statutory deductions.

            (d) Notwithstanding paragraph (a) or (b) above and without regard to
the fact that payment is to be made in a single sum, until the earlier of the
Phase Out Date or one year after the Termination Date, Employee shall be
entitled to continued coverage under the Company's medical, dental and other
welfare benefit plans at the same level of coverage (and required employee
contributions, if any) as Employee was receiving at the time of his Termination
Date, subject to the Company's right to make changes to such plans for all of
its executive level employees generally and further subject to the Company's
right to provide Employee with cash, on a tax equivalent basis, such that
Employee is able to purchase comparable coverage on his own; provided, however,
that this obligation of the Company shall cease upon Employee's obtaining new
employment


                                       9

that provides Employee with eligibility for comparable medical benefits without
a pre-existing condition limitation; and, provided, further, that such extended
coverage shall be in addition to, and not as a substitute for, Employee's COBRA
rights which shall apply at the end of such extended coverage. All other benefit
plan coverages, retirement benefit accruals and fringe benefit eligibility shall
cease on the Termination Date subject to applicable rights under ERISA and
COBRA.

      4. Other Payments. The payment due under Section 3 hereof shall be in
addition to and not in lieu of any payments or benefits accrued for Employee
through the Termination Date under any plan, policy or program of the Company,
including the Supplemental Retirement Plan and the Deferred Compensation
Agreement, except that no payments shall be due to Employee under any severance
pay plan for the Company's employees.

      5. Enforcement.

            (a) In the event that the Company shall fail or refuse to make
payment of any amounts due Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to an escrow
agent, who shall invest such sum with interest to be paid to the prevailing
party, any amount remaining unpaid under Section 3 or 4. In such event, the
parties shall engage in arbitration in the City of Harrisburg, Pennsylvania, in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the Company and one by Employee,
and the third of whom shall be selected by the other two arbitrators. Any award
entered by the arbitrators shall be final, binding and nonappealable and
judgment


                                       10

may be entered thereon by either party in accordance with applicable law in any
court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify any
provision of this Agreement or to award a remedy for a dispute involving this
Agreement other than a benefit specifically provided under or by virtue of the
Agreement.

            (b) The Company shall pay Employee on demand the amount necessary to
reimburse Employee in full for all reasonable expenses (including reasonable
attorneys' fees and expenses) incurred by Employee in enforcing any of the
obligations of the Company under this Agreement subject to Employee's duty to
repay such sums to the Company in the event that the Employee does not prevail
on any material issue which is the subject of such arbitration. If Employee
prevails on at least one material issue which is the subject of such
arbitration, the Company shall be responsible for all of the fees of the
American Arbitration Association and the arbitrators and any expenses relating
to the conduct of the arbitration (including Employee's reasonable attorneys'
fees and expenses). Otherwise, each party shall be responsible for his or its
own expenses relating to the conduct of the arbitration (including reasonable
attorneys' fees and expenses) and shall equally share the fees of the American
Arbitration Association.

      6. No Mitigation. Employee shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.


                                       11

      7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its Subsidiaries or Affiliates and for which Employee may qualify, from
the date hereof through the Termination Date.

      8. No Set-Off. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against Employee or others.

      9. Taxes. Any payment required under this Agreement shall be subject to
all requirements of law with regard to the withholding of taxes, filing, making
of reports and the like, and the Company shall use its best efforts to satisfy
promptly all such requirements.

      10. Confidential Information. Employee recognizes and acknowledges that,
by reason of his employment by and service to the Company, he has had and will
continue to have access to confidential information of the Company, including,
without limitation, information and knowledge pertaining to products and
services offered, innovations, designs, ideas, plans, trade secrets, proprietary
information, distribution and sales methods and systems, sales and profit
figures, customer and client lists, and relationships between the Company and
its Subsidiaries and Affiliates and other distributors, customers, clients,
suppliers and others who have business dealings with the Company ("Confidential
Information"). Employee acknowledges that such Confidential


                                       12

Information is a valuable and unique asset and covenants that he will not,
either during or after his employment by the Company, disclose or use any such
Confidential Information to any person for any reason whatsoever without the
prior written authorization of the Board, unless such information is in the
public domain through no fault of Employee or except as may be required by law.

      11. Non-Competition.

            (a) During his employment by the Company and for a period of one
year thereafter, Employee will not, unless acting with the prior written consent
of the Board, directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with or use or permit
his name to be used in connection with, any business or enterprise engaged in by
the Company or any of its Affiliates, either during his employment by the
Company or on the Termination Date, as applicable, in the geographic area
comprising the Company's franchised service territory (the "Geographic Area").
It is recognized by Employee that the business of the Company and its Affiliates
and Employee's connection therewith is or will be involved in activity
throughout the Geographic Area, and that more limited geographical limitations
on this non-competition covenant would not be appropriate. Employee also shall
not, directly or indirectly, during such one year period (a) solicit or attempt
to convert any account or customer of the Company or its Affiliates existing on
the Termination Date to another supplier, or (b) following Employee's
employment, solicit or attempt to hire any then employee of the Company or its
Affiliates.


                                       13

            (b) The foregoing restriction shall not be construed to prohibit the
ownership by Employee of less than 5 percent of any class of securities of any
corporation which is engaged in any of the foregoing businesses having a class
of securities registered pursuant to the Exchange Act, provided that such
ownership represents a passive investment and that neither Employee nor any
group of persons including Employee, either directly or indirectly, manages or
exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business, other than exercising his
rights as a shareholder, or seeks to do any of the foregoing.

      12. Equitable Relief.

            (a) Employee acknowledges that the restrictions contained in
Sections 10 and 11 hereof are reasonable and necessary to protect the legitimate
interests of the Company and its Affiliates, that the Company would not have
entered into this Agreement in the absence of such restrictions, and that any
violation of any provision of those Sections will result in irreparable injury
to the Company. Employee represents that his experience and capabilities are
such that the restrictions contained in Section 11 hereof will not prevent
Employee from obtaining employment or otherwise earning a living at the same
general level of economic benefit as anticipated by this Agreement. Employee
further represents and acknowledges that (i) he has been advised by the Company
to consult his own legal counsel in respect of this Agreement, and (ii) that he
has had full opportunity, prior to execution of this Agreement, to review
thoroughly this Agreement and understands its terms and conditions.


                                       14

            (b) Employee agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 10 or 11 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 10 or 11 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, service, or other limitations permitted by
applicable law.

            (c) Employee irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Section 10 or 11 hereof,
including, without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief or other equitable relief, may be
brought in the United States District Court for the Middle District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in York County, Pennsylvania,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Employee may
have to the laying of venue of any such suit, action or proceeding in any such
court. Employee also irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 15 hereof.

            (d) Employee agrees that he will provide, and that the Company may
similarly provide, a copy of Sections 10 and 11 hereof to any business or
enterprise (i)


                                       15

which he may directly or indirectly own, manage, operate, finance, join, control
or participate in the ownership, management, operation, financing, control or
control of, or (ii) with which he may be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise, or
in connection with which he may use or permit his name to be used; provided,
however, that this provision shall not apply in respect of Section 12 hereof
after expiration of the time period set forth therein.

      13. Term of Agreement. The term of this Agreement shall be for five years
commencing on the date hereof and shall automatically be renewed for additional
periods of one year until the Company notifies Employee in writing, at least 90
days in advance of expiration, that this Agreement will not be renewed. If any
notice of non-renewal occurs within two years after a Change of Control, such
notice shall constitute an involuntary Termination of Employment for purposes of
Section 3 above. Notwithstanding anything herein to the contrary, this Agreement
(other than the provisions of Sections 10 through 11 hereof) shall terminate on
the Phase-Out Date or if the employment of Employee by the Company shall
terminate for any reason other than as provided herein.

      14. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be


                                       16

required to perform if no such succession or successions had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used in this
Agreement, the Company shall mean the Company as herein defined and any such
successor or successors to its business and/or assets, jointly and severally.

      15. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:

                  If to the Company, to:

                           The York Water Company
                           130 East Market Street
                           York, PA  17405-7089
                           Attention:  Chairman of the Board

                  If to Employee, to:

                           Vernon L. Bracey
                           P.O. Box 187
                           York, PA  17405-0187

or to such other names or addresses as the Company or Employee, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Section. Any such notice shall be deemed delivered and effective when
received in the case of personal delivery, five days after deposit, postage
prepaid, with the U.S. Postal Service in the case of registered or certified
mail, or on the next business day in the case of overnight express courier
service.


                                       17

      16. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

      17. Contents of Agreement, Amendment and Assignment.

            (a) This Agreement supersedes all prior agreements, sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by Employee and the Company and only if approved
by the Board. The provisions of this Agreement may provide for payments to
Employee under certain compensation or bonus plans under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this Agreement without further action by the
Company.

            (b) Nothing in this Agreement shall be construed as giving Employee
any right to be retained in the employ of the Company.

            (c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of Employee and the Company hereunder shall
not be assignable in whole or in part.

      18. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable,


                                       18

such invalidity or unenforceability shall not affect any other provisions or
applications of this Agreement which can be given effect without the invalid or
unenforceable provision or application.

      19. Remedies Cumulative; No Waiver. No right conferred upon Employee by
this Agreement is intended to be exclusive of any other right or remedy, and
each and every such right or remedy shall be cumulative and shall be in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity. No delay or omission by Employee in exercising any right, remedy
or power hereunder or existing at law or in equity shall be construed as a
waiver thereof.

      20. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

      21. Employee's Acknowledgment. By executing this Agreement as of the date
first above written, Employee acknowledges that he has no grounds for asserting
that a Good Reason Termination exists as of that date and, therefore, that no
obligation under Section 3 exists at the current time.


                                       19

            IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.

                                           THE YORK WATER COMPANY



                                           By:/s/ Jeffrey S. Osman
- ----------------------                        ----------------------------------
Witness                                    President and Chief Executive Officer



                                           /s/ Vernon L. Bracey
- ----------------------                     -------------------------------------
Witness                                    Vernon L. Bracey


                                       20

EX-10.7

                                                                    Exhibit 10.7

                          SUPPLEMENTAL RETIREMENT PLAN


      SUPPLEMENTAL RETIREMENT PLAN, made as of this ______ day of ____________
by and between THE YORK WATER COMPANY, a Pennsylvania corporation with its
principal business office located at 130 East Market Street, York, Pennsylvania
(hereinafter called "Employer") and         (hereinafter called "Employee"):

      WITNESSETH:

      WHEREAS, Employer wishes to encourage Employee's continued employment, and
Employee is willing to undertake such employment, subject to receipt of deferred
compensation upon the terms hereinafter set forth;

      NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
do hereby mutually agree as follows:

      1.    Employment

            Employer hereby engages Employee upon the terms and conditions as
hereinafter provided.

      2.    Term

            This Agreement shall continue in full force and effect until the
later of (i) the termination of Employee's employment by Employer, which shall
be at the will of the Employer and in Employer's sole discretion and without
hindrance in any manner by virtue of the terms of this Agreement to which
provision Employee hereby consents and agrees or (ii) notwithstanding such
termination of employment, payment to Employee or his designee(s) of all
benefits to which Employee shall become entitled hereunder.

      3.    Duties

            From and after the date hereof, Employee shall serve Employer in
Employer's business in such capacity or capacities as may from time to time be
determined by the President or Board of Directors of Employer. During the period
of active, full-time employment hereunder, Employee shall;

            (a) devote his full time and best efforts to the business and
affairs of Employer (allowing a reasonable time for vacation);

            (b) perform such services, not unreasonable or inconsistent with
Employee's position, education, training or background, as may be designated by
the President or Board of Directors of Employer at any time and from time to
time;

            (c) use his best efforts to promote the business of Employer; and

            (d) hold such office or directorship in Employer, to which Employee
may from time to time be elected or appointed, without further compensation
other than that for which provision is made in this Agreement.

      4.    Compensation

            During the period of Employee's employment hereunder, Employer
agrees to pay Employee for his services such a salary as may from time to time
be mutually agreed between Employer and Employee.

      5.    Definitions

            The following definitions are applicable to the benefits payable
hereunder:

            (a) Supplemental Retirement Benefits


                                       2

            These are hereinafter more specifically defined as Normal Retirement
Benefits in paragraph (f) hereof; Early Retirement Benefits in paragraph (g)
hereof and Late Retirement Benefits in paragraph (h) hereof.

            (b) Normal Retirement Age - Age sixty-five (65)


            (c) Early Retirement Age

            Any time on or after attainment of age fifty-five (55) and prior to
the Normal Retirement date hereunder,

            (d) Disability Retirement

            Employee in the active, full-time employment of Employer shall be
eligible for the Disability Retirement Benefit after six (6) months of
disability if Employer shall determine, on the basis of medical evidence
satisfactory to the Employer in the latter's sole discretion, that Employee is
disabled, mentally or physically, so as to be prevented from continuing to
render service to Employer on a regular, active, full-time basis and that such
disability is likely to be permanent and continuous during the remainder of
Employee's life.

            (e) Monthly Retirement Benefit Unit

            For purposes of Benefit determination hereunder, the monthly benefit
unit commencing at age sixty-five (65) is         , payable for one hundred
eighty (180) consecutive months.

            (f) Normal Retirement Benefit

            Monthly retirement benefit unit multiplied by each calendar year of
full-time, active service with Employer completed subsequent to         and
prior to attainment of age sixty-five (65).


                                       3

            (g) Early Retirement Benefit

            Monthly retirement benefit unit multiplied by each calendar year of
full-time, active service with the Employer subsequent to         and as of the
December 31st immediately prior to the Employee's election to retire early, and
payable monthly to the December 31st following the Employee's eightieth (80th)
birthday.

            (h) Late Retirement Benefit

            Monthly retirement benefit unit multiplied by each calendar year of
full-time, active service with the Employer subsequent to         and as of the
December 31st immediately prior to the Employee's election to retire late, and
payable monthly to the December 31 st following the Employee's eightieth (80th)
birthday.

            (i) Disability Retirement Benefit

            Disability Retirement Benefit will be payable and calculated in the
same manner as if the Employee had elected Early Retirement hereunder.

            (j) Pre Retirement Death Benefit

            The lesser of         per month indexed at four percent (4%) per
annum for each complete calendar year subsequent to         or one hundred
percent (100%) of monthly salary for the month in which death occurs payable for
twelve (12) consecutive months, thereafter sixty percent (60%) of the initial
monthly benefit payable for one hundred and sixty-eight (168) additional
consecutive months.

      6.    Supplemental Retirement Benefits


                                       4

            Subject to all of the terms and conditions hereof, Employer agrees
to pay to Employee, and Employee shall be entitled to receive from Employer, the
following Supplemental Retirement Benefits as hereinbefore defined in paragraph
5(a) hereof.

            (a) Normal Retirement Benefits

            At such time as Employee shall attain the age of sixty-five (65)
while in the active, lull-time employment of Employer, his active, full-time
employment shall cease and Employer shall pay the Normal Retirement Benefit to
Employee. Benefits will commence on the first day of the first month next
succeeding Employee's retirement from active, full-time employment.

            (b) Early Retirement Benefits

            At any time after the Employee becomes eligible for Early Retirement
Benefits while in the full-time, active employment of the Employer the Employee
may elect to terminate his employment by providing three (3) months notice to
Employer. In such event, employment will terminate three (3) months after the
date notice is delivered to Employer, and Employer will commence payment of
Early Retirement Benefits hereunder on the first day of the month ext succeeding
Employee's termination of employment.

            (c) Late Retirement Benefits

            If mutually agreed by Employer and Employee, the Employee shall
continue in the active, full-time employment of Employer past his normal
retirement age of sixty-five (65) years, but in no event past the age of seventy
(70) years. At any time thereafter of the age of sixty-five (65) years the
Employee may elect to terminate his employment by providing three (3) months
notice to Employer. In such event employment will terminate three (3) months
after the



                                       5

date notice is delivered to Employer and in no event later than age seventy (70)
years (with or without notice prior to age seventy (70) years) and Employer will
commence payment of Late Retirement Benefits hereunder on the first day of the
month next succeeding Employee's termination of employment.

            (d) Disability Retirement Benefits

            If while actively employed on a full-time basis with Employer the
Employee becomes disabled and such disability continues for six (6) months and
is deemed by Employer to he permanent in accordance with paragraph 5(d) hereof,
the Employer may terminate Employee's employment and commence Disability
Retirement Benefits which shall continue only so long as Employee will suffer
from permanent disability as similarly determined by Employer in its sole
discretion.

            (e) Pro Retirement Death Benefits

            If Employee dies while actively employed by Employer on a full-time
basis or while disabled prior to the commencement of Disability Retirement
Benefits, the Pre Retirement Death Benefit will be payable.

            (f) Termination of Employment by Employee Prior to Age 65


            If the Employee terminates employment by Employer prior to age
sixty-five (65), other than as a result of death or disability or early
retirement as provided for hereunder, Employee will no longer be entitled to
receive benefits under this Agreement.

      7.    Eligibility in Other Employer Plans

            Whether or not the Employer's regular Pension Plan is a qualified
plan under the IRC, nothing contained in this Agreement shall affect the right
of Employee to participate or to


                                       6

continue to participate in a Pension Plan or in any other supplemental
compensation arrangements which may constitute a part of Employer's regular
compensation structure or in any discretionary bonus which Employer may pay to
its Employees; and at the cessation of active, full-time employment, Employee
may retire and receive the benefits under the provisions of any such Pension
Plan or other arrangements in accordance with the terms thereof.

            Any benefits payable to Employee pursuant to this Agreement shall
not be deemed salary or other eligible compensation for the purpose of computing
fringe benefits or benefits to which Employee may be entitled under any Pension
Plan or other arrangement of Employer for the compensation of its employees.

      8.    Employee Revocable Designation

            In the event of death of Employee prior to the payment in full of
the applicable benefits hereunder, Employee's remaining monthly payments shall
be paid to such beneficiary or such beneficiaries as may have theretofore been
designated in writing by Employee on forms provided by the Employer and
containing the Employer's acknowledgment or acceptance thereof The Employee
shall have the right at any time and from time to time to change the beneficiary
regardless of whether distribution of the benefits may have commenced. In the
event of the Employee's failure to make such designation, or if no designee
shall survive the Employee, the remaining monthly payments shall be paid to
Employee's spouse; provided that if Employee's spouse shall become entitled to
payment hereunder, but shall die before payment in full of the applicable
benefits, any remainder thereof shall be paid in monthly installments either to
the issue of the Employee, per stirpes, or to Employee's estate, in the sole
discretion of the Employer.

      9.    Employer's Election


                                       7

            Notwithstanding that an effective designation of a beneficiary or
beneficiaries entitled to receive payment of benefits or remainder thereof may
then be in force, the Board of Directors of Employer may, at its option, at any
time or from time to time in its absolute and sole discretion, accelerate the
time and the manner of making payment of any one or more Benefit Installments,
or may anticipate any payments thereof in event of any emergency or necessity
affecting the personal or family affairs or Employee or any beneficiary of
Employee, if the latter is deceased.

      10.   Minority or Disability

            If Employer in its sole discretion shall deem any person entitled to
receive any payments under this Agreement to be unable to care for his or her
affairs because of illness or accident, or is a minor, any such payments (unless
a prior claim therefore shall have been made by a duly appointed Guardian,
committee or other legal representative) may be made to the spouse, child or
chit then, parent, brother or sister of such person;, or to any third person or
entity deemed by the Employer to have incurred expense for such person, in such
manner and amount as Employer may determine. Any such payment shall be a
complete discharge to the extent thereof of the obligations of Employer under
this Agreement.

      11.   Non-alienation of Benefits

            None of the rights, interest or benefits contemplated under this
Agreement may be sold, given away, assigned, transferred, pledged, mortgaged,
alienated, hypothecated or in any way encumbered or disposed of by Employee, or
any executor, administrator, heir, legatee, distributee, relative or any other
person or entity, whether or not in being, claiming under Employee by virtue of
this Agreement, and none of the rights, interest or benefits contemplated by
this Agreement shall be subject to execution, attachment or similar process. Any
(or


                                       8

attempted) sale, gift, assignment, transfer, pledge, mortgage, alienation,
hypothecation or encumbrance, or other disposition of this Agreement or of such
rights, interest or benefits contrary to the foregoing provisions, or the levy
or any attachment or similar process thereon, shall be null and void and without
effect.

      12.   Discharge Provisions

            (a) Notwithstanding anything which might be herein contained to the
contrary, it being clearly understood and agreed upon by the parties hereto the
EMPLOYMENT OF THE EMPLOYEE IS AND SHALL REMAIN EMPLOYMENT SOLELY AT THE WILL OF
THE EMPLOYER, the Employer may at any time discharge Employee, whether or not
for cause, in which event or in the event Employee sues or in any manner
contests such "at will" employment or Employer's right to discharge Employee,
then upon written notice to Employee and effective immediately upon the mailing
thereof in the manner set forth in paragraph 19 hereof, Employee's right to
receive benefits hereunder shall be fixed and determined as of such date;
provided that nothing herein shall affect Employee's right to receive payment of
such benefits in the manner and at the time herein provided, except as otherwise
provided in paragraph 12(b) hereof.

            (b) If the Employee is discharged without cause, a monthly benefit
payable for one hundred and eighty (180) consecutive months will be payable upon
the discharged Employee's attainment of age sixty-five (65), or in the event of
his prior death. The benefit payable under this paragraph will be calculated
using the then discounted present value of the discharged Employee's monthly
retirement benefit units accrued on the Employer's books as of the December 31st
immediately prior to the date when the Employees rights to receive benefit is
fixed under paragraph 12(a) hereof. The monthly benefit will be determined
assuming that the



                                       9

discounted present value is payable for one hundred and eighty (180) consecutive
equal monthly installments assuming interest at the same rate as used in
determining the present value, No disability retirement benefits will be payable
under this provision.

            (c) In the event that Employee shall be convicted of a crime
involving Employee's business affairs or in the event that Employer shall have
reasonable cause to believe Employee to be guilty of any such crime, all rights
of Employee under this Agreement shall terminate immediately, and Employer shall
have the right to terminate and make no payments whatsoever of Benefit
Installments or Disability Benefits hereunder, notwithstanding that such amounts
would constitute alt or a portion of the benefits otherwise payable hereunder.
Such right of Employer shall be in addition to, and not in lieu of, any and all
other rights which Employer may have in such event. The provisions hereof shall
be applicable notwithstanding that payment of such Benefit Installments or
Disability Benefits may have theretofore commenced under any provision of this
Agreement.

      13.   Non Competition Provision

            Notwithstanding anything herein contained to the contrary, no
payment of any then unpaid installments of benefits under this Agreement shall
be made and all rights under this Agreement of the Employee, his spouse,
executors or administrators, or other persons claiming through or on behalf of
Employee to receive payments thereof, shall be forfeited, unless such forfeiture
is waived by Employer's Board of Directors, if the Employee engages in or takes
part in any business enterprise of any kind during employment by Employer or
within a period of three (3) years after termination of such employment or at
any time while the Employee is receiving benefits hereunder for any reason
whatsoever, within a sixty (60) mile radius of York, Pennsylvania, whether as an
Employee or as an owner directly or indirectly, which manufacture,



                                       10

produces or sells any article then manufactured, produced or sold by the
Employer or by a present or future holding company of Employer or subsidiary of
Employer or of such holding company, or which may be in any other way directly
or indirectly competitive with the business of the Employer or such holding
company or subsidiary of Employer.

      14.   No Trust Relationship

            Nothing contained in this Agreement and no action taken pursuant to
the provisions of this Agreement shall create or be construed to create a trust
or security relationship of any kind, nor a fiduciary relationship between
Employer and Employee, or any designated beneficiary of the latter or other
person presently or prospectively entitled to the receipt of payments hereunder.
To the extent that any person becomes entitled, presently or prospectively, to
receive payments from Employer under this Agreement, such right shall be no
greater than the right shall be no greater than the right of any unsecured
general creditor of the Employer.

      15.   Power and Authority

            The Employer through either its Board of Directors or Executive
Committee shall have full power and authority to interpret, construe and
administer this Agreement, and any such interpretation or construction hereof by
the Employer, or other action hereunder, including the amount or recipient of
any one or more payments of the benefits payable hereunder, shall be binding and
conclusive on all persons, whether in being or not. Employer shall not be liable
to any person, whether in being or not, for any action taken or omitted in
connection with the interpretation and administration of this Agreement, unless
attributable to the willful misconduct or bad faith of Employer, it being
understood and agreed, however, that the employment of Employee is and shall
continue to be solely at the will of the Employer.


                                       11

      16.   Waiver of Breach

            Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right of
power hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.

      17.   Modification

            This Agreement shall not be modified or amended except by written
Agreement duly executed by Employee and Employer.

      18.   Severability

            If any clause, sentence, paragraph, section or part of this
Agreement shall be held by any court of competent jurisdiction to be invalid,
such judgment shall not affect, impair or invalidate any of the other parts
hereof.

      19.   Notices

            Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and sent by registered or certified mail, if
to Employee, to his address as shown on the books of Employer, and if to
Employer, to the address shown above, or such other address as Employer may have
designated in writing, or if such written notice is actually received by the
person to whom sent.

      20.   Claims Procedure

            A claim for benefits must be filed before payment of retirement or
death benefits will commence. A claim shall be deemed filed when an Employee or
his beneficiary or representative requests, in writing, payment of benefits due
under the Plan. The claim may be



                                       12

filed with the Plan Administrator or any officer of Employer. In the event that
a claim for benefits is filed, the Plan Administrator, within three (3) months
after the claim is filed, shall give notice of the decision on the claim; and if
notice on the denial of a claim is not furnished, and the claim has not been
granted within the three (3) month claim processing period, the claim shall be
deemed denied for all purpose of processing to the review stage as hereinafter
described.

            (a) The three (3) month time period mentioned above may be extended
by the Plan Administrator for an additional three (3) months if special
circumstances require an extension of time for processing the claim. If an
extension is required, the Plan Administrator shall furnish written notice of
the three (3) month extension to the claimant prior to the termination of the
initial three (3) month period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Plan
Administrator expects to render the final decision.

            (b) The Plan Administrator shall provide to every claimant who is
denied a claim for benefits written notice setting forth:

                        (i) the specific reason or reasons for the denial,

                        (ii) the specific reference to the pertinent Plan
            provisions on which the denial is based,

                        (iii) a description of any additional material or
            information necessary for the claimant to perfect the claim arid an
            explanation of why such material or information is necessary, and

                        (iv) an explanation of the Plan's claim review
            procedure.

                                       13

            (c) In the event that the claim of the Employee or his beneficiary
or representative is denied, the claimant or his duly authorized representative
may request a review of the denied claim by means of a written application for
review delivered to the Plan Administrator. Pursuant to this right of Review,
the claimant Or his duly authorized representative may review pertinent
documents and submit issues and comments in writing.

            (d) Any request for review of a denied claim must be filed no later
than sixty (60) days after the earlier of receipt by the claimant of written
notification of the three (3) month claim processing period including any
extension thereof.

            (e) In the event a request for review has been made as herein
provided, the Plan Administrator shall make a decision On the request for review
within sixty (60) days after the receipt by the Plan Administrator of the
request for the review, unless special circumstances require an extension of
time for processing the review, in which case the Plan Administrator shall
render a decision as soon as possible, but in no event later than one hundred
and twenty (120) days after the Plan Administrator has received the request for
review.

            If an extension is required, the Plan Administrator shall furnish
written notice of the extension to the claimant prior to the commencement of the
extension. The decision on review shall he furnished to the claimant in writing
within the time for review and shall include specific reasons for the decision,
as well as specific references to the pertinent Plan provisions on which the
decision is based.

            (f) If the Plan Administrator is unable after diligent search to
locate an employee or former employee participant or beneficiary to whom a
benefit is due under the provisions of this Plan, such benefit shall be
forfeited on the last day of the Plan Year in which



                                       14

such search is concluded, If a claim is made subsequently by such participant or
beneficiary for the benefit so forfeited, such benefit shall be restored in
full.

      21.   Plan Administrator

            The Plan Administrator shall be The York Water Company.

      22.   Gender and Plural

            All references made and pronouns used herein shall be construed in
the singular or plural, and in such gender as the context may require.

      23.   Captions

            The captions of the various provisions shall not be deemed a part of
this Agreement and shall not be construed in any way to limit the contents
hereof but are inserted herein only for reference and for convenience of the
parties.

      24.   Governing State Law

            This Agreement may be executed at different times in different
places, but all questions concerning the construction or validity hereof, or
relating to performance hereunder, shall be determined in accordance with the
laws of the Commonwealth of Pennsylvania.

      25.   Duplicate Originals

            This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and there shall be no requirement to produce
another counterpart.

      26.   Successors or Assigns


                                       15

            It is hereby agreed that the terms and provisions of this
Supplemental Retirement Plan shall be binding upon the successors or assigns of
The York Water Company (Employer).




                                       16

            IN WITNESS WHEREOF, the Employer has caused this Agreement to be
executed by its duly authorized officers, and the Employee has hereunto set his
hand and seal as of the day and year first above written.

ATTEST:                                   THE YORK WATER COMPANY


- -----------------------                   ------------------------------
Secretary                                 President





(SEAL)                                    ------------------------------


                                       17

TO WHOM IT MAY CONCERN

I designate the following as my beneficiary for the Supplemental Retirement Plan
of The York Water Company.

Name of Beneficiary

              Primary

                      Name            __________________________________________

                      Address         __________________________________________



                      Relationship    __________________________________________


              Secondary

                      Name            __________________________________________

                      Address         __________________________________________



                      Relationship    __________________________________________

                                                 Signed     ____________________

                                                 Date       ____________________

Commonwealth of Pennsylvania                     )
                                                 )  SS:
County of York                                   :

On this, the ____ day of ____________, 2004, before me, a Notary Public, the
undersigned personally appeared, known to me (or satisfactorily proven) to be
the person whose name is subscribed to the within instrument and acknowledged
that he executed the same for the purposes therein contained.

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


                                                       -------------------------
                                                       Notary Public

                                  Schedule 10.7



                                                    Monthly Retirement     Pre Retirement Death
           Name                Effective Date          Benefit Unit               Benefit
           ----                --------------       ------------------     --------------------
                                                                  
     Jeffrey S. Osman         October 15, 1984           $115.74                 $3333.00
    Kathleen M. Miller        February 9, 2004            116.14                  6666.70
     Vernon L. Bracey         February 10, 2004           122.55                  6430.49
     Jeffrey R. Hines            May 1, 1990              120.12                  3208.33
      Duane R. Close          October 15, 1984            102.88                  2917.00
     Bruce C. McIntosh         April 15, 1999             146.20                  4316.66

EX-10.8

                                                                    Exhibit 10.8



                         DEFERRED COMPENSATION AGREEMENT

      THIS AGREEMENT, made as of this        day of June, 1991, by and between
THE YORK WATER COMPANY, a Pennsylvania corporation with its principal business
office located at 130 East Market Street, York, Pennsylvania (hereinafter called
"Company"), and                              (hereinafter called "Participant").

      WITNESSETH:

      WHEREAS, Company wishes to encourage Participant's continued employment,
and Participant is willing to undertake such employment, subject to receipt of
deferred compensation upon the tern hereinafter set forth;

      NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
do hereby mutually agree as follows:

                               ARTICLE I. GENERAL

      1.1 EMPLOYMENT

            The Company hereby engages Participant upon the terms and conditions
as hereinafter provided.

      1.2 TERM OF AGREEMENT

            This Agreement shall continue in full force and effect until the
later of (i) the termination of Participant's employment by the Company, WHICH
SHALL BE AT THE WILL OF THE COMPANY AND IN THE COMPANY'S SOLE DISCRETION AND
WITHOUT HINDRANCE IN ANY MANNER BY VIRTUE OF THE TERMS OF THIS AGREEMENT TO
WHICH PROVISION PARTICIPANT HEREBY CONSENTS AND AGREES or (ii) notwithstanding
such termination of employment, payment to Participant or his designee(s) of all
benefits to which Participant shall become entitled hereunder.

      1.3 DUTIES

            From and after the date hereof, Participant shall serve the Company
in Company's business in such capacity or capacities as may from time to time be
determined by the President or Board of Directors of the Company. During the
period of active, full-time employment hereunder, Participant shall:

            (a) devote his full time and best efforts to the business and
affairs of the Company (allowing a reasonable time for vacation);

            (b) perform such services, not unreasonable or inconsistent with
Participant's position, education, training or background, as may be designated
by the President or Board of Directors of the Company at any time and from time
to time; and

            (c) use his best efforts to promote the business of the Company.

      1.4 COMPENSATION

            During the period of Participant's employment hereunder, the Company
agrees to pay Participant for his services such a salary as may from time to
time be mutually agreed between the Company and Participant.

                             ARTICLE II. DEFINITIONS

      Whenever the following terms are used in this Plan, they shall have the
meanings specified below unless the context indicates to the contrary:

      2.1 "Administrator" shall mean that individual so named by the Board.

      2.2 "Application for Participation" shall mean a document in the form set
forth in Exhibit A hereto, whereby an Eligible Employee enrolls as a Participant
in the Plan.

      2.3 "Beneficiary" shall mean such person or legal entity as may be
designated by a Participant under Section 6.6 to receive benefits hereunder
after such Participant's death; or, in


                                       2

the absence of such designation, the Participant's surviving spouse or if none,
the personal representative of the Participant.

      2.4 "Board" shall mean the Board of Directors of The York Water Company.

      2.5 "Company" shall mean The York Water Company.

      2.6 "Compensation" shall mean the annualized compensation plus the year
end salary adjustment of a Participant for the 19__ Fiscal Year, before any
reduction to such compensation is effective in accordance with the Application
for Participation.

      2.7 "Company's Matching Contribution" shall mean the amount equal to the
Participant's deferred income up to two and one-half percent contributed to the
Employee's Deferred Income Account.

      2.8 "Deferred Income" shall mean chat portion up to five percent (5%) of
the Participant's annualized 19__ Compensation which the Participant elects to
defer in accordance with the Application for Participation.

      2.9 "Deferred Income Account" shall mean the bookkeeping account
established by the Administrator for each Participant to which the Participant's
Deferred Income plus interest or any other earnings of an insurance policy or
policies maintained by the Company is credited and from which distributions to
the Participant or to his or her Beneficiary are made.

      2.10 "Eligible Employee" shall mean a management or highly compensated
employee selected by the Board to be a participant in the Plan.

      2.11 "Fiscal Year" shall mean the year beginning _________________ and
ending ___________________.

      2.12 "Participant" shall mean any Eligible Employee who participates in
the Plan under Article II.




                                       3

      2.13 "Plan" shall mean The York Water Company Deferred Income Plan.

      2.14 "Plan Year" shall mean the calendar year.

      2.15 "Retirement" shall wean termination of employment with the Company
which may be on or after the earlier of (i) the attainment of an age of 65 years
or (ii) the completion of eight (8) years of participation in the Plan, but in
no case will retirement be before the attainment of an age of 60 years or after
the attainment of an age of 70 years.

                ARTICLE III. PARTICIPATION BY ELIGIBLE EMPLOYEES

      3.1 PARTICIPATION

            Prior to the beginning of any Plan Year, an Eligible employee may
elect to participate in the Plan by completing and executing an Application for
Participation and filing it with the Administrator.

      3.2 CHANGE IN TERMS OF PARTICIPATION

            An Eligible Employee who elects under Section 3.1 to participate in
the Plan shall have his or her compensation reduced for the Plan Year following
the filing of the election in the amount set forth in the Application for
Participation. The Participant's compensation shall be reduced by a like amount
in each Plan Year for an eight (8) year period.

                          ARTICLE IV. INSURANCE POLICY

      4.1 The Company shall apply for and become the owner/beneficiary of a life
insurance policy on the life of Participant. Except as set forth hereinafter,
during such time as Participant shall be employed by the Company, the Company in
each year of an eight (8) year period shall make an annual premium deposit with
the insurance carrier of the sum of the Participant's deferred income plus the
Company's matching contribution during each calendar year of the eight (8) year
period following the effective date of this Agreement.



                                       4

            (a) This Agreement is conditioned upon the consent of the insurance
Company to issue upon the life of Participant.

            (b) For the purpose of this Agreement, the term "Effective Date of
this Agreement" shall be deemed to be _____________________.

            (c) The Company agrees to refrain from making policy loans against
the life insurance policy during the term of this Agreement.

                   ARTICLE V. DISTRIBUTION OF DEFERRED INCOME

      5.1 RETIREMENT

            In the event of a Participant's Retirement, a monthly retirement
benefit shall be paid to him or her for 120 months, commencing on the first of
the month coincident with or following the Participant's Retirement. The monthly
amount payable will be equal to _____% of his deferred income account
immediately prior to retirement divided by the following factor (1-corporate
marginal Federal income tax bracket for the corporate fiscal year ending
immediately prior to retirement), i.e., if corporate tax bracket was 341 the
factor would be (1-.34-.65). If the Participant dies before all such monthly
installments have been paid, the remaining installments shall continue to be
paid to the Participant's Beneficiary, or in the event of the death of the
Beneficiary, to the Beneficiary's surviving spouse, and if none, to the personal
representative of the Beneficiary.

      5.2 DEATH

            In the event of a Participant's death before distribution of his or
her Deferred Income Account has commenced under Sections 5.1, 5.3 or 5.4, the
Beneficiary or Beneficiaries designated by the Participant in the Application
for Participation, or in any subsequent designation under Section 7.6(a), shall
receive a death benefit in art amount equal to the proceeds


                                       5

of any insurance policy or policies maintained by the Company on the
Participant's life as an investment of the amount credited, or to be credited,
to the Participant's Deterred Income Account on or after the date of his death
plus (ii) an amount which, when added to the proceeds of such insurance policy
or policies, would be deductible by the Company for Federal corporation income
tax purposes at the corporate tax rate in effect in the year of the
Participant's death, and, at such rate, would reduce the Company's net after-tax
cost of the death benefit to the proceeds of such insurance policy or policies.

            The death benefit determined as above shall be paid to the
Beneficiary or Beneficiaries at their discretion in a lump sum or in ten (10)
annual installments, with each installment being an amount equal to one -- tenth
of the death benefit determined as above. Interest shall not be credited to a
Participant's Deferred Income account after the date of the Participant's death.
If the Beneficiary or Beneficiaries designated by the Participant should die
before such lump sum or annual installments have been paid, the lump sum or
remaining installments shall be paid to the surviving spouse of the participant,
and if there is no surviving spouse, then to the personal representative of the
Beneficiary.

      5.3 DISABILITY

            In the event a Participant's employment with the Company is
terminated before his or her attainment of retirement age on account of
disability, as determined by the Administrator on the basis of medical evidence
satisfactory to the Administrator, in the latter's sole discretion, or if the
Participant becomes disabled before his or her Deterred Income Account is fully
distributed, the Participant may request, and the Administrator in his sole
discretion may grant, an acceleration of the payments due the Participant, to
the extent necessary to relieve any financial hardship of the Participant caused
by such disability.



                                       6

            The amount of the Deferred Income Account will be that amount of the
cash value of the insurance policy or policies maintained by the Company
(Section 4.0 at the date the Participant is found to be disabled.

      5.4 TERMINATION OF EMPLOYMENT

            In the event a Participant's employment with the Company is
terminated other than by death or disability before he or she is eligible for
Retirement, the amount of the Participant's contribution plus accumulated
Interest, if any, without the Company's matching contribution credited to the
Participant's Deferred Income Account shall be distributed to the Participant
immediately upon his termination in a lump sum and the agreement shall be
immediately terminated.

      5.5 FINANCIAL HARDSHIP

            (a) Before Retirement. In the event a Participant before his or her
Retirement experiences financial hardship, the Participant may request, and the
Administrator in his sole discretion may grant, a distribution in one lump sum
of such portion of the Participant's Deferred Income Account as is required to
relieve such financial hardship and is not, reasonably available from the
Participant's other resources.

            (b) After Retirement. In the event a Participant after his or her
Retirement experiences financial hardship, the Participant may request, and the
Administrator in his sole discretion may grant, an acceleration of the
installments payable to the Participant to the extant necessary to relieve such
financial hardship.

            (c) FINANCIAL HARDSHIP. For purposes of this Section 5.5, a
distribution will be on account of "financial hardship" if the distribution is
necessary in light of immediate and heavy financial needs of the Participant.
The Administrator, in his sole discretion, shall


                                       7

determine whether or not a Participant has experienced "financial hardship"
within the meaning of this Section 5.5(c).

            (d) TAXES. The Participant acknowledges that such payments are
subject to income taxes and may have an adverse effect on his personal tax
situation.

      5.6 VALUATION OF DISTRIBUTION

            All distributions under the Plan shall be based upon the value of
the Participant's Deferred Income Account at the end of the calendar quarter
preceding the date of the distribution.

                              ARTICLE VI. FUNDING

      6.1 PLAN UNFUNDED

            The Plan shall be unfunded and no trust shall be created by the
Plan. The allocation to each Participant's Deferred Income Account shall be made
through bookkeeping entries and no actual funds need be set aside. To the extent
that any funds are credited within the general assets of the Company to an
account to cover all or part of the Company's potential liabilities under the
Plan, any funds so credited may be kept in cash or invested and reinvested in
such manner as the Company shall determine. In the exercise of the foregoing
discretionary investment powers, the Company may use the amounts so credited as
premium payments for policies of insurance issued by any insurance company
licensed to do business in Pennsylvania. Title to and beneficial ownership of
any assets whether cash or investments, shall at all times remain in the Company
and a Participant (or his or her Beneficiary) shall not have any property
interest whatsoever in any specific assets of the company. A Participant (or his
or her Beneficiary) shall have the rights of a general unsecured creditor
against the Company for any distributions due hereunder.



                                       8

                           ARTICLE VII. ADMINISTRATION

      7.1 ADMINISTRATOR

            The Administrator shall be in charge of the operation and
administration of the Plan.

      7.2 POWERS AND DUTIES OF ADMINISTRATOR

            The Administrator shall administer the Plan in accordance with its
terms and shall have all the powers necessary to carry out such terms. All
interpretations of the Plan and questions concerning its administration and
application shall be determined by the Administrator, and such determination
shall be binding on all persons except as otherwise expressly provided herein.

      7.3 RECORDS AND REPORTS

            The Administrator shall keep a record of his or her proceedings and
actions and shall maintain all such books of account, records and other data as
shall be necessary for the proper administration of the Plan. Such records shall
contain all relevant data pertaining to individual Participants and their rights
under the Plan. The Administrator shall have the duty to carry into effect all
rights or benefits provided hereunder to the extent assets of the Company are
properly available therefor.

      7.4 PAYMENT OF EXPENSES

            The Company shall pay all expenses of administering the Plan. Such
expenses shall include any expenses incident to the functioning of those to whom
the Board delegates duties, and those persons appointed by the Administrator
under Section 7.2.

      7.5 INDEMNIFICATION FOR LIABILITY



                                       9

            The Company shall indemnity the Administrator and the employees of
the Company to whom the Administrator delegates duties under the Plan against
any and all claims, losses, damages, expenses and liabilities arising from their
responsibilities in connection with the Plan, unless the same is determined to
be due to gross negligence or willful misconduct.

      7.6 DESIGNATION OF BENEFICIARY AND PROOF

            (a) Designation of Beneficiary. Each Participant shall designate a
Beneficiary in his or her Application for Participation to receive any Deferred
Income which may become payable under Section 5.2. The Participant may change
his or her designation from time to time by filing a subsequent designation of
Beneficiary with the administrator on a form prescribed by the Administrator.

            (b) Documentary Proof. The Administrator way require the execution
and delivery of such documents, papers and receipts as he or she may deem
reasonably necessary in order to be assured that any payment under Section 3.2
is made to the Beneficiary entitled thereto.

      7.7 CLAIMS PROCEDURE

            (a) Filing Claim for Benefits. If an individual (hereinafter
referred to as the "Applicant," which reference shall include the personal
representative, if any, of the individual) does not receive the timely payment
of the amount credited to his or her Deferred Income Account to which the
Applicant believes he or she is entitled under the terms of the Plan, the
Applicant may make a claim for such amount in the manner hereinafter provided.

            All claims under the Plan shall be made in writing and shall be
signed by the Applicant. Claims shall be submitted to the Administrator for
initial review. If the Applicant does not furnish sufficient information with
the claim for the Administrator to determine the


                                       10

validity of the claim, the Administrator shall furnish the Applicant with forms,
within ten days of receipt of the initial claim, indicating any additional
information which is necessary for the Administrator to determine the validity
of the claim.

            Each claim hereunder shall be acted on and approved or disapproved
by the Administrator within 90 days following the receipt by the Administrator
of the information necessary to process the claim unless special circumstances
require an extension of the time for processing, in which case a decision shall
be rendered by the Administrator as soon as possible but not later than 180 days
after such information is received by the Administrator. The Administrator shall
notify the Applicant within the initial 90-day period as to the extension, the
nature of the special circumstances and the date by which the final decision is
expected to be made.

            In the event the Administrator denies a claim in whole or in part,
the Administrator shall notify the Applicant in writing of the denial of the
claim and notify such Applicant of his or her right to a review of the decision
by the Administrator. Such notice by the Administrator shall also set forth, in
a manner calculated to be understood by the Applicant, the specific reason for
such denial, the specific Plan provisions on which the denial is based, a
description of any additional material or information necessary to perfect the
claim, with an explanation of why such material or information is necessary, and
an explanation of the Plan's claim review procedure as set forth in Section
7.7(b).

            If no action is taken by the Administrator on an Applicant's claim
within 180 days after receipt by the Administrator, such application shall be
deemed to be denied for purposes of the following appeals procedure.



                                       11

            (b) Appeals Procedure. Any Applicant whose claim for benefits is
denied in whole or in part (such Applicant being hereinafter referred to as the
"Claimant") may appeal from such denial to the Board for a review of the
Administrator's decision. Such appeal must be made within six months after the
Claimant has received written notice of the denial or if no such written notice
is received by the Claimant, within six months of the date the application is
deemed denied as provided above. An appeal must be submitted in writing within
such period and must:

                  (i) Request a review by the Board of the claim under the Plan;

                  (ii) Set forth all of the grounds upon which the Claimant's
request for review is based and any facts in support thereof; and

            The Board shall review all appeals by Claimants. The Board shall act
upon each appeal within 60 days after receipt thereof unless special
circumstances require an extension of the time for processing, in which case a
decision shall be rendered by the Board as soon as possible, but not later than
120 days after the appeal is received by the Board. The Board shall notify the
Claimant within the initial 60-day period that an extension is necessary.

            The Board shall make a full and fair review of each appeal and any
written materials submitted by the Claimant and/or the Company in connection
therewith. The Board may require the Claimant and/or the Company to submit such
additional facts, documents or other evidence as the Board in its discretion
deems necessary or advisable in making its review. The Claimant shall be given
the opportunity to review pertinent documents or materials upon submission of a
written request to the Board, provided the Board finds the requested documents
or materials are pertinent to the appeal.



                                       12

            On the basis of its review, the Board shall make an independent
determination of the Claimant's eligibility for benefits under the Plan. The
decision of the Board on any claim for benefits shall be final and conclusive
for all purposes.

            In the event the Board denies an appeal in whole or in part, the
Board shall give written notice of the decision to the Claimant, which notice
shall set forth in a manner calculated to be understood by the Claimant the
specific reasons for such denial and shall make specific reference to the
pertinent Plan provisions on which the Board's decision was based.

                     ARTICLE VIII. AMENDMENT AND TERMINATION

      8.1 AMENDMENT OR MODIFICATION

            This Agreement shall not be amended or modified except by written
agreement duly executed by Participant and Company.

      8.2 TERMINATION

            The Board shall have the right at any time to terminate the Plan and
to discontinue compensation reduction contributions if the Board determines that
it is in the interest of the Company to do so. Upon termination of the Plan, the
amounts then credited to the Deferred Income Account of each Participant shall
be paid in a lump sum to each such Participant not later than six months
following the date of termination.

                      ARTICLE IX. MISCELLANEOUS PROVISIONS

      9.1 RIGHT OF COMPANY TO DISCHARGE ELIGIBLE EMPLOYEES

            The adoption and maintenance of this Plan shall not be deemed to
constitute a contract between the Company and any Eligible Employee, or to be a
consideration for, or an inducement or condition of, the employment of any
person. NOTHING HEREIN CONTAINED OR ANY ACTION TAKEN HEREUNDER SHALL BE DEEMED
TO GIVE ANY ELIGIBLE


                                       13

EMPLOYEE THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE COMPANY OR TO INTERFERE
WITH THE RIGHT OF THE COMPANY TO DISCHARGE ANY ELIGIBLE EMPLOYEES AT ANY TIME
NOR SHALL IT BE DEEMED TO GIVE TO THE COMPANY THE RIGHT TO REQUIRE THE ELIGIBLE
EMPLOYEE TO REMAIN IN ITS EMPLOY AT ANY TIME, NOR SHALL IT INTERFERE WITH THE
ELIGIBLE EMPLOYEE'S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT AT ANY TIME.

      9.2 ALIENATION OR ASSIGNMENT OF BENEFITS

            None of the rights, interest or benefits contemplated under this
Agreement may be sold, given away, assigned, transferred, pledged, mortgaged,
alienated, hypothecated or in any way encumbered or disposed of by Participant,
or any executor, administrator, heir, legatee, distributee, relative or any
other person or entity, whether or not in being, claiming under Participant by
virtue of this Agreement, and none of the rights, interest or benefits
contemplated by this Agreement shall be subject to execution, attached, or
similar process. Any (or attempted) sale, gift, assignment, transfer, pledge,
mortgage, alienation, hypothecation or this Agreement or of such rights,
interest or benefits contrary to the foregoing provisions, or the levy or any
attachment or similar process thereon, shall be null and void and without
effect.

      9.3 RIGHT TO WITHHOLD

            The Company shall, have the right to withhold from all distributions
from the Plan any federal, state or local taxes required by law to be withheld
with respect to such distributions.

      9.4 NOTICES

            Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and sent by registered or certified mail, if
to Participant to his address as


                                       14

shown on the books of Company, and if to the Company to the address shown above,
or such other address as the Company may have designated in writing, or if such
written notice is actually received by the person to whom sent.

      9.5 POWER AND AUTHORITY

            The Company through either its Board of Directors or Executive
Committee shall have full power and authority to interpret, construe and
administer this Agreement, and any such interpretation or construction hereof by
the Company or other action hereunder, including the amount or recipient of any
one or more payments of the benefits payable hereunder, shall be binding and
conclusive on all persons whether in being or not. The Company shall not be
liable to any person, whether in being or not f or any action taken or omitted
in connection with the interpretation and administration of this Agreement,
unless attributable to the willful misconduct or bad faith of the Company, it
being understood and agreed however that the employment of Participant is and
shall continue to be solely at the will of the Company.

      9.6 WAIVER OR BREACH

            Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right of
power hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.

      9.7 GENDER AND PLURAL

            All references made and pronouns used herein shall be construed in
the singular or plural, and in such gender as the context may require.

      9.8 CAPTIONS



                                       15

            The captions of the various provisions shall not be deemed a part of
this Agreement and shall not be construed in any way to limit the contents
hereof but are inserted herein only for reference and for convenience of the
parties.

      9.9 GOVERNING STATE LAW

            This Agreement may be executed at different times in different
places, but all questions concerning the construction or validity hereof or
relating to performance hereunder shall be determined in accordance with the
laws of the Commonwealth of Pennsylvania.

      9.10 DUPLICATE ORIGINALS

            This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and there shall be no requirement to produce
another counterpart.

      9.11 EXAMPLE CALCULATIONS

            The Participant hereby acknowledges that it is understood that all
example calculation sheets furnished at anytime to the Participant or his/her
agent were furnished for illustrative purposes only and that the funds available
for distribution under this Plan may be considerably less than the illustrations
indicated as example calculations. It is further understood that the example
calculations are not to be considered a warranty, guarantee or any other such
commitment by the Company of funds that will be available for payment under any
Section of this Agreement.

      9.12 SUCCESSORS OR ASSIGNS

            It is hereby agreed that the terms and provisions of this
Supplemental Retirement Plan shall be binding upon the Successors or Assigns of
The York Water Company (Company).


                                       16

            IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers, and the Participant has hereunto set
his hand and seal as of the day and year first above written.

ATTEST:                                  THE YORK WATER COMPANY


- ----------------------------------       ----------------------------------
            Secretary                                President





(SEAL)
                                         ----------------------------------
                                                     Participant




                                       17

                                    EXHIBIT A


                          APPLICATION FOR PARTICIPATION
                                     IN THE
                              DEFERRED INCOME PLAN


      1. This Application for Participation constitutes the election of
                           (insert name of Participant) (the "Participant") to
participate in the Deferred Income Plan (the "Plan").

      2. The Participant agrees to the terms and conditions of the Plan as such
Plan now exists, and as it may be amended from time to time.

      3. The Participant agrees that the Payroll Department of The York Water
Company (the "Company") shall reduce the Participant's compensation by      %
for the 1991 calendar year. This election shall be effective
1991. The Participant understands that such reduction in his or her compensation
shall be effective only for eight years.

      4. The Participant designates the following person(s) or legal entity as
the Beneficiary to receive any deferred compensation to which he or she is
entitled upon his or her death:



- -----------------------------------           ----------------------------------
                 Name                                   Relationship

- --------------------------------------------------------------------------------

However, the Participant understands that if no designated Beneficiary survives
the Participant, the Deferred Income payable under this Plan will be paid to the
Participant's surviving spouse, or if none, to the Participant's personal
representative.

      5. The Participant acknowledges that the Company is under no obligation to
continue the Plan and that participation in the Plan in no way guarantees his or
her employment.

      6. This Application for Participation shall become effective on the
effective date stated in Paragraph 3 above, without further notice to the
Participant by the Company.


- -----------------------------------           ----------------------------------
                 Date                             Signature of Participant

This application received this         day of                     , 1991.
                               -------        --------------------


                                         By:
                                              ----------------------------------
                                                     Administration


                                       18

TO WHOM IT MAY CONCERN

I designate the following as my beneficiary for the Deferred Income Plan of The
York Water Company.

Name of Beneficiary

         Primary

               Name
                                ------------------------------------------------
               Address
                                ------------------------------------------------

                                ------------------------------------------------
               Relationship
                                ------------------------------------------------

         Secondary

               Name
                                ------------------------------------------------
               Address
                                ------------------------------------------------

                                ------------------------------------------------
               Relationship
                                ------------------------------------------------

                                 Signed
                                          --------------------------------------
                                 Date
                                          --------------------------------------

Commonwealth of Pennsylvania     )
                                 )  SS:
County of York                   :

On this, the               day of                                  , 19        ,
before me, a notary public, the undersigned personally appeared, known to me (or
satisfactorily proven) to be the person whose name is subscribed to the within
instrument and acknowledged that he executed the same for the purposes therein
contained.

In witness whereof, I hereunto set my hand and official seal.


- -------------------------------
      Notary Public



                                       19

                                  SUPPLEMENTAL
                         DEFERRED COMPENSATION AGREEMENT

      WHEREAS, effective January 1, 1988, The York Water Company entered into a
Deferred Compensation Agreement with the hereinafter named participant; and

      WHEREAS, the projected estimated benefits were based upon 1988 interest
and dividend rate levels; and

      WHEREAS, the actual experience has been considerably less than projected;
and

      WHEREAS, Section 3.2 requires "the participant's compensation shall be
reduced by a like amount in each Plan Year for an eight (8) year period"; and

      WHEREAS, it has now been determined that an eight (8) year period will
result in a considerable reduction in the projected benefits; and

      WHEREAS, the Company and participants are willing to extend the period to
bring the 1988 projected benefits more in line with the 1988 estimated projected
benefits.

      NOW, THEREFORE, the parties hereto, intending to be legally bound, do
hereby mutual agree as follows:

1. Section 3.2 is hereby amended so that the participant's compensation shall be
reduced by a like amount in each Plan Year for an eleven (11) year period. The
period is measured from January 1, 1988.

2. The Company's matching contribution shall continue f or the same period in
the same amount.

3. The parties agree that all other terms and conditions set forth in the
Agreement effective January 1, 1989 shall remain in full force and effect.




                                       20

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
        day of March, 1994.


ATTEST:                                   THE YORK WATER COMPANY


- -----------------------------------       -----------------------------------
            Secretary                                President




(SEAL)
                                          -----------------------------------
                                                     Participant





                                       21

                                  Schedule 10.8



        Name                Effective Date            Monthly Benefit Factor (%)
        ----                --------------            --------------------------
                                                
   Jeffrey S. Osman          May 11, 1988                       0.717
  Kathleen M. Miller      February 22, 1999                     0.962
   Vernon L. Bracey        August 29, 2002                      0.717
   Jeffrey R. Hines          May 1, 1990                        1.110
    Duane R. Close           May 11, 1988                       2.032
  Bruce C. McIntosh       December 18, 1996                     0.664