-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UHzRRRzApzEppz8OYw/uB+oQA7uNM5qoJw5G+vPbfzL/x9kGsgwV2zOKrL4F0vsz qJws+8uwe1Q8jcQN61hqgA== 0001157523-06-003766.txt : 20060418 0001157523-06-003766.hdr.sgml : 20060418 20060418164847 ACCESSION NUMBER: 0001157523-06-003766 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060418 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060418 DATE AS OF CHANGE: 20060418 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHWEST WATER CO CENTRAL INDEX KEY: 0000092472 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] IRS NUMBER: 951840947 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-08176 FILM NUMBER: 06765134 BUSINESS ADDRESS: STREET 1: ONE WILSHIRE BUILDING STREET 2: 624 SOUTH GRAND AVENUE, SUITE 2900 CITY: LOS ANGELES STATE: CA ZIP: 90017-3782 BUSINESS PHONE: 213 929 1800 MAIL ADDRESS: STREET 1: ONE WILSHIRE BUILDING STREET 2: 624 SOUTH GRAND AVENUE, SUITE 2900 CITY: LOS ANGELES STATE: CA ZIP: 90017-3782 FORMER COMPANY: FORMER CONFORMED NAME: SUBURBAN WATER SYSTEMS DATE OF NAME CHANGE: 19751202 8-K 1 a5126655.txt SOUTHWEST WATER COMPANY 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 18, 2006 SOUTHWEST WATER COMPANY (Exact Name of Registrant as Specified in its Charter) DELAWARE 0-8176 95-1840947 (State or Other Jurisdiction of (Commission (IRS Employer Incorporation or Organization) File Number) Identification Number) ONE WILSHIRE BUILDING 624 SOUTH GRAND AVENUE, SUITE 2900 LOS ANGELES, CALIFORNIA 90017-3782 (Address of Principal Executive Offices, including zip code) (213) 929-1800 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT (a) Change of Control Severance Agreement. On April 17, 2006, the Board of Directors of Southwest Water Company, a Delaware corporation (the "Company") approved the form of a Change of Control Severance Agreement. All "named executive officers," as that term is defined in Item 402(a)(3) of Regulation S-K, other than Anton C. Garnier, are eligible to enter into the Change of Control Severance Agreement ("Agreement"), should they wish to do so. The Board of Directors of the Company may, from time to time, permit other key employees of the Company to enter into the Agreement. The Change of Control Severance Agreement has a term of three (3) years subject to automatic renewal for three-year terms, unless a 90-day notice of non-renewal is given prior to the expiration of a current term. The Agreement terminates prior to a change of control upon the termination of employment of the named executive officer or other participants. The Agreement provides that the named executive officers or other participants will, upon a change of control (as defined in the Agreement), be entitled for a period of two (2) years thereafter, to a severance payment if such person's employment is terminated by the named executive other than participants for good reason (as defined in the Agreement) or by the Company for other than good cause (as defined in the Agreement). Named executives or other participants will be entitled to severance pay in an amount up to 2.99 times the sum of their most recent base salary plus average bonus for the prior three full years. The severance benefits also include acceleration of vesting of previously granted stock options held as of the date of the change of control. All severance benefits payable under the Agreement will be limited so that no excess parachute payments, as defined in Section 280G of the Internal Revenue Code, will result. A copy of the form of Change of Control Severance Agreement is attached to this report as Exhibit 10.1. (b) Executive Employment Agreement. On April 17, 2006, the Company and Mark A. Swatek entered into an Executive Employment Agreement, pursuant to which Mr. Swatek will be employed by the Company as its Chief Executive Officer commencing May 15, 2006. The material terms of the Agreement are (i) Term: The Agreement is "at will" and does not have any specific term. The Agreement may be terminated on 100 days notice by either party. (ii) Base Salary: $375,000 a year. (iii) Bonus: Target bonus equal to 50% of Base Salary with a potential of 100%, in accordance with criteria to be established between the Company and Mr. Swatek for 2006 and pursuant to normal Company procedures thereafter. (iv) Relocation Assistance: Executive will be reimbursed for relocation expenses plus $900,000 paid as follows: (a) $100,000 within five days of the effective date in May; (b) $250,000 within 5 days of escrow on his house being opened; (c) $250,000 one week prior to close of escrow; (iv) $300,000 on January 15, 2007. (v) Transition Assistance: Executive will be paid expenses involved in commuting to Littleton, Colorado up to two trips a month for himself and his wife, and he will be eligible for temporary housing until he acquires a new residence in the local area. (vi) Grant of Options: Executive will be granted options to purchase 75,000 shares of Company stock under the 2006 Equity Incentive Plan following adoption of the Plan by the stockholders. Those options will vest 50% one year following the date of grant and 50% two years following the date of grant. The options will expire 7 years following the date of grant. (vii) Benefits: Executive will be entitled to all benefits afforded to the senior management employees. A copy of the Agreement is attached to this Report as Exhibit 10.2. ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS Mark A. Swatek, 53, will be employed as the Chief Executive Officer of the Company effective May 15, 2006, pursuant to the Executive Employment Agreement referred to in Item 1.01(b). Mr. Swatek has been employed by one or more subsidiaries of MWH Global, Inc., a worldwide engineering, consulting and construction firm that specializes in serving the municipal water and wastewater market. He has served as President (2000-2004) and a member of the Board of Directors (2000-2006) of MWH constructors; as a member of the Board of Directors of MWH Global (2003-2006); as a director of MWH Americas (2005-2006); and as President of MWH State and Local Government operations, the largest operating division of MWH Global, Inc. (2005-2006). There is no arrangement or understanding between Mr. Swatek and any other person pursuant to which he was selected as an officer of the Company. There is no family relationship between Mr. Swatek and any director or executive officer of the Company or any person nominated or chosen by the Company to become a director or executive officer of the 2 Company. Mr. Swatek has held no directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940, as amended. There have been no transactions or series of similar transactions since the beginning of the Company's last fiscal year, or any currently proposed transaction or series of similar transactions, to which the Company or any of its subsidiaries was or is to be a party in which the amount involved exceeds $60,000, and in which Mr. Swatek or any member of his immediate family had, or will have, a direct or indirect material interest. The press release announcing Mr. Swatek's employment is furnished as Exhibit 99.1. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 10.1 Form of Change of Control Agreement between Southwest Water Company, a Delaware corporation, on the one hand and executive officers to be designated by the Company's Board of Directors on the other hand. 10.2 Executive Employment Agreement dated April 17, 2006, between Mark A. Swatek and Southwest Water Company. 99.1 Press Release dated April 18, 2006. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. SOUTHWEST WATER COMPANY By: /s/ Shelley A. Farnham ---------------------- Its: Secretary ---------------------- Dated: April 18, 2006 3 EX-10.1 2 a5126655-ex101.txt EXHIBIT 10.1 Exhibit 10.1 CHANGE OF CONTROL SEVERANCE AGREEMENT THIS CHANGE OF CONTROL SEVERANCE AGREEMENT ("Agreement") is made effective as of________________, 2006 (the "Effective Date") by and between Southwest Water Company, a Delaware corporation (the "Company"), and __________________________ ("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; WHEREAS, the Company and Executive are parties to that certain Severance Compensation Agreement dated as of ____________ (the "Prior Agreement") and the Company and Executive desire to terminate the Prior Agreement and institute this Agreement; 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. 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 Change of Control Payment Period (as defined below), as applicable. 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 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: 2 (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 (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 3 (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. (c) Change of Control Payment Period. "Change of Control Payment Period" shall mean the period of twenty-four (24) months after the Date of Termination of Executive, where such Termination is an Involuntary Termination of Employment or a termination of employment by Executive for Good Reason. (d) Code. "Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor code. (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: 4 (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; (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. 5 (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 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: (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 _____ 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. (c) Other Benefits. Executive shall be entitled to the benefits set forth in Section 4. 6 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 Change of Control Payment 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, 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 for the Change 7 of Control Payment 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 Change of Control Payment 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. (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 8 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. (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 10, WHICH DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN 9 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 "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 10 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. (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. 11 (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. Corporation: Executive Southwest Water Company One Wilshire Building 624 South Grand Avenue Suite 2900 Los Angeles, California 90017 Attention: Human Resources [Signature page follows] 12 IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the date first above written. COMPANY SOUTHWEST WATER CORPORATION, a Delaware corporation By --------------------------------------- Its: EXECUTIVE ----------------------------------------- Name: 13 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. 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, 14 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". (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: (1) That this General Release is written in a manner calculated to be understood by Executive. (2) 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. (3) This General Release provides for consideration in addition to anything of value to which Executive is already entitled. (4) Executive is advised to consult an attorney before signing this General Release. (5) 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. (6) 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. 15 (7) 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 16 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: (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: ------------------------------ ------------------------------ ------------------------------ [Signature page follows] 17 The parties hereto have executed this Agreement as of the date first set forth above. SOUTHWEST WATER COMPANY, a Delaware corporation By: -------------------------------- Its: Executive ----------------------------------- 18 EX-10.2 3 a5126655-ex102.txt EXHIBIT 10.2 Exhibit 10.2 EXECUTIVE EMPLOYMENT AGREEMENT ------------------------------ THIS AGREEMENT is made and entered into the 17th day of April, 2006, by and between SOUTHWEST WATER COMPANY, a Delaware corporation (the "Company"), and MARK A. SWATEK ("Executive"). Recital ------- Executive and the Company desire to enter into this Agreement to establish the terms and conditions of Executive's employment by the Company. Agreement --------- NOW, THEREFORE, the parties agree as follows: 1. Effective Date. The effective date of this Agreement and the date on which Executive's employment by the Company shall begin is May 15, 2006 (the "Effective Date"). 2. Term. Executive's employment under this Agreement is "at will" and for no specific term or any term. 3. Employment, Title and Duties. The Company hereby employs Executive and Executive agrees to serve the Company in the capacity of Chief Executive Officer, reporting directly to, and subject to the direction of, the Board of Directors of the Company (the "Board"). Executive shall, if elected a director, also serve as Chairman of the Board. Executive shall, during his employment under this Agreement, diligently and faithfully perform the duties hereinafter specified and devote his full business time and efforts exclusively to the Company. However, Executive may engage in charitable and community affairs and the management of his personal passive investments, provided that such activities do not interfere with the performance of his duties under this Agreement. Executive shall perform such duties as are customary for a chairman of the board, if elected a director, and a chief executive officer, including such duties as may be specified in the Bylaws of the Company and such duties, consistent with Executive's position, as are assigned to him from time to time by the Board. Executive shall attend all meetings of the Board unless specifically directed otherwise. 4. Base Salary. The Company shall pay Executive a base salary of Three Hundred Seventy-Five Thousand Dollars ($375,000.00) a year ("Base Salary"), less all deductions required by law or authorized by Executive in writing. Salary shall be paid in equal installments (subject to proration for a period of employment of less than the applicable payroll period) on the Company's regular payroll dates. Base Salary shall be subject to review in and after 2008. 5. Bonus. Executive shall be entitled to participate in the Company's executive bonus program with a target bonus equal to fifty percent (50%) of Base Salary and a potential of 100% of Base Salary. Although Executive will have been employed by Company for a period of less than a full-calendar year at year-end 2006, Executive will be evaluated and a bonus determined on the same basis as if he were employed for the full calendar year. The basis for determining bonus will be established jointly between Executive and the Company by August 15, 2006, for calendar year 2006, and pursuant to normal Company procedures thereafter. 6. Grant of Options. Executive shall be granted options to purchase 75,000 shares of the Company's Common Stock, par value $.01 per share (the "Options"). The Options shall be issued in accordance with and subject to the Southwest Water Company 2006 Equity Incentive Plan; shall vest at the rate of 50% one year following the date of grant and 50% two years following the date of grant; and shall expire seven (7) years following the date of grant. 7. Benefits. Executive shall be entitled to participate in all benefit plans and benefits established and provided from time to time by the Company to its senior management employees; subject to and on a basis consistent with the terms, conditions and overall administration of such benefit plans. It is agreed that Executive will be entitled to five (5) weeks vacation. The Company agrees to use reasonable efforts to shorten any waiting periods that may be required before Executive can participate in a plan or benefit, to the extent allowed by said benefit plans and pertinent regulations. 8. Automobile Allowance. Executive shall receive an automobile allowance of One Thousand Dollars ($1,000.00) a month during Executive's employment. Executive will also be provided a parking space at the Company's expense in its downtown Los Angeles office building. 9. Club Membership. Executive shall be proposed for membership in a downtown Los Angeles Club deemed advantageous by the Company; and if Executive becomes a member of such club, the Company shall reimburse him his initiation fee and monthly dues during Executive's employment. 10. Relocation Assistance. The Company will reimburse Executive for his actual relocation expenses, plus an additional $900,000 to help offset the cost of purchasing a home in the Los Angeles area. The $900,000 amount shall be paid as follows: (i) $100,000 paid within five (5) days of the Effective Date; (ii) $250,000 paid within five (5) days of Executive entering into escrow on Executive's new home; (iii) $250,000 paid one week prior to the close of escrow on Executive's new home; and (iv) $300,000 on January 15, 2007. All payments will be made only if Executive is employed by the Company at the time payment is due, and all payments shall be subject to applicable withholding. 11. Transition Assistance. The parties anticipate that Executive will commuting to Littleton, Colorado until such later date as he acquires a new residence in the Los Angeles area (the "Transition Period"). From the Effective Date, the Company will assist Executive by (i) reimbursing him for air travel expenses for himself or his wife during the Transition Period up to a total of two trips a month, and (ii) by reimbursing him for temporary housing during the Transition Period. 2 12. Expenses. All travel and other proper and reasonable expenses incident to the rendering of services by Executive hereunder shall be paid by the Company in accordance with Company policy. 13. Term; Termination; Change of Control. This Agreement shall terminate upon the death of Executive and may be terminated by the Company or Executive at any time for any reason or for no reason upon one hundred (100) days written notice given by the terminating party to the other party. The Company agrees to enter into an agreement with Executive providing Executive certain rights in the event of change of control of the Company, in form and substance substantially similar to any such agreements that might be entered into between the Company and other senior management employees. 14. Post-Termination Obligations. (a) After the termination of Executive's employment hereunder for any reason whatsoever, Executive shall not, either alone or jointly, with or on behalf of others, either directly or indirectly, expressly or impliedly, whether as principal, partner, agent, shareholder, director, employee, consultant or otherwise, at any time during a period of two (2) years following such expiration or termination, solicit in any manner whatsoever the employment or engagement of, either for his own account or for any other person, firm, company or other entity, any person who is employed by the Company or any affiliated entity, whether or not such person would commit any breach of his contract of employment by reason of his leaving the service of the Company or any affiliated entity. (b) Executive shall not (either during his employment by the Company or thereafter) disclose to any person not connected with the Company or use for his own benefit or for the benefit of any person other than the Company any proprietary or confidential information either disclosed to or developed by Executive during his employment by the Company. For purposes of this Agreement, the term "proprietary or confidential information" means all ideas, information and materials, tangible or intangible, not generally known to the public, relating in any manner to the business of the Company, its customers, clients, consultants, vendors and others with whom it does business, including, without limitation, any Trade Secret, knowledge or data, whether of a technical or commercial nature, production records or data, policies, procedures, formulas, financial records and data, managerial and operational policies, plans, including sales and marketing plans, strategies, methods, practices and procedures, customer and vendor lists, data and information, specifications, pricing elements, marketing strategies, and other technical or business information related to the conduct of the Company's business. The term "Trade Secret" as used in this Agreement shall include the meaning set out in California Civil Code ss. 3426.1(d). 15. Notices. Any notice to be given in connection with this Agreement shall be in writing and shall be deemed effectively given upon personal delivery (including delivery by a courier service) if receipt is acknowledged in writing by the addressee; or when communicated by electronically confirmed facsimile transmission; or three (3) days following deposit with the United States Postal Service, certified mail (postage prepaid and return receipt requested), addressed as follows: 3 If to the Company: Southwest Water Company 624 South Grand Avenue, Suite 2900 Los Angeles, California 90017 Attention: President Facsimile: 213.929.1889 If to Executive: Mark A. Swatek At last address on file with the Company or to such other address as any party may specify by written notice to the other. 16. Entire Agreement; Amendments; Waiver (a) This Agreement supersedes all prior or contemporaneous agreements or statements, whether written or oral, concerning the terms of Executive's employment. No amendment or modification of this Agreement shall be binding unless set forth in a writing signed by the Company and Executive. No waiver by either party of any breach by the other party of any provision or condition of this Agreement shall be effective unless in writing and signed by the party effecting the waiver, and no such waiver shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time. (b) This Agreement does not constitute a commitment of the Company with regard to Executive's employment, express or implied, other than to the extent expressly provided for herein. Upon termination, it is the contemplation of both parties that Executive's employment with the Company shall cease unless an employment agreement with respect to a subsequent period shall have been entered into, and that neither the Company nor Executive shall have any obligation to the other with respect to continued employment. (c) Captions and headings used in this Agreement are for convenience of reference only and shall be disregarded in construing any provision of this Agreement. (d) The Company shall have the right but not the obligation to use Executive's name or likeness for any publicity or advertising purpose during the term of Executive's employment with the Company. (e) This Agreement shall be governed by and construed in accordance with the laws of the State of California. In the event of any controversy or claim by either party hereunder, the prevailing party in any final and legally binding adjudication (as to which all periods for the filing of any appeal have expired) with respect to such controversy or claim shall be 4 entitled to reimbursement from the losing party of all reasonable attorneys' fees and costs and for all other reasonable expenses of such adjudication. IN WITNESS WHEREOF, the parties hereto have executed this Executive Employment Agreement as of the date first above written. SOUTHWEST WATER COMPANY By: /s/ Maureen A. Kindel ------------------------------------- Maureen A. Kindel Its: Director -------------------------------- By: ------------------------------------- Its: -------------------------------- /s/ Mark A. Swatek ---------------------------------------------- MARK A. SWATEK 5 EX-99.1 4 a5126655-ex991.txt EXHIBIT 99.1 Exhibit 99.1 Southwest Water Names Mark A. Swatek Chief Executive Officer LOS ANGELES--(BUSINESS WIRE)--April 18, 2006--Southwest Water Company (NASDAQ:SWWC) announced that its board of directors has selected Mark A. Swatek chief executive officer. Swatek, 53, will join the company in mid-May, succeeding Anton C. Garnier, chairman and chief executive officer, who has led the company for 38 years. "Mark Swatek brings a strong operating track record and more than 28 years of experience leading and managing companies in the water and wastewater industry," Garnier said. "He has a proven record of driving both top-line growth and profitability. I am extremely pleased to have Mark join the Southwest Water team and lead the company in its next stage of growth and development." Commenting on his new position, Swatek said, "In evaluating the opportunity with Southwest Water, I found a company with a solid track record of growth and performance. Southwest Water, under Tony Garnier's leadership, has earned a reputation for providing reliable, quality service to its clients. I look forward to leading this company's talented management team to continue to capitalize on the tremendous growth opportunities in the water and wastewater industry." Swatek was chosen after the board conducted a nation-wide search for a candidate with strong leadership abilities and a thorough knowledge of the water utility industry. He most recently was president of MWH State and Local Government operations, the largest operating division of MWH Global, a $1 billion worldwide engineering consulting and construction firm that specializes in serving the municipal water and wastewater market. In this capacity, he managed the 1000 person, $350 million revenue per year US municipal operations which provides water/wastewater engineering, program management, and facility design-build activities for city, county, and state governments. Prior to this position, Swatek was President of MWH Constructors, the design-build construction subsidiary of MWH, where he was responsible for rapid top and bottom line growth of the subsidiary, creating one of the top integrated design-build-operate companies focusing on water/wastewater facilities in the US and UK. Swatek earned bachelor of science and master of science degrees in civil engineering from Purdue University, and is a graduate of the Harvard Business School Advanced Management Program. He is a registered professional engineer and licensed general contractor in multiple states. Swatek also has served as a director on a number of boards of engineering and contractor companies. Southwest Water Company provides a broad range of services including water production, treatment and distribution; wastewater collection and treatment; utility billing and collection; utility infrastructure construction management; and public works services. The company owns regulated public utilities and also serves cities, utility districts and private companies under contract. More than two million people from coast to coast depend on Southwest Water for high-quality, reliable service. Additional information may be found on the company's Web site: www.swwc.com. CONTACT: Southwest Water Company DeLise Keim, 213-929-1846 www.swwc.com or PondelWilkinson Inc. Robert Jaffe, 310-279-5969 www.pondel.com -----END PRIVACY-ENHANCED MESSAGE-----