Document:

Exhibit 10.24.2

 

THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

	
  Warrant No. A-3

  	
   

  	
  Number of Shares: 30,000

  
	
  Date of Issuance: October 6, 2003

  	
   

  	
  (subject to adjustment)

  

 

 

SOUTHWEST
WATER COMPANY 

Common Stock Purchase Warrant

 

                SOUTHWEST
WATER COMPANY (the “Company”), for value received, hereby certifies that
Guarantee and Trust Co., TTEE, FBO: William L. McIntyre Jr. IRA Rollover, or
his registered assigns (the “Registered Holder” or “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company,
any time after the date hereof and on or before the Expiration Date (as defined
in Section 5 below), up to 30,000 shares of Common Stock of the Company (“Common
Stock”), at a purchase price of $10.10 per share. The shares purchasable
upon exercise of this Warrant and the purchase price per share, as adjusted
from time to time pursuant to the provisions of this Warrant, are hereinafter
referred to as the “Warrant Stock” and the “Purchase Price,”
respectively.

 

                1.             Exercise.

 

                                (a)           Manner of Exercise.
This Warrant may be exercised by the Registered Holder, in whole or in part, by
surrendering this Warrant, with the purchase form appended hereto as Exhibit
A duly executed by such Registered Holder or by such Registered Holder’s
duly authorized attorney, at the principal office of the Company, or at such
other office or agency as the Company may designate, accompanied by payment in
full of the Purchase Price payable in respect of the number of shares of
Warrant Stock purchased upon such exercise. The Purchase Price may be paid by
cash, check or wire transfer.

 

                                (b)           Effective Time of Exercise.
Each exercise of this Warrant shall be deemed to have been effected immediately
prior to the close of business on the day on which this Warrant shall have been
surrendered to the Company as provided in Section 1(a) above. At such time, the
person or persons in whose name or names any certificates for Warrant Stock
shall be issuable upon such exercise as provided in Section 1(c) below shall be
deemed to have become the holder or holders of record of the Warrant Stock
represented by such certificates.

 

                                (c)           Delivery to Holder.
As soon as practicable after the exercise of any portion of this Warrant, and
in any event within ten (10) days thereafter, the Company at its expense will
cause to be issued in the name of, and delivered to, the Registered Holder, or
as such Holder (upon payment by such Holder of any applicable transfer taxes)
may direct:

 

 

 

 

 

                                                (i)            a certificate or certificates for
the number of shares of Warrant Stock to which such Registered Holder shall be
entitled, and

 

                                                (ii)           in case such exercise is in part
only, a new warrant or warrants (dated the date hereof) of like tenor, calling
in the aggregate on the face or faces thereof for the number of shares of
Warrant Stock equal (without giving effect to any adjustment therein) to the number
of such shares called for on the face of this Warrant minus the number
of such shares purchased by the Registered Holder upon such exercise as
provided in Section 1(a) above.

 

                2.             Adjustments.

 

                                (a)           Stock Splits and Dividends.
If outstanding shares of the Company’s Common Stock shall be subdivided into a
greater number of shares or a dividend in Common Stock shall be paid in respect
of Common Stock, the Purchase Price in effect immediately prior to such
subdivision or at the record date of such dividend shall simultaneously with
the effectiveness of such subdivision or immediately after the record date of
such dividend be proportionately reduced. If outstanding shares of Common Stock
shall be combined into a smaller number of shares, the Purchase Price in effect
immediately prior to such combination shall, simultaneously with the
effectiveness of such combination, be proportionately increased. When any
adjustment is required to be made in the Purchase Price, the number of shares
of Warrant Stock purchasable upon the exercise of this Warrant shall be changed
to the number determined by dividing (i) an amount equal to the number of
shares issuable upon the exercise of this Warrant immediately prior to such
adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.

 

                                (b)           Reclassification, Etc.
In case there occurs any reclassification or change of the outstanding
securities of the Company or of any reorganization of the Company (or any other
corporation the stock or securities of which are at the time receivable upon
the exercise of this Warrant) or any similar corporate reorganization on or
after the date hereof, then and in each such case the Registered Holder, upon
the exercise hereof at any time after the consummation of such
reclassification, change, or reorganization shall be entitled to receive, in
lieu of the stock or other securities and property receivable upon the exercise
hereof prior to such consummation, the stock or other securities or property to
which such Holder would have been entitled upon such consummation if such
Holder had exercised this Warrant immediately prior thereto, all subject to
further adjustment pursuant to the provisions of this Section 2.

 

                                (c)           Adjustment Certificate.
When any adjustment is required to be made in the Warrant Stock or the Purchase
Price pursuant to this Section 2, the Company shall promptly mail to the
Registered Holder a certificate setting forth (i) a brief statement of the
facts requiring such adjustment and (ii) the Purchase Price after such
adjustment or (iii) the kind and amount of stock or other securities or
property into which this Warrant shall be exercisable after such adjustment.

 

                3.             Transfers.

 

                                (a)           Unregistered Security.
Each holder of this Warrant acknowledges that this Warrant and the Warrant
Stock have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), and agrees not to sell, pledge, distribute,
offer for sale, transfer

 

2

 

or otherwise dispose of this Warrant or
any Warrant Stock issued upon its exercise in the absence of (i) an effective
registration statement under the Act as to this Warrant or such Warrant Stock
and registration or qualification of this Warrant or such Warrant Stock under
any applicable U.S. federal or state securities law then in effect, or (ii) an
opinion of counsel, satisfactory to the Company, that such registration and
qualification are not required. Each certificate or other instrument for
Warrant Stock issued upon the exercise of this Warrant shall bear a legend
substantially to the foregoing effect.

 

                                (b)           Transferability. Subject to the provisions of Section
3(a) hereof and of Section 1.12 of the Investors’ Rights Agreement dated
February 25, 2000, as amended among the Company and certain Holders of
Warrants, this Warrant and all rights hereunder are transferable, in whole or
in part, upon surrender of the Warrant with a properly executed assignment (in
the form of Exhibit B hereto) at the principal office of the Company provided,
however, that this Warrant may not be
transferred in part unless the transferee acquires the right to purchase at
least 12,000 shares (as adjusted pursuant to Section 2) of Warrant Stock
hereunder.

 

                                (c)           Warrant Register.
The Company will maintain a register containing the names and addresses of the
Registered Holders of this Warrant. Until any transfer of this Warrant is made
in the warrant register, the Company may treat the Registered Holder of this
Warrant as the absolute owner hereof for all purposes; provided,  however,
that if this Warrant is properly assigned in blank, the Company may (but shall
not be required to) treat the bearer hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary. Any Registered Holder
may change such Registered Holder’s address as shown on the warrant register by
written notice to the Company requesting such change.

 

                4.             No Impairment. The Company will not, by amendment of
its charter or through reorganization, consolidation, merger, dissolution, sale
of assets or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will, subject to
Section 13 below, at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant
against impairment.

 

                5.             Termination. This Warrant (and the right to purchase
securities upon exercise hereof) shall terminate upon the earliest to occur of
the following (the “Expiration Date”): (a) February 24, 2010, (b) the
sale, conveyance, disposal, or encumbrance of all or substantially all of the
Company’s property or business or the Company’s merger into or consolidation
with any other corporation (other than a wholly-owned subsidiary corporation)
or any other transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company is disposed of, provided
that this Section 5(b) shall not apply to a merger effected exclusively for the
purpose of changing the domicile of the Company.

 

                6.             Notices
of Certain Transactions.  In
case:

 

                                (a)           the Company shall take a record of
the holders of its Common Stock (or other stock or securities at the time
deliverable upon the exercise of this Warrant) for the purpose of entitling or
enabling them to receive any dividend or other distribution, or to receive any
right to subscribe for or purchase any shares of stock of any class or any
other securities, or to receive any other right, to subscribe for or purchase
any shares of stock of any class or any other securities, or to receive any
other right, or

 

 

3

 

                                (b)           of any capital reorganization of the
Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company, any consolidation or merger of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the surviving entity), or any transfer off all or
substantially all of the assets of the Company, or

 

                                (c)           of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company,

 

then, and in each such case, the Company
will mail or cause to be mailed to the Registered Holder of this Warrant a
notice specifying, as the case may be, (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right, or (ii) the
effective date on which such reorganization, reclassification, consolidation,
merger, transfer, dissolution, liquidation or winding-up is to take place, and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such other stock or securities at the time deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up) are to be determined. Such notice shall be mailed at
least ten (10) days prior to the record date or effective date for the event
specified in such notice.

 

                7.             Reservation
of Stock.  The Company
will at all times reserve and keep available, solely for the issuance and
delivery upon the exercise of this Warrant, such shares of Warrant Stock and
other stock, securities and property, as from time to time shall be issuable
upon the exercise of this Warrant.

                

                8.             Exchange
of Warrants. Upon the surrender by the Registered Holder
of any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company, the Company will, subject to the provisions of Section 3
hereof, issue and deliver to or upon the order of such Holder, at the Company’s
expense, a new Warrant or Warrants of like tenor, in the name of such
Registered Holder or as such Registered Holder (upon payment by such Registered
Holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common Stock called
for on the face or faces of the Warrant or Warrants so surrendered.

 

                9.             Replacement
of Warrants.  Upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of loss, theft or
destruction) upon delivery of an indemnity agreement (with surety if reasonably
required) in an amount reasonably satisfactory to the Company, or (in the case
of mutilation) upon surrender and cancellation of this Warrant, the Company
will issue, in lieu thereof, a new Warrant of like tenor.

 

                10.           Mailing of Notices. Any notice required or permitted
pursuant to this Warrant shall be in writing and shall be deemed sufficient
upon receipt, when delivered personally or sent by courier, overnight delivery
service or confirmed facsimile, or on the date of receipt or refusal indicated
on the return receipt, if deposited in the regular mail, as certified or registered
mail (airmail if sent internationally), with postage prepaid and return receipt
requested, addressed (a) if to the Registered Holder, to the address of the
Registered Holder most recently furnished in writing to the Company and (b) if
to the Company, to the address set forth below or subsequently modified by
written notice to the Registered Holder.

 

 

4

 

 

                11.           No Rights as Shareholder. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a shareholder of the Company.

                

                12.           No Fractional Shares.
 No fractional shares of Common Stock
will be issued in connection with any exercise hereunder. In lieu of any
fractional shares which would otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the fair market value of
one share of Common Stock on the date of exercise. Such fair market value shall
be equal to the mathematical average of the closing prices of the Company’s
Common Stock on the three (3) trading days immediately prior to the date of
exercise.

 

                13.           Amendment or Waiver. Any term of this Warrant may be amended
or waived only by an instrument in writing signed by the party against which
enforcement of the amendment or waiver is sought.

                

                14.           Headings.  The headings in this Warrant are for purposes
of reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.

 

 

 

5

 

                15.           Governing Law. This Warrant shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of law.

 

	
  SOUTHWEST WATER COMPANY,

  
	
  a Delaware corporation

  
	
   

  	
   

  
	
  By 

  	
  /s/ Richard Shields

  
	
   

  
	
  Title:

  	
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  Richard Shields

  
	
   

  
	
  Title:

  	
   

  
	
   

  
	
  Address: 

  	
  Southwest Water Company

  
	
   

  	
  624 South Grand Avenue, Suite 2900  

  
	
   

  	
  Los Angeles, CA 90017 

  
	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
   

  
	
  Fax Number: (213) 929-1888

  
					

 

 

6

 

EXHIBIT A

PURCHASE FORM

 

	
  To:

  	
   

  	
  Southwest Water Company

  	
   

  	
  Dated: 

  
	
   

  	
   

  	
  624 South Grand Avenue, Suite 2900

  	
   

  	
   

  
	
   

  	
   

  	
  Los Angeles, CA 90017

  	
   

  	
   

  
	
   

  	
   

  	
  Attn: Chief Financial Officer

  	
   

  	
   

  

 

                The
undersigned, pursuant to the provisions set forth in the attached Warrant No.
A-3, hereby irrevocably elects to purchase                        shares
of the Common Stock covered by such Warrant and herewith makes payment of $                         ,
representing the full purchase price for such shares at the price per share provided
for in such Warrant.

 

                The
undersigned acknowledges that it has reviewed the representations and
warranties contained in Section 4 of the Investor’s Rights Agreement (as
defined in the Warrant) and by its signature below hereby makes such
representations and warranties to the Company. Defined terms contained in such
representations and warranties shall have the meanings assigned to them in the
Investor’s Rights Agreement, provided that the term “Investor” shall
refer to the undersigned and the term “Securities” shall refer to the
Warrant Stock.

 

                The
undersigned further acknowledges that it has reviewed the market standoff
provisions set forth in Section 1.12 of the Investors’ Rights Agreement and
agrees to be bound by such provisions.

 

	
  Signature:

  	
   

  
	
   

  	
   

  
	
  Name (print):

  	
   

  
	
   

  	
   

  
	
  Title (if applic.)

  	
   

  
	
   

  
	
  Company (if applic.):

  	
   

  
					

 

 

 

 

 

EXHIBIT B

ASSIGNMENT FORM

 

                FOR
VALUE RECEIVED,                                                                                               
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant with respect to the number of shares of covered Stock
covered thereby set forth below, unto:

 

	
  Name of Assignee

  	
   

  	
  Address/Fax Number

  	
   

  	
  No. of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Witness:

  	
   

  

 

 

 

 

 

COMMON STOCK
WARRANT RECEIPT

SOUTHWEST WATER COMPANY

 

Guarantee and Trust Co., TTEE, FBO:
William L. McIntyre Jr. IRA Rollover hereby acknowledges receipt from Southwest
Water Company (the “Company”) of the following document dated as of October 6,
2003:

 

Warrant to purchase Thirty Thousand
(30,000) shares of Common Stock of the Company 

 

	
  Dated:

  	
  12/30/03

  	
   

  

 

 

	
   

  	
  Guarantee and Trust Co., TTEE, FBO:

  
	
   

  	
  William L. McIntyre Jr. IRA Rollover

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY: 

  	
  /s/  [Illegible]

  
	
   

  	
   

  
	
   

  	
   

  
	
  ITS: 

  	
  /s/  William L. McIntyre Jr.Exhibit 10.24.3

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933.

 

 

	
  Warrant No. A-4

  	
   

  	
   

  	
   

  	
  Number of Shares: 18,837

  
	
  Date of Issuance: October 6, 2003

  	
   

  	
   

  	
   

  	
  (subject to adjustment)

  

 

SOUTHWEST WATER
COMPANY

 

Common Stock
Purchase Warrant

 

                                                                                                SOUTHWEST WATER COMPANY
(the “Company”), for value received, hereby certifies that William L.
McIntyre, Jr., or his registered assigns (the “Registered Holder” or “Holder”),
is entitled, subject to the terms set forth below, to purchase from the
Company, any time after the date hereof and on or before the Expiration Date
(as defined in Section 5 below), up to 18,837 shares of Common Stock of the
Company (“Common Stock”), at a purchase price of $10.10 per share. The
shares purchasable upon exercise of this Warrant and the purchase price per
share, as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the “Warrant Stock” and the “Purchase
Price,” respectively.

 

                                                1 .                                    Exercise.

 

                                                                                                (a)                                  Manner of Exercise.  This Warrant may be exercised by the
Registered Holder, in whole or in part, by surrendering this Warrant, with the
purchase form appended hereto as Exhibit A duly executed by such
Registered Holder or by such Registered Holder’s duly authorized attorney, at
the principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full of the Purchase Price
payable in respect of the number of shares of Warrant Stock purchased upon such
exercise. The Purchase Price may be paid by cash, check or wire transfer.

 

                                                                                                (b)                                 Effective Time of Exercise.  Each exercise of this Warrant shall be deemed
to have been effected immediately prior to the close of business on the day on
which this Warrant shall have been surrendered to the Company as provided in
Section 1(a) above. At such time, the person or persons in whose name or names
any certificates for Warrant Stock shall be issuable upon such exercise as
provided in Section l (c) below shall be deemed to have become the holder or
holders of record of the Warrant Stock represented by such certificates.

 

                                                                                                (c)                                  Delivery to Holder.  As soon as practicable after the exercise of
any portion of this Warrant, and in any event within ten (10) days thereafter,
the Company at its expense will cause to be issued in the name of, and
delivered to, the Registered Holder, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct:

 

                                                                                                                                                (i)                                     a certificate or certificates for the
number of shares of Warrant Stock to which such Registered Holder shall be
entitled, and

 

 

 

                                                                                                                                                (ii)                                  in case such exercise is in part only,
a new warrant or warrants (dated the date hereof) of like tenor, calling in the
aggregate on the face or faces thereof for the number of shares of Warrant
Stock equal (without giving effect to any adjustment therein) to the number of
such shares called for on the face of this Warrant minus the number of
such shares purchased by the Registered Holder upon such exercise as provided
in Section 1(a) above.

 

                                                2.                                       Adjustments.

 

                                                                                                (a)                                  Stock Splits and Dividends.  If outstanding shares of the Company’s Common
Stock shall be subdivided into a greater number of shares or a dividend in
Common Stock shall be paid in respect of Common Stock, the Purchase Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number
of shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Purchase Price, the number of shares of Warrant Stock purchasable upon the
exercise of this Warrant shall be changed to the number determined by dividing
(i) an amount equal to the number of shares issuable upon the exercise of this
Warrant immediately prior to such adjustment, multiplied by the Purchase Price
in effect immediately prior to such adjustment, by (ii) the Purchase Price in
effect immediately after such adjustment.

 

                                                                                                (b)                                 Reclassification, Etc.  In case there occurs any reclassification or
change of the outstanding securities of the Company or of any reorganization of
the Company (or any other corporation the stock or securities of which are at
the time receivable upon the exercise of this Warrant) or any similar corporate
reorganization on or after the date hereof, then and in each such case the
Registered Holder, upon the exercise hereof at any time after the consummation
of such reclassification, change, or reorganization shall be entitled to
receive, in lieu of the stock or other securities and property receivable upon
the exercise hereof prior to such consummation, the stock or other securities
or property to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto, all subject to further adjustment pursuant to the provisions of this
Section 2.

 

                                                                                                (c)                                  Adjustment Certificate.  When any adjustment is required to be made in
the Warrant Stock or the Purchase Price pursuant to this Section 2, the Company
shall promptly mail to the Registered Holder a certificate setting forth (i) a
brief statement of the facts requiring such adjustment and (ii) the Purchase
Price after such adjustment or (iii) the kind and amount of stock or other
securities or property into which this Warrant shall be exercisable after such
adjustment.

 

                                                3.                                       Transfers.

 

                                                                                                (a)                                  Unregistered Security.  Each holder of this Warrant acknowledges that
this Warrant and the Warrant Stock have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), and agrees
not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose
of this Warrant or any Warrant Stock issued upon its exercise in the absence of
(i) an effective registration statement under the Act as to this Warrant or
such Warrant Stock and registration or qualification of this Warrant or such
Warrant Stock under any applicable U.S.

 

2

 

federal or state securities law then in effect, or (ii)
an opinion of counsel, satisfactory to the Company, that such registration and
qualification are not required. Each certificate or other instrument for
Warrant Stock issued upon the exercise of this Warrant shall bear a legend
substantially to the foregoing effect.

 

                                                                                                (b)                                 Transferability.  Subject to the provisions of Section 3(a)
hereof and of Section 1.12 of the Investors’ Rights Agreement dated February
25, 2000, as amended among the Company and certain Holders of Warrants, this
Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of the Warrant with a properly executed assignment (in the form of Exhibit
B hereto) at the principal office of the Company provided, however, that this Warrant may not be transferred in part unless
the transferee acquires the right to purchase at least 12,000 shares (as
adjusted pursuant to Section 2) of Warrant Stock hereunder.

 

                                                                                                (c)                                  Warrant Register.  The Company will maintain a register
containing the names and addresses of the Registered Holders of this Warrant.
Until any transfer of this Warrant is made in the warrant register, the Company
may treat the Registered Holder of this Warrant as the absolute owner hereof
for all purposes; provided, however,
that if this Warrant is properly assigned in blank, the Company may (but shall
not be required to) treat the bearer hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary. Any Registered Holder
may change such Registered Holder’s address as shown on the warrant register by
written notice to the Company requesting such change.

 

                                                4.                                       No
Impairment.  The Company
will not, by amendment of its charter or through reorganization, consolidation,
merger, dissolution, sale of assets or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will, subject to Section 13 below, at all times in good faith
assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment.

 

                                                5.                                       Termination.  This Warrant (and the right to purchase
securities upon exercise hereof) shall terminate upon the earliest to occur of
the following (the “Expiration Date”): (a) February 24, 2010, (b) the
sale, conveyance, disposal, or encumbrance of all or substantially all of the
Company’s property or business or the Company’s merger into or consolidation
with any other corporation (other than a wholly-owned subsidiary corporation)
or any other transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company is disposed of, provided
that this Section 5(b) shall not apply to a merger effected exclusively for the
purpose of changing the domicile of the Company.

 

                                                6.                                       Notices of
Certain Transactions.  In case:

 

                                                                                                (a)                                  the Company shall take a record of the
holders of its Common Stock (or other stock or securities at the time
deliverable upon the exercise of this Warrant) for the purpose of entitling or
enabling them to receive any dividend or other distribution, or to receive any right
to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right, to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right, or

 

                                                                                                (b)                                 of any capital reorganization of the
Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company, any consolidation or

 

3

 

merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the surviving
entity), or any transfer of all or substantially all of the assets of the
Company, or

 

                                                                                                (c)                                  of the voluntary or voluntary
dissolution, liquidation or winding-up of the Company,

 

then, and in each such case, the Company will mail or
cause to be mailed to the Registered Holder of this Warrant a notice
specifying, as the case may be, (i) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the effective
date on which such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record of Common Stock
(or such other stock or securities at the time deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up) are to be determined. Such notice shall be mailed at
least ten (10) days prior to the record date or effective date for the event
specified in such notice.

 

                                                7.                                       Reservation
of Stock. The Company will at all times reserve and keep available,
solely for the issuance and delivery upon the exercise of this Warrant, such
shares of Warrant Stock and other stock, securities and property, as from time
to time shall be issuable upon the exercise of this Warrant.

 

                                                8.                                       Exchange
of Warrants. Upon the surrender by the Registered Holder of any Warrant
or Warrants, properly endorsed, to the Company at the principal office of the
Company, the Company will, subject to the provisions of Section 3 hereof, issue
and deliver to or upon the order of such Holder, at the Company’s expense, a
new Warrant or Warrants of like tenor, in the name of such Registered Holder or
as such Registered Holder (upon payment by such Registered Holder of any
applicable transfer taxes) may direct, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.

 

                                                9.                                       Replacement
of Warrants.  Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and (in the case of loss, theft or destruction)
upon delivery of an indemnity agreement (with surety if reasonably required) in
an amount reasonably satisfactory to the Company, or (in the case of
mutilation) upon surrender and cancellation of this Warrant, the Company will
issue, in lieu thereof, a new Warrant of like tenor.

 

                                                10.                                 Mailing of Notices.  Any notice required or permitted pursuant to
this Warrant shall be in writing and shall be deemed sufficient upon receipt,
when delivered personally or sent by courier, overnight delivery service or
confirmed facsimile, or on the date of receipt or refusal indicated on the
return receipt, if deposited in the regular mail, as certified or registered
mail (airmail if sent internationally), with postage prepaid and return receipt
requested, addressed (a) if to the Registered Holder, to the address of the
Registered Holder most recently furnished in writing to the Company and (b) if
to the Company, to the address set forth below or subsequently modified by
written notice to the Registered Holder.

 

4

 

                                                11.                                 No Rights as Shareholder.  Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a shareholder of the Company.

 

                                                12.                                 No Fractional Shares.  No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share
of Common Stock on the date of exercise. Such fair market value shall be equal
to the mathematical average of the closing prices of the Company’s Common Stock
on the three (3) trading days immediately prior to the date of exercise.

 

                                                13.                                 Amendment or Waiver.  Any term of this Warrant may be amended or
waived only by an instrument in writing signed by the party against which
enforcement of the amendment or waiver is sought.

 

                                                14.                                 Headings.  The headings in this Warrant are for purposes
of reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.

 

5

 

                                                15.                                 Governing Law.  This Warrant shall be governed, construed and
interpreted in accordance with the laws of the State of Delaware, without
giving effect to principles of conflicts of law.

 

	
   

  	
  SOUTHWEST WATER COMPANY,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Richard Shields

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   Richard Shields

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address: 

  	
  Southwest Water Company

  
	
   

  	
   

  	
  624 South Grand Avenue, Suite 2900

  Los Angeles, CA 90017

  
	
   

  	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Fax Number: (213) 929-1888

  
					

 

 

6

 

EXHIBIT A

 

PURCHASE FORM

 

	
  To:

  	
  Southwest Water Company

  	
  Dated:

  
	
   

  	
  624 South Grand Avenue, Suite 2900

  	
   

  
	
   

  	
  Los Angeles, CA 90017

  	
   

  
	
   

  	
  Attn: Chief Financial Officer

  	
   

  

 

                                                                                                The undersigned, pursuant
to the provisions set forth in the attached Warrant No. A-4, hereby irrevocably
elects to purchase                                                                                               shares of the Common
Stock covered by such Warrant and herewith makes payment of $                                                         , representing the full
purchase price for such shares at the price per share provided for in such
Warrant.

 

                                                                                                The undersigned acknowledges
that it has reviewed the representations and warranties contained in Section 4
of the Investor’s Rights Agreement (as defined in the Warrant) and by its
signature below hereby makes such representations and warranties to the
Company. Defined terms contained in such representations and warranties shall
have the meanings assigned to them in the Investor’s Rights Agreement, provided
that the term “Investor” shall refer to the undersigned and the term “Securities”
shall refer to the Warrant Stock.

 

                                                                                                The undersigned further
acknowledges that it has reviewed the market standoff provisions set forth in
Section 1.12 of the Investors’ Rights Agreement and agrees to be bound by such
provisions.

 

	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name (print):

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title (if applic.)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Company (if applic.):

  	
   

  
	
   

  	
   

  	
   

  
							

 

EXHIBIT B

 

ASSIGNMENT FORM

 

	 
	
  FOR VALUE RECEIVED,

  	
   

  
	
  hereby sells, assigns and transfers
  all of the rights of the undersigned under the attached Warrant with respect
  to the number of shares of covered Stock covered thereby set forth below,
  unto:

  
			

 

	
  Name of Assignee

  	
   

  	
  Address/Fax Number

  	
   

  	
  No. of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Dated:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Witness:

  	
   

  

 

 

COMMON STOCK
WARRANT RECEIPT

SOUTHWEST WATER
COMPANY

 

William L. McIntyre, Jr. hereby acknowledges receipt
from Southwest Water Company (the “Company”) of the following document dated as
of October 6, 2003:

 

Warrant to purchase Eighteen Thousand Eight Hundred
Thirty Seven (18,837) shares of Common Stock of the Company

 

 

	
  Dated: 12/30/03

  	
   

  

 

 

 

 

	
   

  	
   

  	
  William
  L. McIntyre, Jr.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY: 

  	
  /s/ William
  L. McIntyre

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ITS: 

  	
  William
  L. McIntyre

  
	
   

  	
   

  	
   

  

 

 

XXX

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