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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))
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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
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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
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Its: Secretary
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Dated: April 18, 2006
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