Document:

Restated Certificate of Incorporation dated April 29, 2002.

 Exhibit 4.1 
  
 RESTATED 
 CERTIFICATE OF INCORPORATION OF

 SOUTHWEST WATER COMPANY 
  
 A Delaware corporation 
  
 FIRST: The name of the corporation is SOUTHWEST WATER COMPANY (hereinafter referred to as the “Corporation”). 
  
 SECOND: The address of the registered office of the Corporation in the State
of Delaware is 1209 Orange Street, County of New Castle, Wilmington, Delaware 19801. The name of the registered agent at that address is The Corporation Trust Company. 
  
 THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized
under the General Corporation Law of the State of Delaware. 
  
 FOURTH: 
  
 A. The total number of shares of all classes
of stock which the Corporation shall have authority to issue is twenty-five million two hundred fifty thousand (25,250,000), 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) twenty-five million (25,000,000) shares of common stock, with a par
value of $.01 per share (the “Common Stock”).” 
  
 B. The shares of Preferred Stock may be issued from time to time in one or more series. Except for the Series A Preferred Stock and the Series D Preferred Stock and subject to the rights, preferences, privileges, and restrictions of the
Series A Preferred Stock and the Series D Preferred Stock, the Board of Directors is authorized, by filing a certificate of designations pursuant to the General Corporation Law of the State of Delaware, to fix the number of shares of any series of
Preferred Stock; to determine the designation of any series of Preferred Stock; to determine or alter the rights, preferences, privileges, and restrictions (including voting, dividend, registration, conversion, redemption, and liquidation rights,
preferences, privileges, and restrictions) granted to or imposed upon any wholly unissued series of Preferred Stock, and, within the limits and restrictions stated in any resolution of the Board of Directors originally fixing the number of shares
constituting any series of Preferred Stock, to increase or decrease (but not below the number of shares of such series of Preferred Stock then outstanding) the number of shares of any such series 
  

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 subsequent to the issuance of shares of Preferred Stock of that series. Each share of a series of Preferred Stock shall
be identical in all respects to every other share of that series of Preferred Stock. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares of Preferred Stock then outstanding) by the
affirmative vote of the holders of a majority of the shares of Common Stock, without a vote of the holders of the shares of Preferred Stock, or of any series thereof, unless a vote of any such holders of the shares of Preferred Stock is required
pursuant to the certificate or certificates of designation establishing the series of Preferred Stock. 
  
 C. The rights, preferences, privileges, and restrictions relating to twelve thousand one hundred thirty-three and one-fourth (12,133.25) shares of
Preferred Stock are as follows: 
  
 (1) Designation and Number
of Shares. Ten thousand three hundred seventy-three and one-fourth (10,373.25) shares of Preferred Stock shall be designated and known as the “Series A Preferred Stock” and one thousand seven hundred sixty (1,760) shares of Preferred
Stock shall be designated and known as the “Series D Preferred Stock.” 
  
 (2) Dividends. The holders of the Series A 5-1/4% $.01 par value Preferred Stock and the Series D 5-1/2% $.01 par value Preferred Stock shall be entitled to receive out of any funds of the Corporation at the
time legally available for the declaration of dividends, dividends at the rate of Two Dollars and Sixty Two and one-half cent ($2.625) per share per annum and Two Dollars and Seventy-Five Cents ($2.75) per share per annum, respectively, and no more,
payable in cash, annually, or at such intervals as the Board of Directors may from time to time determine, when and as declared by the Board of Directors. 
  
 All such dividends shall accrue from the respective dates of issuance of the shares of the Series A Preferred Stock and the Series D Preferred Stock (and
shall include any accrued and unpaid dividends on the shares of Series A Preferred Stock and Series D Preferred Stock of Southwest Water Company, a California corporation and predecessor in interest to the Corporation, converted into, or redeemed
for, the Series A Preferred Stock and the Series D Preferred Stock of the Corporation) and shall accrue from day to day, whether or not earned or declared. Such dividends shall be payable before any dividends shall be declared or paid upon or set
apart for the Common Stock, and shall be cumulative, so that if in any year or years dividends upon the issued and outstanding shares of the Series A Preferred Stock and the Series D Preferred Stock as herein provided shall not have been paid
thereon or declared and set apart therefor, the amount of the deficiency shall be fully paid or declared and set apart for payment, but without interest, before any distribution, whether by way of dividend or otherwise, shall be declared or paid
upon, or set apart for payment on, the Common Stock. Each share of the Series A Preferred Stock 
  

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 and the Series D Preferred Stock shall rank on a parity with each other share of the Series A Preferred Stock and the
Series D Preferred Stock with respect to dividends, except for the respective rates fixed for the Series A Preferred Stock and the Series D Preferred Stock, and no dividend shall be declared or paid upon, or set apart for payment on, the Series A
Preferred Stock or the Series D Preferred Stock, unless, at the same time, a dividend, bearing the same proportion to the applicable dividend accrual, shall also be declared or paid upon, or set apart for payment on, as the case may be, both the
Series A Preferred Stock and the Series D Preferred Stock. 
  
 (3)
Liquidation. In the event of the liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, each holder of shares of the Series A Preferred Stock and the Series D Preferred Stock shall be entitled to receive
out of the assets of the Corporation, whether such assets are capital or surplus of any nature, Fifty Dollars ($50.00) per share and Fifty-two Dollars ($52.00) per share, respectively, and, in addition, to such respective amounts, a further amount
equal to the dividends unpaid and accumulated thereon as provided in paragraph (2) of this Section C, respectively, to the date of distribution, whether or not earned or declared, and no more, before any payment shall be made or any assets
distributed to the holders of shares of the Common Stock. If upon the liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, the assets to be distributed among the holders of shares of the Series A Preferred
Stock and the Series D Preferred Stock shall be insufficient to permit the payment to such holders of the full preferential amounts aforesaid, then the entire assets of the Corporation to be distributed shall be distributed ratably among the holders
of shares of the Series A Preferred Stock and the Series D Preferred Stock, in proportion to the aggregate amounts which the shares of Series A Preferred Stock and Series D Preferred Stock are entitled to receive pursuant to this paragraph (3).

  
 For the purposes of this Section C, in the event of any
liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, subject to all of the preferential rights of the holders of shares of the Series A Preferred Stock and the Series D Preferred Stock on distribution or
otherwise, the holders of shares of the Common Stock shall be entitled to receive, ratably, all remaining assets of the Corporation. A consolidation or merger of the Corporation with or into any other corporation or corporations shall be deemed not
to be a liquidation, dissolution, or winding up of the Corporation, within the meaning of this paragraph (3). 
  
 (4) Redemption Provisions. The Corporation, at the option of the Board of Directors, may redeem the whole, or from time to time any part, of the
shares of the Series A Preferred Stock and the Series D Preferred Stock on any dividend date by paying in cash therefor Fifty-two Dollars ($52.00) per share and Fifty-four Dollars ($54.00) per share, respectively, and, in addition to the
aforementioned amount, an amount in cash equal to all dividends on such 
  

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 shares of the Series A Preferred Stock and the Series D Preferred Stock unpaid and accumulated as provided in paragraph
(2) of this Section C, respectively, whether or not earned or declared, to and including the date fixed for redemption, such respective sums being hereinafter sometimes referred to as the “Series A Preferred Stock redemption price” and the
“Series D Preferred Stock redemption price,” respectively. In case of the redemption of only a part of the outstanding shares of the Series A Preferred Stock and the Series D Preferred Stock, the Corporation shall (except in the case of a
partial redemption pursuant to the sinking fund provisions of paragraph (5) of this Section C applicable to the shares of the Series D Preferred Stock then being redeemed) designate by lot, in such manner as the Board of Directors may determine, the
shares of the Series A Preferred Stock and the Series D Preferred Stock to be redeemed, or shall effect such redemption pro rata. Less than all of the shares of the Series A Preferred Stock and the Series D Preferred Stock at any time outstanding
may not be redeemed until all dividends accrued and in arrears upon all issued and outstanding shares of the Series A Preferred Stock and the Series D Preferred Stock shall have been paid for all past dividend periods, and until full dividends for
the then current dividend period on all issued and outstanding shares of the Series A Preferred Stock and the Series D Preferred Stock, other than the shares of the Series A Preferred Stock and the Series D Preferred Stock to be redeemed, shall have
been paid or declared and the full amount thereof set apart for payment. At least thirty (30) days previous notice by mail, postage prepaid, shall be given to the holders of record of shares of the Series A Preferred Stock and the Series D Preferred
Stock to be redeemed, such notice to be addressed to each such stockholder at his last office address as shown on the records of the Corporation. On or after the date fixed for redemption and stated in such notice, each holder of shares of the
Series A Preferred Stock and the Series D Preferred Stock called for redemption shall surrender his certificate evidencing such shares of the Series A Preferred Stock and the Series D Preferred Stock to the Corporation at the place designated in
such notice and shall thereupon be entitled to receive payment of the Series A Preferred Stock redemption price and the Series D Preferred Stock redemption price, respectively. In case less than all of the shares of the Series A Preferred Stock and
the Series D Preferred Stock represented by any such surrendered certificates are redeemed, a new certificate shall be issued representing the unredeemed shares of the Series A Preferred Stock and the Series D Preferred Stock, respectively. If such
notice of redemption shall have been duly given and if on the date fixed for redemption funds necessary for the redemption shall be available therefor, then notwithstanding that the certificates evidencing any shares of the Series A Preferred Stock
and the Series D Preferred Stock so called for redemption shall not have been surrendered, the dividends with respect to the shares of the Series A Preferred Stock and the Series D Preferred Stock so called for redemption shall forthwith after such
date cease, except only the right of the holders to receive the Series A Preferred Stock redemption price and Series D Preferred Stock redemption price, without interest, upon the surrender of the certificates therefor. 
  

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 If, on or prior to any date fixed for redemption of shares of the Series A Preferred Stock and the
Series D Preferred Stock, the Corporation deposits with any bank or trust company in the City of Los Angeles, State of California, as a trust fund, a sum sufficient to redeem, on the date fixed for redemption thereof, the shares of the Series A
Preferred Stock and the Series D Preferred Stock called for redemption, with irrevocable instructions to give the notice of redemption thereof if such notice shall not previously have been given by the Corporation, or to complete the giving of such
notice if theretofore commenced, and to pay, on and after the date fixed for redemption (or prior thereto), the Series A Preferred Stock redemption price and the Series D Preferred Stock redemption price to the respective holders thereof upon the
surrender of the stock certificates therefor, then from and after the date of the deposit (although prior to the date fixed for redemption), the shares of the Series A Preferred Stock and the Series D Preferred Stock called for redemption shall be
deemed to be redeemed and dividends on those shares shall cease to accrue after the date fixed for redemption. The deposit shall be deemed to constitute full payment for the shares of the Series A Preferred Stock and the Series D Preferred Stock to
the respective holders thereof, and, from and after the date of such deposit, the shares of the Series A Preferred Stock and the Series D Preferred Stock shall be deemed to be redeemed and no longer outstanding, and the holders thereof shall cease
to be stockholders with respect to the shares of the Series A Preferred Stock and the Series D Preferred Stock so redeemed and shall have no rights with respect thereto except the right to receive from the bank or trust company with which such
deposit has been made payment of the Series A Preferred Stock redemption price and Series D Preferred Stock redemption price, respectively, without interest, upon the surrender of the certificates therefor. 
  
 (5) The Series D Preferred Stock Sinking Fund. On the first Monday of
January of each year, beginning with January of 1989, or on the next business day if said day is a holiday (a “Sinking Fund Payment Date”), for so long as any of the shares of the Series D Preferred Stock are issued and outstanding, the
Corporation shall set aside Eleven Thousand Dollars ($11,000) in cash out of any moneys legally available therefor as a sinking fund for the annual redemption of 220 shares of the Series D Preferred Stock (the “Sinking Fund”). Said sum
shall be set aside only after full payment or provision has been made for payment of the dividends on the shares of the Series A Preferred Stock and the Series D Preferred Stock for all prior periods to the end of the last preceding quarterly
dividend period. The money placed in the Sinking Fund shall be kept separate from other monies of the Corporation and shall not be used in the general corporate business. 
  
 On or before the ninetieth (90th) day next following each Sinking Fund Payment Date, all of the cash in the Sinking Fund shall be used to acquire shares of the Series D Preferred Stock by redemption on a pro 
  

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 rata basis at Fifty Dollars ($50.00) per share, plus accrued dividends thereon to the date of redemption which shall be
paid from the general funds of the Corporation and not from the Sinking Fund. 
  
 If, on any Sinking Fund Payment Date, the funds of the Corporation legally available therefor shall be insufficient to discharge such Sinking Fund requirements in full, funds to the extent legally available for such
purpose shall be set aside for the Sinking Fund. Shares of the Series D Preferred Stock shall be redeemed pro rata to the extent that there are sufficient funds in the Sinking Fund therefor. The Sinking Fund requirements shall be cumulative, so that
for any year or years in which the sinking fund requirements for the annual redemption of 220 shares of the Series D Preferred Stock are not fully discharged as they accrue, funds legally available therefor, after payment or provision for dividends,
for each fiscal year thereafter shall be applied thereto until such requirements are fully discharged and shares of the Series D Preferred Stock shall be redeemed therefrom as provided in this paragraph (5). 
  
 In the event that all of the shares of the Series D Preferred Stock
represented by any certificate are not redeemed, a new certificate representing the unredeemed shares of the Series D Preferred Stock shall be issued. 
  
 (6) Voting Rights. Each issued and outstanding share of the Series A Preferred Stock and the Series D Preferred Stock shall have five (5) votes.

  
 FIFTH: Each issued and outstanding share of the Common Stock
shall have one (1) vote. Except as otherwise expressly provided by the Board of Directors pursuant to Section B of Article FOURTH or as expressly provided in this Certificate of Incorporation or by law, all classes of the capital stock of the
Corporation with the right to vote shall vote together as a single class and not as separate classes. 
  
 SIXTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further
definition, limitation, and regulation of the powers of the Corporation and of its directors and stockholders: 
  
 A. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors (the “Board”). In addition
to the powers and authority expressly conferred upon the Board by statute or by this Certificate of Incorporation or the bylaws of the Corporation, the Board is hereby empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation. 
  

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 B. The number of Directors shall be not less than seven nor more than nine, and the exact number of
Directors shall be fixed from time to time exclusively by the Board of Directors acting pursuant to a resolution adopted by affirmative vote of a majority of the total number of authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time of any such resolution). 
  
 The Board of Directors shall be divided into three classes, designated as Class I, Class II and Class III. The number of directors in each class shall be determined by the Board of Directors and shall consist of as
nearly equal a number of directors as practicable. The term of the Class I directors initially shall expire at the first annual meeting of stockholders ensuing after the 1998 Annual Meeting of Stockholders; the term of Class II directors initially
shall expire at the second Annual Meeting of Stockholders ensuing after the 1998 Annual Meeting of Stockholders; and the term of Class III directors initially shall expire at the third Annual Meeting of Stockholders ensuing after the 1998 Annual
Meeting of Stockholders. In the case of each class, the directors shall serve until their respective successors are duly elected and qualified. At each Annual Meeting of Stockholders, directors of the respective class whose term expires shall be
elected, and the directors chosen to succeed those whose terms shall have expired shall be elected to hold office for a term to expire at the third ensuing Annual Meeting of Stockholders after their election, and until their respective successors
are elected and qualified. 
  
 Any vacancy in the office of a
director shall be filled by the vote of the majority of the remaining directors, regardless of any quorum requirements set forth in the Bylaws of the corporation. Any director appointed to fill a vacancy in the office of director shall serve until
the next Annual Meeting of Stockholders at which directors of the class for which such director shall have been chosen are to be elected, and until his or her successor is elected and qualified. Newly created directorships shall be filled by the
Board of Directors. 
  
 C. Unless otherwise provided by the bylaws
of the Corporation, the directors of the Corporation need not be elected by written ballot. 
  
 D. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any
consent in writing by the stockholders of the Corporation. 
  
 E.
Special meetings of stockholders of the Corporation may be called only by the Board pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for adoption) or by one or more holders of at least 20% of 
  

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 the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote at any
meeting of the stockholders, and not by any other person or persons. 
  
 SEVENTH: The Board is expressly empowered to adopt, amend, or repeal bylaws of the Corporation. Any adoption, amendment, or repeal of bylaws of the Corporation by the Board shall require the approval of a majority of the total number of
authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment, or repeal of bylaws of the Corporation is presented to the Board). In addition, the
bylaws of the Corporation may be adopted, amended, or repealed by the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in
the election of directors (the “Voting Stock”), voting together as a single class (it being understood that, for purposes of this Certificate of Incorporation, each share of the Voting Stock shall have the number of votes granted to it
pursuant to Articles FOURTH and FIFTH of this Certificate of Incorporation or any designation of the rights, privileges, preferences, and restrictions of any class or series of Preferred Stock made pursuant to Article FOURTH of this Certificate of
Incorporation (a “Preferred Stock Designation”)). 
  
 EIGHTH: The stockholder vote required to approve any Business Combination (as hereinafter defined) shall be as set forth in this Article EIGHTH. 
  
 A. (1) Except as otherwise expressly provided in Section B of this Article EIGHTH: 
  
 (a) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (x) any Interested
Stockholder (as hereinafter defined) or (y) any other corporation (whether or not it is itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Stockholder;
or 
  
 (b) any sale, lease, exchange, mortgage, pledge, transfer,
or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value (as
hereinafter defined) of ten percent (10%) of the total value of the assets of the Corporation and its consolidated subsidiaries as reflected in the most recent balance sheet of the Corporation; or 
  
 (c) the issuance or transfer by the Corporation or any Subsidiary (in one
transaction or a series of transactions) of 
  

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 any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities, or other property (or a combination thereof) having an aggregate Fair Market Value of $5,000,000 or more; or 
  
 (d) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of any Interested Stockholder or
any Affiliate of any Interested Stockholder; or 
  
 (e) any
reclassification of securities (including any reverse stock split) or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or
otherwise involving any Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which
is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder 
  
 shall require (x) the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then outstanding shares of Voting Stock, voting together as a single class and (y) the affirmative vote of
the holders of at least a majority of the voting power of all of the then outstanding shares of Voting Stock other than the Voting Stock of which an Interested Stockholder or an Affiliate is the beneficial owner, voting together as a single class.
Such affirmative votes shall be required notwithstanding any other provisions of this Certificate of Incorporation, any Preferred Stock Designation, any provision of law or of any agreement with any national securities exchange which might otherwise
permit a lesser vote or no vote, but such affirmative vote shall be required in addition to and not in lieu of any affirmative vote of the holders of any particular class or series of the Voting Stock required by this Certificate of Incorporation,
any Preferred Stock Designation, or any provision of law. 
  
 (2)
The term “Business Combination,” as used in this Article EIGHTH, shall mean any transaction which is referred to in any one or more of subparagraphs (a) through (e) of paragraph (1) of this Section A. 
  
 B. The provisions of Section A of this Article EIGHTH shall not be applicable
to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law, any other provision of this Certificate of Incorporation, any Preferred Stock Designation, or any agreement with
any national securities exchange, if, in the case of a Business Combination that does not involve any cash or other consideration being received by the stockholders of the Corporation, solely in their respective capacities as stockholders of the
Corporation, the condition specified in the following paragraph (1) is met, or, in the case of any other 
  

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 Business Combination, the conditions specified in either of the following paragraphs (1) or (2) are met: 
  
 (1) The Business Combination shall have been approved by a majority of the
Continuing Directors (as hereinafter defined), it being understood that this condition shall not be capable of satisfaction unless at the time of consideration of such matter by the Board there is at least one Continuing Director. 
  
 (2) All of the following conditions shall have been met: 
  
 (a) the consideration to be received by holders of shares of a particular
class of outstanding Voting Stock shall be in cash or in the same form as the Interested Stockholder has paid for shares of such class of Voting Stock within the two-year period ending on and including the date on which the Interested Stockholder
became an Interested Stockholder (the “Determination Date”). If, within such two-year period, the Interested Stockholder has paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration to be
received per share by holders of shares of such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock acquired by the Interested Stockholder within such two-year period.

  
 (b) the aggregate amount of (x) the cash and (y) the Fair
Market Value, as of the date of the consummation of the Business Combination (the “Consummation Date”), of the consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least
equal to the higher of the following (it being intended that the requirements of this subparagraph (b) shall be required to be met with respect to all shares of Common Stock outstanding whether or not the Interested Stockholder has previously
acquired any shares of Common Stock): 
  
 (i) (if applicable) the
highest per share price (including any brokerage commissions, transfer taxes, and soliciting dealers’ fees) paid by the Interested Stockholder for any shares of Common Stock acquired by it within the two-year period immediately prior to the
date of the first public announcement of the proposal of the Business Combination (the “Announcement Date”) or in the transaction in which it became an Interested Stockholder, whichever is higher, plus interest compounded annually from the
Determination Date through the Consummation Date at the prime rate of interest of Security Pacific National Bank (or such other major bank headquartered in the State of California as may be selected by a majority of the Continuing Directors) from
time to time in effect in the City of Los Angeles, less the aggregate amount of any cash dividends paid, and the Fair Market Value of any dividends paid in 
  

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 other than cash, on each share of Common Stock from the Determination Date through the Consummation Date in an amount up
to but not exceeding the amount of interest so payable per share of Common Stock; or 
  
 (ii) the Fair Market Value per share of Common Stock on the Announcement date. 
  
 (c) the aggregate amount of (x) the cash and (y) the Fair Market Value, as of the Consummation Date, of the consideration other than cash to be received
per share by holders of shares of any class, other than Common Stock, of outstanding Voting Stock shall be at least equal to the highest of the following (it being intended that the requirements of this subparagraph (c) shall be required to be met
with respect to every such class of outstanding Voting Stock, whether or not the Interested Stockholder has previously acquired any shares of a particular class of Voting Stock): 
  
 (i) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes, and soliciting
dealers’ fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it within the two-year period immediately prior to the Announcement Date or in the transaction in which it became an Interested
Stockholder, whichever is higher, plus interest compounded annually from the Determination Date through the Consummation Date at the prime rate of interest of Security Pacific National Bank (or such other major bank headquartered in the State of
California as may be selected by a majority of the Continuing Directors) from time to time in effect in the City of Los Angeles, less the aggregate amount of any cash dividends paid and the Fair Market Value of any dividends paid in other than cash,
on each share of such class of Voting Stock from the Determination Date through the Consummation Date in an amount up to but not exceeding the amount of interest so payable per share of such class of Voting Stock; or 
  
 (ii) the Fair Market Value per share of such class of Voting Stock on the
Announcement Date; or 
  
 (iii) the highest preferential amount
per share to which the holders of shares of such class of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation. 
  
 (d) after such Interested Stockholder has become an Interested Stockholder
and prior to the consummation of such Business Combination, all of the following conditions shall have been satisfied: 
  
 (i) except as approved by a majority of the Continuing Directors, there shall have been no failure to declare 
  

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 and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on any outstanding
Preferred Stock; 
  
 (ii) there shall have been (x) no reduction
in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Continuing Directors; and (y) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization, or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure to
so increase such annual rate is approved by a majority of the Continuing Directors; 
  
 (iii) such Interested Stockholder shall have not become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Stockholder becoming an
Interested Stockholder; and 
  
 (iv) none of the Continuing
Directors shall have been removed from office, except by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of Voting Stock other than the Voting Stock of which an Interested
Stockholder or an Affiliate is the beneficial owner, voting together as a single class. 
  
 (e) after such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately, solely in such Interested
Stockholder’s capacity as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of, or in
connection with, such Business Combination, or otherwise. 
  
 (f)
a proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 (the “1934 Act”) and the rules and regulations thereunder (or any subsequent
provisions replacing the 1934 Act, rules, or regulations) and setting forth, as an exhibit thereto, the opinion of an investment banking firm selected by a majority of the Continuing Directors, or, if there are no Continuing Directors, an opinion of
the investment banking firm most recently retained by the Corporation before the Interested Stockholder became an Interested Stockholder, or any successor in interest to such investment banking firm, that the proposed Business Combination is fair
from a financial point of view to the stockholders of the Corporation other than the Interested Stockholder, shall be mailed to all stockholders of the Corporation at least 30 days prior to the consummation of such Business Combination 

 

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 (whether or not such proxy or information statement is required to be mailed pursuant to the 1934 Act or subsequent
replacement provisions). 
  
 C. For the purposes of this Article
EIGHTH: 
  
 (1) “Person” shall mean any individual,
partnership, joint venture, firm, corporation, association, or other entity, and shall include any group of persons or entities required to file or deliver to the Corporation any statement pursuant to Section 13(d) of the 1934 Act. 
  
 (2) “Interested Stockholder” shall mean any person (other than the
Corporation or any Subsidiary) who or which: 
  
 (a) is the
beneficial owner, directly or indirectly, of more than 20% of the voting power of the outstanding Voting Stock; or 
  
 (b) is an Affiliate of the Corporation and, at any time within the two-year period immediately prior to the date in question, was the beneficial owner,
directly or indirectly, of 20% or more of the voting power of the then outstanding Voting Stock; or 
  
 (c) is an assignee of, or has otherwise succeeded, to any shares of Voting Stock which were, at any time within the two-year period immediately prior to
the date in question, beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the
Securities Act of 1933. 
  
 (3) A person shall be a
“beneficial owner” of any Voting Stock: 
  
 (a) which
such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns, directly or indirectly; or 
  
 (b) which such person or any of its Affiliates or Associates has (x) the right to acquire (whether such right is exercisable immediately or only after
the passage of time), pursuant to any agreement, arrangement, or understanding or upon the exercise of conversion rights, exchange rights, warrants, or options, or otherwise; or (y) the right to vote pursuant to any agreement, arrangement, or
understanding; or 
  
 (c) which are beneficially owned, directly
or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement, or understanding for the purpose of acquiring, holding, voting, or disposing of any shares of Voting Stock. 

 

 13 

 (4) For the purposes of determining whether a person is an Interested Stockholder pursuant to paragraph
(2) of this Section C, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of paragraph (3) of this Section C but shall not include any other shares of Voting Stock which may be
issuable pursuant to any agreement, arrangement, or understanding, or upon exercise of conversion rights, warrants, options, or otherwise. 
  
 (5) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the 1934 Act, as in effect on February 1, 1988. 
  
 (6) “Subsidiary” means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph (2) of this Section C, the term “Subsidiary” shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. 

 
 (7) “Continuing Director” means any member of the Board who is
not an Affiliate or Associate of the Interested Stockholder and who was a member of the Board prior to the time that the Interested Stockholder became an Interested Stockholder, and any successor of a Continuing Director who is not an Affiliate or
Associate of the Interested Stockholder and who is recommended to succeed a Continuing Director by a majority of Continuing Directors then on the Board. For the purposes of this Article EIGHTH, the act of a majority of the Continuing Directors shall
be the act of the Board. 
  
 (8) “Fair Market Value”
means: 
  
 (a) in the case of stock, the highest closing sale
price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for the New York Stock Exchange – Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on the New York Stock Exchange, on the principal United States securities exchange registered under the 1934 Act on which such stock is listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc., Automated Quotations System or any system then in use, or, if no
such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors in good faith; and 
  

 14 

 (b) in the case of property other than cash or stock, the fair market value of such property on the date
in question as determined by a majority of the Continuing Directors in good faith. 
  
 (9) In the event of any Business Combination in which the Corporation survives, the phrase “consideration other than cash to be received” as used in subparagraphs (b) and (c) of paragraph (2) of Section B of
this Article EIGHTH shall include the shares of Common Stock and the shares of any other class of outstanding Voting Stock retained by the holders of such shares. 
  
 D. A majority of the Continuing Directors shall have the power and duty to determine, on the basis of information known to
them after reasonable inquiry, all facts necessary to determine compliance with this Article EIGHTH, including, without limitation, (u) whether a person is an Interested Stockholder; (v) the number of shares of Voting Stock beneficially owned by any
person; (w) whether a person is an Affiliate or Associate of another; (x) whether the applicable conditions set forth in paragraph (2) of Section B of this Article EIGHTH have been met with respect to any Business Combination; (y) whether the assets
which are the subject of any Business Combination referred to in subparagraph (b) of paragraph (1) of Section A of this Article EIGHTH have an aggregate Fair Market Value of 10% or more of the assets of the Corporation and its consolidated
subsidiaries as reflected in the most recent balance sheet of the Corporation; and (z) whether the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination referred to
in subparagraph (b) of paragraph (1) of Section A of this Article EIGHTH has an aggregate Fair Market Value of $5,000,000 or more. 
  
 E. Nothing contained in this Article EIGHTH shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law.

  
 F. The provisions of this Article EIGHTH shall not be altered,
amended, or replaced except by (x) the affirmative vote of a majority of the Continuing Directors and (y) the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then outstanding shares of the Voting Stock, voting
together as a single class. 
  
 NINTH: Except as expressly set
forth in Section E of this Article NINTH, the stockholder vote required to approve any Reorganization (as hereinafter defined) shall be the affirmative vote of the holders of at least 66-2/3% of the voting power of all the then outstanding shares of
the Voting Stock, voting together as a single class. 
  
 A. As
used in this Article NINTH, the following terms shall have the following meanings: 
  

 15 

 (1) A “Reorganization” shall mean each of the following: 
  
 (a) any merger as to which the Corporation is a constituent corporation (as
defined below) and as to which the holders of the outstanding Voting Stock of the Corporation immediately prior to such merger do not hold a majority of the voting power of the outstanding Voting Stock of the surviving corporation immediately
subsequent to such merger. 
  
 (b) any acquisition by any person
in exchange in whole or in part for its equity securities (or the equity securities of any other person) or its debt securities (or the debt securities of any other person) for all or any portion of the outstanding Voting Stock of the Corporation
if, immediately following such exchange, the person effecting such exchange has control (as defined below) of the Corporation. 
  
 (c) any acquisition by any person in exchange in whole or in part for its equity securities (or the equity securities of any other person) or for its
debt securities (or the debt securities of any other person) of assets of the Corporation having a Fair Market Value (as defined below) immediately prior to such acquisition equal to or in excess of 50% of the Fair Market Value of all assets of the
Corporation immediately prior to such acquisition. 
  
 (d) any
liquidation, dissolution, or winding up of the Corporation involving assets of the Corporation having a Fair Market Value (as defined below) immediately prior to such event equal to or in excess of 50% of the Fair Market Value of all assets of the
Corporation immediately prior to such event. 
  
 (2) A
“constituent corporation” means a corporation which is merged with one or more other corporations, and includes the surviving corporation. 
  
 (3) “[C]ontrol” means the ownership, directly or indirectly, of outstanding shares of the Voting Stock of the Corporation possessing, in the
aggregate, more than 50% of the voting power of all outstanding Voting Stock of the Corporation. 
  
 (4) “[E]quity security” means any share of stock, any security convertible (with or without consideration) into any share of stock, and any
warrant or other right to acquire, subscribe to, or purchase any share of stock or any security convertible into any share of stock. 
  

 16 

 (5) “[P]erson” shall have the same meaning ascribed to such term in Article EIGHTH of this
Certificate of Incorporation. 
  
 (6) “Fair Market
Value” means, in the case of property other than cash, the fair market value of such property on the date in question as determined by a majority of the Disinterested Directors in good faith. 
  
 (7) “Disinterested Director” means any member of the Board who, at
the time the proposed Reorganization is considered by the Board or at the time alteration, amendment, or repeal of this Article NINTH is considered by the Board, (x) is not, in the case of a Reorganization of the type specified in subparagraph (a)
of paragraph (1) of this Section A, an Affiliate of, or an officer of, director of, or the record or beneficial owner of one percent (1%) or more of any equity security of, any constituent corporation to the proposed Reorganization (other than the
Corporation or any wholly-owned subsidiary of the Corporation); (y) is not, in the case of a Reorganization of the types specified in subparagraphs (b) and (c) of paragraph (1) of this Section A, an Affiliate of, or an officer of, director of, or
the record or beneficial owner of one percent (1%) or more of any equity security of, either the person making the acquisition or of any person whose equity or debt securities are to be exchanged for the Voting Stock or assets of the Corporation; or
(z) in the case of a Reorganization of the type specified in subparagraph (d) of paragraph (1) of this Section A or in the case of an alteration, amendment, or repeal of this Article NINTH, does not have any relationship described in clauses (x) or
(y) of this paragraph (7) to any person who has announced or presented for consideration by the Board or who within six months after consideration of an alteration, amendment, or repeal of this Article NINTH announces or presents for consideration
by the Board, any Reorganization. For the purposes of this Article NINTH, the act of a majority of the Disinterested Directors shall be the act of the Board. 
  
 (8) “Affiliate” shall have the same meaning ascribed to such term in Article EIGHTH of this Certificate of Incorporation. 
  
 B. For the purposes of subparagraph (a) of paragraph (1) of Section A of this
Article NINTH, in determining whether the holders of the outstanding Voting Stock of the Corporation immediately prior to such merger (the “Original Holders”) hold a majority of the voting power of the outstanding Voting Stock of the
surviving corporation after the merger: 
  
 (1) All equity
securities held by the Original Holders convertible into Voting Stock of the surviving corporation, all warrants, all rights to subscribe to, and all rights to purchase Voting Stock of the surviving corporation held by the Original Holders shall be
ignored; 
  

 17 

 (2) All equity securities held by persons other than the Original Holders convertible into Voting Stock
of the surviving corporation shall be deemed to have been converted on the effective date of the merger; and 
  
 (3) All warrants, all rights to subscribe to, and all rights to purchase Voting Stock of the surviving corporation held by persons other than the
Original Holders shall be deemed to have been exercised on the effective date of the merger. 
  
 C. For the purposes of subparagraph (b) of paragraph (1) of Section A of this Article NINTH, in determining whether the acquiring person has control of the Corporation immediately following such exchange: 

 
 (1) All equity securities held by the Original Holders convertible into
Voting Stock of the Corporation, all warrants, all rights to subscribe to, and all rights to purchase Voting Stock of the Corporation held by the Original Holders shall be ignored; 
  
 (2) All equity securities held by persons other than the Original Holders convertible into Voting Stock of the Corporation
shall be deemed held by the acquiring person and shall be deemed to have been converted on the effective date of the exchange; and 
  
 (3) All warrants, all rights to subscribe to, and all rights to purchase Voting Stock of the Corporation held by persons other than the Original Holders
shall be deemed to be held by the acquiring person and shall be deemed to have been exercised on the effective date of the exchange. 
  
 D. Any series of transactions or proposed transactions which are designed to achieve the result specified in either subparagraphs (b), (c), or (d) of
paragraph (1) of Section A of this Article NINTH or which have the effect of achieving the result specified in either subparagraphs (b), (c), or (d) of paragraph (1) of Section A of this Article NINTH shall be subject to all of the provisions of
this Article NINTH. 
  
 E. The provisions of this Article NINTH,
other than the provisions of Sections F and G of this Article NINTH, shall not be applicable to any particular Reorganization, and such Reorganization shall require only such affirmative vote as is required by law, any other provision of this
Certificate of Incorporation, any Preferred Stock Designation, or any agreement with any national securities exchange, if the Reorganization shall have been approved by a majority of the Disinterested Directors, it being understood that this
condition shall not be capable of satisfaction unless at the time of consideration of such matter by the Board there is at least one Disinterested Director. 
  

 18 

 F. The affirmative vote of the holders of the Voting Stock shall be required (unless the condition set
forth in Section E is satisfied) notwithstanding any other provisions of this Certificate of Incorporation, Preferred Stock Designation, any provision of law, or of any agreement with any national securities exchange which might otherwise permit a
lesser vote or no vote, but such affirmative vote shall be required in addition to and not in lieu of any affirmative vote of the holders of any particular class or series of the Voting Stock required by law, this Certificate of Incorporation, or
any Preferred Stock Designation. Nothing herein shall relieve any other constituent corporation or any acquiring person referred to in subparagraphs (b) and (c) of paragraph (1) of Section A of this Article NINTH from any fiduciary or other
obligation imposed upon such constituent corporation or acquiring person by law, by any charter document of, or agreement or other instrument governing or regulating the actions of, such constituent corporation or other person. 
  
 G. A majority of the Disinterested Directors shall have the power and the
duty to determine, on the basis of information known to them after reasonable inquiry, all facts necessary to determine compliance with this Article NINTH, including, without limitation, (t) whether a particular transaction or proposed transaction
constitutes a Reorganization, as defined in Section A of this Article NINTH; (u) the number of shares of Voting Stock of the Corporation or any surviving corporation beneficially owned or deemed to be owned by any person pursuant to subparagraphs
(a) or (b) of paragraph 1 of Section A of this Article NINTH or pursuant to Sections B or C of this Article NINTH; (v) whether an acquiring person will, in any transaction described in subparagraph (b) of paragraph 1 of Section A of this Article
NINTH, obtain control of the Corporation as defined in paragraph 3 of Section A of this Article NINTH; (w) the Fair Market Value of any or all assets of the Corporation for the purposes of subparagraph (c) of paragraph 1 of Section A and paragraph
(6) of Section A of this Article NINTH; (x) whether any series of transactions and/or proposed transactions are within the scope of Section D of this Article NINTH; (y) whether the affirmative vote of the Disinterested Directors provided for in
Section E has in fact been obtained with respect to any proposed Reorganization pursuant to paragraph (1) of Section A of this Article NINTH; and (z) whether the affirmative vote of holders of Voting Stock required by this Article NINTH has in fact
been obtained with respect to any proposed Reorganization pursuant to paragraph 1 of Section A of this Article NINTH. 
  
 H. The provisions of this Article NINTH shall not be altered, amended, or repealed except by (x) the affirmative vote of a majority of the Disinterested
Directors and (y) the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then outstanding shares of the Voting Stock, voting together as a single class. 
  
 TENTH: The Board, when evaluating any offer of another party, (x) to make a tender or exchange offer for any shares of the
Voting Stock; 
  

 19 

 (y) to effect a Business Combination (as defined in Article EIGHTH); or (z) to effect a Reorganization (as defined in
Article NINTH), shall, in connection with the exercise of its judgment in determining what is in the best interests of the Corporation as a whole, be authorized to consider such factors as the Board determines in its sole discretion to be relevant.
In connection with any such evaluation, the Board is authorized to conduct such investigations and to engage in such legal proceedings as the Board may determine to be appropriate. 
  
 ELEVENTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for (w) any breach of the director’s duty of loyalty to the Corporation or its stockholders; (x) for acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (y) liability under Section 174 of the General Corporation Law of the State of Delaware; or (z) any transaction from which the director derived an improper personal benefit. If the General Corporation Law of the State of
Delaware is hereafter amended to authorize the further elimination or limitation of the liability of a director, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended. Any repeal or modification of the foregoing provisions of this Article ELEVENTH by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal or modification for or with respect to any acts or omissions of a director occurring prior to such repeal or modification. 
  
 TWELTH: The Corporation reserves the right to amend or repeal any provision
contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware, and all rights conferred upon stockholders are granted subject to this reservation; provided, however, that, notwithstanding any other
provision of this Certificate of Incorporation, any Preferred Stock Designation, or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to and not in lieu of any affirmative vote of the holders of any
particular class or series of the then outstanding shares of the Voting Stock required by this Certificate of Incorporation, any Preferred Stock Designation, or any provision of law, (x) the affirmative vote of the holders of at least 66-2/3% of the
voting power of all of the then outstanding shares of the Voting Stock, voting together as a single class, shall be required to amend or repeal this Article TWELFTH, Article SIXTH, Article SEVENTH, Article EIGHTH, Article NINTH, Article TENTH, and
Article ELEVENTH of this Certificate of Incorporation; and (y) in addition to the vote specified in clause (x) of this Article TWELFTH, the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding
shares of the Voting Stock, other than the Voting Stock of which an Interested Stockholder (as defined in Article EIGHTH of this Certificate of Incorporation) is the beneficial owner, voting together as a single class, shall be required in order to
amend or repeal this 
  

 20 

 Article TWELFTH, Article EIGHTH, or Article TENTH of this Certificate of Incorporation. 
  

 21Form of Securities Purchase Agreement dated May 28, 2003

 EXHIBIT 4.4 
  

 

  
  
  
  
  
 SECURITIES PURCHASE AGREEMENT 
  
  
  
 among 
  
  
 SOUTHWEST WATER COMPANY 
  
  
  
 and 
  
  
  
 THE SEVERAL PURCHASERS NAMED HEREIN 
  
  
  
  
  
  
  
 Dated as of May 28, 2003 
  
  
  
  
  

 SECURITIES PURCHASE AGREEMENT 
  
 THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated as of May 28, 2003, among Southwest Water
Company, a Delaware corporation (the “Company”), and the several Purchasers named on the signature pages hereto (individually a “Purchaser” and collectively, the “Purchasers”). 
  
 Recitals: 
  
 The Company desires to issue and sell to the Purchasers, and the Purchasers desire to purchase from the Company, an
aggregate of up to 1,108,033 shares (the “Shares”) of the Company’s common stock, $.01 par value per share (the “Common Stock”) at a price of $10.830 per Share upon and subject to the terms and conditions of this Agreement.

  
 Agreement: 
  
 The Company and each Purchaser, severally and not jointly, agree as follows:

  
 Section 1.    Purchase of Company
Securities. 
  
 1.1    Purchase
and Sale of the Shares.    Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser, and each Purchaser, severally and not jointly, will purchase from the Company the number of
Shares set forth on the signature page for each Purchaser at the purchase price set forth on the signature page for each purchaser (the “Purchase Price”). 
  
 Section 2.    Closing.    The closing (the “Closing”) of the
purchase and sale of the Shares (the “Offering”) will take place at the offices of Latham & Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, California, 90071-2007 at 10:00 A.M., local time, on May 28, 2003. The Closing may
take place at another time, place or earlier date as is mutually agreed upon by the Company and the Purchasers. The date of the Closing is referred to as the “Closing Date.” At the Closing, the Company will cause its transfer agent to
deliver to each Purchaser stock certificates representing the Shares purchased by the Purchaser, against payment of each Purchaser’s Purchase Price by wire transfer of immediately available United States funds payable to the Company’s
account pursuant to the wire transfer instructions set forth on Exhibit A. The Shares will be registered in each Purchaser’s name or the name of the nominee of each Purchaser on the Closing Date pursuant to instructions delivered to the Company
not less than two business days prior to the Closing Date, and certificates that the Company’s transfer agent cannot reasonably deliver physically prior to Closing will be delivered to the appropriate Purchaser within 3 business days after the
Closing Date, with a copy of such certificates to be faxed to such Purchasers on the Closing Date immediately prior to such Purchaser’s wire transfer of funds. 
  
 Section 3.    Conditions to the Obligations of the Purchasers at
Closing.    The obligation of each Purchaser to purchase and pay for the Shares at Closing is subject to the satisfaction on or prior to the Closing Date of the following conditions, each of which may be waived by that
Purchaser (as to itself and to no other Purchaser): 
  
 3.1    Opinion of Counsel to the Company.    Such Purchaser will have received from Latham & Watkins LLP, special counsel for the Company, its opinion dated the Closing Date in the
form of Exhibit B. 

 3.2    Representations and Warranties.    The
representations and warranties of the Company contained in Section 6 must be true and correct in all material respects on and as of the Closing Date except to the extent that the representations and warranties relate to an earlier date in
which case the representations and warranties must be true and correct in all material respects on and as of such earlier date. 
  
 3.3    Performance of Covenants.    The Company will have performed or complied in all material
respects with all covenants and agreements required to be performed by it on or prior to the Closing pursuant to this Agreement. 
  
 3.4    No Injunctions; etc.    No court or governmental injunction, order or decree prohibiting the
purchase and sale of the Shares will be in effect. There will not be in effect any law, rule or regulation prohibiting or restricting the sale or requiring any consent or approval of any person that has not been obtained which prohibits the
consummation of any of the transactions contemplated by this Agreement. 
  
 3.5    Closing Documents.    The Company will have delivered to such Purchaser the following: 
  
         (a)    a certificate of the Secretary or Assistant Secretary of the Company, dated as
of the Closing Date, certifying (i) that attached thereto are true and complete copies of the Certificate of Incorporation and Bylaws of the Company, as in effect on the date of such certification; (ii) that attached thereto are true and complete
copies of the resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement as in effect on the date of such certification; and (iii) as to the incumbency and specimen signature of the
officer of the Company executing this Agreement (such certificate to contain a certification by another officer of the Company as to the incumbency and signature of the officer signing the certificate referred to herein). 
  
         (b)    a
certificate of the Secretary of State of the State of Delaware, dated a recent date, to the effect that the Company is in good standing. 
  
         (c)    a certificate executed by the Chief Executive Officer or Chief Financial
Officer of the Company, dated as of the Closing Date, to the effect that the representations and warranties of the Company contained in Section 6 hereof are true and correct in all material respects as of the date of this Agreement and the
Closing Date, and that all covenants, agreements and conditions required to be satisfied by the Company under this Agreement at the Closing have been performed, satisfied and complied with by the Company in all material respects. 
  
 3.6    Waivers and
Consents.    The Company will have obtained all consents and waivers necessary to execute and deliver this Agreement and all related documents and agreements and to issue and deliver the Shares, and any such consents and
waivers will be in full force and effect. 
  
 3.7    Satisfaction of the Purchaser.    All proceedings to be taken in connection with the Offering are to be consummated at or prior to the Closing, and all documents incidental
thereto shall be reasonably satisfactory in form and substance to such Purchaser and its counsel, and such Purchaser and its counsel shall have received copies of all documents and information which it may have reasonably requested in connection
with the transaction and all corporate proceedings in connection therewith, in form and substance reasonably satisfactory to such Purchaser and its counsel. 
  
 Section 4.    Conditions to the Obligations of the Company at Closing.    The obligation of the
Company to issue and sell the Shares to a Purchaser at the Closing is subject to the satisfaction on or prior to the Closing Date of the following conditions, each of which may be waived by the Company: 
  

 -2- 

 4.1    Representations and Warranties.    The
representations and warranties of such Purchaser contained in this Agreement must be true and correct in all material respects on and as of the Closing Date. 
  
 4.2    Performance of Covenants.    Each Purchaser will have performed or complied in all material
respects with all covenants and agreements required to be performed by it on or prior to the Closing pursuant to this Agreement. 
  
 4.3    No Injunctions.    No court or governmental injunction, order or decree prohibiting the
purchase and sale of the Shares will be in effect. There will not be in effect any law, rule or regulation prohibiting or restricting the sale or requiring any consent or approval of any person that has not been obtained which prohibits the
consummation of any of the transactions contemplated by this Agreement. 
  
 4.4    Closing Documents.    Each Purchaser will have delivered to the Company the following: 
  
         (a)    a duly completed and executed (i) Stock Certificate Questionnaire in the form
of Appendix I hereto, (ii) Registration Statement Questionnaire in the form of Appendix II hereto and (iii) Purchaser Questionnaire in the form of Appendix IV hereto. 
  
 Section 5.    Representations and Warranties of the
Purchasers.    Each Purchaser, severally and not jointly, represents and warrants to the Company that as of the date hereof and as of the Closing Date: 
  
 5.1    Accredited Investor.    The Purchaser is an “accredited
investor” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”). The Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act. The
Purchaser has answered all questions in the Registration Statement Questionnaire attached hereto as Appendix II for use in preparation of the Shelf Registration Statement (as defined herein) to register the resale of the Shares held by the Purchaser
and the answers thereto are true and correct and the Purchaser will notify the Company immediately of any change in any of such information until such time as the Purchaser has sold all of its Shares or until the Company is no longer required to
keep the Shelf Registration Statement effective. 
  
 5.2    Authority, etc.    The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full corporate or
partnership power and authority, as the case may be, to execute and deliver this Agreement and perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary corporate, partnership or other required action on the part of the Purchaser. This Agreement has been duly executed and delivered by the Purchaser and constitutes the valid
and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations of public policy. 
  
 5.3    Investment Intent.    The Purchaser understands that the Shares are “restricted
securities” (as defined in Rule 144 under the Securities Act) and have not been registered under the Securities Act or any applicable state securities law and the Purchaser is acquiring the Shares as principal for its own account for investment
purposes only and not with a view to distributing or reselling such Shares or any part thereof in violation of any federal or state securities laws, and has no present intention of distributing any of such Shares. The Purchaser is acquiring the
Shares hereunder in the ordinary course of its 
  

 -3- 

 business. The Purchaser does not have any agreement or understanding, directly or indirectly, with any person to
distribute any of the Shares. 
  
 5.4    Experience of the Purchaser.    The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Shares
and is able to afford a complete loss of such investment. 
  
 5.5    Access to Information.    The Purchaser acknowledges that it has been afforded (i) the opportunity to ask the questions it deemed necessary of, and to receive answers from,
representatives of the Company concerning the Company and the terms and conditions of the Offering; and (ii) the opportunity to request such additional information concerning the Company as the Company possesses or can acquire without unreasonable
effort or expense. 
  
 5.6    No
General Solicitation.    The Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television
or radio, whether closed circuit, or generally available, or any seminar, meeting or other conference whose attendees were invited by any general solicitation or general advertising. 
  
 5.7    International Actions.    The Purchaser acknowledges,
represents and agrees that no action has been or will be taken in any jurisdiction outside the United States by the Company or the placement agent that would permit an offering of the Shares, or possession or distribution of offering materials in
connection with the issue of the Shares, in any jurisdiction outside the United States. 
  
 5.8    No Tax or Legal Advice.    The Purchaser agrees that nothing in this Agreement or any other materials presented to the Purchaser in connection with the
purchase and sale of the Shares constitutes legal, tax or investment advice. The Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of
the Shares. 
  
 Section
6.    Representations and Warranties of the Company.    The Company represents and warrants to each Purchaser that as of the date hereof and as of the Closing Date: 
  
 6.1    Organization, Good Standing and
Qualification; Subsidiaries.    The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of the Company and its subsidiaries (as defined in Rule 405
under the Securities Act) (“Subsidiaries”) has full corporate power and authority to own and hold its properties and to conduct its business as described in the reports and proxy statements filed by the Company under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), since January 1, 2002, with the U.S. Securities and Exchange Commission (the “SEC”) (the “SEC Documents”). Each of the Company and its Subsidiaries is duly
qualified to do business, and in good standing, in each jurisdiction in which the nature of its business requires qualification or good standing, except for any failure to be so qualified or in good standing that would not have a material adverse
effect on the business, properties, results of operations, assets, condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, or on the Company’s ability to perform its material obligations under this Agreement (a
“Material Adverse Effect”). Except as set forth on Schedule 6.1, the Company has no subsidiary corporations or entities. 
  
 6.2    Capitalization.    As of the date hereof, the authorized capital stock of the Company
consists of 25,000,000 shares of Common Stock and 250,000 shares of preferred stock, $.01 par value per 
  

 -4- 

 share (the “Preferred Stock”). As of May 23, 2003, (i) 9,784,769 shares of Common Stock were issued and
outstanding and (ii) 10,264.75 shares of Series A Preferred Stock were issued and outstanding. All the outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance
with all applicable state and federal securities laws in all material respects and were not issued in violation of, or subject to any preemptive, subscription or other similar rights of any stockholder of the Company. Other than as provided on
Schedule 6.2 of this Agreement or disclosed in or filed as exhibits to the SEC Documents and except for options to purchase in the aggregate 30,000 shares of Common Stock granted to certain of the Company’s directors (the “Recent Director
Option Grants”), there are no other options, warrants or other rights, convertible debt, agreements, arrangements or commitments of any character obligating the Company to issue or sell any shares of capital stock of or other equity interests
in the Company. Except as disclosed in or filed as exhibits to the SEC Documents or as provided on Schedule 6.2, the Company is not obligated to retire, redeem, repurchase or otherwise reacquire any of its capital stock or other securities. The
Company owns, directly or indirectly, all of the capital stock of its Subsidiaries, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest, other than as reflected in the SEC Documents or as provided on
Schedule 6.1. Except as disclosed in the SEC Documents or as set forth on Schedule 6.2 hereof, there are no stockholder agreements, voting agreements or similar agreements with respect to the Common Stock to which the Company is a party or, to the
knowledge of the Company, between or among any of the Company’s stockholders. 
  
 6.3    Corporate Power, Authorization; Enforceability.    The Company has full corporate power and authority to execute, deliver and enter into this Agreement and
to consummate the transactions contemplated hereby. All action on the part of the Company, its directors or stockholders necessary for the authorization, execution, delivery and performance of this Agreement by the Company, the authorization, sale,
issuance and delivery of the Shares contemplated hereby and the filing of the Shelf Registration Statement (as defined below) has been taken. The Shares to be purchased on the Closing Date, when issued in accordance with this Agreement, will be
validly issued, fully paid and nonassessable and will be free and clear of all liens, adverse claims or encumbrances (collectively, “Liens”) imposed by or through the Company and will not be subject to any preemptive rights or other
similar rights of stockholders of the Company. This Agreement has been duly executed and delivered by the Company and constitutes a legally valid and binding obligation of the Company, enforceable against the Company in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy. No further
approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Shares. Other than the filing with the Nasdaq National Market System (“Nasdaq”) of a Notification
Form for the listing of additional shares and the Company’s payment to Nasdaq of the requisite quarterly fees for the Company’s outstanding shares, no further corporate action is required under the rules of Nasdaq with respect to the
transactions contemplated by this Agreement, including without limitation, the issuance of the Shares and the inclusion thereof for trading on Nasdaq. 
  
 6.4    Financial Statements and SEC Documents.    (a) Included in the Company’s Form 10-K for
the year ended December 31, 2002, are true and complete copies of the audited consolidated balance sheets (the “Balance Sheet”) of the Company as of December 31, 2001 and 2002, and the related audited consolidated statements of income,
stockholders’ equity and cash flows for the years ended December 31, 2000, 2001 and 2002 (the “Audited Financial Statements”), accompanied by the report of KPMG LLP with respect thereto. The Company’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2003 (the “Quarterly Report”) has been filed with the SEC pursuant to the EDGAR System. Included in the Quarterly Report are the requisite unaudited balance sheets of the Company and the related
unaudited statements of income and statements of cash flows (the “Unaudited Financial Statements,” and together with the “Audited Financial Statements,” the “Financial Statements”). The Financial Statements have

  

 -5- 

 been prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a consistent
basis during the period involved (except as may be indicated in the notes thereto and except that the Unaudited Financial Statements may not contain all footnotes required by GAAP), and as of their respective dates, fairly present, in all material
respects, the consolidated financial position of the Company and its subsidiaries and the results of its operations as of the time and for the periods indicated therein subject, in the case of the Unaudited Financial Statements, to normal, year-end
adjustments. Such Financial Statements are in agreement with, the books and records of the Company in all material respects. The Company keeps accounting records in accordance with GAAP in which all material assets and liabilities, and all material
transactions, including off-balance sheet transactions, of the Company are recorded in conformity with applicable accounting principles and disclosed as required in the SEC Documents. 
  
 (b) As of their respective filing dates, each SEC Document complied in all material respects with the requirements of the
Exchange Act and the Sarbanes-Oxley Act of 2002, if applicable, and the rules and regulations of the SEC thereunder applicable to the SEC Document. None of the SEC Documents, when filed, contained any untrue statement of a material fact or omitted
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. As of their respective filing dates, the Financial Statements of the
Company included in the SEC Documents complied as to form in all material respects with then applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto. 
  
 6.5    No Material Adverse
Changes.    Since March 31, 2003, except as disclosed in the SEC Documents filed subsequent to that date, if any, there has not been any material adverse change in the business, properties, assets, condition (financial or
otherwise), or operating results of the Company and its subsidiaries, taken as a whole. 
  
 6.6    Absence of Certain Developments.    Except as described in or contemplated by this Agreement, or the SEC Documents, since March 31, 2003, through the
Closing Date, the Company has not (a) issued any stock, options, bonds or other corporate securities except (i) pursuant to the exercise of employee stock options under the Company’s stock option plans, (ii) for the issuance of shares of Common
Stock to employees pursuant to the Company’s employee stock purchase plan, (iii) pursuant to the conversion or exercise of outstanding Common Stock Equivalents (as defined below), (iv) for the Recent Director Option Grants and (v) pursuant to
the Company’s Dividend Reinvestment Plan; (b) except for any borrowings under the Company’s existing revolving credit agreements, borrowed any amount or incurred or become subject to any material liabilities (absolute, accrued or
contingent), other than current liabilities incurred in the ordinary course of business and liabilities under contracts entered into in the ordinary course of business and liabilities not required to be reflected on the Company’s Balance Sheet
pursuant to GAAP or required to disclosed in filings made with the SEC; (c) except for any borrowings, consistent with past practice, under the Company’s existing revolving credit agreements, discharged or satisfied any material lien or adverse
claim or paid any material obligation or liability (absolute, accrued or contingent), other than current liabilities shown in the Company’s Financial Statements and current liabilities incurred in the ordinary course of business; (d) except for
the quarterly cash dividends paid in April 2003 on the Company’s Common Stock and Preferred Stock, declared or made any payment or distribution of cash or other property to the stockholders of the Company or purchased or redeemed any securities
of the Company; (e) mortgaged, pledged or subjected to any lien or adverse claim any of its material properties or assets, except for liens for taxes not yet due and payable or otherwise in the ordinary course of business; (f) sold, assigned or
transferred any of its material assets, tangible or intangible, except in the ordinary course of business; (g) suffered any extraordinary losses or waived any rights of material value other than in the ordinary course of business; (h) made any
material capital expenditures or commitments therefor other than in the ordinary course of business; (i) entered 
  

 -6- 

 into any other material transaction other than in the ordinary course of business; (j) suffered any material damages,
destruction or casualty loss, whether or not covered by insurance, affecting any of the properties or assets of the Company or any of its Subsidiaries which could, individually or in the aggregate, have or result in a Material Adverse Effect; (k)
made any material change in the nature or operations of the business of the Company and its Subsidiaries; (l) defaulted in the payment of principal or interest, or violated any material covenant, with respect to any outstanding debt obligations that
are material to the Company and its Subsidiaries as a whole; (m) materially changed its critical accounting policies or deviated materially from historical accounting and other practices in connection with the maintenance of the Company’s books
and records; or (n) entered into any agreement or commitment to do any of the foregoing. As used herein, the term “Common Stock Equivalents” means any securities of the Company or its subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including without limitation, any debt, Preferred Stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock. 
  
 6.7    No
Conflict; Governmental Consents.    (a) The execution and delivery by the Company of this Agreement and the consummation of the transactions contemplated hereby will not (i) result in the violation of any provision of the
Certificate of Incorporation or Bylaws of the Company, (ii) result in any violation of any law, statute, rule, regulation, order, writ, injunction, judgment or decree of any court or governmental authority to or by which the Company is bound, or
(iii) conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute (with due notice or lapse of time or both) a default under, any lease, loan agreement, mortgage, security agreement, trust indenture or
other agreement to which the Company is a party or by which it is bound or to which any of its properties or assets is subject, nor result in the creation or imposition of any Lien upon any of the properties or assets of the Company, except, in the
case of clauses (ii)-(iii), such violations, conflicts, breaches, defaults, creations or impositions which would not be reasonably expected to have a Material Adverse Effect. 
  
 (b)    No consent, approval, license, permit, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other governmental authority remains to be obtained or is otherwise required to be obtained by the Company in connection with the authorization, execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby, including, without limitation the issue and sale of the Shares, except filings as may be required to be made by the Company after the Closing with (i) the SEC (including any Form D
filing), (ii) the National Association of Securities Dealers, Inc. (“NASD”), (iii) Nasdaq, (iv) state blue sky or other securities regulatory authorities. 
  
 6.8    No General Solicitation.    Neither the Company nor any person
acting on behalf of the Company has conducted any “general solicitation,” as described in Rule 502(c) under Regulation D promulgated under the Securities Act (“Regulation D”), with respect to any of the Shares being offered
hereby. 
  
 6.9    Registration
Form.    The Company is eligible to register the resale of the Shares by the Purchaser on a registration statement on Form S-3 under the Securities Act. To the Company’s knowledge, there exists no facts or circumstances
that could reasonably be expected to prohibit or delay the preparation and filing of a registration statement on Form S-3. 
  
 6.10    No Integration.    Neither the Company, nor any of its affiliates, nor any person acting on
their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would prevent the parties hereto from consummating the transactions contemplated hereby pursuant
to an exemption from registration under the Securities Act pursuant to the provisions of Regulation D. Assuming the accuracy of the representations and warranties 
  

 -7- 

 herein contained of each Purchaser to the extent relevant for such determination, no registration under the Securities
Act is required for the offer, issuance and sale of the Shares to the Purchasers by the Company. The issuance of the Shares to the Purchaser will not be integrated with any other past issuance of the Company’s securities that requires
stockholder approval under the rules of Nasdaq or that would result in a violation of the Securities Act. The issuance of the Shares to the Purchasers does not require stockholder approval, including any approval pursuant to the rules of Nasdaq.

  
 6.11    No
Brokers.    The Company has taken no action that would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments by the Purchaser relating to this Agreement or the transactions
contemplated hereby, except for dealings with A.G. Edwards, its placement agent (the fees of which will be borne solely by the Company). The Purchasers shall have no obligation with respect to any fees of a type contemplated by this Section
6.11 owed by the Company in connection with the transactions contemplated hereby. 
  
 6.12    Taxes.    The Company has filed all material federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and the Company has no knowledge of a tax deficiency which has been or might be asserted or threatened against it which is reasonably likely to have a Material Adverse Effect. 
  
 6.13    Licenses and Permits.    To the Company’s knowledge, each
of the Company and its Subsidiaries has all Permits (as defined below) required by law or governmental regulations from all applicable courts, administrative agencies or commissions or other governmental authorities or instrumentalities, whether in
the United States of America (federal, state or local) or outside of the United States of America that are necessary to operate its businesses as presently conducted and all such Permits are in full force and effect, except where the failure to have
any such Permits in full force and effect would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Company’s knowledge, neither the Company nor any of its Subsidiaries is in default under, or
in violation of or noncompliance with, any of such Permits, except for any such default, violation of or noncompliance which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Upon consummation of
the transactions contemplated by this Agreement, each such Permit will remain in full force and effect and will not create a right of any other person to terminate or revoke, modify or condition such Permit based on such consummation.
“Permit” means any permit, certificate, consent, approval, authorization, order, license, variance, franchise or other similar indicia of authority issued or granted by any court, administrative agency or commission or other governmental
authority or instrumentality, whether in the United States of America (federal, state or local) or outside of the United States of America. 
  
 6.14    Litigation.    Except as set forth in the SEC Documents, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board, governmental agency or authority, or self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or its
Subsidiaries or any of its directors or officers in their capacities as such which would, if there were an unfavorable decision, reasonably be expected to result in a Material Adverse Effect. Except as disclosed in the SEC Documents, neither the
Company nor any of its Subsidiaries is a party to or subject to the provisions of any injunction, judgment, decree or order of any court, regulatory body or administrative agency or other governmental body, which is reasonably expected to result in,
a Material Adverse Effect. 
  
 6.15    Investment Company.    The Company is not, and after giving effect to the transactions contemplated herein, will not be an “investment company” within the meaning of
that term under the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder. 
  

 -8- 

 6.16    No Default or Violation.    Neither the
Company nor any of its Subsidiaries is (i) in default under or in violation of any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound or (ii) to its
knowledge, in violation of any order of any court, arbitrator or governmental body, which, in the case of clause (i) and (ii) would reasonably be expected to have a Material Adverse Effect. 
  
 6.17    Listing and Maintenance Requirements
Compliance.    The Company has not since December 31, 2002, received written notice from Nasdaq to the effect that the Company is not in compliance with the continuing listing or maintenance requirements of the exchange or
market. The Company’s Common Stock is registered under Section 12(g) of the Exchange Act and is listed on Nasdaq. The Company is in compliance in all material respects with all listing and maintenance requirements of such market, and has not
taken any action designed to terminate registration of its Common Stock or delist the Common Stock from Nasdaq. 
  
 6.18    Patents and Trademarks.    To the Company’s knowledge, the Company and each of its
Subsidiaries has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and know-how (including trade secrets or other unpatented and/or unpatenable proprietary
or confidential information, systems or procedures) (collectively, the “Intellectual Property Rights”) that are necessary for use in connection with its business as presently conducted, except where the failure to have such Intellectual
Property Rights would not reasonably be expected to have a Material Adverse Effect, and, to the Company’s knowledge, there is no existing infringement by another person or entity of any of the Intellectual Property Rights that are necessary for
use in connection with the Company’s business as presently conducted. To the Company’s knowledge, the Company is not infringing on or in conflict with any right of any other person with respect to any intangibles nor is there any claim of
infringement made or threatened by a third party against or involving the Company. 
  
 6.19    Environmental Matters.    The Company and each of its Subsidiaries has obtained all permits, licenses and other authorizations that are required under
federal, state and local laws relating to pollution or protection of the environment, including laws related to emissions, discharges, releases or threatened releases of pollutants, contaminants or hazardous or toxic material or wastes into ambient
air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants or hazardous or toxic materials or wastes
(“Environmental Laws”), except for any failures to obtain the permits, licenses or authorizations that would not, individually or in the aggregate, be reasonably expected to have or result in a Material Adverse Effect or as disclosed in
the SEC Documents. To the Company’s knowledge, the Company and each of its Subsidiaries is in compliance with all terms and conditions of such permits, licenses and authorizations and is also in compliance with all other limitations,
restrictions, conditions and requirements contained in the Environmental Laws or contained in any plan, order, judgment, decree or notice, except for any non-compliance which could not, individually or in the aggregate, be reasonably expected to
have or result in a Material Adverse Effect or as disclosed in the SEC Documents. The Company is not aware of, nor has the Company received written notice of, any events, conditions, circumstances, actions or plans which may interfere with or
prevent continued compliance or which would give rise to any liability under any Environmental Laws, except for any liability which could not, individually or in the aggregate, be reasonably expected to have or result in a Material Adverse Effect.

  
 6.20    No
Anti-dilution.    The issuance of the Shares does not constitute an anti-dilution event for any existing security holders of the Company, pursuant to which such security holders would be entitled to additional securities or a
reduction in the applicable conversion price or exercise price of any securities. 
  

 -9- 

 6.21    No “Piggy-back” Registration
Rights.    Except as set forth on Schedule 6.2, the Company has not granted or agreed to grant to any person any rights (including “piggy-back” registration rights) to require the Company to file a registration
statement under the Securities Act with respect to any securities, or to include such securities with the Shares in the Shelf Registration Statement, except for such as have been satisfied or waived and no securities of the Company (other than the
Shares) shall be included in the Shelf Registration Statement. 
  
 6.22    Accounting.    The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (a) transactions are executed in accordance with
management’s general or specific authorization; (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (c) access to assets is permitted only
in accordance with management’s general or specific authorization; and (d) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

  
 6.23    Insurance.    The Company maintains and will continue to maintain insurance of the types, against such losses and in amounts, with such insurers and subject to deductibles and
exclusions as are customary in the Company’s industry and otherwise reasonably prudent, all of which insurance is in full force and effect. 
  
 6.24    Properties.    The Company and each of its Subsidiaries has good title to all material
properties and assets reflected as owned by it in the Financial Statements and that it otherwise purports to own, and such properties and assets are not subject to any lien, mortgage, pledge, charge, claim or encumbrance of any kind except: (a)
those, if any, reflected in the SEC Documents, or (b) those which are not material to the Company and its Subsidiaries as a whole. The Company and each of its Subsidiaries holds its leased properties under valid and binding leases, with such
exceptions as would not reasonably be expected to have a Material Adverse Effect. 
  
 6.25    Material Contracts/Trade Relations.    All material agreements to which the Company or its Subsidiaries is a party and which are required to have been
filed by the Company on Exhibit 10 to the SEC Documents have been filed by the Company with the SEC pursuant to the requirements of the Exchange Act. Each such agreement is in full force and effect, except as otherwise required pursuant to their
terms and is binding on the Company or its Subsidiaries, as the case may be, in each case, in accordance with its terms, and neither the Company or any of its Subsidiaries nor, to the Company’s knowledge, any other party thereto is in breach of
or in default under any such agreement, which breach or default would reasonably be expected to have a Material Adverse Effect. There exists no actual or, to the knowledge of the Company, threatened termination, cancellation or limitation of, or any
material adverse modification or change in, the business relationship of the Company or any of its Subsidiaries, or the business of the Company or any of its Subsidiaries, with any customer or supplier or any group of customers or suppliers whose
purchases or inventories provided to the business of the Company or any of its Subsidiaries are individually or in the aggregate material to the Company. 
  
 6.26    Certain Transactions.    Except as set forth in the SEC Documents, none of the officers or
directors of the Company and, to the knowledge of the Company, none of the employees (or the spouses or the affiliates (as defined in Rule 12b-2 of the Exchange Act) of any of the officers or directors) of the Company, is presently a party to any
transaction with the Company (other than for services as employees, officers and directors), in excess of $60,000, other than (a) for payment of salary or consulting fees for services rendered, (b) reimbursement for expenses incurred on behalf of
the Company and (c) for other employee or director benefits, including, without limitation, under any employee or director stock purchase plan of the Company or any stock option agreements under any stock option plan of the Company. 
  

 -10- 

 6.27    Other Information.    Each Purchaser hereby
acknowledges that the offer and sale of the Shares to the Purchasers and the transactions contemplated hereby is nonpublic information and each such Purchaser hereby agrees to keep all such information relating to the offer and sale of the Shares
and the transactions contemplated hereby confidential except as set forth herein. Except to those Purchasers that have executed a written non-disclosure agreement with the Company, to the knowledge of the Company, the Company has not provided to any
Purchaser any material nonpublic information relating to its business. 
  
 Section 7.    Covenants of the Company.    The Company covenants and agrees as follows: 
  
 7.1    Reporting Status.    So long as the Company is subject to the reporting requirements of the
Exchange Act, the Company will use its reasonable commercial efforts to timely file all reports required to be filed with the SEC pursuant to the Exchange Act. 
  

7.2    Form D; Form 8-K.    The Company will file a Form D within 15 days of the Closing Date
with respect to the Shares with the SEC as required under Regulation D under the Securities Act, and upon request, will provide a copy thereof to each Purchaser. The Company shall file within three days after the Closing Date a Current Report on
Form 8-K with the SEC in respect of the transactions contemplated by this Agreement. 
  
 7.3    Listing and Maintenance Requirements Compliance.    So long as the Company shall continue the listing and trading of its Common Stock on Nasdaq the Company
will use its reasonable commercial efforts to comply in all respects with the Company’s reporting, filing and other obligations under the by-laws or rules of such quotation system. The Company shall (a) in the time and manner required by
Nasdaq, prepare and file with Nasdaq an additional shares listing application covering the number of Shares issued under this Agreement and (b) take all reasonable steps necessary to cause the Shares to be approved for listing on Nasdaq as soon as
practicable thereafter. 
  
 7.4    Integration.    The Company will ensure that the issuance of the Shares to the Purchasers will not be integrated with any other issuance of the Company’s securities in the
future that would result in a violation of the Securities Act or the rules of Nasdaq. 
  
 Section 8.    Survival of Representations and Warranties.    Notwithstanding any investigation made by any party to this Agreement, all representations and
warranties made by the Company and the Purchasers herein shall survive for a period of two years after the Closing Date. 
  
 Section 9.    Registration of Common Stock; Legends. 
  
 9.1    Registrable Securities.    For the purposes of this Agreement,
“Registrable Securities” means (a) the Shares and (b) any shares of Common Stock of the Company issued as a distribution with respect to the Shares referred to in (a); provided that (i) any shares of Common Stock will cease to be
Registrable Securities, and (ii) the Company will not be obligated to maintain the effectiveness of the Shelf Registration Statement (as defined below), and the Company’s obligations under this Section 9 will cease, with respect to a
holder’s (a “Holder”) Registrable Securities following the earliest of (x) the second anniversary of the Closing Date, (y) the date on which the Holder may sell in a single transaction all Registrable Securities then held by such
Holder pursuant to Rule 144 under the Securities Act or any successor rule (“Rule 144”) as a result of such Holder owning 1% or less of the outstanding Common Stock, and (z) such time as such Registrable Securities held by such Purchaser
have been sold (A) pursuant to Rule 144 or (B) pursuant to an effective registration statement. The period of time during which the Company is required to keep the Shelf Registration Statement effective is referred to as the “Registration
Period.” 
  

 -11- 

 9.2    Registration.    (a) The Company will file
within 30 days after the Closing Date with the SEC a shelf registration statement on Form S-3 or successor form or another form selected by the Company that is available to it under the Securities Act (the “Shelf Registration Statement”)
with respect to the resale of Registrable Securities beneficially owned by the Purchasers following the Closing on a delayed or continuous basis under Rule 415 of the Securities Act and use its reasonable commercial efforts to cause the Shelf
Registration Statement to be declared effective no later than the 120th day after the Closing Date; provided,
however, that not less than two days prior to the filing of the Shelf Registration Statement, the Company shall provide the Holders with a copy of the Shelf Registration Statement proposed to be filed and the Company agrees to consider all
appropriate comments provided by such Holders with respect to the Shelf Registration Statement for inclusion in the Shelf Registration Statement. The Shelf Registration Statement shall contain the Plan of Distribution in substantially the form
attached hereto as Exhibit C. 
  
 (b)    If (i) the Shelf Registration Statement has not been declared effective by the SEC on or before the 120th day after the Closing Date (the “Default Date”), or (ii) the Purchasers’ use of the prospectus forming a part of the Shelf Registration Statement (the “Prospectus”) is suspended for more than 60
days in any 12-month period pursuant to Section 9.6(a), the Company shall pay to each Purchaser, as liquidated damages, an amount equal to $0.003 for each Share then held by the Purchaser for each day after the Default Date that the Shelf
Registration Statement is not declared effective or for each day in excess of 60 days in any 12 month period that the Purchaser’s use of the Shelf Registration Statement is suspended pursuant to Section 9.6(a); provided, however, that
the aggregate amounts payable pursuant to this Section 9.2(b) shall in no event exceed 10% of the aggregate Purchase Price paid by the Purchaser pursuant to this Agreement in any 12 month period. The foregoing payment shall constitute the
sole monetary remedy available to the Purchaser in the event that the Company does not comply with the deadlines set forth in Section 9.2(b) or Section 9.6(a) with respect to the effectiveness of the Shelf Registration Statement. The
Company shall pay any amounts payable under this Section 9.2 in cash within 30 days after the Default Date or within 30 days after the date that the Prospectus has been suspended for more than 60 days in any 12-month period, as applicable.

  
 9.3    Registration
Procedures.    In connection with the registration of any Registrable Securities under the Securities Act as provided in this Section 9, the Company will use its reasonable commercial efforts: 
  
 (a)    To cause the Shelf Registration Statement (and any
other related registrations, qualifications or compliances as may be reasonably requested and as would permit or facilitate the sale and distribution of all Registrable Securities until the distribution thereof is complete) to become effective as
soon as practicable following the filing thereof and notify the Purchasers promptly upon effectiveness; 
  
 (b)    To prepare and file with the SEC the amendments and supplements to the Shelf Registration Statement and the Prospectus and,
subject to Section 9.6(a), take all other reasonable actions as may be necessary to keep the Shelf Registration Statement continuously effective and free from any material misstatement or omission to state a material fact during the
Registration Period, and to comply in all material respects with the provisions of the Securities Act (to the extent applicable to the Company) with respect to the Holder’s disposition of Registrable Securities. 
  
 (c)    To furnish to each Holder of Registrable
Securities a reasonable number of copies of the Shelf Registration Statement and of each amendment and supplement thereto, a reasonable number of copies of the Prospectus (including each preliminary Prospectus), in conformity with the requirements
of the Securities Act, and the other documents incorporated by reference therein (including exhibits to any of the foregoing) as the Holder may reasonably request, in order to facilitate the disposition of the Registrable Securities owned by the
Holder; 
  

 -12- 

 (d)    To register or qualify the Registrable Securities covered by the Shelf
Registration Statement under blue sky laws of the various states as any Holder reasonably requests, and do any and all other acts and things that may be reasonably necessary or advisable to enable a Holder to consummate the disposition in those
states, except that the Company will not be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not, but for the requirements of this Section 9.3(d) be obligated to be qualified, to
subject itself to taxation in any jurisdiction, or to consent to general service of process in any jurisdiction; 
  
 (e)    To provide a transfer agent and registrar for the Registrable Securities covered by the Shelf Registration Statement not later
than the effective date of the Shelf Registration Statement; 
  
 (f)    To notify each Holder of Registrable Securities at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the
Prospectus included in the Shelf Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and, at the
request of any Holder, subject to Section 9.6(a), the Company will promptly prepare a supplement or amendment to the Prospectus so that, as thereafter delivered to the Holders of Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 
  
 (g)    To cause all Registrable Securities to be listed on each securities exchange or Nasdaq on which
similar securities issued by the Company are then listed; 
  
 (h)    With a view to making available to the Holders the benefits of certain rules and regulations of the SEC that at any time permit the sale of the Registrable Securities to the public without registration, so long as
any Registrable Securities are outstanding, the Company shall use its reasonable commercial efforts for a period of up two years following the Closing Date: 
  
 (i)    to make and keep public information available, as those terms are understood and defined in Rule 144(c) under
the Securities Act; 
  
 (ii)    to file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and 
  

(iii)    to furnish to the Holder upon any reasonable request a written statement by the Company as to its
compliance with the public information requirements of Rule 144(c) under the Securities Act. 
  
 (i)    To enter into customary agreements (in the event a Purchaser elects to engage an underwriter in connection with the Shelf Registration Statement, including an underwriting agreement
containing customary terms and conditions) and take all other actions reasonably related thereto, as reasonably required in order to expedite or facilitate the disposition of Registrable Securities in connection therewith; provided, however, that,
except as provided in Section 9.4 hereof, the Company shall not be liable for any expenses, including any underwriter’s fees, commissions and discounts or counsel fees with respect to the sale of Registrable Securities. 
  
 (j)    To advise the Purchasers promptly after it has
received notice or obtained knowledge of the existence of any stop order by the SEC delaying or suspending the effectiveness of the Shelf Registration Statement or of the initiation or threat of any proceeding for that purpose, and to make

  

 -13- 

 every reasonable commercial effort to obtain the withdrawal of any order suspending the effectiveness of the Shelf
Registration Statement at the earliest possible time. 
  
 9.4    Registration and Selling Expenses.    All expenses incurred by the Company in connection with the Company’s performance of or compliance with this Section 9, including
(i) all SEC registration and filing fees, (ii) blue sky fees and expenses, (iii) all necessary printing and duplicating expenses, and (iv) all fees and disbursements of counsel and accountants retained on behalf of the Company will be paid by the
Company. Each Holder may, at its election, retain its own counsel and other representatives and advisors as it chooses at its own expense. The Company will not be liable for any underwriter’s fees, commissions and discounts with respect to the
sale of Registrable Securities. 
  
 9.5    No Delay.    No Holder will have a right to take any action to restrain, enjoin or otherwise delay any registration pursuant to Section 9.2 hereof as a result of any
dispute, controversy or other matter that may arise with respect to the interpretation or implementation of this Agreement. 
  
 9.6    Certain Obligations of Holders. 
  
 (a)    The Company may voluntarily suspend (a “Suspension”) the effectiveness of the Shelf
Registration Statement for a limited time, which in no event shall be longer than 60 consecutive or non-consecutive days in any 12-month period, if (i) the Shelf Registration Statement is not usable because the Prospectus is required, pursuant to
Rule 3-05 and Article 11 of Regulation S-X, to include financial statements in respect of businesses acquired or to be acquired and pro forma financial statements and such financial statements are not readily available; or (ii) an event occurs as a
result of which the Shelf Registration Statement would, in the reasonable and good faith judgment of the Company’s Board of Directors, after consultation with counsel, contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading, and the Company reasonably determines that the disclosure of such event at such time would have an adverse effect on the business of the Company and its
subsidiaries, taken as whole or would cause the premature disclosure of or impede the Company’s ability to consummate a proposed material transaction. The Company shall not be required to specify in the written notice to the Holders the nature
of the event giving rise to any Suspension. In the event of any Suspension, the Company will use its reasonable commercial efforts to cause the use of the Prospectus so suspended to be resumed as soon as possible within 60 days after delivery of a
notice of Suspension to the Purchasers. 
  
 (b)    As a condition to the inclusion of its Registrable Securities, each Holder will furnish to the Company the information requested in Appendix II and any other information that the Company reasonably requests from
such Holder from time to time in connection with any registration, qualification or compliance referred to in this Section 9. Each Holder promptly will furnish to the Company all information required to be disclosed in order to make the
information previously furnished by it to the Company not materially misleading. 
  
 (c)    Each Holder hereby covenants to the Company not to make any sale of the Registrable Securities without effectively complying with the prospectus delivery requirements under the Securities
Act. In the event of a sale of Registrable Securities by the Holder under the Shelf Registration Statement, the Holder shall deliver to the Company’s transfer agent, with a copy to the Company, a Certificate of Subsequent Sale substantially in
the form attached hereto as Appendix III, so that the Registrable Securities may be properly transferred. 
  
 (d)    The rights to cause the Company to register Registrable Securities granted to the Holders by the Company under Section
9.2 may be assigned in whole or in part by a Holder, provided, that: (i) the Company is furnished with an opinion of counsel to the Holder of such Registrable Securities 
  

 -14- 

 to the effect that the transfer may be effected in accordance with the Securities Act; (ii) the transfer involves not
less than the lesser of all of the Holder’s Registrable Securities or 25,000 shares of Common Stock; (iii) the Holder gives prior written notice to the Company; and (iv) the transferee agrees to comply with the terms and provisions of this
Agreement in a written instrument satisfactory in form and substance to the Company and its counsel. 
  
 (e)    Each Holder agrees that, upon receipt of any notice from the Company of the happening of an event of the kind described in
Section 9.3(f) or Section 9.6(a) or upon notice from the Company of the existence of (i) any request by the SEC or any other federal or state governmental authority during the period of effectiveness of the Shelf Registration Statement
for amendments to the Shelf Registration Statement or Prospectus; (ii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Shelf Registration Statement covering any or
all of the Registrable Securities or the initiation of any proceedings for that purpose; (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; or (iv) of the occurrence of any event or passage of time that makes the financial statements included in the Shelf
Registration Statement ineligible for inclusion therein or any statement made in the Shelf Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Shelf Registration Statement, Prospectus or other documents so that, in the case of the Shelf Registration Statement or the Prospectus, as the case may be, it will not 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, in light of the circumstances under which they were made, not misleading, such Holder will, forthwith discontinue disposition of Registrable
Securities pursuant to the Shelf Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Shelf Registration Statement or until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Shelf
Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. 
  
 9.7    Transfer of Shares.    A Purchaser may transfer all or any part of its Shares to any person
under common management with the Purchaser, and the Company will affect such transfer of restricted certificates and will promptly amend the Prospectus forming a part of the Shelf Registration Statement to add the transferee to the selling
stockholders in the Shelf Registration Statement; provided that such transferee shall be required to provide the Company with the information requested in Appendix II hereto and all other information reasonably requested by the Company from time to
time in connection with any registration, qualification or compliance referred to in this Section 9. 
  
 9.8    Transfer; Restricting Legends.    The Purchasers agree that the Shares may only be
transferred or disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares other than pursuant to an effective registration statement, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the
Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement. In addition, each Purchaser agrees to the imprinting of a legend on any of the Shares substantially in the following
form: 
  
 THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN 
  

 -15- 

 RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  
  
 Section
10.    Indemnification. 
  
 (a)    The Company will indemnify, to the extent permitted by law, each Holder of Registrable Securities and each director, officer or controlling person of each Holder within the meaning of Section 15 of the Securities
Act against all losses, claims, damages, liabilities and expenses (or action in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on (i) any untrue statement
or alleged untrue statement of a material fact contained in, or incorporated by reference into, the Shelf Registration Statement or Prospectus (or any amendment or supplement thereto) or any preliminary Prospectus, (ii) any omission or alleged
omission to state in the Shelf Registration Statement a material fact required to be stated therein or necessary to make the statements therein not misleading or the omission or alleged omission to state in the Prospectus (or any supplement thereto)
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, or (iii) any failure by the Company to perform any material agreement, covenant or
undertaking in this Agreement, and will promptly reimburse each Holder and each director, officer or controlling person of each Holder for reasonable legal and other expenses incurred in connection with investigating or defending any such claim,
loss, damage, liability or action as incurred; provided however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (A) an untrue statement or
alleged untrue statement or by any omission or alleged omission made in the Shelf Registration Statement or Prospectus (or any amendment or supplement thereto) made in reliance upon and in conformity with written information furnished by any Holder
specifically for use in the preparation of the Shelf Registration Statement or Prospectus (or any amendment or supplement thereto), or (B) the failure by the Holder or any other person that has the right to be indemnified hereunder to deliver to any
purchaser of its Registrable Securities the Prospectus or any supplement or amendment thereto in the form provided to such Holder or such other person that has the right to be indemnified hereunder by the Company if such Holder is required to make
such delivery pursuant to the prospectus delivery requirements of the Securities Act or (C) in the case of the occurrence of any event of the type specified in Section 9.6(e) or if the Company gives the Holder notice under Section
9.6(a), the use by the Holder of the Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 9.6(e);
provided further, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises directly out of or is based primarily upon an untrue statement or omission made in any
preliminary Prospectus or final Prospectus if (i) such Holder failed to send or deliver a copy of the final Prospectus or Prospectus supplement furnished by the Company under Section 9.6(e) with or prior to the delivery of written
confirmation of the sale of the Shares, and (ii) the final Prospectus or Prospectus supplement would have corrected such untrue statement or omission. Notwithstanding the foregoing, (1) as provided in Section 9.2(b), the sole monetary remedy
available to any Holder for the Company’s failure to comply with the deadlines set forth in Section 9.2(b) or Section 9.6(a) shall be as provided in Section 9.2(b) and (2) the Company shall not be liable to any Holder for
any consequential damages, including lost profits, with respect to such losses, claims, damages, liabilities and expenses to which such Holder may become 
  

 -16- 

 subject arising out of, or based upon, any breach of any covenant made by the Company in this Agreement. 
  
 (b)    In connection with the Shelf Registration
Statement in which a Holder of Registrable Securities is participating, each Holder will furnish to the Company in writing the information as is reasonably requested by the Company for use in the Shelf Registration Statement or Prospectus and will
severally, but not jointly, indemnify, to the extent permitted by law, the Company, its directors and officers and each person or entity, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages, liabilities and expenses resulting from (i) any untrue statement or alleged untrue statement of a material fact contained in, or information incorporated by reference into, the Shelf Registration Statement or Prospectus (or any
amendment or supplement thereto) or any preliminary Prospectus or (ii) any omission or alleged omission to state in the Shelf Registration Statement a material fact required to be stated therein or necessary to make the statements therein not
misleading or the omission or alleged omission to state in the Prospectus 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, but only
to the extent the losses, claims, damages, liabilities or expenses arises out of or is based upon (A) an untrue statement or alleged untrue statement or by an omission or alleged omission made in reliance upon and in conformity with the written
information specifically furnished by the Holder to the Company for use in connection with the preparation of the Shelf Registration Statement or Prospectus or (B) in the case of the occurrence of any event of the type specified in Section 9.6(e)
or the Company gives the Holder notice under Section 9.6(a), the use by the Holder of the Prospectus after the Company has notified such Holder in writing that the prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 9.6(e). Notwithstanding the foregoing or any other provision of this Agreement, in no event will a Holder of Registrable Securities be liable for any losses, claims, damages, liabilities or
expenses in excess of the net proceeds received by such Holder upon the disposition of Registrable Securities pursuant to the Shelf Registration Statement giving rise to such claim. 
  
 (c)    Promptly after receipt by an indemnified party under Section 10(a) or (b) of notice
of any claim as to which indemnity may be sought, including the commencement of any action or proceeding, the indemnified party will, if a claim in respect thereof may be made against the indemnifying party under this Section, promptly notify the
indemnifying party in writing of the commencement thereof; provided that the failure of the indemnified party to so notify the indemnifying party will not relieve the indemnifying party from its obligations under this Section except to the extent
that the indemnifying party is adversely affected by the failure. In case any action or proceeding is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party and its counsel
shall, to the extent it wishes, conduct the defense of any action with counsel approved by the indemnified party (which approval will not be unreasonably withheld or delayed) although the indemnified party will be entitled to participate therein at
the indemnified party’s expense, and after notice from the indemnifying party to the indemnified party of its election to so assume the defense thereof, the indemnifying party will not be liable to the indemnified party under this Section for
any legal or any other expenses subsequently incurred by the indemnified party in connection with the defense thereof unless incurred at the written request of the indemnifying party. Notwithstanding the above, the indemnified party will have the
right to employ counsel of its own choice in any action or proceeding (and be reimbursed by the indemnifying party for the reasonable fees and expenses of the counsel and other reasonable costs of the defense) if the indemnified party shall have
been advised in writing by counsel that representation of the indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests or conflicts between the indemnified party and
any other party represented by the counsel in the action or proceeding or counsel to the indemnified party is of the opinion that it would not be desirable for the same counsel to represent both the indemnifying party and the indemnified party
because the representation is reasonably 
  

 -17- 

 expected to result in a conflict of interest; provided, however, that the indemnifying party will not in connection with
any one action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all
indemnified parties, except to the extent that local counsel, in addition to regular counsel, is required in order to effectively defend against the action or proceeding. An indemnifying party will not be liable to any indemnified party for any
settlement or entry of judgment concerning any action or proceeding effected without the consent of the indemnifying party. 
  
 (d)    If the indemnification provided for in Section 10(a) or (b) is held by a court of competent jurisdiction to be
unavailable under applicable law to an indemnified party in respect of any losses, claims, damages or liabilities referred to therein, then each applicable indemnifying party, in lieu of indemnifying the indemnified party, will contribute to the
amount paid or payable by the indemnified party as a result of the losses, claims, damages or liabilities in the proportion as is appropriate to reflect the relative fault of the Company on the one hand and of the indemnified party on the other in
connection with the statements or omissions which resulted in the losses, claims, damages, or liabilities, as well as any other relevant equitable considerations including the relative benefits to the parties. The relative fault of the Company on
the one hand and of the indemnified party on the other will be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied
by the Company or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent the statement or omission. Notwithstanding the provisions of this subsection (d), a Purchaser
shall not be required to contribute any amount in excess of the amount by which the net proceeds received by the Purchaser from the sale of the Shares to which such loss relates exceeds the amount of any damages which such Purchaser has otherwise
been required to pay by reason of such untrue statement. The amount paid or payable by a party as a result of the losses, claims, damages and liabilities referred to above will be deemed to include, subject to the limitations set forth in Section
10(c), any reasonable legal or other fees or expenses incurred by the party in connection with investigating or defending any action or claim. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity that is not guilty of fraudulent misrepresentation. 
  
 Section 11.    Miscellaneous. 
  

11.1    Notices.    Any notice or other communication given hereunder will be deemed sufficient
if in writing and sent by registered or certified mail, return receipt requested, or delivered by hand against written receipt therefor, or sent by confirmed facsimile, addressed to: 
  
 If to the Company: 
  

Southwest Water Company 
 225 North Barraca Avenue, Suite 200 
 West Covina, California 
 Attn:    Richard Shields 
             Chief Financial Officer 
 Facsimile: (626) 915-1558 
  

 -18- 

 With a copy to (which shall not constitute notice): 
  
 Latham & Watkins LLP 
 633 West Fifth Street, Suite 4000 
 Los Angeles, California 90071-2007 
 Attn: Cynthia Rotell and Alan Adler 
 Facsimile: (213) 891-8763 
  
 If to a Purchaser: 
  
 To the name and address or facsimile number of the Purchaser on the signature page hereto. 
  
 Notices will be deemed to have been given or delivered on the date of
mailing, except notices of change of address, which will be deemed to have been given or delivered when received. 
  
 11.2    Successors and Assigns.    Subject to Section 9.6(d) and Section 9.8, this
Agreement will be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. 
  
 11.3    Entire Agreement; Amendment.    This Agreement sets forth the entire agreement and
understanding among the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Agreement may be amended only by mutual written agreement of the
Company and the Purchaser or Purchasers, as the case may be, holding at least 75% of the Shares issued under this Agreement. 
  
 11.4    Governing Law.    The terms and provisions hereof will be construed in accordance with and
governed by the laws of the State of California without regard to that State’s conflicts of law principles. 
  
 11.5    Severability.    The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction will not affect any other provision of this Agreement, which will remain in full force and effect. If any provision of this Agreement is declared by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced in whole or in part, the provision will be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions
thereof will nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provisions will be deemed dependent upon any other covenant or provision unless so expressed herein. 
  
 11.6    No Waiver.    A
waiver by any party of a breach of any provision of this Agreement will not operate, or be construed, as a waiver of any subsequent breach by that same party. 
  

11.7    Further Assurances.    The parties agree to execute and deliver all further documents,
agreements and instruments and take further action as may be reasonably necessary or appropriate to carry out the purposes and intent of this Agreement. 
  
 11.8    Counterparts.    This Agreement may be executed in two or more counterparts, each of which
will be deemed an original, but all of which will together constitute the same instrument. 
  
 11.9    No Third Party Beneficiaries.    Nothing in this Agreement creates in any person not a party to this Agreement any legal or equitable right, remedy or
claim under this Agreement, and this 
  

 -19- 

 Agreement is for the exclusive benefit of the parties hereto. The parties expressly recognize that this Agreement is not
intended to create a partnership, joint venture or other similar arrangement between any of the parties or their respective affiliates. 
  
 11.10    Publicity Restrictions.    Subject to Section 11.11, no press release or other
public disclosure relating to the transactions contemplated by this Agreement may be issued or made by or on behalf of any party without prior consultation with the other parties, except as required by applicable law, court process or Nasdaq or
other stock exchange rules, in which case the Purchaser or Holder required to make the disclosure will allow the Company reasonable time (to the extent practicable) to comment thereon in advance of the issuance. The Company may issue an initial
press release relating to the transactions contemplated by this Agreement, but shall not identify any Purchaser in such press release without the consent of such Purchaser. 
  
 11.11    Tax Acknowledgments.    Notwithstanding any other provision
in this Agreement to the contrary, the Company (and each employee, representative, or other agent of the Company) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction
contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such tax treatment and tax structure. 
  
  
 (signature pages follows) 
  
  

 -20- 

 IN WITNESS WHEREOF, the undersigned have duly executed this Securities Purchase Agreement as of
the date first above written. 
  
  

	SOUTHWEST WATER COMPANY
		
	 By:
	 	  

	 	 	 Name:
 Title:  

  
  

	T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
		
	 By:
	 	  

	 	 	 Name:
 Title:  

  
  

	THE RIVERVIEW GROUP, LLC
		
	 By:
	 	  

	 	 	 Name:
 Title:  

  
  

	ZLP MASTER TECHNOLOGY FUND, LTD.
		
	 By:
	 	  

	 	 	 Name:
 Title:  

  
  

	CAMDEN PARTNERS LIMITED PARTNERSHIP
		
	 By:
	 	Camden Partners Hedge Fund I, LLC
	 Its:      
	 	General Partner
	 	 	 
	 	 	 
	 By:     
	 	  

	 	 	 Name:

	 	 	 Title:  

  
 .

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