Document:

Exhibit 4.1

    Exhibit
      4.1

    SIMMONS
      FIRST NATIONAL CORPORATION 

    

    INCENTIVE
      AND NONQUALIFIED STOCK OPTION PLAN 

    

    I.
      Purpose of the Plan 

    

    This
      Stock
      Option Plan (the "Plan") is intended as an incentive to employees of Simmons
      First National Corporation ("Company") and its affiliates or subsidiaries.
      The
      purposes of the Plan are to retain employees with a high degree of training,
      experience and ability, to attract new employees whose services are considered
      unusually valuable, to encourage the sense of proprietorship of such persons
      and
      to stimulate the active interest of such persons in the development and
      financial success of the Company. It is intended that options granted under
      the
      Plan, if so designated, will qualify as "incentive stock options" under the
      Internal Revenue Code of 1986 as amended (the "Internal Revenue Code") provided,
      however, that nonqualified stock options may also be granted which do not
      qualify as incentive stock options. 

     

    II.
      Administration
      of the Plan

     

    A.
      The
      Executive Compensation Committee of the Board of Directors of the Company
      ("Committee"), which shall consist of at least four members of the Board or
      Directors all of whom are "disinterested persons" within the meaning of Rule
      16b-3 of the Securities and Exchange Commission, will recommend to the Board
      of
      Directors qualified individuals as described in Paragraph III to participate
      in
      the Plan. The Committee shall have the power and authority to recommend to
      the
      Board the number of shares to be optioned to each participant and which
      participants shall receive options, to interpret the provisions of the Plan
      and
      to supervise the administration of the Plan. All decisions and selections made
      by the Committee pursuant to the Plan shall be made by a majority of the members
      eligible to vote on matters affecting the Plan. For the purposes or the Plan,
      no
      member of the Board of Directors shall be authorized to vote upon any matters
      concerning the Committee, who is an executive officer or salaried employee
      of
      the Company or of any of its affiliates or subsidiaries or who has, at any
      time
      within one year prior to the date when any matter involving the Plan is being
      acted upon by the Committee, served the Company or any of its affiliates or
      subsidiaries in such a position. The Committee may from time to time refer
      matters involving the Plan to one or more special subcommittees of its members
      for study, reports and recommendations to be made to the Committee. Any decision
      of the Committee which shall be reduced to writing and signed by a majority
      of
      its members shall be fully effective the same as if such decision were made
      by a
      duly constituted meeting or the Committee. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    B.
      The
      Board of Directors of the Company shall by resolution grant options to the
      participants designated by the Committee for the amount of shares recommended
      by
      the Committee. Such grant shall be in the absolute decision of the Board of
      Directors, and shall be final without approval of the shareholders of the
      Company.

     

    III.
      ELIGIBILITY
      

    

    Eligibility
      for participation in the Plan shall include only employees or the Company or
      of
      any affiliates or subsidiaries of the Company (as defined in Section 425(f)
      of
      the Internal Revenue Code) who are executive, administrative, professional,
      or
      technical personnel and who have the principal responsibility, subject to the
      Board of Directors, for the management, direction and financial success of
      the
      Company. An employee who owns, directly or indirectly, stock possessing more
      than ten percent (10%) of the total combined voting power or value of all
      classes of stock in the Company or an affiliate or subsidiary thereof shall
      not
      be eligible to participate in the Plan. The Directors of the Company who are
      not
      employees of the Company or of any affiliates or subsidiaries, shall not be
      eligible to participate in the Plan by reason of their status as Directors,
      but
      Directors who are qualified employees shall be eligible to participate. An
      employee who has been granted an option hereunder may be granted an additional
      option or options if the Committee shall so determine.

     

    IV.
      SHARES
      SUBJECT TO THE PLAN

     

    Subject
      to
      the adjustments as provided in Paragraph IX hereof, there shall be subject
      to
      the Plan 70,000 shares of class A common stock of the Company par value $5.00
      per share. Any or all of the shares subject to the Plan may be granted at such
      time as the Board of Directors may determine, The shares subject to the Plan
      shall consist of authorized but unissued shares or treasury shares held by
      the
      Company. Any of such shares which may remain unsold and which are not subject
      to
      outstanding options at the termination of the Plan shall cease to be subject
      to
      the Plan, but until termination of the Plan, the Company shall at all times
      make
      available to a sufficient number of shares to meet the requirements of the
      Plan.
      Should any option expire or be cancelled prior to the exercise in full, the
      shares thereof subject to such options may again be subject to an option under
      the Plan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    V.
      OPTION
      PRICE 

    

    A.
      The
      purchase price for each share under an option granted pursuant to the Plan
      shall
      be determined by the Committee, but shall in the case of options designated
      as
      incentive stock options not be less than 100% of the fair market value of such
      shares on the date the option is granted. 

    

    B.
      The
      aggregate fair market value (determined at the time the option is granted)
      of
      stock treated as acquired pursuant to incentive stock options which are
      exercisable by any participant for the first time during any calendar year
      (under all incentive stock option plans of the Company or as affiliates or
      subsidiaries thereof) shall not exceed $100,000. 

    

    C.
      The
      fair market value of a share on a particular date shall be deemed to be (i)
      the
      average of the closing bid and ask price as reported by the National Association
      of Securities Dealers Quotation System ("NASDAQ") on that date or (ii) if the
      stock hereafter becomes listed on a stock exchange, the mean between the highest
      and lowest sales price per share of the stock on the principal national
      securities exchange which the stock may be listed from time to time on that
      date
      or, in either case, if there shall have been no sale on that date last preceding
      date on which such sale or sales were reported to NASDAQ or effected such
      exchange. In the event that the method just described for determining the fair
      market value of the shares shall not be applicable or shall not remain
      consistent with the provisions of the Internal Revenue Code or the regulations
      of the Secretary of the Treasury promulgated thereunder, then the fair market
      value per share shall be determined by such other method consistent with the
      Internal Revenue Code or regulations as the Committee shall in its discretion
      select and apply at the time of the grant of such option.

     

    VI.
      OPTION
      PERIOD

    

    A.
      Options
      granted under this Plan shall terminate and be of no force and effect with
      respect to any shares not previously purchased by the optionee upon the
      happening of the first of the following: 

     

    1.
      The
      expiration of ten (10) years from the date of granting such option, or

    

    2.
      The
      expiration of three (3) months after termination of the optionee's employment
      with the Company for any reason (including retirement), with or without cause,
      other than by death, or 

    

    3.
      The
      expiration of twelve (12) months after the date of death of the optionee.

    

    B.
      "Employment with the Company" as used in this Plan shall include employment
      with
      any affiliate or subsidiary of the Company and options granted under this Plan
      shall not be affected by an employee's transfer of employment from the Company
      to an affiliate or subsidiary, from an affiliate or subsidiary to the Company
      or
      between affiliates or subsidiaries.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    VII.
      TERMS
      AND EXERCISE OF OPTIONS 

    

    A.
      The
      Board of Directors in granting options hereunder shall have discretion to
      determine the terms on which options shall be exercisable, including such
      provisions as deemed advisable to permit qualification as "incentive stock
      options" within the meaning of Section 422A of the Internal Revenue Code, as
      the
      same may from time to time be amended. Specifically, the Board is authorized
      to
      grant options which are exercisable in installments over any period up to and
      including nine (9) years after the grant. Any incentive stock options
      outstanding under the Plan may be amended, if necessary, in order to retain
      such
      qualifications. 

     

    B.
      Options
      may be exercised solely by the optionee during his lifetime, or in the event
      of
      his legal incapacity, by his legal representative, or after his death, by the
      person or persons entitled thereto under his Will or the laws of descent and
      distribution. In the event of the retirement of an optionee while in the
      employee of the Company at or beyond age 65, or any time after age 62, if the
      optionee has 10 or more years of employment with the company any unmatured
      installments of the option shall be accelerated as of the date of retirement
      and
      the option shall be exercisable in full within three months following the date
      of retirement. In the event of the death of an optionee while in the employee
      of
      the Company, any unmatured installments of the option shall be accelerated
      as of
      the date of death and the option shall be exercisable in full within twelve
      (12)
      months following the date of death, unless otherwise expressly provided in
      the
      option granted to such optionee. In the event of termination of employment
      for
      any reason other than retirement or death, if the Committee fails for any reason
      to take action to approve acceleration of then unmatured installments of any
      outstanding option, such option shall be exercisable by the employee' or his
      legal representative within three (3) months of the date of termination as
      to
      all then matured installments and all unmatured installments shall be forfeited.
      In no event may an option be exercised more than ten (10) years after the date
      of its grant. 

    

    C.
      Options
      may be exercised, whether in whole or in part, by written notification to the
      Company, accompanied by cash or Cashier's Check for the aggregate price of
      the
      number of shares being purchased, or upon exercising of an option the optionee
      may, with the approval of the Committee, pay for the shares by tendering stock
      in the Company already owned by the optionee, with such stock being valued
      on
      the date of exercise by application of the method set out in Paragraph V
      hereinabove. An optionee may, with approval of the Committee, also pay for
      such
      shares with a combination of stock and cash of the Company as stated above.
      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    D.
      Options
      granted under the Plan which are not incentive stock options become exercisable
      at such time the Committee may, in its discretion, determine, which time may
      be
      different from those specified in Paragraph VIIA for incentive stock options.
      In
      the event stock options covering more than $100,000 of stock which would
      otherwise qualify as an incentive stock option first becomes exercisable in
      a
      calendar year (under a11 incentive stock option plans of the Company or an
      affiliate or subsidiary thereof), the Committee may designate the stock that
      is
      treated as an incentive stock option by issuing a separate stock certificate
      (or
      certificates) for $100,000 of stock and identifying such certificate (or
      certificates) as incentive stock option stock in the Company's stock transfer
      records and the balance of the stock shall be treated as acquired pursuant
      to
      the exercise of a nonqualified stock option. 

     

    E.
      If a
      participant leaves employment with the Company and accepts employment within
      twelve (12) months after separation from the Company with a financial
      institution with business offices within the State of Arkansas, any unexercised
      options granted to the participant under the Plan shall be forfeited and any
      stock purchased within six (6) months prior to or any time following the
      termination of employment with the Company pursuant to the exercise of a
      nonqualified stock option granted hereunder shall be subject to an option on
      behalf of the Company to repurchase such stock at the option price for a period
      commencing on the date of the termination of employment and expiring thirty
      (30)
      days following the first anniversary of such employees' termination of
      employment. 

    

    F.
      Stock
      certificates to be issued or transferred pursuant to Options granted under
      this
      Plan shall have noted thereon that same have been issued or transferred pursuant
      to an option granted under this P Ian and are subject to the terms of any
      restrictions on transfer contained in the Plan. 

     

    VIII.
      ASSIGNABILITY
      

    

    Options
      granted under this Plan shall not be assignable or transferable by the optionee
      r otherwise than by Will or the laws of descent and distribution and shall
      be
      exercisable during the lifetime of the optionee only by the optionee for his
      individual account or r in the event of his legal incapacity, by his legal
      representatives. Other than is permitted in the preceding sentence, no
      assignment, or transfer of an option, or of the rights represented thereby,
      whether voluntarily or involuntarily, by operation of law or otherwise, shall
      vest in the purported assignee or transferee, any interest or right therein
      whatsoever, but immediately upon any such purported assignment or transfer,
      or
      any attempt to make the same, such option shall terminate and become of no
      further effect. 

     

    IX.
      REORGANIZATIONS
      AND RECAPITALIZATION OF THE COMPANY 

    

    A.
      The
      existence of the Plan and options granted hereunder shall not affect in any
      way
      the right or power of the Company or its shareholders to make or authorize
      any
      or all adjustments, recapitalizations, reorganizations or other changes in
      the
      Company's capital structure or its business, or any merger or consolidation
      of
      the Company, or any issue of bonds, debentures, preferred or prior preferred
      stocks ahead of or affecting the common stock or the rights thereof, or the
      dissolution or the liquidation of the Company, or any sale or transfer of all
      or
      any part of its assets or business, or any corporate act or proceeding, whether
      of a similar character or otherwise.

     

    B.
      The
      shares with respect to which options may be granted hereunder are shares of
      the
      common stock of the Company as presently constituted, but if and whenever,
      prior
      to the delivery by the Company of all of the shares of common stock which are
      subject to options granted hereunder, the Company shall effect a subdivision
      or
      consolidation of shares or other capital readjustments, the payments of a stock
      dividend or other increase or reduction in the number of shares of the common
      stock outstanding without receiving compensation therefor in money, services
      or
      property, the number of shares of common stock available under the Plan and
      the
      number of shares of common stock with respect to which options shall be granted
      hereunder, may thereafter be exercised shall (i) in the event of an increase
      in
      the number of shares, be proportionately increased, and the cash consideration
      payable per share shall be proportionately reduced; and (ii) in the event of
      a
      reduction in the number of outstanding shares, be proportionately reduced,
      and
      the cash consideration payable per share shall be proportionately
      increased.

    

    C.
      If the
      Company is reorganized or merged or consolidated with or sells or otherwise
      disposes of substantially all of its assets to another corporation or if at
      least a majority of the outstanding common stock of the Company is acquired
      by
      another corporation (in exchange for stock or other securities of such other
      corporation) while unexercised options remain outstanding under the Plan, there
      shall be substituted for the shares subject to the unexercised installments
      of
      such outstanding options an appropriate number of shares, if any, of each class
      of stock or other securities of the reorganized, merged, consolidated, or
      acquiring securities of the reorganized, merged, consolidated, or acquiring
      corporation which were distributed or issued to the shareholders of the Company
      in respect of such shares, In the case of any reorganization, merger or
      consolidation wherein the Company is not the surviving corporation, or any
      sale
      or distribution of substantially all of the assets of the Company to another
      corporation or the acquisition of at least a majority of the outstanding common
      stock of the Company by another corporation (in exchange for stock or other
      securities of such other corporations) all options granted under the Plan shall
      become immediately vested without regard to the terms of any installment
      provisions set forth in such option. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    D.
      In the
      event there shall be any change of the number, or kind of, issued shares under
      option, or of any stock or other securities into which such stock shall have
      been changed, or for which it shall have been exchanged, then if the Committee
      shall, in its sole discretion, determine such changes equitably requires an
      adjustment in the number, or kind, or option, such adjustment shall be made
      by
      the Board of Directors and shall be effective and binding for all purposes
      of
      the Plan. 

     

    X.
      REGISTRATION
      AND LISTING

    

    The
      Company from time to time shall take such steps as may be necessary to cause
      the
      issuance of shares upon the exercise of options granted under the Plan to be
      registered under the Securities Act of 1933, as amended, and such other Federal
      or State Securities laws as may be applicable, The timing of such registration
      shall be at the sale discretion of the Company, Until such shares are
      registered, they shall bear a legend restricting the sale of such securities.
      The Company shall also from time to time take such steps as may be necessary
      to
      list the shares issuable upon exercise of options granted under the Plan for
      trading on the same basis which the Company r s then outstanding shares are
      admitted to trading on any public markets. 

     

    XI.
      EFFECTIVE
      DATE OF PLAN

    

    This
      Plan
      shall become effective on the later of the date of its adoption by the Board
      of
      Directors of the Company or its approval by the vote of the holders of a
      majority of the outstanding shares of the Company's Class A Common Stock. This
      Plan shall not become effective unless such shareholder approval shall be
      obtained within twelve (12) months before or after the adoption of the Plan
      by
      the Board of Directors. 

     

    XII.
      AMENDMENTS
      OR TERMINATION

    

    The
      Board
      of Directors may amend, alter or discontinue the Plan, but no amendment or
      alteration shall be made without the approval of the shareholders which would:
      

    

    A.
      Materially increase the benefits accruing to participants under the Plan, or
      

    

    B.
      Increase the number of securities which may be issued under the Plan, or
 

    

    C.
      Modify
      the requirements as to eligibility for participants in the Plan. 

     

    No
      amendment, alteration or discontinuation of the Plan shall adversely affect
      any
      stock options granted prior to the time such amendment, alteration or
      discontinuation.

     

    XIII.
      GOVERNMENT
      REGULATIONS 

    

    Notwithstanding
      any provisions hereof, or any option granted hereunder, the obligation of the
      Company to sell and deliver shares under any such option shall be subject to
      all
      applicable laws, rules and regulations and to such approvals by any governmental
      agencies or national securities exchange as may be required, and the optionee
      shall agree that he will not exercise anyA
      option
      granted hereunder, and that the Company will not be obligated to issue any
      shares under any such option, if the exercise thereof or if the issuance of
      such
      shares shall constitute a violation by the optionee or the Company of any
      applicable law or regulation.Exhibit 10.1

                      CHANGE OF CONTROL SEVERANCE AGREEMENT
                      -------------------------------------

          THIS CHANGE OF CONTROL SEVERANCE AGREEMENT ("Agreement") is made
effective as of May 15, 2006 (the "Effective Date") by and between SOUTHWEST
WATER COMPANY, a Delaware corporation (the "Company") and MARK A. SWATEK
("Executive").

          WHEREAS, Executive is employed as an executive officer or key employee
of the Company;

          WHEREAS, the Company believes it to be in the best interests of its
stockholders to attract, retain and motivate key executive officers and
employees and to ensure continuity of management;

          WHEREAS, the Company recognizes that the possibility of a change of
control of the Company may result in the departure of key executives or
employees to the detriment of the Company and its stockholders; and

          WHEREAS, in order to induce Executive to remain in its employ, the
Company hereby agrees that as of the Effective Date, Executive shall be entitled
to receive the change of control benefits set forth below.

          NOW, THEREFORE, in consideration of Executive's continued employment
as an executive officer or key employee of the Company and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:

          1.   Term of Agreement.
               -----------------

               (a)  Original Term and Extension. Subject to earlier termination
as set forth in Section 1(b), this Agreement shall commence on the Effective
Date and shall continue in effect until the third anniversary of the Effective
Date; provided, however, that the term of this Agreement shall automatically be
extended for one or more additional terms of three years each (whether or not
one or more Change of Control (as defined below) have occurred) unless, not
later than 90 days prior to the last day of the then existing term, the Company
shall have given notice to Executive that it does not wish to extend this
Agreement. Notwithstanding the foregoing, if a Change of Control occurs during
the original or any extended term of this Agreement, the term of this Agreement
shall automatically continue in effect for the duration of the Protective Period
(as defined below) and any attempt to have this Agreement terminate prior to
such time shall be of no force or effect.

               (b)  Earlier Termination. Notwithstanding the provisions of
section 1(a), the term of this Agreement shall terminate upon the earlier of (i)
the date as of which Executive ceases to be an executive officer or key employee
of the Company and such cessation of position is not subject to Section 3 hereof
or (ii) the expiration of the Protective Period (as defined below), as
applicable.

<PAGE>

          2.   Certain Definitions.
               -------------------

               (a)  Cause. "Cause" shall mean, and the Company 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 (other than any such
failure resulting from incapacity of Executive due to physical or mental
illness), which failure is not remedied within thirty (30) days after a written
demand for substantial performance is delivered to Executive by the Chief
Executive Officer of the Company or the Compensation and Organization Committee
of the Board, which demand specifically identifies the manner in which Executive
has not substantially performed Executive's duties; or

                    (iii) willful engagement by Executive in misconduct which is
materially injurious to the Company, 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.
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 the
Compensation and Organization Committee finding that in the good faith opinion
of the Compensation and Organization Committee, Executive was guilty of conduct
set forth in this subparagraph and specifying the particulars thereof in detail.

               (b)  Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:

                    (i) the acquisition, directly or indirectly, by any "person"
or "group" (as those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") and the rules
thereunder) of "beneficial ownership" (as determined pursuant to Rule 13d-3
under the Exchange Act) of securities entitled to vote generally in the election
of directors ("voting securities") of the Company that represent more than 50%
of the combined voting power of the Company's then outstanding voting
securities, other than:

                         (A) an acquisition by a trustee or other fiduciary
holding securities under any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the Company or by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any person controlled by the Company;

                         (B) an acquisition of voting securities by the Company
or a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of the stock of
the Company; or

                                       2
<PAGE>

                         (C) an acquisition of voting securities pursuant to a
transaction described in clause (iii) below that would not be a Change of
Control under clause (iii).

          Notwithstanding the foregoing, neither of the following events shall
constitute an "acquisition" by any person or group for purposes of this clause
(i): (x) a change in the voting power of the Company's voting securities based
on the relative trading values of the Company's then outstanding securities as
determined pursuant to the Company's Articles of Incorporation or (y) an
acquisition of the Company's securities by the Company which, either alone or in
combination only with the other event, causes the Company's voting securities
beneficially owned by a person or group to represent more than 50% of the
combined voting power of the Company's then outstanding voting securities;
provided, however, that if a person or group shall become the beneficial owner
of more than 50% of the combined voting power of the Company's then outstanding
voting securities by reason of share acquisitions by the Company as described
above and shall, after such share acquisitions by the Company, become the
beneficial owner of any additional voting securities of the Company, then such
acquisition shall constitute a Change of Control; or

                    (ii) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board; or

                    (iii) the consummation by the Company (whether directly
involving the Company or indirectly involving the Company through one or more
intermediaries) of (x) a merger, consolidation, reorganization, or business
combination, (y) a sale or other disposition of all or substantially all of the
Company's assets or (z) the acquisition of assets or stock of another entity, in
each case, other than a transaction which results in the Company's voting
securities outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or indirectly,
all or substantially all of the Company's assets or otherwise succeeds to the
business of the Company (the Company or such person, the "Successor Entity")
directly or indirectly, of more than 50% of the combined voting power of the
Successor Entity's outstanding voting securities immediately after the
transaction; or
                    (iv) a liquidation or dissolution of the Company.

          For purposes of clause (i) above, the calculation of voting power
shall be made as if the date of the acquisition were a record date for a vote of
the Company's stockholders, and for purposes of clause (iii) above, the
calculation of voting power shall be made as if the date of the consummation of
the transaction were a record date for a vote of the Company's stockholders.

                                       3
<PAGE>

               (c) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor code.

               (d) Covenant Period. "Covenant Period" shall mean the twenty-four
(24) months following the Date of Termination where such termination is an
Involuntary Termination of Employment or a termination of employment by
Executive for Good Reason.

               (e) Date of Termination. "Date of Termination" shall mean the
date specified in the Notice of Termination (as defined below) as being the
effective date of the termination of Executive's employment with the Company,
provided that such date shall not be less than 30 days following the date the
Notice of Termination is delivered.

               (f) Disability. "Disability" shall mean a physical or mental
incapacity as a result of which Executive becomes unable to continue the proper
performance of Executive's duties hereunder for six consecutive calendar months
or for shorter periods aggregating 180 business days in any 12 month period, but
only to the extent that such definition does not violate the Americans with
Disabilities Act.

               (g) Good Reason. "Good Reason" shall mean, with respect to any
termination by Executive of Executive's employment with the Company, any of the
following which occurs during the Protective Period (as defined below), without
the express written consent of Executive, unless such circumstances are cured
prior to the Date of Termination:

                    (i) The assignment to Executive by the Company of duties
materially inconsistent with Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change of Control of the Company,
or a material change in Executive's title or offices as in effect immediately
prior to a Change of Control of the Company, except in connection with the
termination of Executive's employment for Cause, death or Disability or by
Executive other than for Good Reason;

                    (ii) A material reduction in Executive's base salary as in
effect at the time of a Change of Control of the Company, unless such reduction
is on a basis not materially less favorable to Executive relative to other
 employees;

                    (iii) Any failure by the Company to continue in effect any
material benefit plan or arrangement in which Executive is participating at the
time of a Change of Control of the Company, unless (a) an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan or arrangement, or (b) such failure is on a basis not
materially less favorable to Executive, both in terms of the amount of benefits
provided and the level of Executive's participation, relative to other
participants;

                    (iv) Any failure by the Company to continue in effect any
bonus or incentive plan or arrangement in which Executive is participating at
the time of a Change of Control of the Company, unless (a) an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan or arrangement, or (b) such failure is on a basis
not materially less favorable to Executive, both in terms of the amount of
benefits provided and the level of Executive's participation, relative to other
participants;

                                       4
<PAGE>

                    (v) Any requirement by the Company that Executive be based
anywhere other than within fifty (50) miles of Executive's office location as of
the date of a Change of Control, except for required travel by Executive on the
Company's business to an extent substantially consistent with Executive's
business travel obligations at the time of a Change of Control of the Company;

                    (vi) Any failure by the Company to provide Executive with
the number of paid vacation days to which Executive is entitled at the time of a
Change of Control of the Company;

                    (vii) Any material breach by the Company of any provision of
this Agreement;

                    (viii) Any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company; or

                    (ix) Any purported termination by the Company of Executive's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements set forth herein, and for purposes of this Agreement, no such
purported termination shall be effective.

               (h) Involuntary Termination of Employment. "Involuntary
Termination of Employment" shall mean any termination of Executive's employment
by the Company and its subsidiaries, other than a termination for Cause or due
to death or Disability.

               (i) Notice of Termination. "Notice of Termination" shall mean a
written notice delivered by the party effecting the termination of Executive's
employment to the other party. The notice shall state the specific termination
provision in this Agreement relied upon for the termination of Executive's
employment, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated and shall state the date upon which such termination
shall be effective.

               (j) Protective Period. "Protective Period" shall mean the six (6)
months preceding the effective date of a Change of Control and the twenty-four
(24) months following the effective date of a Change of Control.

               (k) Termination Base Salary. "Termination Base Salary" shall mean
Executive's base salary at the rate in effect at the time the Notice of
Termination is given or, if a greater amount, Executive's base salary at the
rate in effect immediately prior to the Change of Control.

          3.   Change of Control Severance Plan.
               --------------------------------

          Upon the occurrence, during a Protective Period, of (a) Executive's
voluntary termination of employment for Good Reason or (b) an Involuntary
Termination of Employment of Executive, Executive shall be entitled to receive
the following compensation and benefits, subject to Executive's compliance with
Sections 6 and 7:

                                       5
<PAGE>

               (a) Salary Due Prior to Termination. The Company shall pay to
Executive when otherwise due Executive's then base salary through the Date of
Termination, along with credit for any vacation earned but not taken and any
earned and awarded, but unpaid bonus amount. Such payment shall be within five
days after the Date of Termination.

               (b) Severance Pay. The Company shall pay to Executive, as
severance pay, an amount equal to 2.99 times the sum of (i) Executive's
Termination Base Salary and (ii) the average aggregate annual bonus paid by the
Company to Executive for the three (3) full calendar years preceding the date of
Change of Control (the "Change of Control Payment"). If Executive has not been
employed by the Company for three (3) full calendar years preceding the date of
Change of Control, the Change of Control Payment, with respect to part (ii) of
this clause above, shall be computed based on the average aggregate annual bonus
paid by the Company to Executive for the full term of Executive's employment
with the Company. The Change of Control Payment shall be paid in cash in a
single lump sum within fifteen days after the Date of Termination, except as
provided for in Section 5 below.

          4.   Acceleration of Option Vesting Upon a Change of Control.
               -------------------------------------------------------

          Notwithstanding the provisions of the Company's equity compensation
plans or of any particular option grant, all unvested options granted under any
equity compensation plan of the Company (or assumed by the Company) and held by
Executive as of the effective date of a Change of Control of the Company shall
vest and become immediately exercisable upon the effective date of the Change of
Control of the Company.

          5.   Limitation on Payments.
               ----------------------

          If the severance and other benefits provided for in this Agreement or
otherwise payable to Executive constitute "excess parachute payments" within the
meaning of Section 280G of the Code, but for this Section, then Executive's
Change of Control Payments and other severance benefits under this Agreement
shall be reduced to such lesser amount as would result in no portion of such
severance benefits being classified as excess parachute payments under Section
2806 of the Code.

          6.   Non-Compete and Confidentiality Covenants.
               -----------------------------------------

               (a) Non-Compete. As an inducement for the Company to enter into
this Agreement, Executive agrees that during the Covenant Period, Executive
shall not, directly or indirectly in any geographic area where the Company
currently operates (i) engage without the prior express written consent of the
Company, in any business or activity, whether as an employee, consultant,
partner, principal, agent, representative, stockholder (except as a holder of
less than 2% of the combined voting power of the outstanding stock of a publicly
held company) or in any other individual, corporate or representative capacity,
or render any services or provide any advice to any business, activity, person
or entity, if Executive knows or reasonably should know that such business,
activity, service, person or entity, directly or indirectly, competes in any
material manner with the Business, or (ii) meaningfully assist, help or
otherwise support, without the prior express written consent of the Company, any
person, business, corporation, partnership or other entity or activity, whether
as an employee, consultant, partner, principal, agent, representative,

                                       6
<PAGE>

stockholder (other than in the capacity as a stockholder of less than 2% of the
combined voting power of the outstanding shares of stock of a publicly held
company) or in any other individual, corporate or representative capacity, to
create, commence or otherwise initiate, or to develop, enhance or otherwise
further, any business or activity if Executive knows or reasonably should know
that such business or activity, directly or indirectly competes in any material
manner with the Business. For purposes of this Section 6, the term "Business"
shall refer to the business of the Company as presently conducted or as
conducted on the Date of Termination. As of the date of this Agreement, the
business of the Company, generally, involves the ownership, operation, billing,
collection, maintenance, construction management, servicing and management of
entities in the water or wastewater industry and water and wastewater utilities.

               (b) Non-Solicitation. As an additional inducement for the Company
to enter into this Agreement, Executive agrees that during the Covenant Period,
Executive shall not, directly or indirectly (i) with respect to the Business,
take any action to solicit or divert any business (or potential business) or
clients or customers (or potential clients or potential customers) away from the
Company who it comes in contact with or are involved in the Business, (ii)
induce customers, potential customers, clients, potential clients, suppliers,
agents or other persons under contract or otherwise associated or doing business
with respect to the Business with the Company to terminate, reduce or alter any
such association or business with respect to the Business with or from the
Company, and/or (iii) knowingly induce any person in the employment of the
Company to (A) terminate such employment, (B) accept employment, or enter into
any consulting arrangement, with anyone other than the Company, and/or (C)
interfere with the customers, suppliers, or clients of the Company in any manner
or the business of the Company.

               (c) Confidentiality. Throughout the Covenant Period, Executive
shall not, directly or indirectly, disclose or make available to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever, any Confidential Information (as defined below). Executive agrees
that, upon termination of Executive's employment with the Company, all
Confidential Information in Executive's possession that is in writing or other
tangible form (together with all copies or duplicates thereof, including
computer files) shall be returned to the Company and shall not be retained by
Executive or furnished to any third party, in any form except as provided
herein; provided, however, that Executive shall not be obligated to treat as
confidential, or return to the Company copies of any Confidential Information
that (i) was publicly known at the time of disclosure to Executive, (ii) becomes
publicly known or available thereafter other than by any means in violation of
this Agreement or any other duty owed to Company by any person or entity, or
(iii) is lawfully disclosed to Executive by a third party. As used in this
Agreement, the term "Confidential Information" means: information disclosed to
Executive or known by Executive as a consequence of or through Executive's
relationship with the Company, about the customers, employees, business methods,
operations, public relations, contracts, organization, procedures, finances,
customer lists, rates and prospects of the Company and its affiliates.

               (d) Remedies. Executive agrees and acknowledges that Executive's
right to receive any of the benefits set forth in Sections 3 and 4 (to the
extent Executive is otherwise entitled to such payments) is conditioned upon
Executive's compliance with the covenants in this Section 6, and all benefits
granted to Executive under this Agreement shall terminate immediately upon
Executive's breach of any covenant in this Section 6 and Executive shall be
responsible for refunding to the Company the benefits previously received under
this Agreement.

                                       7
<PAGE>

               (e) Understanding of Covenants. Executive represents that he (i)
is familiar with the foregoing covenants not to compete and not to solicit, and
(ii) is fully aware of his obligations hereunder, including, without limitation,
the reasonableness of the length of time, scope and geographic coverage of these
covenants.

          7.   Additional Condition to Payment.
               -------------------------------

          The Company's obligations to make the Change of Control Payments and
to provide any other benefits under Sections 3 and 4 shall be contingent upon
Executive's execution (and, if applicable, non-revocation) of a general release
of claims against the Company and any related parties, in the form attached as
Exhibit A; provided, however, that in the event of a change in law affecting the
breadth or efficacy of the release, the Company may modify Exhibit A as
necessary to have the same effect as Exhibit A would have had, but for the
change in law. Executive understands that he will not be entitled to any
payments under this agreement should he fail to execute or should he revoke such
release.

          8.   Indemnity.
               ---------

          In any situation where under applicable law the Company has the power
to indemnify, advance expenses to and defend Executive in respect of any
judgments, fines, settlements, loss, cost or expense (including attorneys' fees)
of any nature related to or arising out of Executive's activities as an agent,
employee, officer or director of the Company or in any other capacity on behalf
of or at the request of the Company, the Company shall promptly on written
request, indemnify Executive, advance expenses to Executive and defend Executive
to the fullest extent permitted by applicable law, including but not limited to
making such findings and determinations and taking any and all such actions as
the Company may, under applicable law, be permitted to have the discretion to
take so as to effectuate such indemnification, advancement or defense. Such
agreement by the Company shall not be deemed to impair any other obligation of
the Company respecting Executive's indemnification or defense otherwise arising
out of this or any other agreement or promise of the Company or under any
statute.

          9.   Arbitration; Dispute Resolution, etc.
               ------------------------------------

               (a) Executive and the Company each agrees that any dispute or
controversy arising out of, relating to, or in connection with this Agreement,
or the interpretation, validity, construction, performance, breach, or
termination thereof (any such occurrence, a "Dispute") shall be settled by
arbitration to be held in Los Angeles County, California, in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association (the "Rules"). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction.

                                       8
<PAGE>

               (b) The arbitrator shall apply California law to the merits of
any Dispute, without reference to rules of conflict of law. The arbitration
proceedings shall be governed by federal arbitration law and by the Rules,
without reference to state arbitration law. The Company and Executive each
hereby expressly consents to the personal jurisdiction of the state and federal
courts located in California for any action or proceeding arising from or
relating to this Agreement and/or relating to any arbitration in which the
parties are participants.

               (c) The Company and Executive shall each pay one-half of the
costs and expenses of such arbitration, and shall separately pay its counsel
fees and expenses.

               (d) EXECUTIVE HAS READ AND UNDERSTANDS SECTION 9, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION
WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH, OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE COMPANY/EXECUTIVE
RELATIONSHIP.

               (e) THE COMPANY AGREES THAT BY SIGNING THIS AGREEMENT, THE
COMPANY AGREES TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF COMPANY'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
COMPANY/EXECUTIVE RELATIONSHIP.

          10.  Code Section 409A.
               -----------------

               (a) Short-Term Deferral Exemption. This Agreement is not intended
to provide for any deferral of compensation subject to Code Section 409A and,
accordingly, the Change of Control Payment is to be paid not later than the
later of: (i) the 15th day of the third month following Executive's first
taxable year in which such severance benefit is no longer subject to a
substantial risk of forfeiture, and (ii) the 15th day of the third month
following first taxable year of the Company in which such severance benefit is
no longer subject to substantial risk of forfeiture, as determined in accordance
with Code Section 409A and any Treasury Regulations and other guidance issued
thereunder. The date determined under this subsection is referred to as the
"Short-Term Deferral Date."

               (b) Compliance with Code Section 409A. Notwithstanding anything
to the contrary in the Agreement, in the event that the Change of Control
Payment is not actually or constructively received by Executive on or before the
Short-Term Deferral Date, to the extent such Change of Control Payment
constitutes a deferral of compensation subject to Code Section 409A, then: (i)
subject to clause (ii), such Change of Control Payment shall be paid upon
Executive's "separation from service," as defined in Code Section
409A(a)(2)(A)(i), with respect to the Company, and (ii) if Executive is a

                                       9
<PAGE>

"specified employee," as defined in Code Section 409A(a)(2)(B)(i), with respect
to the Company, such Change of Control Payment shall be paid upon the date which
is six months after the date of Executive's "separation from service" (or, if
earlier, the date of Executive's death) in accordance with Code Section
409A(a)(2)(B)(i) and any Treasury Regulations or other guidance issued
thereunder. In the event that the Change of Control Payment is subject to this
subsection, such Change of Control Payment shall be paid not later than 60 days
following the payment date determined under this subsection, and shall be made
subject to Section 6(d) and Section 7.

          11.  Miscellaneous.
               -------------

               (a) Mitigation. Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise nor, except as provided in Section 4(a), shall the amount of any
payment or benefit provided for in this Agreement be reduced by any compensation
earned or benefit received by Executive as the result of employment by another
the Company or self-employment, by retirement benefits, by offset against any
amount claimed to be owed by Executive to the Company, or otherwise.

               (b) Modification. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Executive and such officer as may be designated by the
Board. 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 similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California without
regard to its conflicts of law principles. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Except as expressly provided in this Agreement, any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The section headings contained in
this Agreement are for convenience only, and shall not affect the interpretation
of this Agreement.

               (c) Successors; Binding Agreement.

                    (i) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets as stock of the Company to
expressly 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 had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Executive to terminate Executive's employment
and receive compensation from the Company in the same amount and on the same
terms to which Executive would be entitled hereunder if Executive terminates
Executive's employment for Good Reason within the Protective Period, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.

                                       10
<PAGE>

                    (ii) This Agreement shall inure to the benefit of and be
enforceable by Executive and Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amount would still be payable to
Executive hereunder had Executive continued to live, 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 is no
such designee, to Executive's estate.

               (d) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

               (e) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

               (f) Entire Agreement. Except as set forth in clause (g) below,
this Agreement sets forth the entire agreement of the parties hereto in respect
of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto in respect of the subject matter contained herein. Any of
Executive's rights hereunder shall be in addition to any rights Executive may
otherwise have under benefit plans or agreements of the Company to which
Executive is a party or in which Executive is a participant, including, but not
limited to, any Company sponsored employee benefit plans and stock options
plans. In the event any provision of this Agreement shall conflict with the
provisions of any other agreement to which Executive and the Company are
parties, the provisions of this Agreement shall control.

               (g) Termination of Prior Agreements. This Agreement is effective
as of the Effective Date. The Prior Agreement and any other prior severance or
change of control agreement between Executive and any of the Company, or
predecessors to any of the Company, or any subsidiary of the Company are hereby
expressly terminated as of the Effective Date. Executive hereby terminates and
waives any and all rights, title and interest Executive may have under the Prior
Agreement.

               (h) Governing Law. This Agreement is made and is to be governed
by and construed under the laws of the State of California.

               (i) Notice. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
delivered by United States certified or registered mail (return receipt
requested, postage prepaid) or by courier guaranteeing overnight delivery or by
hand delivery (with signed receipt required), addressed to the respective
addresses set forth below, and such notice or communication shall be deemed to
have been duly given two days after deposit in the mail, one day after deposit
with such overnight carrier or upon delivery with hand delivery. The addresses
set forth below may be changed in writing in accordance herewith.

                                       11
<PAGE>

          Corporation:     Southwest Water Company
                           One Wilshire Building
                           624 South Grand Avenue
                           Suite 2900
                           Los Angeles, California 90017
                           Attention: Human Resources

          Executive:       Mark A. Swatek
                           At last address on file with the Company

          IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.

                           COMPANY

                           SOUTHWEST WATER COMPANY,
                           a Delaware corporation

                           By:       /s/ Maureen Kindel
                                 ---------------------------------------

                           Its:      Director
                                 ---------------------------------------

                           EXECUTIVE

                                     /s/ Mark Swatek
                           ---------------------------------------------
                           MARK A. SWATEK

                                       12
<PAGE>

                                    EXHIBIT A
                             FORM OF GENERAL RELEASE
                             -----------------------

                                 GENERAL RELEASE
                                 ---------------

          THIS GENERAL RELEASE ("Agreement") is entered into by and between
______________ ("Executive") and Southwest Water Company, a Delaware corporation
(the "Company") as of _______, 200__ (the "Effective Date").

                                    Recitals
                                    --------

          WHEREAS, Executive is currently employed by the Company as
_______________;

          WHEREAS, the Company and Executive desire to terminate their
employment relationship in accordance with the terms of that certain Change of
Control Severance Agreement dated __________________, 200__, by and between
Executive and Company (the "Severance Agreement"); and

          WHEREAS, Executive's receipt of the benefits set forth in the
Severance Agreement are conditioned upon Executive's execution and delivery of
this Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth below, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties expressly, knowingly
and voluntarily agree as follows:

          1.   Release of the Company and Related Persons.

               (a) General Release. In consideration for the Company's payments
and other benefits specified in the Severance Agreement, Executive hereby
releases and forever discharges the Company and its respective parents,
subsidiaries, predecessors, successors, heirs, estates and each of their
associates, owners, stockholders, members, assigns, employees, agents,
directors, officers, partners, lawyers, and all persons acting by, through,
under, or in concert with them, or any of them (collectively the "Releasees") of
and from any and all manner of action or actions, causes or causes of action, in
law or in equity, suits, debts, liens, contracts, agreements, promises,
liabilities, claims, demands, damages, losses, costs or expenses, of any nature
whatsoever, known or unknown, fixed or contingent (hereinafter called "Claims"),
which Executive now has or may hereafter have against the Releasees by reason of
any and all acts, omissions, events or facts occurring or existing prior to the
date hereof. This release includes, but is not limited to, any and all alleged
claims based on Title VII of the Civil Rights Act of 1964, the Civil Rights Act
of 1866, the Age Discrimination in Employment Act (including the Older Workers
Benefit Protection Act), the Equal Pay Act, the Americans with Disabilities Act,
the California Fair Employment and Housing Act, the California Labor Code, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974,
the Family and Medical Leave Act of 1993 or any common law, public policy,
contract (whether oral or written, express or implied) or tort law, or any other
local, state or federal law, regulation or ordinance having any bearing
whatsoever on the terms and conditions of Executive's employment and the
cessation thereof. The foregoing release, together with subparagraph (c) of this
Section 1, shall hereinafter be referred to as the "General Release".

                                        1
<PAGE>

               (b) Release of Unknown Claims. Executive acknowledges that he is
familiar with the provisions of California Civil Code section 1542, which
provides as follows:

          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
          NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
          RELEASE, WHICH, IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
          SETTLEMENT WITH THE DEBTOR.

Executive, being aware of said code section, hereby expressly waives any rights
he may have thereunder, as well as under any other statutes or common law
principles of similar effect.

               (c) Older Worker's Benefit Protection Act. Executive agrees and
expressly acknowledges that this General Release includes a waiver and release
of all claims which Executive has or may have under the Age Discrimination in
Employment Act of 1967, as amended, 29 U.S.C. ss. 621, et seq. ("ADEA"). The
following terms and conditions apply to and are part of the waiver and release
of the ADEA claims under this Agreement:

                    (i) That this General Release is written in a manner
calculated to be understood by Executive.

                    (ii) The waiver and release of claims under the ADEA
contained in this General Release do not cover rights or claims that may arise
after the date on which Executive signs this General Release.

                    (iii) This General Release provides for consideration in
addition to anything of value to which Executive is already entitled.

                    (iv) Executive is advised to consult an attorney before
signing this General Release.

                    (v) Executive is granted twenty-one (21) days after
Executive is presented with this General Release to decide whether or not to
sign this General Release. If Executive executes this General Release prior to
the expiration of such period, Executive does so voluntarily and after having
had the opportunity to consult with an attorney.

                    (vi) Executive will have the right to revoke the General
Release within seven (7) days of signing this Agreement. In the event the
General Release is revoked, this General Release will be null and void in its
entirety, and Executive will not receive any of the payments provided for in the
Severance Agreement.

                                        2
<PAGE>

                    (vii) If Executive wishes to revoke the General Release, he
shall deliver written notice stating his intent to revoke the General Release to
________________ on or before 5:00 p.m. on the Seventh (7th) Day after the
Effective Date.

               (d) No Assignment of Claims. Executive represents and warrants to
the Releasees that there has been no assignment or other transfer of any
interest in any Claim which Executive may have against the Releasees, or any of
them, and Executive agrees to indemnify and hold the Releasees harmless from any
liability, claims, demands, damages, costs, expenses and attorneys' fees
incurred as a result of any person asserting any such assignment or transfer of
any rights or Claims under any such assignment or transfer from such party.

               (e) No Suits or Actions. If Executive hereafter commences, joins
in, or in any manner seeks relief through any suit arising out of, based upon,
or relating to any of the Claims, or in any manner asserts any of the Claims
against the Releasees, then he will pay to the Releasees against whom any such
Claim is asserted, in addition to any other damages caused thereby, all
attorneys' fees incurred by such Releasees in defending or otherwise responding
to such Claim. This provision, however, shall not apply to claims relating to
the interpretation of this Agreement, or to the alleged breach of this
Agreement. Such claims will be governed by Section 9 of the Severance Agreement.

          2.   Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

          3.   Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective legal representatives, heirs,
successors, assigns, related entities, directors, officers, employees,
stockholders and agents to the full extent permitted by law.

          4.   Severability. If any clause or provision in this Agreement is
found to be void, invalid, or unenforceable, it shall be severed from the
remaining provisions and clauses which shall remain in full force and effect.

          5.   Waiver. A waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by that same party.

          6.   Governing Law. This Agreement shall be governed by the laws of
the state of California applicable to agreements made and to be wholly performed
in such state.

          7.   Headings. The section headings contained in this Agreement are
for convenience and reference purposes only and shall not affect in any way the
meaning and interpretation of this Agreement.

          8.   Notices. All notices, requests, demands and other communications
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing and shall be deemed to have been duly given, made and
received on the date when delivered by hand delivery with receipt acknowledged
or upon the third day after deposit in the United States mail, registered or
certified with postage prepaid, return receipt requested, addressed as set forth
below or to such other address as either party may have furnished to the other
party:

                                        3
<PAGE>

          (a) If to Company:         Southwest Water Company
                                     One Wilshire Building
                                     624 South Grand Avenue
                                     Suite 2900
                                     Los Angeles, California  90017
                                     Attention:  _____________

          (b) If to Executive:       _________________________

                                     _________________________

                                     _________________________

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.

                               SOUTHWEST WATER COMPANY,
                               a Delaware corporation

                               By:
                                    ----------------------------------

                               Its:
                                    ----------------------------------

                               Executive

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

                                       4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}]]