Document:

EXHIBIT 10.2

                          REGISTRATION RIGHTS AGREEMENT

       REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 16,
2002, by and among Ault, Incorporated, a Minnesota corporation (the "Company"),
and Nidec America Corporation, a Delaware corporation (the "Purchaser").

       The Company has agreed, on the terms and subject to the conditions set
forth in the Asset Purchase Agreement dated July 16, 2002 (the "Purchase
Agreement"), to issue and sell to the Purchaser shares (the "Preferred Shares")
of the Company's Series B Convertible Preferred Stock, no par value (the
"Preferred Stock"). The Preferred Shares are convertible pursuant to a
Certificate of Designation (the "Certificate of Designation") into shares (the
"Conversion Shares") of the Company's Common Stock, no par value (the "Common
Stock"). In addition, the Company, pursuant to the Certificate of Designation,
may pay dividends on the Preferred Stock in shares of the Company's Common Stock
("Dividend Shares"). As a condition to Closing the Purchase Agreement, the
Company has agreed to enter into an agreement to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities Act"), and
under applicable state securities laws with respect to the Conversion shares and
Dividend Shares. Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Purchase Agreement.

       In consideration of the Purchaser entering into the Purchase Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

       1.1 Definitions. As used in this Agreement, the following capitalized
terms have the meanings respectively indicated below:

              (a) Applicable Period -- The period referred to in Section
       2.1(a)(ii), or such shorter period as is necessary to complete the
       distribution of the Registrable Securities covered thereby.

              (b) Holder -- Any person owning or having the right to acquire,
       through conversion of Preferred Shares, Registrable Securities, including
       initially the Purchaser and thereafter any permitted assignee thereof.

              (c) Exchange Act - The Securities Exchange Act of 1934, as
       amended.

              (d) Majority Holders-- Holders holding a majority of the
       Registrable Securities included in the Registration Statement.

<PAGE>

              (e) Person - An individual, partnership, joint venture,
       corporation, trust, limited liability company, limited liability
       partnership, unincorporated organization or government or any department
       or agency thereof.

              (f) Prospectus -- The prospectus included in the Registration
       Statement, including any preliminary prospectus, and any such Prospectus
       as amended or supplemented by any prospectus supplement with respect to
       the terms of the offering of any portion of the Registrable Securities
       covered by the Registration Statement, and by all other amendments and
       supplements to such Prospectus, including post-effective amendments, and
       in each case including all exhibits thereto and all material incorporated
       by reference therein.

              (g) Registrable Securities - The Conversion Shares and any
       Dividend Shares; provided that Registrable Securities shall cease to be
       Registrable Securities: (i) when a Registration Statement with respect to
       the sale of such securities shall have become effective under the
       Securities Act and such securities shall have been disposed of in
       accordance with such Registration Statement or, if earlier, when the
       Applicable Period shall have expired with respect to such securities;
       (ii) if counsel to the Company reasonably determines they are eligible to
       be distributed to the public pursuant to Rule 144(k) (or any successor
       provision) under the Securities Act and, if requested by the Company's
       transfer agent in connection with any sale by a Holder of Conversion
       Shares or Dividend Shares, provide a legal opinion to the Company's
       transfer agent to such effect; (iii) when new certificates for them not
       bearing a legend restricting further transfer shall have been delivered
       by the Company and subsequent disposition of them shall not require
       registration or qualification of them under the Securities Act or any
       similar state law then in force; (iv) when they shall have ceased to be
       outstanding; or, (v) with respect to Conversion Shares issuable upon the
       conversion of outstanding Preferred Shares, when such Preferred Shares
       shall have been redeemed.

              (h) Register, registered and registration - Refers to a
       registration effected by preparing and filing a Registration Statement in
       compliance with the Securities Act and the declaration or ordering of
       effectiveness of the Registration Statement by the SEC;

              (i) Registration Statement -- A "shelf"registration statement of
       the Company pursuant to the provisions of Section 2.1(a) of this
       Agreement which covers Registrable Securities and is filed on Form S-3
       under Rule 415 under the Securities Act, or any similar rule that may be
       adopted by the SEC, and all amendments and supplements to such
       registration statement, including post-effective amendments, in each case
       including the Prospectus contained therein, all exhibits thereto and all
       material incorporated by reference therein.

              (j) SEC-- The Securities and Exchange Commission.

              (k) Securities Act-- The Securities Act of 1933, as amended.

                                       2
<PAGE>

                                   ARTICLE II
                               REGISTRATION RIGHTS

       2.1 Registration.

              (a) Shelf Registration.

                    (i) The Company shall, as expeditiously as reasonably
possible (but in any event on or before the thirtieth (30th) day following the
date hereof), use its reasonable best efforts to prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities and use its
reasonable best efforts to cause the Registration Statement to become and remain
effective during the Applicable Period to enable the sale of Registrable
Securities in accordance with the method or methods of distribution reasonably
requested by Purchaser and disclosed in the Registration Statement.

                    (ii) The Company agrees to use its reasonable best efforts
to keep the Registration Statement continuously effective for a period of six
(6) years following the date on which such Registration Statement is initially
declared effective, or such shorter period which will terminate (i) when all of
the Registrable Securities covered by the Registration Statement have been sold
pursuant to the Registration Statement or (ii) when all Conversion Shares and
all Dividend Shares shall cease to be Registrable Securities as provided in
Section 1.1(g) above.

              (b) Registration Procedures. In connection with fulfilling its
responsibilities under the provisions of Section 2.1(a) above, the Company will,
as expeditiously as possible:

                    (i) prepare and file with the SEC such amendments and
supplements to such Registration Statement as may be necessary (A) to keep such
Registration Statement effective for the Applicable Period if required by the
rules, regulations or instructions applicable to the registration form used by
the Company for such Registration Statement or by the Securities Act or by any
other rules and regulations thereunder for shelf registration and (B) to enable
the Holders to comply with the provisions of the Securities Act with respect to
the sale or other disposition of all securities covered by such Registration
Statement during the Applicable Period in accordance with the intended methods
of set forth in such Registration Statement;

                    (ii) furnish to each Holder such number of copies of the
Registration Statement, such number of copies of the Prospectus included in such
Registration Statement and such other documents as such Holder may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities owned by such Holder (including any Prospectus amended or
supplemented as set forth in Section 2.1(b)(iv));

                    (iii) use its reasonable best efforts to register or qualify
for sale the Registrable Securities covered by the Registration Statement under
state securities or "blue-sky laws", so-called, of such states as any Holder
shall reasonably request (to the extent the sale of the Registrable Securities
in such states is not exempt from registration), and do any and all other acts
and things which may be necessary or advisable to enable such Holder to
consummate the disposition in such states of such Registrable Securities owned
by such Holder; PROVIDED, that the registration obligations in this subparagraph
(iii) shall be subject to the following limitations and conditions: (A) the
Company shall have no obligation whatsoever under this subparagraph (iii)

                                       3
<PAGE>

so long as the Common Stock is qualified as a National Market Security on the
NASDAQ Stock Market or is listed on a national securities exchange; (B) the
Company shall have no obligation to register or qualify Registrable Securities
in any states other than Connecticut, Minnesota and thirteen (13) other states
reasonably designated by the Majority Holders unless the Holder or Holders
seeking to register or qualify the Registrable Securities in additional states
agree in writing to pay all filing fees, legal fees and other costs and expenses
incurred in connection with such other registrations; (C) the Company shall not
be required for purposes of this subparagraph (iii) to (1) qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this subparagraph (iii) be obligated to be
qualified, (2) subject itself to taxation in any such jurisdiction, or (3)
consent to general service of process in any such jurisdiction.

                    (iv) notify each Holder covered by such Registration
Statement: (i) of the issuance by the SEC or any state securities authority of
any stop order suspending the effectiveness of such Registration Statement or
the initiation of any proceedings for that purpose, (ii) of receipt of
notification with respect to the suspension of the qualification of the
Registrable Securities for offer or sale in any jurisdiction or the initiation
of any proceeding for such purpose, (iii) at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act, of the Company's
becoming aware that the Prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing (other than a fact relating to such Holder), and as promptly as
practicable use its reasonable best efforts to prepare a Prospectus supplemented
or amended so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include 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 in the light of the
circumstances then existing;

                    (v) otherwise use its reasonable best efforts (A) to comply
with federal and applicable state securities laws and all applicable rules and
regulations of the SEC; and (B) make generally available to its security holders
the earning statement referred to in Section 11(a) of the Securities Act which
covers a period of at least 12 months after the effective date of the
Registration Statement; provided that in fulfilling its obligations under this
clause (B) the Company may rely on the provisions of and definitions contained
in Rule 158 under the Securities Act;

                    (vi) use its reasonable best efforts (A) to secure the
listing of all such Registrable Securities covered by such registration
statement on the NASDAQ National Market System; and (B) if the Company elects to
list the Company's Common Stock on a national securities exchange, to cause all
Registrable Securities covered by the Registration Statement to be listed on
such national securities exchange.

                    (vii) provide a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later than the
effective date of such Registration Statement;

                                       4
<PAGE>

                    (viii) make available for inspection by any Holder, and by
any attorney, accountant or other agent retained by any such Holder, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by any such Holder,
underwriter, attorney, accountant or agent in connection with such Registration
Statement; provided, however, that all such persons shall agree to standard
confidentiality provisions regarding all such records, documents and
information;

                    (ix) permit counsel to the Purchaser to review the
Registration Statement and all amendments and supplements thereto, and any
comments made by the staff of the SEC and the Company's responses thereto, a
reasonable period of time prior to the filing thereof with the SEC.

Each Holder shall be deemed to have agreed by including Registrable Securities
in the Registration Statement that upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 2.1(b)(iv)
hereof, such Holder will forthwith discontinue such Holder's disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 2.1(b)(iv) hereof
and, if so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Holder's possession of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the Applicable Period shall be extended by the number of
days during the period from and including the date of the giving of such notice
to and including the date when each Holder of any Registrable Securities covered
by such Registration Statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 2.1(b)(iv) hereof.

Each Holder shall provide to the Company in writing information concerning
itself required by law to be included in any Registration Statement registering
shares held by such Holder.

              (c) Registration Expenses. The Company shall, whether or not the
Shelf Registration shall become effective, pay all expenses incident to its
performance of or compliance with this Section in connection with the Shelf
Registration, including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws (subject to the
limitation set forth in Section 2.1(b)(iii) hereof), photocopy expenses,
messenger and delivery expenses, fees and disbursements of counsel for the
Company and all independent public accountants and other persons retained by the
Company; provided, however, that the Company shall bear no responsibility for
any fees or disbursements of any counsel for any Holder, any fees, commissions,
discounts or disbursements of any broker or underwriter. In all cases, any
allocation of Company personnel or other general overhead expenses of the
Company or other expenses for the preparation of financial statements or other
data normally prepared by the Company in the ordinary course of its business
shall be borne by the Company.

              (d) Indemnification and Contribution. The Company hereby
indemnifies, to the extent permitted by law, each Holder, its officers,
directors, employees, agents and representatives, if any, and each Person, if
any, that "controls" such Holder within the meaning

                                       5
<PAGE>

of Section 15 of the Securities Act, against all losses, claims, damages,
liabilities (or proceedings in respect thereof) and expenses (under the
Securities Act or common law or otherwise), joint or several, caused by any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses are caused by any untrue statement or alleged
untrue statement contained in or by any omission or alleged omission from
information respecting such Holder furnished in writing to the Company by such
Holder expressly for use therein. In connection with the Registration Statement
with respect to Registrable Securities held by a Holder, each such Holder will
furnish to the Company in writing such information respecting such Holder as
shall be reasonably requested by the Company for use in such Registration
Statement or Prospectus and will indemnify, to the extent permitted by law, the
Company, its officers, directors, employees, agents and representatives and each
Person, if any, that "controls" the Company within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages, liabilities (or
proceedings in respect thereof) and expenses resulting from any untrue statement
or alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in the Registration Statement
or Prospectus or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement is contained in or such omission
is from information so furnished in writing by such Holder expressly for use
therein provided, that, in no event shall any indemnity under this Section
2.1(d) exceed the net purchase price of securities sold by such Holder under the
Registration Statement. Any Person entitled to indemnification under the
provisions of this Section 2.1(d) shall: (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, permit such indemnifying party to assume the defense of such
claim, with counsel reasonably satisfactory to the indemnified party; and if
such defense is so assumed, such indemnifying party shall not enter into any
settlement without the consent of the indemnified party and such indemnifying
party shall not be subject to any liability for any such settlement made without
its consent (which consent shall not be unreasonably withheld). In the event an
indemnifying party shall not be entitled, or elects not, to assume the defense
of a claim, such indemnifying party shall not be obligated to pay the fees and
expenses of more than one counsel or firm of counsel for all parties indemnified
by such indemnifying party in respect of such claim, unless in the reasonable
judgment of any such indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties in respect to
such claim. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of a participating Holder, its officers,
directors or any Person, if any, who controls such Holder as aforesaid, and
shall survive the transfer of such securities by such Holder.

If for any reason the foregoing indemnity is unavailable, or is insufficient to
hold harmless an indemnified party, then the indemnifying party shall contribute
to the amount paid or payable by the indemnified party as a result of such
losses, claims, damages, liabilities or expenses (x) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
on the one hand and the indemnified party on the other or (y) if the allocation
provided by clause (x) above is not permitted by applicable law or provides a
lesser sum to the indemnified

                                       6
<PAGE>

party than the amount hereinafter calculated, in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations provided, however, that in
no case shall such Holder be responsible for any amount in excess of the net
purchase price of securities sold by it under the Registration Statement.
Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

       2.2 Rule 144. The Company covenants that it will timely file the reports
required to be filed by it under the Securities Act or the Exchange Act
(including but not limited to the reports under Sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(l) of Rule 144 adopted by the SEC
under the Securities Act) and the rules and regulations adopted by the SEC
thereunder (or, if the Company is not required to file such reports, will, upon
the request of any Holder, make publicly available such information), and will
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by: (i) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any Holder, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.

                                  ARTICLE III
                                  MISCELLANEOUS

       3.1 Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of the Majority
Holders; PROVIDED, that no amendment, modification or supplement or waiver or
consent to the departure with respect to the provisions of Section 2.1(d) hereof
shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder of Registrable Securities.

       3.2 Successors, Assigns and Transferees. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
representatives, administrators, heirs, successors and assigns, as applicable,
including, without limitation and without the need for an express assignment,
subsequent Holders. If any successor, assignee or transferee of any Holder shall
acquire Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable Securities such
Person shall be entitled to receive the benefits hereof and shall be
conclusively deemed to have agreed to be bound by all of the terms and
provisions hereof.

       3.3 Notices. Any notice, demand or request required or permitted to be
given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given (i) when delivered personally or
by verifiable facsimile transmission (with an

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<PAGE>

original to follow) on or before 5:00 p.m., eastern time, on a Business Day or,
if such day is not a Business Day, on the next succeeding Business Day, (ii) on
the next Business Day after timely delivery to a nationally-recognized overnight
courier and (iii) on the Business Day actually received if deposited in the U.S.
mail (certified or registered mail, return receipt requested, postage prepaid),
addressed to the parties as follows:

         If to the Company:

         Ault Incorporated
         7105 Northland Terrace
         Minneapolis, Minnesota  55428-1028
         Attn:  Frederick M. Green
         Tel:   (763) 592-1910
         Fax:  (763) 592-1911

         with a copy to:

         Lindquist & Vennum P.L.L.P.
         4200 IDS Center
         Minneapolis, Minnesota  55402
         Attn:  Richard Primuth, Esq.
         Tel:   (612) 371-3260
         Fax:  (612) 371-3207

         If to the Purchaser:

         Nidec America Corporation
         318 Industrial Lane
         Torrington,CT 06790
         Attn:  Thomas A. Keenan
         Phone:  860-496-4505
         Facsimile:  860-482-9126
         E-mail:  Tom.Kennan@Nidec.com

         With a copy to:

         Day, Berry & Howard LLP
         260 Franklin Street
         Boston, MA 02110-3179
         Attn:  Jeffrey A. Clopeck
         Phone:  617-345-4612
         Facsimile  617-345-4745
         E-mail:  jaclopeck@dbh.com

and if to any other Holder, to such address as shall be designated by such
Holder in writing to the Company.

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<PAGE>

       3.4 Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.

       3.5 Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of such provision, paragraph, word, clause, phrase or sentence in
every other respect and of the remaining provisions, paragraphs, words, clauses,
phrases or sentences hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.

       3.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.

       3.7 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Minnesota, without regard
to the conflicts of laws rules thereof.

       IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
hereby have executed this Registration Rights Agreement as of the date first
above written.

AULT, INCORPORATED

By: /s/ Frederick M. Green
   -------------------------------------------
Name:  Frederick M. Green
Title: President and Chief Executive Officer

NIDEC AMERICA CORPORATION

By: /s/ Thomas A. Keenan
   -------------------------------------------
Name:  Thomas A. Keenan
Title: President and Chief Operating Officer

                                       9Prepared by R.R. Donnelley Financial -- Severance Compensation Agreement

  
 Exhibit 10.9B 
  
 SEVERANCE COMPENSATION 
 AGREEMENT 
  
 THIS SEVERANCE COMPENSATION AGREEMENT (the “Agreement”) is made and entered into as of the 31st day of August,
2001 by and between SOUTHWEST WATER COMPANY, a Delaware corporation (the “Company”), and Robert W. Monette (“Executive”), with respect to the following: 
  
 RECITALS 
  
 A.  The Company,
through its subsidiaries Suburban Water Systems (“Suburban”), ECO Resources, Inc. (“ECO”) and New Mexico Utilities, Inc. (“NMU”), Master Tek International, Inc. (“MTI”) and Operations Technologies, Inc.
(“OPTECH”), is engaged in the business of producing and delivering water and providing water and wastewater services, and providing multi-family billing and sub-metering services. Executive is employed by Southwest Water Company as the
President of OPTECH. 
  
 B.  The Company’s Board of Directors has determined that it is appropriate to
reinforce and encourage the continued attention and dedication of members of the Company’s management, including Executive, to their assigned duties without distraction in potentially disturbing circumstances arising from the possibility of a
change in control of the Company and/or the subsidiary of the Company which employs Executive. 
  
 C.  This
Agreement sets forth the severance compensation which the Company agrees it will pay to Executive if Executive’s employment with the Company or, if applicable, the subsidiary which employs Executive, terminates under one of the circumstances
described herein following a Change in Control, as defined herein, of the Company or the subsidiary of the Company which employs Executive. 
  
 AGREEMENT 
  
 IN CONSIDERATION OF the foregoing recitals and the mutual promises and
covenants contained herein, the Company and Executive agree as follows: 
  
 1.  Term.    The term of this Agreement shall commence upon the last execution and delivery of this Agreement by the Company and shall continue until the first to occur of: 

 
 (a)  The second anniversary of any Change in Control, as defined in paragraph 2 below, of the Company
or the subsidiary which employs Executive. For the purposes of this provision, the two year period provided for herein, whether commenced by a Change in Control of the Company or a change in control of a subsidiary, shall not be extended by a
subsequent Change in Control of either the Company or, if applicable, the Subsidiary which employs Executive. 

  
 (b)  The Retirement, as defined in paragraph 2 below,
of Executive. 
  
 (c)  The death of Executive. 
  
 (d)  Termination by the Company (or the subsidiary which employs Executive, if applicable) of Executive’s
employment for Cause, as defined in paragraph 2 below. 
  
 (e)  Termination by Executive of
Executive’s employment with Robert W. Monette, whether or not for Good Reason, as defined in paragraph 2 below. 
  
 Provided, however,
that upon any termination by Executive for Good Reason, or any termination of Executive by the Company (or the subsidiary which employs Executive, if applicable) other than for Cause, the obligations of the Company pursuant to paragraph 4 below
shall survive such termination. Provided further, that the rights of Executive pursuant to paragraph 7 below shall survive any termination of this Agreement, including termination by Executive of Executive’s employment other than for Good
Reason and a termination by the Company (or the subsidiary which employs Executive, if applicable) of Executive’s employment for Cause. 
  
 2.  Definitions.    As used in this Agreement, the following terms shall have the meanings given to them in this paragraph 2: 
  
 (a)  Cause.    The term “Cause” shall mean, and the Company (or the
subsidiary which employs Executive, if applicable) shall be entitled to terminate the employment of Executive for (i) fraud, misappropriation or embezzlement of money or property by Executive, (ii) willful and continued failure of Executive to
substantially perform Executive’s duties with the Company (or the subsidiary which employs Executive, if applicable) (other than any such failure resulting from incapacity of Executive due to physical or mental illness), after a demand for
substantial performance is delivered to Executive by the Chief Executive Officer of the Company or the Compensation Committee of the Board, which demand specifically identifies the manner in which Executive has not substantially performed
Executive’s duties and (iii) willful engagement by Executive in misconduct which is materially injurious to the Company (or the subsidiary which employs Executive, if applicable), monetarily or otherwise. For purposes of this subparagraph, no
act, or failure to act, on Executive’s part shall be considered “willful” unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive’s action or omission was in the best
interest of the Company (or the subsidiary which employs Executive, if applicable). Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Executive a copy
of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Company’s Board of Directors at a meeting of the Board called and held for the purpose (after reasonable notice to Executive
and an opportunity for Executive, together with Executive’s counsel, to be heard before the Board), finding that in the good faith opinion of the Board Executive was guilty of conduct set forth in this subparagraph and specifying the
particulars thereof in detail. 
 

 2 

  
 (b)  Change in
Control.    The term “Change in Control” shall mean, with respect to the Company or the subsidiary which employs Executive, as applicable, each of the following: 
  

(i)  A change in control of the Company or the subsidiary which employs Executive, as applicable, of a nature that would be required to be
reported in response to Item 6(e)of Schedule 14A, Regulation 240.14a-101, promulgated under the Securities Exchange Act of 1934, as amended, as in effect on the date of this Agreement, or, if Item 6(e) is no longer in effect, any regulation issued
by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 which serves similar purposes (i.e., a change in the person or persons owning, directly or indirectly, sufficient voting stock to elect the Board of Directors
or to take other significant shareholder actions for the Company or the subsidiary which employs Executive, as applicable). Provided that, without limitation, a Change of Control shall be deemed to have occurred if and when: 
  
 (A)  Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934) who is not at the date hereof a beneficial owner, directly or indirectly, of securities of the Company (or the subsidiary which employs Executive, if applicable) representing fifty percent (50%) or more of the combined voting power of the
Company’s (or the subsidiary which employs Executive, if applicable) then outstanding securities becomes such a beneficial owner, or 
  
 (B)  During any period of two (2) consecutive years, individuals who were members of the Board of Directors of the Company at the beginning of such period cease for any reason (other than
death or disability) to constitute at least a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director, was approved by vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period. The provisions of this clause (B) shall apply only at the Company level and not at the subsidiary level. 
  
 (ii)  Consummation of (A) any reorganization, consolidation or merger of the Company (or of the subsidiary which employs Executive, if applicable)
in which the Company (or of the subsidiary which employs Executive, if applicable) is not the continuing or surviving corporation or pursuant to which shares of the Company’s (or of the subsidiary which employs Executive, if applicable) Common
Stock would be converted into cash, securities or other property, other than a merger of the Company (or of the subsidiary which employs Executive, if applicable) in which the holders of the Company’s (or of the subsidiary which employs
Executive, if applicable) common stock immediately prior to such transaction, immediately following such transaction, own more than fifty percent (50%) of the combined voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company’s then outstanding, voting securities or (B) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the
Company (or of the subsidiary which employs Executive, if applicable). 
  
 For the purpose of applying the foregoing
definition, (x) if Executive is an employee of the Company, then the term Change in Control shall mean, as to Executive, only a change in control 
 

 3 

  
 of the Company and (y) if Executive is an employee of a subsidiary of the
Company, then the term Change in Control shall mean, as to Executive, either a change in control of the Company or a change in control of the subsidiary which employs Executive. 
  
 (c)  Date of Termination.    The term “Date of Termination” shall mean: 
  
 i.  If this Agreement is terminated by the death of Executive, the date of death of Executive; or 

 
 ii.  If Executive’s employment is terminated by the Company (or the subsidiary which employs
Executive, if applicable) for any reason, the date on which a Notice of Termination is given; provided that if within thirty (30) days after any Notice of Termination is given to Executive by the Company (or the subsidiary which employs Executive,
if applicable) Executive notifies the Company (or the subsidiary which employs Executive, if applicable) that a dispute exists concerning the termination, the Date of Termination shall be the date the dispute is finally determined, whether by mutual
agreement by the parties or upon final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected). 
  
 (d)  Good Reason.    The term “Good Reason” shall mean, with respect to any termination by Executive of
Executive’s employment with the Company (or the subsidiary which employs Executive, if applicable), each of the following which occurs subsequent to a Change in Control without the express written consent of Executive: 
  
 (i)  The assignment to Executive by the Company (or the subsidiary which employs Executive, if applicable) of
duties inconsistent with Executive’s position, duties, responsibilities and status with the Company (or the subsidiary which employs Executive, if applicable) immediately prior to a Change in Control of the Company (or the subsidiary which
employs Executive, if applicable), or a change in Executive’s title or offices as in effect immediately prior to a Change in Control of the Company (or the subsidiary which employs Executive, if applicable), or any removal of Executive from or
any failure to reelect Executive to any of such positions, except in connection with the termination of Executive’s employment for Retirement or Cause or as a result of Executive’s death or by Executive other than for Good Reason;

  
 (ii)  A reduction by the Company (or the subsidiary which employs Executive, if
applicable) in Executive’s base salary as in effect on the date hereof or as the same may be increased from time to time during the term of this Agreement or the Company’s (or the subsidiary which employs Executive, if applicable) failure
to increase (within twelve (12) months after Executive’s last increase in base salary) Executive’s base salary after a Change in Control of the Company (or the subsidiary which employs Executive, if applicable) in an amount which at least
equals, on a percentage basis, the average percentage increase in base salary for all officers of the Company (or the subsidiary which employs Executive, if applicable) effected in the preceding twelve (12) months; 
  
 (iii)  Any failure by the Company (or the subsidiary which employs Executive, if applicable) to continue in
effect any benefit plan or arrangement in which 
 

 4 

  
 Executive is participating at the time of a Change in Control of the Company (or
the subsidiary which employs Executive, if applicable) (or any other plans providing Executive with substantially similar benefits) (hereinafter referred to as “Benefit Plans”), or the taking of any action by the Company (or the subsidiary
which employs Executive, if applicable) which would adversely affect Executive’s participation in or reduce Executive’s benefits under any such Benefit Plan, expressed as a percentage of his base salary, by more than ten (10) percentage
points in any fiscal year as compared to the prior fiscal year or deprive Executive of any material fringe benefit enjoyed by Executive at the time of a Change in Control of the Company (or the subsidiary which employs Executive, if applicable);

  
 (iv)  Any failure by the Company (or the subsidiary which employs Executive, if
applicable) to continue in effect any bonus or incentive plan or arrangement in which Executive is participating at the time of a Change in Control of the Company (or the subsidiary which employs Executive, if applicable) (or any other plans or
arrangements providing him with substantially similar benefits) (hereinafter referred to as “Incentive Plans”) or the taking of any action by the Company (or the subsidiary which employs Executive, if applicable) which would adversely
affect Executive’s participation in any such Incentive Plan or reduce Executive’s benefits under any such Incentive Plan, expressed as a percentage of his base salary, by more than ten (10) percentage points in any fiscal year as compared
to the immediately preceding fiscal year; 
  
 (v)  Any failure by the Company (or the
subsidiary which employs Executive, if applicable) to continue in effect any plan or arrangement to receive securities of the Company in which Executive is participating at the time of a Change in Control of the Company (or the subsidiary which
employs Executive, if applicable) (or plans or arrangements providing him with substantially similar benefits) (hereinafter referred to as “Securities Plans”) or the taking of any action by the Company (or the subsidiary which employs
Executive, if applicable) which would adversely affect Executive’s participation in or materially reduce Executive’s benefits under any such Securities Plan; 
  
 (vi)  Any requirement by the Company (or the subsidiary which employs Executive, if applicable) that Executive be based anywhere other than within
fifty (50) miles of Executive’s office location as of the date of a Change in Control, except for required travel by Executive on the Company’s (or the subsidiary which employs Executive, if applicable) business to an extent substantially
consistent with Executive’s business travel obligations at the time of a Change in Control of the Company (or the subsidiary which employs Executive, if applicable); 
  
 (vii)  Any failure by the Company (or the subsidiary which employs Executive, if applicable) to provide Executive with the number of paid vacation
days to which Executive is entitled at the time of a Change in Control of the Company (or the subsidiary which employs Executive, if applicable); 
  
 (viii)  Any material breach by the Company of any provision of this Agreement; 
 

 5 

  
 (ix)  Any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the Company; or 
  
 (x)  Any
purported termination by the Company (or the subsidiary which employs Executive, if applicable) of Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of subparagraph (e) below, and for
purposes of this Agreement, no such purported termination shall be effective. 
  
 (e)  Notice of Termination.    Any termination of Executive’s employment by the Company (or the subsidiary which employs Executive, if applicable) for Retirement or Cause shall be
communicated by a Notice of Termination. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific ground for such termination relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment. For purposes of this Agreement, no such purported termination by the Company (or the subsidiary which employs Executive, if applicable)
shall be effective without such Notice of Termination. 
  
 (f)  Retirement.    The term “Retirement” as used in this Agreement shall mean termination by the Company (or the subsidiary which employs Executive, if applicable) or Executive of
Executive’s employment based on Executive’s having reached age sixty-five (65) or such other age as shall have been fixed in any written agreement between Executive and Executive’s employer entity. 
  
 (g)  Termination of Employment.    The term “Termination of Employment”
shall mean any termination of Executive’s employment with the Company (or the subsidiary which employs Executive, if applicable), however effected or caused. 
  
 (h)  Involuntary Termination of Employment.    The term “Involuntary Termination of Employment” shall mean
(i) any termination by the Company (or the subsidiary which employs Executive, if applicable) of Executive’s employment with the Company (or the subsidiary which employs Executive, if applicable) effected after a Change in Control other than a
termination for Retirement, death or Cause and (ii) any termination of Executive’s employment with the Company (or the subsidiary which employs Executive, if applicable) by Executive after a Change in Control for Good Reason. 

 
 3.  Services by Executive.    In consideration for the Company’s execution and
delivery of this Agreement, Executive agrees that Executive will render services to the Company (or to any subsidiary thereof or successor thereto, as applicable) during the period of Executive’s employment to the best of Executive’s
ability and in a prudent and businesslike manner and that Executive shall devote substantially the same time, efforts and dedication to Executive’s duties as heretofore devoted. 
  
 4.  Severance Obligations Upon any Involuntary Termination.    Upon any Involuntary Termination of Executive’s employment with the
Company (or the subsidiary which employs Executive, if applicable) subsequent to a Change in Control and during the term of this 
 

 6 

 Agreement, Executive shall be entitled to the benefits provided in this paragraph (subject to any applicable payroll taxes or other taxes
required to be withheld and employee benefit premiums): 
  
 (a)  The Company shall pay (or
shall cause the employer subsidiary to pay) to Executive Executive’s full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given plus credit for any vacation earned but not taken and the
amount, if any, of any bonus for a past fiscal year which has been awarded to Executive but not yet paid to Executive pursuant to any bonus plan of the Company (or the subsidiary which employs Executive, if applicable). Such payment shall be made
within five (5) days after the Date of Termination. 
  
 (b)  The Company shall pay (or
shall cause the employer subsidiary to pay) to Executive, as severance pay, an amount equal to two and ninety-nine one hundredths (2.99) times Executive’s annual base compensation, as defined herein (the “Severance Payment”). As used
herein, annual base compensation shall mean the average aggregate annual amount paid by the Company (or any subsidiary of or successor to the Company) to Executive for the five (5) full calendar years preceding the date of Change of Control for
salaries, bonuses and automobile allowances (or the amount reported by Executive as taxable income for personal use of a car provided by the Company (or the subsidiary which employs Executive, if applicable) in lieu of an automobile allowance)
together with the amounts, if any, of insurance premiums paid by the Company (or the subsidiary which employs Executive, if applicable) with respect to Executive and reported as taxable income by Executive and any other amounts paid or provided by
the Company (or any successor to or subsidiary of the Company and reported as taxable income by Executive. If Executive has not been employed by the Company (or the subsidiary which employs Executive, if applicable) for five (5) full calendar years
preceding the date of Change of Control, the Severance Payment shall be computed based on the average aggregate annual amount paid by the Company (or the subsidiary which employs Executive, if applicable) to Executive for the full term of
Executive’s employment with the Company (or the subsidiary which employs Executive, if applicable). The Severance Payment shall be paid in cash in a single lump sum within five (5) days after the Date of Termination. 
  
 (c)  The Company shall cause Executive to continue to be covered, without any cost to Executive in excess of the
cost borne by Executive prior to the Change of Control, under health, medical and dental benefits (“Benefits”) comparable to those in effect immediately prior to the Change of Control, including, but not limited to, medical, dental, life
insurance, accidental death and dismemberment, and long term disability benefits. Such continuation shall (i) also apply to Executive’s dependents (including Executive’s spouse) who were covered under such Benefits immediately prior to the
Change of Control and (ii) apply for twenty-four (24) months after the Date of Termination; provided, however, that such coverage shall terminate if and to the extent Executive becomes eligible for Benefits coverage from a subsequent employer;
provided further, however, that if Executive (and/or Executive’s spouse) would have been entitled to retiree Benefits under the Company’s benefit plans (or those of the subsidiary which employs Executive, if applicable) had Executive
voluntarily retired on the Date of Termination, then such coverage shall be continued as provided under such plans. 
 

 7 

  
 (d)  Provide a full service outplacement service for
Executive as selected by Executive for a period not exceeding three (3) months and at a cost not exceeding $15,000 in the aggregate. 
  
 Any payment due by the Company pursuant to this paragraph 4 which is not made as and when due shall bear interest from the date due until date of payment at the maximum rate which Executive may charge for the loan or
forbearance of money under the then applicable usury law of the State of California. 
  
 5.  No
Obligation to Mitigate Damages.    Executive shall not be required to mitigate damages or the amount of any payment provided for under paragraph 4 of this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as the result of employment by another employer after the Date of Termination, or otherwise. Any indebtedness of Executive to the Company (or
to any subsidiary of or successor to the Company) as of the Date of Termination may be offset against the Company’s payment obligations pursuant to paragraph 4 above. 
  
 6.  Parachute Payment Limitation.    Notwithstanding anything to the contrary in this Agreement, the payments and benefits otherwise
provided in paragraphs 4(b), (c) and (d) of this Agreement shall be reduced if and to the extent that such payments and benefits, when added to any payments and benefits provided by the Company (and the subsidiary which employs Executive, if
applicable) other than under this Agreement, would result in any such payments being nondeductible to the Company or would subject Employee to an excise tax pursuant to the golden parachute payment provisions of Section 280G or Section 4999 of the
Internal Revenue Code of 1986, as amended. Any reduction of payments and benefits under this Agreement resulting from the foregoing limitations shall be applied to the payments and benefits due to be otherwise provided to Executive latest in time.

  
 7.  Other Benefits.    The provisions of this Agreement, and any payment
provided for in paragraph 4 hereof, shall not reduce any amounts otherwise payable, or in any way diminish Executive’s existing rights, or rights which would accrue solely as a result of the passage of time, under any Benefit Plan, Incentive
Plan or Securities Plan, employment agreement or other contract, plan or arrangement. The provisions of this paragraph 7 shall apply to any Termination of Employment with the Company (or the subsidiary which employs Executive if applicable), whether
or not such Termination of Employment results in payments due to Executive pursuant to paragraph 4 above. 
  
 8.  Not a Contract of Employment.    This Agreement shall not be deemed to constitute a contract of employment. Further, no portion of this Agreement shall affect (a) the right of the Company (or
any subsidiary of or successor to the Company) to discharge Executive at will or (b) the terms and conditions of any other agreement between the Company (or the subsidiary which employs Executive, if applicable) and Executive, except as expressly
provided herein. 
 

 8 

  
 9.  Successors to the Company. 
  
 (a)  The Company shall require any successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to Executive, expressly, absolutely and unconditionally to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Any failure of the Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall entitle Executive to terminate Executive’s employment for Good Reason. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined
and any successor or assign to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this paragraph 9 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
If at any time during the term of this Agreement Executive is employed by any corporation a majority of the voting securities of which is then owned by the Company, “Company” as used herein shall include such employer. In such event, the
Company agrees that it shall pay or shall cause such employer to pay any amounts owed to Executive pursuant to paragraph 4 hereof. 
  
 (b)  This Agreement shall inure to the benefit of and be enforceable by Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts are still payable to Executive hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Executive’s devisee,
legatee, or other designee or, if there be no such designee, to Executive’s estate. 
  
 10.  Notices.    All notices required or permitted hereunder shall be in writing and shall be personally delivered or sent by first class mail, registered or certified with return receipt
requested to the parties at their respective addresses set forth after their signatures to this Agreement. Any notice which is personally served shall be effective upon delivery; any notice sent by first class mail, registered or certified, postage
prepaid, return receipt requested and properly addressed shall be effective upon the date of delivery or refusal indicated on the return receipt. Either party may change his, her or its address for notices hereunder by written notice to the other
given in the manner specified in this paragraph. 
  
 11.  General Provisions. 

 
 (a)  The Company’s obligation to pay (or to cause one of its subsidiaries to pay) Executive the
amounts and to make the arrangements provided for in paragraph 4 hereof, shall be absolute and unconditional and, except as provided in paragraphs 5 and 6 hereof, shall not be affected by any circumstances, including without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company (or any subsidiary of or successor to the Company) may have against Executive. All amounts payable by the Company (or any subsidiary of or successor to the Company) shall be paid
without notice or demand. 
 

 9 

  
 (b)  No provisions of this Agreement may be modified,
amended, waived or discharged unless such waiver, modification or discharge is agreed to in a writing signed by Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of any similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 
  
 (c)  This Agreement contains each and every agreement of every kind and nature whatsoever between the parties
hereto concerning the subject matter hereof, and all preliminary negotiations and agreements of whatsoever kind with respect to the subject matter hereof are superseded and of no further force or effect. If Executive is entitled to and receives the
benefits provided in paragraphs 4 and 7 hereof, performance of the obligations of the Company thereunder shall constitute full settlement of all claims which Executive might otherwise assert against the Company on account of termination of
Executive’s employment. 
  
 (d)  This Agreement shall be governed by and construed in
accordance with the laws of the State of California. 
  
 (e)  This Agreement may be
executed in two (2) or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument 
  
 (f)  The invalidity or unenforceability of any provision of this Agreement as to any jurisdiction, fact or circumstance shall not affect the
validity or enforceability of any other provision of this Agreement or of such provision as to any other jurisdiction, fact or circumstance, and each provision of this Agreement shall be enforced and complied with to the maximum extent possible.

  
 (g)  Executive shall not have any right to pledge, hypothecate, anticipate or assign
this Agreement or the rights hereunder, except by last will and testament. 
  
 (h)  The
obligation to pay amounts under this Agreement is an unfunded obligation of the Company, and no such obligation shall create a trust or be deemed to be secured by any pledge or encumbrance on any property of the Company (or any subsidiary of or
successor to the Company). 
  
 (i)  In the event of any legal action between the Company
and Executive to enforce the provisions of this Agreement, to prevent the breach or continued breach of this Agreement, to recover damages on account of the breach or alleged breach of this Agreement, to seek a judicial determination of the
obligations and rights of the parties hereunder or in which this Agreement is asserted as a defense, the prevailing party shall be entitled to recover from the other party its attorneys’ fees incurred in such amount as the court shall determine
to be reasonable, in addition to its costs and all other relief which the court determines such prevailing party is entitled to receive. For the purposes of this provision, the term “legal action” shall exclude an action by Executive as
the result of any termination of Executive’s employment. Except as provided in the immediately preceding sentence, all legal expenses 
 

 10 

 which are reasonable and necessary and which are associated with any such termination shall be paid by the Company.

  
 (j)  In the event Executive is employed by a subsidiary of the Company rather than the
Company itself, all references herein to the Company shall, as and when required by the context of this Agreement, be deemed to refer to such subsidiary employer. The provisions of this subparagraph shall not, however, be deemed or construed to
relieve the Company of any of the Company’s obligations or to deprive the Company of any of its rights pursuant to this Agreement. 
 

 11 

  
 IN WITNESS WHEREOF, Executive and the Company have executed and delivered this
Severance Compensation Agreement as of the day and year first above written. 
  
 Robert W. Monette

  
 “Executive” 
  
 Address for Notices: 
  
 Southwest Water Company 
 225 N. Barranca Avenue-Suite 200 
 West Covina, CA 91791-1605 
  
 
	  SOUTHWEST WATER COMPANY,
     a Delaware corporation
 
	 
	 By:
 	 	       /s/ ANTON C. GARNIER
 

	  	 	 Anton C. Garnier
 
	 
	 Title:
 	 	 President
 

	  	 	 President
 

 
 
	  
 Address for Notices:
  
 Southwest Water Company
 225 North Barranca
Avenue, Suite 200
 West Covina, California 91791-1605
 Attn: Corporate Secretary
 

 
 

 12

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