CHANGE IN CONTROL AND SEVERANCE AGREEMENT

Exhibit 10.42

CHANGE IN CONTROL AND SEVERANCE AGREEMENT

(As amended and restated effective as of December 31, 2008)

THIS Amended and Restated Agreement made as of the 31st day of December, 2008 , by and between Aqua America, Inc., a Pennsylvania corporation (“Aqua America”), formerly known as Philadelphia Suburban Corporation, and Nicholas DeBenedictis (the “Executive”).

WHEREAS, the Executive is presently employed by Aqua America, as its Chairman, Chief Executive Officer;

WHEREAS, Aqua America considers it essential to foster the employment of well-qualified, key management personnel, and, in this regard, the board of directors of Aqua America recognizes that, as is the case with many publicly-held corporations such as Aqua America, the possibility of a change in control of Aqua America may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of Aqua America and its subsidiaries;

WHEREAS, the board of directors of Aqua America has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of management of Aqua America and its subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of Aqua America, although no such change is now contemplated;

WHEREAS, in order to induce the Executive to remain in the employ of Aqua America or its subsidiaries, for which the Executive provides key executive services, Aqua America previously entered into an Agreement, to provide the Executive with certain compensation in the event that the Executive’s employment is terminated subsequent to a “Change in Control” (as defined in Section 1 hereof) of Aqua America as a cushion against the financial and career impact on the Executive of any such Change in Control;

WHEREAS, the Agreement has been amended from time to time with the mutual consent of Aqua America and the Executive;

WHEREAS, Aqua America and the Executive wish to amend and restate the Agreement at this time to comply with section 409A of the Code (as defined below) and the final regulations issued thereunder, to make such other changes as set forth herein and to incorporate a severance benefit provided under a letter agreement with the Executive dated May 20, 1992.

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 that the Agreement shall be amended and restated to read as follows effective January 1, 2009:

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 Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(b) “Base Compensation” shall mean the Executive’s current base annual salary, plus the greater of the Executive’s target bonus for the year in which the Executive incurs a Termination of Employment, or the last actual bonus paid to the Executive under the Annual Cash Incentive Compensation Plan (or any successor plan maintained by Aqua America), in all capacities with Aqua America and its Subsidiaries or Affiliates. The Executive’s Base Compensation shall be determined prior to reduction for salary deferred by the Executive under any deferred compensation plan of Aqua America and its Subsidiaries or Affiliates, or otherwise.

(c) 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 Aqua America; provided , however , that nothing in this Section 1(c) 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 forty days after the date of such acquisition.

(d) “Board” shall mean the board of directors of Aqua America.

(e) “Cause” shall mean the Executive’s willful failure to perform or observe any of his employment duties or to comply with the lawful directives of the Board after notice and reasonable opportunity to cure said failure; dishonesty; or conviction of a crime involving moral turpitude.

(f) “Change in Control” shall mean:

(i) any Person (including any individual, firm, corporation, partnership or other entity except Aqua America, any subsidiary of Aqua America, any employee benefit plan of Aqua America or of any subsidiary, or any Person or entity organized, appointed or established by Aqua America for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person, shall become the Beneficial Owner in the aggregate of 20% or more of the Common Stock of Aqua America then outstanding;

(ii) during any twenty-four month period, individuals who at the beginning of such period constitute the Board cease for any reason to constitute a majority thereof, unless the election, or the nomination for election by Aqua America’s shareholders, of at least seventy-five percent of the directors who were not directors at the beginning of such period was approved by a vote of at least seventy-five percent of the directors in office at the time of such election or nomination who were directors at the beginning of such period; or

(iii) there occurs a sale of 50% or more of the aggregate assets or earning power of Aqua America and its subsidiaries, or its liquidation is approved by a majority of its shareholders or Aqua America is merged into or is merged with an unrelated entity such that following the merger the shareholders of Aqua America no longer own more than 50% of the resultant entity.

Notwithstanding anything in this subsection 1(f) to the contrary, a Change in Control shall not be deemed to have taken place under clause (f)(i) above if (i) such Person becomes the beneficial owner in the aggregate of 20% or more of the Common Stock of Aqua America then outstanding as a result, in the determination of a majority of those members of the Board of Directors of Aqua America in office prior to the acquisition, of an inadvertent acquisition by such Person if such Person, as soon as practicable, divests itself of a sufficient amount of its Common Stock so that it no longer owns 20% or more of the Common Stock then outstanding, or (ii) such Person becomes the beneficial owner in the aggregate of 20% or more of the Common Stock of Aqua America outstanding as a result of an acquisition of common stock by Aqua America which, by reducing the number of common stock outstanding, increases the proportionate number of shares of common stock beneficially owned by such Person to 20% or more of the shares of common stock then outstanding; provided, however that if a Person shall become the beneficial owner of 20% or more of the shares of common stock then outstanding by reason of common stock purchased by Aqua America and shall, after such share purchases by Aqua America become the beneficial owner of any additional shares of common stock, then the exemption set forth in this clause shall be inapplicable.

(g) “Equity Compensation Plan” shall mean Aqua America’s 1994 Equity Compensation Plan, and its predecessors and successors.

(h) “Good Reason Termination” shall mean a Termination of Employment initiated by the Executive upon one or more of the following occurrences:

(i) any failure of Aqua America or their successor(s) to comply with and satisfy any of the terms of this Agreement;

(ii) any significant involuntary reduction of the authority, duties, responsibilities or reporting relationships held by the Executive immediately prior to the Change in Control;

(iii) any involuntary removal of the Executive from the employment grade, compensation level or officer positions which the Executive holds with Aqua America or, if the Executive is employed by a Subsidiary, with a Subsidiary, held by him immediately prior to the Change in Control, except in connection with promotions to higher office;

(iv) any involuntary reduction in the Executive’s target level of annual and long-term compensation as in effect immediately prior to the Change in Control;

(v) any transfer of the Executive, without his express written consent, to a location which is outside the Bryn Mawr, Pennsylvania area by more than 50 miles, other than on a temporary basis (less than 6 months);

(vi) the Executive being required to undertake business travel to an extent substantially greater than the Executive’s business travel obligations immediately prior to the Change in Control ; or

(vii) the Executive determines, in his sole discretion, at any time within 12 months after the Change in Control, that circumstances have changed with respect to Aqua America, and that he is no longer able to effectively perform his duties and responsibilities.

(i) “Normal Retirement Date” shall mean the first day of the calendar month coincident with or next following the Executive’s 65th birthday.

(j) “Subsidiary” shall mean any corporation in which Aqua America, directly or indirectly, owns at least a 50% interest or an unincorporated entity of which Aqua America, directly or indirectly, owns at least 50% of the profits or capital interests.

(k) “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.

(l) “Termination of Employment” shall mean the involuntary termination of the Executive’s actual employment relationship with Aqua America and any of its Subsidiaries that actually employ the Executive.

2.  Notice of Termination . Any Termination of Employment following a Change in Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 16 hereof. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for the Executive’s Termination of Employment under the provision so indicated, 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 Prior to a Change in Control . The severance benefits provided to the Executive pursuant to the terms of a letter agreement dated May 20, 1992 are hereby replaced by the severance benefits provided under this Agreement. Subject to Section 25 hereof, in the event of the Executive’s Termination of Employment for any reason other than disability, death, or for Cause, Aqua America shall pay to the Executive a single lump sum cash payment equal to the Executive’s annual base salary at the Termination Date, excluding any bonus, subject to required employment taxes and deductions. Such payment shall be made to the Executive within 60 days following the Executive’s Termination of Employment.

4.  Severance Compensation Upon a Change in Control .

(a) Subject to the provisions of Section 13 and Section 25 hereof, in the event of the Executive’s involuntary Termination of Employment for any reason other than Cause or in the event of a Good Reason Termination, in either event within two years after a Change in Control, Aqua America shall pay to the Executive, upon the execution of a release in the form required by Aqua America of its terminating executives prior to the Change in Control, a single lump sum cash payment equal to three times the Executive’s Base Compensation, plus a pro-rata share of the Executive’s target bonus under Aqua America’s Annual Cash Incentive Compensation Plan (or any successor plan maintained by Aqua America) based on the portion of the calendar year elapsed at the time of the Executive’s Termination of Employment, subject to required employment taxes and deductions. Such payment shall be made to the Executive within 60 days following the Executive’s Termination of Employment.

(b) Notwithstanding the foregoing, the amount of any payment to which the Executive becomes entitled to receive under this Section 4, prior to any adjustment made pursuant to Section 5, shall be reduced by any severance benefit owed to the Executive pursuant to Section 3.

5.  Other Payments and Benefits . The payment due under Section 4 hereof shall be in addition to and not in lieu of any payments or benefits due to the Executive under any other plan, policy or program of Aqua America and its Subsidiaries or Affiliates; provided, however, that an Executive shall not be eligible for benefits under any severance or stay-on bonus plan maintained by Aqua America, or any of its Subsidiaries or Affiliates, if the Executive is entitled to receive benefits under this Agreement as a result of a Termination of Employment. In addition, if the Executive is entitled to a payment under Section 4 hereof, the Executive shall be entitled to

(a) an amount equal to (i) thirty-six (36) months of the COBRA rate in effect at the Executive’s Termination of Employment, plus (ii) an additional amount which, after reduction for applicable income and employment taxes owed with respect to such additional amount, equals the income and employment taxes payable with respect to the amount described in clause (i), which shall be paid in a single lump sum at the time the benefit under Section 4 is paid,

(b) fully-paid executive level reasonable outplacement services from the provider of the Executive’s choice for 12 months following the Termination Date. All reimbursements paid to the Executive for purposes of outplacement services shall be made or provided in accordance with the requirements of Treas. Reg. §1.409A-1(b)(9)(v)(A), and

(c) a transfer, without requiring a cash payment from him, of any life insurance policy maintained by Aqua America on his life or any rights the Company may have pursuant to a split dollar life insurance agreement.

6.  Restrictive Covenant .

(a) In exchange for the payments and benefits provided under Section 4 and 5 of this Agreement upon a Change in Control, for a period of 12 months after the Termination Date, the Executive agrees that he will not, unless acting pursuant 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 a geographic area within 25 miles of any location from which Aqua Am