Exhibit 10.6
 
[FORM OF AMENDMENT TO INDIVIDUAL CHANGE-IN-CONTROL AGREEMENT]
AMENDMENT TO CHANGE-IN-CONTROL AGREEMENT
WHEREAS, a Change-in-Control Agreement (the “Agreement”) dated as of [   ], was
previously entered into by and between [     ] (the “Executive”) and [Golden
State Water Company, a California corporation][American States Utility Services,
Inc., a California corporation][NEEDS TO BE CHANGED TO BE SIGNED BY ACTUAL
EMPLOYER] (the “Company”); and

WHEREAS, this Amendment to the Agreement between the Executive and the Company,
as set forth below, is effective January 1, 2009:

1.
Section 6 of the Agreement is amended to read as follows:

“6.           Obligations of the Company upon Termination

(a)           Good Reason, Other Than for Cause or Disability:  If the Company
shall terminate the Executive’s employment other than for Cause or Disability
during the Effective Period, or the Executive shall terminate employment for
Good Reason during the Effective Period, the Company and AWR agree, subject to
Sections 6(f), 8 and 9, to make the payments and provide the benefits described
below:

(i)           The Company or AWR shall pay to the Executive in a cash lump sum
within 10 days from the date of the Executive’s termination of employment, an
amount equal to the product of (A) and (B), where (A) is 2.99 and (B) is
calculated as the sum of (i) the Executive’s annual base salary at the highest
rate in effect in any year of the three calendar years immediately preceding the
date of termination of employment; plus (ii) the average of the payments made to
the Executive pursuant to any ‘cash-pay’ performance incentive plan of the
Company or AWR (a ‘Cash Incentive Payment’) during the five calendars years
immediately preceding the date of termination of employment (or, in the event
that the Executive has less than five calendar years of credited service, the
sum of the Executive’s Cash Incentive Payments during the number of calendar
years of the Executive’s employment with AWR or any of its subsidiaries divided
by the number of calendar years of the Executive’s employment with AWR or any of
its subsidiaries); and provided that if the Executive is employed pursuant to
any written employment agreement, the Cash Incentive Payment in any year for
purposes of calculations under this clause (ii) shall not be less than any
minimum incentive or annual cash bonus required thereunder; provided that Cash
Incentive Payments do not include (A) any extraordinary bonus, including any
holiday, year end, anniversary or signing bonus; (B) any amounts paid or to be
paid to the Executive under this Agreement, (C) reimbursement of moving or other
expenses; or (D) any other lump sum payment, unless specifically designated as a
Cash Incentive Payment pursuant to an incentive plan of the Company or AWR by
the Board of Directors of AWR or the Company, or any committee thereof; plus
(iii) the average of the amount of cash received by the Executive with respect
to dividend equivalents credited to the account of the Executive (‘Dividend
Equivalents’) during the five calendar years immediately preceding the date of
termination of employment (or, in the event that the Executive has less than
five calendar years of credited service or any such year did not include
Dividend Equivalent payments, the sum of the Dividend Equivalents during the
number of calendar years of the Executive’s employment with AWR or any of its
subsidiaries divided by the number of calendar years of the Executive’s
employment with AWR or any of its subsidiaries and in which Dividend Equivalents
were paid). Unless otherwise provided pursuant to the terms of the cash
incentive compensation plan of AWR or the Company or the terms of the award, the
amount paid to the Executive pursuant to this Section 6(a)(i) shall be in lieu
of any Cash Incentive Payment to which the Executive would otherwise be entitled
under any cash incentive plan of the Company or AWR for the year in which the
Executive’s employment is terminated as a result of a Change in Control.
 
 
 

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

 

(ii)           The Company or AWR shall also pay to the Executive in a cash lump
sum within 10 days from the date of the Executive’s termination of employment,
an amount equal to the sum of (A) the Executive’s base salary through the date
of termination, plus (B) any accrued vacation pay, in each case to the extent
not theretofore paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the ‘Accrued Obligations’).

(iii)           The Company or AWR shall also pay to the Executive in a cash
lump sum within 10 days from the date of the Executive’s termination of
employment, an amount equal to the excess of (A) over (B), where (A) is equal to
the single sum actuarial equivalent of what would be the Executive's accrued
benefits under the terms of the Golden State Water Company Pension Plan, or any
successor thereto, including the Golden State Water Company Pension Restoration
Plan and any other supplemental retirement plan providing pension benefits
(hereinafter together referred to as the ‘Pension Plan’) at the time of the
Executive’s termination of employment, without regard to whether such benefits
would be vested thereunder, if the Executive were credited with an additional
three years of credited service (as defined in the Pension Plan), and (B) is
equal to the single sum actuarial equivalent of the Executive’s vested accrued
benefits under the Pension Plan at the time of the Executive’s termination of
employment.  For purposes of this paragraph (iii), the term ‘single sum
actuarial equivalent’ shall be determined using an interest rate equal to six
percent (6%) and the mortality table named and described in detail in Section
A.1 of the Pension Plan after the reduction (if any) of the Executive’s benefit
using the ‘Regular Factors’ under Section A.4 of the Pension Plan and using the
Executive’s age upon termination of employment.  Any payment under this
paragraph (iii) shall not extinguish any rights the Executive has to benefits
under the Pension Plan.

(iv)           For [three years for CEO and CFO] two years after the date of the
Executive’s termination of employment, or such longer period as may be provided
by the terms of the appropriate plan, program, practice or policy, the Company
shall continue to provide medical, dental, vision, accidental death and
dismemberment, and life insurance coverage, and reimbursement of club dues to
the Executive and/or the Executive’s family at least equal to those which would
have been provided to them if the Executive’s employment had not been terminated
(in accordance with the most favorable plans, practices, programs or policies of
the Company and its affiliates applicable generally to other peer executives and
their families immediately preceding the date of the Executive's termination of
employment) (the ‘Continued Benefits’); provided, however, that if the Executive
becomes employed by another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.  For purposes of
determining eligibility (but not the time of commencement of benefits) of the
Executive for any retiree benefits pursuant to such plans, practices, programs
and policies, the Executive shall be considered to have remained employed until
[three years for CEO and CFO] two years after the date of termination of
employment and to have retired on the last day of such period.  Following the
period of continued benefits referred to in this subsection, the Executive and
the Executive’s covered family members shall be given the right provided in
Section 4980B of the Internal Revenue Code of 1986 (the ‘Code’) to elect to
continue benefits in all group medical plans.  In the event that the Executive’s
participation in any of the plans, programs, practices or policies of the
Company referred to in this subsection is barred by the terms of such plans,
programs, practices or policies or applicable law, the Company shall provide the
Executive with benefits substantially similar to those which the Executive would
be entitled as a participant in such plans, programs, practices or policies.  At
the end of the period of coverage, the Executive shall have the option to have
assigned to the Executive, at no cost and with no apportionment of prepaid
premiums, any assignable insurance policy owned by the Company and relating
specifically to the Executive.
 
 
 

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

 

(v)           The Company and AWR shall enable the Executive to purchase within
10 days following the Executive’s termination of employment, the automobile, if
any, provided by the Company for the Executive’s use at the time of the
Executive’s termination of employment at the wholesale value of such automobile
at such time, as shown in the current edition of the National Auto Research
Publication Blue Book.

(vi)           To the extent not theretofore paid or provided, the Company or
AWR shall timely pay or provide the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy, practice, contract or agreement of the Company
and its affiliates (such other amounts and benefits being hereinafter referred
to as ‘Other Benefits’) in accordance with the terms of such plan, program,
policy, practice, contract or agreement.

(vii)           The Executive shall be entitled to interest on any payments not
paid on a timely basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.

(viii)           Upon the occurrence of a Change in Control, each stock option
granted to an Executive under any stock incentive plan of AWR or the Company
shall become immediately exercisable, and each restricted stock award under any
stock incentive plan of AWR or the Company shall immediately vest free of
restrictions.  If the vesting of any stock option or restricted stock award has
been accelerated expressly in anticipation of a Change in Control and the Board
of  Directors later determines that a Change in Control will not occur, the
effect of the acceleration as to any then outstanding and unexercised stock
option or restricted stock award shall be rescinded. In no event shall any such
stock option or restricted stock award be reinstated or extended beyond its
final expiration date.

(b)           Death:  If the Executive’s employment is terminated by reason of
the Executive’s death during the Effective Period, this Agreement shall
terminate without further obligations to the Executive’s legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits.  Accrued Obligations shall be
paid to the Executive’s estate or beneficiary, as applicable, in a cash lump sum
within 10 days of the date of the Executive’s death.

(c)           Disability:  If the Executive’s employment is terminated by reason
of the Executive’s Disability during the Effective Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other
Benefits.  Accrued Obligations shall be paid to the Executive in a cash lump sum
within 10 days of the Executive’s termination of employment.

(d)           Cause, Other than for Good Reason:  If the Executive’s employment
shall be terminated for Cause during the Effective Period or, if the Executive
voluntarily terminates employment during the Effective Period, excluding a
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations and any
benefits payable to the Executive under a plan, policy, practice, etc., referred
to in Section 7 below.  Accrued Obligations shall be paid to the Executive in a
cash lump sum within 10 days of the Executive’s termination of employment.
 
 
 

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

 

(e)           Payment of Club Dues.  This Section 6(e) shall apply to any club
dues that may be reimbursed pursuant to Section 6(a)(iv) that exceed the de
minimus amounts set forth in Treasury Regulations Section 1.409A-1(b)(9)(iv)(D)
(the “Club Dues”).  The amount of Club Dues that the Executive receives in one
taxable year shall not affect the amount of Club Dues that the Executive
receives in any other taxable year.  To the extent the Executive is reimbursed
for any Club Dues, such reimbursement shall be paid to the Executive on or
before the last day of the Executive’s taxable year following the taxable year
in which the expense was incurred.  The Club Dues are not subject to liquidation
or exchange for another benefit.

(f)           Six-Month Delay.  Notwithstanding any other provisions of the
Agreement, any payment or benefit otherwise required to be made after the
Executive’s termination of employment that the Company reasonably determines is
subject to Section 409A(a)(2)(B)(i) of the Code, shall not be paid or payment
commenced until the later of (i) six months after the date of the Executive’s
‘separation from service’ (within the meaning of Section 409A of the Code and
Treasury Regulations Section 1.409A-1(h) without regard to optional alternative
definitions available thereunder) and (ii) the payment date or commencement date
specified in the Agreement for such payment(s).  With respect to any benefit
that the Company cannot provide during the six-month period following the
Executive’s separation from service pursuant to the preceding sentence, the
Executive shall pay the cost or premium for such benefit during such period and
be reimbursed by the Company therefor.  On the earliest date on which such
payments can be made or commenced without violating the requirements of
Section 409A(a)(2)(B)(i) of the Code, the Executive shall be paid, in a single
cash lump sum, an amount equal to the aggregate amount of all payments delayed
pursuant to this Section 6(f), including reimbursement for any premiums paid by
the Executive as a result of the delay.”

2.
The first sentence of Section 7 of the Agreement is amended to read as follows:

“Subject to Section 8, nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliates and for which the
Executive may qualify, nor, subject to Sections 6(f), 8 and 20, shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliates.”

3.
Section 8 of the Agreement is amended to read as follows:

“8.           Limitation on Benefits

Notwithstanding anything in this Agreement to the contrary, if any payments or
benefits to be made to or for the Executive’s benefit, whether pursuant to this
Agreement or otherwise, whether by the Company or another entity or person,
would not be deductible by the Company due to limitations imposed by Section
162(m) of the Code, then to the extent permitted by Treasury Regulation
Section 1.409A-2(b)(7)(i) without subjecting the Executive to adverse tax
consequences, such payments or benefits shall be delayed.  The delayed amounts
shall be paid to the Executive at the earliest date the Company reasonably
anticipates that the deduction of the payment of the amount will not be limited
or eliminated by application of Section 162(m) of the Code; provided, however,
that if the Executive is a Specified Employee, to the extent deemed necessary to
comply with Treasury Regulations Section 1.409A-3(i)(2), the delayed payment
shall not be made before the end of the six-month period following the
Executive’s separation from service.  The Executive shall also be entitled to
interest on any payments deferred as a result of the limitations on
deductibility under Section 162(m) of the Code at the applicable Federal Rate
provided for in Section 7872(f)(2)(A) of the Code.  Either the Company or the
Executive may request a determination as to whether any payments would be
subject to limitations on deductibility under Section 162(m) of the Code and, if
so requested, such determination shall be made by independent legal counsel
selected by the Company and approved by the Executive.”
 
 
 

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

 
 
4.
A new paragraph (e) is added at the end of Section 9 of the Agreement, to read
as follows:

“(e)           Payment.  Notwithstanding anything herein to the contrary, any
payment under this Section 9 shall be paid to the Executive by the end of the
Executive’s taxable year following the taxable year in which the Executive pays
the related taxes.”

5.
Section 22 of the Agreement is amended to read as follows:

“22.           Section 409A

It is intended that any amounts payable under this Agreement shall either be
exempt from Section 409A of the Code or shall comply with Section 409A
(including Treasury regulations and other published guidance related thereto) so
as not to subject the Executive to payment of any additional tax, penalty or
interest imposed under Section 409A of the Code.  The provisions of this
Agreement shall be construed and interpreted to avoid the imputation of any such
additional tax, penalty or interest under Section 409A of the Code yet preserve
(to the nearest extent reasonably possible) the intended benefit payable to the
Executive.”

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to the
Agreement to be duly executed and delivered effective the day and year first
written above in San Dimas, California.
 

 
[GOLDEN STATE WATER COMPANY]
 
[AMERICAN STATES UTILITY SERVICES, INC.]
 
By           __________________________________
Title

Date    __________________________________

EXECUTIVE
 
________________________________________
                              [_____________]

Date    __________________________________