Document:

Exhibit 10.1

 

AMENDMENT NO. 2 TO AMENDED AND RESTATED
BYLAWS

OF

SOUTHWEST WATER COMPANY

 

The following sets forth the second amendment to the Amended and
Restated Bylaws (the “Bylaws”) of Southwest Water Company, a Delaware
corporation, which amendment shall be effective as of February 12, 2004.

 

1.                                       Sections
2 and 3 of Article IV of the Bylaws are hereby amended and restated in
their entirety to read as follows:

 

“SECTION 2.                          Chairman of the Board.  The Chairman of the Board, if such an
officer be elected, shall, if present, preside at all meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned to him by the Board of Directors or prescribed by these
bylaws.  If there is no Chief Executive
Officer or President, the Chairman of the Board shall in addition be the Chief
Executive Officer of the Corporation and shall have the powers and duties
prescribed in Section 3A of this Article IV.

 

SECTION 3A.                      Chief Executive Officer.  Subject to such supervisory powers, if any,
as may be given by the Board of Directors to the Chairman of the Board, if
there is such an officer, the Chief Executive Officer shall, subject to the
control of the Board of Directors and these bylaws, have the responsibility for
the general management and control of the business and affairs of the
Corporation and shall perform all duties and have all powers which are commonly
incident to the office of chief executive or which are delegated to him or her
by the Board of Directors or prescribed by these bylaws. He or she shall have
the power to sign all stock certificates, contracts, and other instruments of
the Corporation which are authorized and shall have general supervision and
direction of all the other officers, employees and agents of the Corporation.

 

SECTION 3B.  President.  In the absence or disability of the Chief
Executive Officer, if there be such an officer, the President shall perform all
the duties of the Chief Executive Officer, and when so acting shall have all
the powers of and be subject to all the restrictions upon the Chief Executive
Officer.  The President shall have such
other duties as from time to time may be prescribed for him by the Board of
Directors or the Chief Executive Officer.”

 

 

2.                                       Article IV,
Section 1 of the Bylaws is hereby amended in its entirety to read as
follows:

 

“SECTION 1.   Generally.  The officers of the Corporation shall
consist of a Chief Executive Officer, President, one or more Vice Presidents, a
Secretary, a Treasurer, and such other officers as may from time to time be
appointed by the Board of Directors. 
Officers shall be elected by the Board of Directors, which shall
consider that subject at its first meeting after every annual meeting of stockholders.  Each officer shall hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal.  Any number of offices may
be held by the same person.”Exhibit 10.2

 

CERTIFICATE OF AMENDMENT

OF

RESTATED CERTIFICATE OF INCORPORATION

OF

SOUTHWEST WATER COMPANY

 

PETER J.
MOERBEEK AND SHELLEY A. FARNHAM certify that:

 

1.             They are the President and
Secretary, respectively, of Southwest Water Company, a Delaware corporation
(this “Corporation”).

 

2.             The following action, setting forth
a proposed amendment (the “Amendment”) to the Restated Certificate of
Incorporation of this Corporation, was duly approved by the Board of Directors
of Southwest Water Company, a Delaware corporation and, at the 2004 Annual
Stockholders’ Meeting, by the necessary number of shares as required by statute
and the Restated Certificate of Incorporation of this Corporation.

 

3.             Said Amendment was duly adopted in
accordance with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.

 

WHEREAS,
Southwest Water Company filed a Certificate of Incorporation with the State of
Delaware on February 2, 1988, a Restated Certificate of Incorporation on April
6, 1988, a Certificate of Amendment of Certificate of Incorporation on May 1,
1995, a Certificate of Amendment of Certificate of Incorporation on June 4,
1998, and a Certificate of Correction of Amendment of Restated Certificate of
Incorporation on September 14, 1998 (collectively, the “Certificate”);

 

WHEREAS, the
Board of Directors desires to amend and restate Article FOURTH, Paragraph A of
the Certificate of this Corporation;

 

NOW,
THEREFORE, IT IS HEREBY RESOLVED, that Article FOURTH, Paragraph A of the
Certificate is hereafter amended and restated in its entirety to read:

 

“A.          The total number of shares of all
classes of stock which the Corporation shall have authority to issue is
seventy-five million two hundred fifty thousand (75,250,000), consisting of the
following:

 

(1)           two hundred fifty
thousand (250,000) shares of Preferred Stock with a par               value of $.01 per share (the “Preferred Stock”); and

 

(2)           seventy-five million
(75,000,000) shares of Common Stock, with a par value of $.01 per share (the
“Common Stock”).”

 

RESOLVED
FURTHER, that the Board of Directors hereby authorizes and directs the
Secretary of this Corporation to do and perform all acts, to execute and
deliver all certificates and to take or cause to be taken all other action as
such officer may deem necessary, desirable or appropriate to carry out the full
intent and purpose of the foregoing resolution.

 

 

IN WITNESS
HEREOF, the undersigned have executed this Certificate of Amendment this 17th
day of May, 2004.

 

 

	
   

  	
  SOUTHWEST
  WATER COMPANY,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Peter J.
  Moerbeek, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Shelley A.
  Farnham, SecretaryExhibit 10.3

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

FOR NON-EMPLOYEE DIRECTORS

 

THIS AGREEMENT, dated, is
made by and between Southwest Water Company, a Delaware corporation hereinafter
referred to as the “Company,” and
                                                  ,
a non-employee director of the Company or Subsidiary of the Company,
hereinafter referred to as “Optionee”:

 

WHEREAS, the Company
wishes to afford the Optionee the opportunity to purchase shares of its $.01
par value Common Stock;

 

WHEREAS, the Company
wishes to carry out its Amended and Restated Stock Option Plan for Non-Employee
Directors, as amended (the “Plan”) (the terms of which are hereby incorporated
by reference and made a part of this Agreement); and

 

WHEREAS, the Plan
provides for the grant of the Non-Qualified Stock Option set forth herein to
the Optionee as an inducement to enter into or remain in the service of the
Company or its Subsidiaries and as an incentive for increased efforts during
such service, and has advised the Company thereof and instructed the
undersigned officers to issue said Option;

 

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

 

ARTICLE I.

DEFINITIONS

 

Whenever the following
terms are used in this Agreement, they shall have the meaning specified below
unless the context clearly indicates to the contrary.  The masculine pronoun shall include the feminine and neuter, and
the singular the plural, where the context so indicates.

 

Section 1.1                                      Board

 

“Board” shall mean the
Board of Directors of the Company as constituted from time to time.

 

Section 1.2                                      Code

 

“Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time.

 

Section 1.3                                      Common Stock

 

“Common Stock” shall mean
the common stock of the Company, par value $.01 per share, of the Company.

 

 

Section 1.4                                      Company

 

“Company” shall mean
Southwest Water Company, a Delaware corporation, or any successor entity.

 

Section 1.5                                      Director

 

“Director” shall mean a
person who is a member of the Board as constituted at that time.

 

Section 1.6                                      Employee

 

“Employee” shall mean any
employee (as defined in accordance with the Regulations and Revenue Rulings
then applicable under Section 3401(c) of the Code) of the Company, or of
any corporation which is then a Subsidiary or a Parent Corporation, whether
such employee is so employed at the time the Plan is adopted or becomes so
employed subsequent to the adoption of the Plan.

 

Section 1.7                                      Exchange Act

 

“Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended.

 

Section 1.8                                      Fair Market
Value

 

“Fair Market Value” of a
share of Common Stock as of a given date shall be (i) the closing price of a share
of Common Stock on the principal exchange on which shares of Common Stock are
then trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day preceding such date, or if shares were
not traded on the trading day preceding such date, then on the next preceding
trading day during which a sale occurred, or (ii) if the Common Stock is not
traded on an exchange (x) the last sales price of a share of the
Common Stock on The Nasdaq Stock Market (if the stock is then traded on The
Nasdaq Stock Market) on the trading day preceding such date, or, if shares were
not traded on the day preceding such date, then on the next preceding trading
day during which a sale occurred; or (y) the mean between the closing representative
bid and asked prices for the Common Stock on the trading day next preceding
such date as reported by the National Association of Securities Dealers, Inc.
through NASDAQ or a successor quotation system or, if shares were not quoted on
the day immediately preceding such date, then on the next preceding trading day
during which a quote occurred, or (iii) if the Common Stock is not publicly
traded on an exchange and prices are not provided through The Nasdaq Stock
Market, NASDAQ or a successor quotation system, the mean between the closing
bid and asked prices for the Common Stock on the trading day next preceding
such date as determined in good faith by the Board; or (iv) if the Common Stock
is not publicly traded, the fair market value of the Common Stock established
by the Board acting in good faith.

 

Section 1.9                                      Non-Employee
Director

 

“Non-Employee Director”
shall mean any Director who is not at the same time an Employee.

 

 

Section 1.10                                Option

 

“Option” shall mean a
non-qualified stock option to purchase Common Stock of the Company granted
under this Agreement and Article 3 of the Plan.

 

Section 1.11                                Optionee

 

“Optionee” shall mean a
Non-Employee Director to whom an Option is granted under this Agreement and the
Plan.

 

Section 1.12                                Parent Corporation

 

“Parent Corporation”
shall have the meaning given in Section 424(e) of the Code.

 

Section 1.13                                Plan

 

“Plan” shall mean the
Amended and Restated Stock Option Plan for Non-Employee Directors of Southwest
Water Company, as the same may be amended or restated from time to time.

 

Section 1.14                                Rule 16b-3

 

“Rule 16b-3” shall mean
that certain Rule 16b-3 under the Exchange Act, as such Rule may be amended
from time to time.

 

Section 1.15                                Secretary

 

“Secretary” shall mean
the Secretary of the Company.

 

Section 1.16                                Securities Act

 

“Securities Act” shall
mean the Securities Act of 1933, as amended.

 

Section 1.17                                Subsidiary

 

“Subsidiary” shall mean
any corporation in an unbroken chain of corporations beginning with the Company
if each of the corporations other than the last corporation in the unbroken
chain then owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

 

Section 1.18                                Termination as a
Non-Employee Director

 

“Termination as a
Non-Employee Director” shall mean the time when the Optionee who is a
Non-Employee Director ceases to be a member of the Board by reason of such
Optionee’s death or disability (within the meaning of Section 22(e)(3) of
the Code), retirement, resignation or for any other reason.

 

 

ARTICLE II.

GRANT OF OPTION

 

Section 2.1                                      Grant of
Option

 

In consideration of the
Optionee’s agreement to serve as a Non-Employee Director of the Company or its
Subsidiaries until the next annual meeting of stockholders of the Company and
for other good and valuable consideration, effective as of May 13, 2004, the
Company irrevocably grants to the Optionee the option to purchase any part or
all of an aggregate of 10,000 shares of its $.01 par value Common Stock upon the
terms and conditions set forth in this Agreement.

 

Section 2.2                                      Purchase Price

 

The price per share of
the Common Stock subject to each Option shall be
$           per share (which
is the Fair Market Value of a share of Common Stock on the date of the granting
of this Option) without commission or other charge.

 

Section 2.3                                      Consideration
to Company

 

In consideration of the
granting of this Option by the Company, the Optionee agrees to render faithful
and efficient services to the Company until the next annual meeting of
stockholders of the Company.  Nothing in
the Plan or this Agreement shall confer upon any Optionee any right to continue
as a director of the Company, or shall interfere with or restrict in any way
the rights of the Company, which are hereby expressly reserved, to discharge
the Optionee at any time for any reason whatsoever, with or without good cause.

 

Section 2.4                                      Adjustments in
Option

 

In the event that the
outstanding shares of the Common Stock subject to the Option are changed into
or exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of merger (including reincorporation by
means of merger), consolidation, recapitalization, reclassification, stock
split-up, stock dividend or combination of shares (a “Recapitalization”), the
Board shall make an appropriate and equitable adjustment in the number and kind
of shares as to which the Option, or portions thereof then unexercised, shall
be exercisable, to the end that after such event the Optionee’s proportionate
interest shall be maintained as before the occurrence of such event.  Such adjustment in the Option may include
any necessary corresponding adjustment in the Option price per share, but shall
be made without change in the total price applicable to the Option or the
unexercised portion of the Option (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices).  Any such adjustment made by the Board shall
be final and binding upon the Optionee, the Company and all other interested
persons.

 

Section 2.5                                      Merger,
Consolidation, Exchange, Acquisition, Liquidation or Dissolution

 

The Board may, in its
absolute discretion and upon such terms and conditions as it deems appropriate,
provided by resolution adopted prior to the occurrence of any merger or
consolidation of the Company into another corporation, the exchange of all or
substantially all of

 

 

the assets of the Company
for the securities of another corporation, the acquisition by another corporation
of 80% or more of the Company’s then outstanding voting stock or the
liquidation or dissolution of the Company provide that, for some period of time
prior to such event, that such Option shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in Sections 3.1(a) or
3.1(b) below.  Any determinations made
by the Board pursuant to this Section shall be applied uniformly to all
Options granted hereby and outstanding on the date of such determination.

 

ARTICLE III.

PERIOD OF EXERCISABILITY

 

Section 3.1                                      Commencement
of Exercisability

 

(a)                                  The Option
may not be exercised in whole or in part during the first year after the date
of grant of the Option.

 

(b)                                 Subject to
the provisions of Sections 3.1(a) and 3.1(c), the Option shall become
exercisable in two (2) cumulative installments as follows:

 

(i)                                     The first
installment shall consist of fifty percent (50%) of the shares covered by the
Option and shall become exercisable on the first anniversary of the date the
Option is granted.

 

(ii)                                  The second
installment shall consist of fifty percent (50%) of the shares covered by the
Option and shall become exercisable on the second anniversary of the date the
Option is granted.

 

(c)                                  Subject to
Section 3.1(a), the portion, if any, of an Option which is unexercisable
on the date of Termination as a Non-Employee Director shall become immediately
exercisable.

 

Section 3.2                                      Duration of
Exercisability

 

The installments provided
for in Section 3.1 are cumulative. 
Each such installment which becomes exercisable pursuant to
Section 3.1 shall remain exercisable until it becomes unexercisable under
Section 3.3.

 

Section 3.3                                      Expiration of
Option

 

The Option may not be
exercised to any extent by anyone after the first to occur of the following events:

 

(a)                                  The
expiration of a period of seven years and one day from the date the Option was
granted; or

 

(b)                                 The
expiration of one year from the date of the Optionee’s Termination as a
Non-Employee Director for any reason, unless the Optionee dies within said one
year period; or

 

 

(c)                                  The
expiration of one year from the date of the Optionee’s death.

 

ARTICLE IV.

EXERCISE OF OPTION

 

Section 4.1                                      Person
Eligible to Exercise

 

During the lifetime of
the Optionee, only the Optionee may exercise the Option or any portion thereof;
provided, however, that nothing in this Section 4.1 shall prevent the
exercise of the Option by a person to whom the Option was lawfully transferred,
in whole or in part, pursuant to a qualified domestic relations order (as defined
in the Code) or pursuant to a transfer permitted by the Board pursuant to
Section 5.2(ii) hereof and Section 7.1 of the Plan.  After the death of the Optionee, any
exercisable portion of the Option may, prior to the time when the Option
becomes unexercisable under Section 3.3, be exercised by his personal
representative or by any person empowered to do so under the Optionee’s will or
under the then applicable laws of descent and distribution.

 

Section 4.2                                      Partial
Exercise

 

Any exercisable portion
of the Option or the entire Option, if then wholly exercisable, may be
exercised in whole or in part at any time and from time to time prior to the
time when the Option or portion thereof becomes unexercisable under
Section 3.3; provided, however, that each partial exercise shall be for
not less than one hundred (100) shares or, if less, the number of shares
remaining to be exercised, and shall be for whole shares only.

 

Section 4.3                                      Manner of
Exercise

 

The Option, or any
exercisable portion thereof, shall be exercised solely by delivery to the
Secretary or his office of all of the following prior to the time when the
Option or such portion becomes unexercisable under Section 3.3:

 

(a)                                  Notice in
writing signed by the Optionee or the other person then entitled to exercise
the Option or portion, stating that the Option or portion is thereby exercised,
such notice complying with all applicable rules established by the Board;

 

(b)                                 The payment
to the Company of the aggregate Option exercise price for the shares with
respect to which such Option or portion is exercised in:

 

(i)                                     Cash;

 

(ii)                                  With the
consent of the Board, (A) certain shares of the Company’s Common Stock owned by
the Optionee duly endorsed for transfer to the Company or (B) shares of the
Company’s Common Stock issuable to the Optionee upon exercise of the Option,
with a Fair Market Value on the date of Option exercise equal to the aggregate
purchase price of the shares with respect to which such Option or portion is
exercised;

 

 

(iii)                               With the
consent of the Board, a full recourse promissory note bearing interest (at no
less than such rate as shall then preclude the imputation of interest under the
Code or successor provision) and payable upon such terms as may be prescribed
by the Board.  The Board may also prescribe
the form of such note and the security to be given for such note.  The Option may not be exercised, however, by
delivery of a promissory note or by a loan from the Company when or where such
loan or other extension of credit is prohibited by law; or

 

(iv)                              With the
consent of the Board, any combination of the consideration provided in the
foregoing subparagraphs (i), (ii) and (iii);

 

(c)                                  Full payment
to the Company (or other employer corporation) of all amounts which, under
federal, state or local law, it is required to withhold in connection with the
exercise of the Option or a portion thereof; all or any part of such payment
may be made, with the consent of the Board, (i) with certain shares of the
Company’s Common Stock owned by the Optionee duly endorsed for transfer, or
(ii) with shares of the Company’s Common Stock issuable to the Optionee upon
exercise of the Option, in each case, having a Fair Market Value at the date of
Option exercise equal to the sums required to be withheld;

 

(d)                                 Such
representations and documents as the Board, in its absolute discretion, deems
necessary or advisable to effect compliance with all applicable provisions of
the Securities Act and any other Federal or state securities laws or
regulations.  The Board may, in its absolute
discretion, also take whatever additional actions it deems appropriate to
effect such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer orders to transfer agents and
registrars; and

 

(e)                                  In the event
the Option or portion thereof shall be exercised pursuant to Section 4.1
by any person or persons other than the Optionee, appropriate proof of the
right of such person or persons to exercise the Option.

 

(f)                                    Notwithstanding
anything herein to the contrary, the Optionee may satisfy the requirements of
subsections (b) and (c) of this Section 4.3 concerning payment for the
shares and all applicable withholding taxes, with the consent of the Board,
through the delivery to the Secretary or his office of (i) an irrevocable
written exercise notice containing instructions to the Company to deliver to
Optionee’s broker the certificate(s) representing the shares with respect to
which the Option or portion is thereby exercised and (ii) timely full payment
(in cash or by check) for the shares with respect to which such Option or
portion is thereby exercised and all amounts which the Company is required to
withhold under federal, state or local law in connection with the exercise of
the Option or portion thereof.  Notwithstanding
anything to the contrary in this Section 4.3, the Board shall not take any
discretionary action which will result in the failure of the Plan to satisfy
any exemptive condition imposed by Rule 16b-3 of the code with respect to the
effected Option or which would be in violation of any applicable law.

 

Section 4.4                                      Conditions to
Issuance of Stock Certificates

 

The shares of stock
issuable and deliverable upon the exercise of the Option, or any portion
thereof, may be either previously authorized but unissued shares or issued
shares

 

 

which have then been
reacquired by the Company.  Such shares
shall be fully paid and nonassessable. 
The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of the Option or
portion thereof prior to fulfillment of all of the following conditions:

 

(a)                                  The
admission of such shares to listing on all stock exchanges on which such class
of stock is then listed;

 

(b)                                 The
completion of any registration or other qualification of such shares under any
state or federal law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory body, which the
Board shall, in its absolute discretion, deem necessary or advisable;

 

(c)                                  The
obtaining of any approval or other clearance from any state or federal
governmental agency which the Board shall, in its absolute discretion,
determine to be necessary or advisable;

 

(d)                                 The receipt
by the Company of full payment for such shares, including payment of all
amounts which, under federal, state or local tax law, it is required to
withhold upon exercise of the Option; and

 

(e)                                  The lapse of
such reasonable period of time following the exercise of the Option as the Board
may establish from time to time for reasons of administrative convenience.

 

Section 4.5                                      Rights as
Stockholder

 

The holder of the Option
shall not be, nor have any of the rights or privileges of, a stockholder of the
Company in respect of any shares purchasable upon the exercise of any part of
the Option unless and until certificates representing such shares shall have
been issued by the Company to such holder.

 

ARTICLE V.

OTHER PROVISIONS

 

Section 5.1                                      Administration

 

With respect to this
Option, the full Board, acting by a majority of its members in office, shall
have the power to interpret the Plan and this Agreement and to adopt such rules
for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations
and determinations made by the Board in good faith shall be final and binding
upon the Optionee, the Company and all other interested persons.  No member of the Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Option.

 

Section 5.2                                      Option
Generally Not Transferable

 

Neither the Option nor
any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest or shall
be

 

 

subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect; provided, however, that
nothing in this Section 5.2 shall prevent (i) transfers by will or by the
applicable laws of descent and distribution, or, to the extent not prohibited
by the Code, pursuant to a qualified domestic relations order (as defined in
the Code) or (ii) with the prior written consent of the Board, by gift or as a
contribution, to a family member of the Optionee, (as defined under the
instructions to use of Form S-8), provided, that an Option that has been so
transferred shall continue to be subject to all of the terms and conditions as
applicable to the original Optionee, and the transferee shall execute any and
all such documents requested by the Board in connection with the transfer,
including without limitation to evidence the transfer and to satisfy any
requirements for an exemption for the transfer under applicable federal and
state securities laws.

 

Section 5.3                                      Shares to Be
Reserved

 

The Company shall at all
times during the term of the Option reserve and keep available such number of
shares of stock as will be sufficient to satisfy the requirements of this
Agreement.

 

Section 5.4                                      Notices

 

Any notice to be given
under the terms of this Agreement to the Company shall be addressed to the
Company in care of its Secretary, and any notice to be given to the Optionee
shall be addressed to him at the address given beneath his signature
hereto.  By a notice given pursuant to
this Section 5.4, either party may hereafter designate a different address
for notices to be given to him.  Any
notice which is required to be given to the Optionee shall, if the Optionee is
then deceased, be given to the Optionee’s personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.4. 
Any notice shall be deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in
a post office or branch post office regularly maintained by the United States
Postal Service.

 

Section 5.5                                      Titles

 

Titles are provided herein
for convenience only and are not to serve as a basis for interpretation or
construction of this Agreement.

 

Section 5.6                                      Construction

 

This Agreement shall be
administered, interpreted and enforced under the laws of the State of
California.

 

Section 5.7                                      Conformity to
Securities Laws

 

The Optionee acknowledges
that the Plan and this Option grant are intended to conform to the extent
necessary with all provisions of the Securities Act and the Exchange Act

 

 

and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation Rule 16b-3.  Notwithstanding anything herein to the contrary, the Plan shall
be administered, and the Option is granted and may be exercised, only in such a
manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law,
the Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.

 

 

IN WITNESS WHEREOF, this
Agreement has been executed and delivered by the parties hereto.

 

	
   

  	
  SOUTHWEST WATER
  COMPANY,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Anton C.
  Garnier, CEO & Chairman

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter J.
  Moerbeek, President and COO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Optionee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  
	
   

  	
   

  
	
  Optionee’s Taxpayer

  	
   

  
	
  Identification Number:

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