**Exhibit 10.3**

 

[FORM OF AMENDED ANDRESTATED CHANGE-IN-CONTROL AGREEMENT]

 

**AMENDED AND RESTATEDCHANGE-IN-CONTROL AGREEMENT**

 

This Amended and RestatedChange-in-Control Agreement (the “Agreement”) is dated as of [   ], is entered into by and between [     ] (the “Executive”) and [Golden State WaterCompany, a California corporation][American States Utility Services, Inc., aCalifornia corporation][NEEDS TO BE CHANGED TO BE SIGNED BY ACTUAL EMPLOYER](the “Company”), and amends and restates in its entirety the Change-in-ControlAgreement dated as of [   ] between theExecutive and the Company.

 

**RECITALS**

 

The Company considers itessential to the best interest of the Company and its shareholders that theExecutive be encouraged to remain with the Company and continue to devote fullattention to the Company’s business notwithstanding the possibility, threat oroccurrence of a Change in Control (as defined in Section 3).  The Company believes that it is in the bestinterest of the Company, its shareholder and the shareholders of its parent,American States Water Company, a California corporation (“AWR”), to reinforceand encourage the continued attention and dedication of the Executive and todiminish inevitable distractions arising from the possibility of a Change inControl.  Accordingly, to assure theCompany that it will have the Executive’s undivided attention and servicesnotwithstanding the possibility, threat or occurrence of a Change in Control,and to induce the Executive to remain in the employ of the Company, and forother good and valuable consideration, the Board of Directors of the Companyhas, at the recommendation of the Company’s Compensation Committee, caused theCompany to enter into this Agreement.

 

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**TERMS AND CONDITIONS**

 

The Executive and the Companyhereby agree to the following terms and conditions:

 

**1.     Term of Agreement**

 

If a Change in Control(as defined in Section 3) occurs on or before the expiration date of thisAgreement and while the Executive is still an employee of the Company, then thisAgreement will continue in effect for two years from the date of such Change inControl and, if the Executive’s employment with the Company is terminatedwithin such two-year period, this Agreement shall thereafter continue in effectuntil all of the obligations of the Company under this Agreement shall havebeen fulfilled.  If no Change in Controloccurs on or before December 31,  2010,this Agreement shall expire; provided, however that this Agreement shall beautomatically extended for an additional two years to December 31, 2012 if (i)a plan or agreement for a Change in Control has been approved by the Board ofDirectors of AWR, on or before the expiration date, or (ii)  the Company has not delivered to you or youshall have not delivered to the Company written notice at least 60 days priorto the expiration date that such expiration date shall not be so extended.  This Agreement shall continue to beautomatically extended for an additional two-year period and each succeedingtwo-year period if a plan or agreement for a Change in Control has beenapproved by the Board of Directors of AWR, or the Company or the Executivefails to give notice by the time and in the manner described in this Section 1.

 

**2.     Change in Control Date**

 

The “Change in Control Date”shall mean the first date during the term of this Agreement on which a Changein Control (as defined in Section 3) occurs; provided, however, 

 

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that if a Change inControl occurs and if the Executive’s employment with the Company is terminatedafter approval by the Board of Directors of AWR of a plan or agreement for aChange in Control but prior to the date on which the Change in Control occurs,the “Change in Control Date” shall mean the date immediately preceding the dateof such termination.

 

**3.     Change in Control**

 

A “Change in Control”shall mean any of the following events:

 

(a)   any sale,lease, exchange or other change in ownership (in one or a series oftransactions) of all or substantially all of the assets of AWR, unless itsbusiness is continued by another entity in which holders of AWR’s votingsecurities immediately before the event own, either directly or indirectly,more than fifty-five percent (55%) of the continuing entity’s voting securitiesimmediately after the event;

 

(b)   any reorganization or merger of AWR, unlessthe holders of AWR’s voting securities immediately before the event own, eitherdirectly or indirectly, more than fifty-five percent (55%) of the continuing orsurviving entity’s voting securities immediately after the event, and (ii) atleast a majority of the members of the Board of Directors of the survivingentity resulting from such reorganization or merger were members of theincumbent Board of Directors of AWR at the time of the execution of the initialagreement or of the action of such incumbent Board of Directors providing forsuch reorganization or merger;

 

(c)   anacquisition by any person, entity or group acting in concert of more thanfifty-five percent (55%) of the voting securities of AWR, unless the holders ofAWR’s voting securities immediately before the event own, either directly orindirectly, more than fifty-five percent (55%) of the acquirer’s votingsecurities immediately after the acquisition;

 

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(d)   theconsummation of a tender offer or exchange offer by any individual, entity orgroup which results in such individual, entity or group beneficially owning(within the meaning of Rule 13d-3 promulgated under the Securities Exchange Actof 1934 twenty-five percent (25%) or more of the voting securities of AWR,unless the tender offer is made by AWR or any of its subsidiaries or the tenderoffer is approved by a majority of the members of the Board of Directors of AWRwho were in office at the beginning of the twelve month period preceding thecommencement of the tender offer; or

 

(e)   a change of one-half or more of the membersof the Board of Directors of AWR within a twelve-month period, unless theelection or nomination for election by shareholders of new directors withinsuch period constituting a majority of the applicable Board was approved by avote of at least two-thirds (2/3) of the directors then still in office whowere in office at the beginning of the twelve month period.

 

**4.     Effective Period**

 

For the purpose of thisAgreement, the “Effective Period” is the period commencing on the Change inControl Date and ending on the date this Agreement terminates.

 

**5.     Termination of Employment**

 

(a)   Death orDisability:  The Executive’semployment shall terminate automatically upon the Executive’s death.  If the Disability (as defined below) of theExecutive occurs during the Effective Period, the Companymay give the Executive written notice of its intention to terminate theExecutive’s employment.  In such event,the Executive’s employment with the Company shallterminate effective on the 30th day after receipt of such notice by theExecutive (the “Disability Effective Date”), provided that, within the 30 days aftersuch receipt, the Executive shall not have returned to full-timeperformance of his or her duties.  Forpurposes 

 

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of this Agreement, “Disability” shall mean the absenceof the Executive from his or her duties with the Companyon a full-time basis for 180 consecutive business days as a result of aphysical or mental condition which prevents the Executive from performing theExecutive’s normal duties of employment and which is (i) determined to be totaland permanent by a physician selected by the Company orits insurers and acceptable to the Executive or the Executive’s legalrepresentative and/or (ii) entitles the Executive to the payment of long-termdisability benefits from the Company’s or AWR’s long-termdisability plan commencing no later than the Disability Effective Date.

 

(b)   Cause:  The Company may terminate the Executive’semployment other than for Cause or Disability during the Effective Period. The Company may also terminate the Executive’s employmentduring the Effective Period for Cause. For purposes of this Agreement, “Cause”shall be limited to the following:

 

(i)            the Executive’s failure to renderservices to the Company where such failure amounts to gross neglect or grossmisconduct of the Executive’s responsibility and duties,

 

(ii)           the Executive’s commission of an actof fraud or dishonesty against the Company or any affiliate of the Company, or

 

(iii)          the Executive’s conviction of a felonyor other crime involving moral turpitude.

 

(c)   GoodReason:  The Executive’s employmentmay be terminated by the Executive during the Effective Period for GoodReason.  For purposes of this Agreement, “GoodReason” shall mean:

 

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(i)            the assignment to the Executive ofany duties inconsistent in any respect with the Executive’s position (includingstatus, offices, titles and reporting requirements), authority, duties orresponsibilities as in effect on the Change in Control Date, or any otheraction by the Company or AWR which results in adiminution in such position, authority, duties or responsibilities, excludingfor this purpose an isolated, insubstantial and inadvertent action not taken inbad faith and which is remedied by the Company or AWR, asapplicable, promptly, but in no event more than thirty (30) days afterreceipt of notice thereof given by the Executive;

 

(ii)           any failure by theCompany or AWR to reappoint the Executive to a position held by theExecutive on the Change in Control Date, except as a result of the terminationof the Executive’s employment by the Company forCause or Disability, the death of the Executive, or the termination of theExecutive’s employment by the Executive other than for Good Reason;

 

(iii)          reduction by theCompany or AWR in the Executive’s base salary in effect on the datehereof or as the same may be increased from time-to-time;

 

(iv)          elimination by the Company or AWR of anycash incentive or other cash bonus compensation plan, without providingsubstitutes therefor, or any modification of the terms thereof that wouldsubstantially diminish (in the aggregate, taking into consideration changes insalary, etc.) the aggregate amount of the base salary and cash incentive orother cash bonus that is reasonably expected to be earned by the Executiveduring any calendar year from the aggregate amount that would reasonably havebeen expected to be earned by the 

 

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Executive, assuming the maintenance of the cashincentive or cash bonus compensation plan or plans in effect on the Change inControl Date;

 

(v)           the taking of any action by the Company or AWR (including the elimination of benefitplans without providing substitutes therefor or the reduction of the Executive’sbenefits thereunder) that would substantially diminish the aggregate value ofthe Executive’s other fringe benefits, including the executive benefits andperquisites, from the levels in effect prior to the Change in Control Date;

 

(vi)          the Company or AWRprovide written notice to the Executive that the Executive will be based at anyoffice or location which increases the distance from the Executive’s home tothe office location by more than 35 miles from the distance in effect as of theChange in Control Date; and

 

(vii)         any failure by theCompany or AWR to comply with and satisfy Section 11(c) of thisAgreement.

 

**6.     Obligations of theCompany upon Termination**

 

(a)   GoodReason, Other Than for Cause or Disability: If the Company shall terminate the Executive’semployment other than for Cause or Disability during the Effective Period, orthe Executive shall terminate employment for Good Reason during the EffectivePeriod, the Company and AWR agree, subject toSection 8, to make the payments and provide the benefits described below:

 

(i)            The Companyor AWR shall pay to the Executive in a cash lump sum within 10 days from thedate of the later of the Change in Control Date or the termination of the Executive’semployment, an amount equal to the product of 

 

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(A) and (B), where (A) is 2.99 and (B) is calculatedas the sum of (i) the Executive’s annual base salary at the highest rate ineffect in any year of the three calendar years immediately preceding the dateof termination of employment; plus (ii) the average of the payments made to theExecutive pursuant to any “cash-pay” performance incentive plan of the Companyor AWR (a “Cash Incentive Payment”) during the five calendars years immediatelypreceding the date of termination of employment (or, in the event that anExecutive has less than five calendar years of credited service, the sum of theExecutive’s Cash Incentive Payments during the number of calendar years of suchExecutive’s employment with AWR or any of its subsidiaries divided by thenumber of calendar years of such Executive’s employment with AWR or any of itssubsidiaries); and provided that if Executive is employed pursuant to anywritten employment agreement, the Cash Incentive Payment in any year for purposesof calculations under this clause (ii) shall not be less than any minimum incentiveor annual cash bonus required thereunder; provided that Cash Incentive Paymentsdo not include (A) any extraordinary bonus, including any holiday, year end,anniversary or signing bonus; (B) any amounts paid or to be paid to theExecutive under this Agreement, (C) reimbursement of moving or other expenses; or(D) any other lump sum payment, unless specifically designated as a Cash IncentivePayment pursuant to an incentive plan of the Company or AWR by the Board ofDirectors of AWR or the Company, or any committee thereof; plus (iii) theaverage of the amount of cash received by the Executive with respect todividend equivalents credited to the account of the Executive (“DividendEquivalents”) during the five calendar 

 

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years immediately preceding the date of termination ofemployment (or, in the event that an Executive has less than five calendaryears of credited service or any such year did not include Dividend Equivalentpayments, the sum of the Dividend Equivalents during the number of calendaryears of such Executive’s employment with AWR or any of its subsidiariesdivided by the number of calendar years of such Executive’s employment with AWRor any of its subsidiaries and in which Dividend Equivalents were paid). Unlessotherwise provided pursuant to the terms of the cash incentive compensationplan of AWR or the Company or the terms of the award, the amount paid to theExecutive pursuant to this Section 6(a)(i) shall be in lieu of any CashIncentive Payment to which the Executive would otherwise be entitled under anycash incentive plan of the Company or AWR for the year in which the Executive’semployment is terminated as a result of a Change in Control.

 

(ii)           The Companyor AWR shall also pay to the Executive in a cash lump sum within 10 days fromthe later of the Change in Control Date or the date of termination ofemployment, an amount equal to the sum of (A) the Executive’s base salarythrough the date of termination, plus (B) any compensation previously deferredby the Executive (together with any accrued earnings or interest thereon), plus(C) 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 asthe “Accrued Obligations”).

 

(iii)          The Company or AWR shall also pay tothe Executive in a cash lump sum within 10 days from the later of the Change inControl Date or the date 

 

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of termination of employment, an amount equal to theexcess of (A) over (B), where (A) is equal to the single sum actuarialequivalent of what would be the Executive’s accrued benefits under the terms ofthe Southern California Water Company Pension Plan, or any successor thereto, includingany supplemental retirement plan providing pension benefits (hereinaftertogether referred to as the “Pension Plan”) at the time of the Executive’stermination of employment, without regard to whether such benefits would bevested thereunder, if the Executive were credited with an additional threeyears of credited service (as defined in the Pension Plan), and (B) is equal tothe single sum actuarial equivalent of the Executive’s vested accrued benefitsunder the Pension Plan at the time of the Executive’s termination ofemployment.  For purposes of thisparagraph (iii), the term “single sum actuarial equivalent” shall be determinedusing an interest rate equal to six percent (6%) and the mortality table namedand 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 SectionA.4 of the Pension Plan and using the Executive’s age upon termination of theExecutive’s employment. Any payment under this paragraph (iii) shall notextinguish any rights the Executive has to benefits under the Pension Plan.

 

(iv)          For [three years for CEO and CFO]  two years after the Executive’s date oftermination, or such longer period as may be provided by the terms of theappropriate plan, program, practice or policy, the Companyshall continue to provide welfare benefits and fringe benefits and otherperquisites to the Executive and/or the Executive’s family at least equal tothose which would 

 

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have been provided to them if the Executive’semployment had not been terminated (in accordance with the most favorableplans, practices, programs or policies of the Company and its affiliatesapplicable generally to other peer executives and their families immediatelypreceding the date of the Executive’s termination of employment); provided,however, that if the Executive becomes employed by another employer and iseligible to receive medical or other welfare benefits under another employer-providedplan, the medical and other welfare benefits described herein shall besecondary to those provided under such other plan during such applicable periodof eligibility.  For purposes ofdetermining eligibility (but not the time of commencement of benefits) of theExecutive for any retiree benefits pursuant to such plans, practices, programsand policies, the Executive shall be considered to have remained employed until[three years for CEO and CFO] two years after the date of termination ofemployment and to have retired on the last day of such period.  Following the period of continued benefitsreferred to in this subsection, the Executive and the Executive’s family shallbe given the right provided in Section 4980B of the Internal Revenue Code of1986 (the “Code”) to elect to continue benefits in all group medicalplans.  In the event that the Executive’sparticipation in any of the plans, programs, practices or policies of theCompany referred to in this subsection is barred by the terms of such plans,programs, practices or policies, the Company shall provide the Executive withbenefits substantially similar to those which the Executive would be entitledas a participant in such plans, programs, practices or policies.  At the end of the period of coverage, theExecutive shall have the option to have 

 

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assigned to the Executive, at no cost and with noapportionment of prepaid premiums, any assignable insurance policy owned by theCompany and relating specifically to the Executive.

 

(v)           The Company and AWR shall enable theExecutive to purchase within 10 days following the later of the Change inControl Date or the termination of employment, the automobile, if any, providedby the Company for the Executive’s use at the time of the Executive’stermination of employment at the wholesale value of such automobile at suchtime, as shown in the current edition of the National Auto Research PublicationBlue Book.

 

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

 

(vii)         The Executive shall be entitled tointerest on any payments not paid on a timely basis as provided in this Section6(a) at the applicable Federal Rate provided for in Section 7872(f)(2)(A) ofthe Code.

 

(viii)        Upon the occurrence of a Change inControl, each stock option granted to an Executive under any stock incentiveplan of AWR or the Company shall become immediately exercisable, and eachrestricted stock award under any stock incentive plan of AWR or the Companyshall immediately vest free of 

 

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restrictions, unless theExecutive refuses any such acceleration in writing. If the vesting of any stockoption or restricted stock award has been accelerated expressly in anticipationof a Change in Control and the Board of Directors later determines that aChange in Control will not occur, the effect of the acceleration as to any thenoutstanding and unexercised stock option or restricted stock award shall berescinded. In no event shall any such stock option or restricted stock award bereinstated or extended beyond its final expiration date.

 

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

 

(c)           Disability:  If the Executive’s employment is terminatedby reason of the Executive’s Disability during the Effective Period, this Agreementshall terminate without further obligations to the Executive, other than forpayment of Accrued Obligations and the timely payment or provision of OtherBenefits. Accrued Obligations shall be paid to the Executive in a cash lump sumwithin 30 days of the Executive’s termination of employment.

 

(d)           Cause, Other than for Good Reason:  If the Executive’s employment shall beterminated for Cause during the Effective Period or, if the Executivevoluntarily terminates employment during the Effective Period, excluding atermination for Good Reason, this Agreement shall terminate without furtherobligations to the Executive, other than for Accrued 

 

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Obligations andany benefits payable to Executive under a plan, policy, practice, etc.,referred to in Section 7 below.  AccruedObligations shall be paid to the Executive in a cash lump sum within 60 days ofthe Executive’s termination of employment.

 

**7.     Non-Exclusivity of Rights**

 

Subject to Section 8,nothing in this Agreement shall prevent or limit the Executive’s continuing orfuture participation in any plan, program, policy or practice provided by the Company or any of its affiliates and for which theExecutive may qualify, nor, subject to Sections 8 and 20, shall anything hereinlimit or otherwise affect such rights as the Executive may have under anycontract or agreement with the Company or any of its affiliates. Amounts whichare vested benefits or which the Executive is otherwise entitled to receiveunder any plan, policy, practice, program, contract or agreement with theCompany or any of its affiliates at or subsequent to the date of termination ofthe Executive’s employment shall be payable in accordance with such plan,policy, practice, program, contract or agreement except as explicitly modifiedby this Agreement.

 

**8.     Limitationon Benefits**

 

Notwithstanding anything in this Agreement to thecontrary, if any payments or benefits to be made to or for the Executive’sbenefit, whether pursuant to this Agreement or otherwise, whether by theCompany or another entity or person, would not be deductible by the Company dueto limitations imposed by Section 162(m) of the Code, then such payments orbenefits shall be deferred to the extent necessary until such time as suchpayments would be deductible under Section 162(m) of the Code.  Either the Company or the Executive mayrequest a determination as to whether any payments would be subject tolimitations on deductibility under Section 162(m) of the Code and, of so requested,such determination shall be made by 

 

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independent legal counsel selected by the Company andapproved by the Executive.  Payment maybe delayed pending any such determination, provided that the Executive shall beentitled to interest on any delayed payment at the applicable Federal Rateprovided for in Section 7872(f)(2)(A) of the Code. The Executive shall also beentitled to interest on any payments deferred as a result of the limitations ondeductibility under Section 162(m) of the Code at the applicable Federal Rateprovided for in Section 7872(f)(2)(A) of the Code.

 

**9.     Parachute Payments**

 

(a)   Gross-UpPayment.  In the event that anypayment or distribution by the Company to or for the benefit of the Executive(whether paid or payable or distributed or distributable pursuant to the termsof this Agreement or otherwise, but determined without regard to any additionalpayments under this Section 9(a)) (a “Payment”) is determined to be subject tothe excise tax imposed by Section 4999 of the Code, or any interest orpenalties are incurred by the Executive with respect to such excise tax (suchexcise tax, together with any such interest and penalties, are hereinaftercollectively referred to as the “Excise Tax”), then the Company shall paypromptly to the Executive an additional payment (a “Gross-Up Payment”) in anamount such that after payment by Executive of all taxes (including anyinterest or penalties imposed with respect thereto) and Excise Tax imposed uponthe Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equalto the Excise Tax imposed upon such Payments.

 

(b)   AccountingFirm.  Subject to the provisions ofSection 9(c), all determinations required to be made under this Section 9,including whether and when a Gross-Up Payment is required and the amount ofsuch Gross-Up Payment and the assumptions to be utilized in arriving at suchdetermination, shall be made by PricewaterhouseCoopers LLP or, if that firmdeclines the engagement, such other certified public accounting firm as may bedesignated by 

 

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Executive and which is satisfactory to the Company(the “Accounting Firm”), which shall provide detailed supporting calculationsboth to the Company and to Executive within 15 business days after suchdeterminations are requested by Executive or the Company.  All fees and expenses of the Accounting Firmshall be borne solely by the Company. The Company shall pay any Gross-Up Payment, as determined pursuant tothis Section 9(b), to Executive within 5 days after the receipt by the Companyof the Accounting Firm’s determination. As a result of the uncertainty in the application of Section 4999 of theCode at the time of the initial determination by the Accounting Firm hereunder,it is possible that Gross-Up Payments which will not have been made by theCompany should have been made (an “Underpayment”), consistent with thecalculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section9(c) and Executive thereafter is required to make a payment of any Excise Tax,the Accounting Firm shall determine the amount of the Underpayment that hasoccurred and the Company shall pay such Underpayment promptly to or for thebenefit of Executive.

 

(c)   InternalRevenue Service Claims.  Executiveshall notify the Company in writing of any claim by the Internal RevenueService that, if successful, would require the payment by the Company of aGross-Up Payment.  Such notificationshall be given as soon as practicable but no later than 10 business days afterExecutive is informed in writing of such claims and shall apprise the Companyof the nature of such claim, and the date on which such claim is requested tobe paid.  Executive shall not pay suchclaim prior to the expiration of the 30-day period following the date on whichit gives such notice to the Company (or such shorter period ending on the datethat any payment of taxes with respect to such claim is due).  If the Company notifies Executive in writingprior to the expiration of such period that it desires to contest such claim,Executive shall:

 

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(i)            Give the Company any informationreasonably requested by either of them relating to such claim,

 

(ii)           Take such action in connection withcontesting such claim as the Company shall reasonably request in writing fromtime to time, including, without limitation, accepting legal representationwith respect to such claim by an attorney reasonably selected by the Company,

 

(iii)          Cooperate with the Company in goodfaith in order to contest such claim effectively, and

 

(iv)          Permit the Company to participate inany proceedings relating to such claim;

 

provided, however,that the Company shall bear and pay directly all costs and expenses (includingadditional interest and penalties) incurred in connection with such contest andshall indemnify and hold the Executive harmless, on an after-tax basis, for anyExcise Tax or income tax (including interest and penalties with respectthereto) imposed as a result of such representation and payment of costs andexpenses.  Without limitation on theforegoing provisions of this Section 9(c), the Company shall control all proceedingstaken in connection with such contests and, at its sole discretion, may pursueor forgo any and all administrative appeals, proceedings, hearings andconferences with the taxing authority in respect of such claim and may, at itssole option, either direct Executive to pay the tax claimed and sue for arefund or contest the claim in any permissible manner, and Executive agrees toprosecute such contest to a determination before any administrative tribunal,in a court of initial jurisdiction and in one or more appellate courts, as theCompany shall determine; provided, however that if the Company directsExecutive to pay such claim and sue for a refund, the Company shall pay theamount of 

 

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such payment toExecutive, and shall indemnify and hold Executive harmless, on an after-taxbasis, from any Excise Tax or income tax (including interest or penalties withrespect thereto) imposed with respect to such payment or with respect to anyimputed income with respect to such payment; and further provided that anyextension of the statute of limitations relating to payment of taxes for thetaxable year of Executive with respect to which such contested amount isclaimed to be due is limited solely to such contested amount.  Furthermore, the control by the Company ofthe contest shall be limited to issues with respect to which the Gross-UpPayment would be payable hereunder and Executive shall be entitled to settle orcontest, as the case may be, any other issue raised by the Internal RevenueService or any other taxing authority.

 

(d)   Refunds.If, after the receipt by Executive of an amount paid by the Company pursuant toSection 9(c), Executive becomes entitled to receive any refund with respect tosuch claim, Executive shall (subject to compliance by the Company with therequirements of Section 9(c)) promptly pay to the Company the amount of suchrefund (together with any interest paid or credited thereon after taxesapplicable thereto).  If, after thereceipt by Executive of an amount paid by the Company pursuant to Section 9(c),a determination is made that Executive shall not be entitled to any refund withrespect to such claim and the Company does not notify Executive in writing ofits intent to contest such denial of refund prior to the expiration of 30 daysafter such determination, then such advance shall be forgiven and shall not berequired to be repaid and the amount of such payment shall offset, to theextent thereof, the amount of Gross-Up Payment required to be paid.

 

**10.  Full Settlement**

 

The obligation of the Company to make the paymentsprovided for in this Agreement and otherwise to perform its obligationshereunder shall not be affected by any 

 

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set-off, counterclaim, recoupment, defense orother claim, right or action which the Company may have against the Executiveor others. In no event shall the Executive be obligated to seek otheremployment or take any other action by way of mitigation of the amounts payableto the Executive under any of the provisions of this Agreement and, except asprovided in Section 6(a)(iv), such amounts shall not be reduced whether or notExecutive obtains other employment.

 

**11.  Successors**

 

(a)           This Agreement is personal to theExecutive and shall not be assignable by the Executive other than by will orthe laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by theExecutive’s legal representatives.

 

(b)           This Agreement shall inure to thebenefit of and be binding upon the Company and its successors and assigns.

 

(c)           The Company will require anysuccessor (whether direct or indirect, by purchase, merger, consolidation orotherwise) to all or substantially all of the business and/or assets of theCompany to assume expressly and agree to perform this Agreement in the samemanner and to the same extent that the Company would be required to perform itif no such succession had taken place. As used in this Agreement, the “Company” shall mean the Company asdefined and any successor to its business and/or assets which assumes andagrees to perform this Agreement by operation of law, or otherwise, and “AWR”shall mean AWR as defined and any successor to its business and/or assets byoperation of law or otherwise.

 

**12.  Arbitration**

 

(a)           Because it is agreed that time willbe of the essence in determining whether any payments are due to the Executiveunder this Agreement, the Executive may submit any claim for payment under thisAgreement or dispute regarding the interpretation of this 

 

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Agreement toarbitration.  This right to selectarbitration shall be solely that of the Executive, and the Executive may decidewhether or not to arbitrate in his or her discretion.  The “right to select arbitration” is notmandatory on the Executive, and the Executive may choose in lieu thereof tobring an action in an appropriate civil court. Once arbitration is commenced, however, it may not be discontinuedwithout the mutual consent of both parties to the arbitration.  During the lifetime of the Executive only heor she can use the arbitration procedure set forth in this section.

 

(b)           Any claim for arbitration may besubmitted as follows: If the Executive disagrees with the Company regarding theinterpretation of this Agreement and the claim is finally denied by the Companyin whole or in part, such claim may be filed in writing with an arbitrator ofthe Executive’s choice who is selected by the method described in the nextthree sentences. The first step of the selection shall consist of the Executivesubmitting a list of 5 potential arbitrators to the Company.  Each of the five arbitrators must be either(1) a member of the National Academy of Arbitrators located in the State ofCalifornia or (2) a retired California Superior Court or Appellate Courtjudge.  Within 2 weeks after receipt ofthe list, the Company shall select one of the five arbitrators as the arbitratorfor the dispute in question.  If theCompany fails to select an arbitrator in a timely manner, the Executive shallthen designate one of the five arbitrators as the arbitrator for the dispute inquestion.

 

(c)           The arbitration hearing shall be heldwithin 30 days (or as soon thereafter as possible) after the picking of thearbitrator.  No continuance of thehearing shall be allowed without the mutual consent of the Executive and theCompany. Absence from or nonparticipation at the hearing by either party shallnot prevent the issuance of an award. Hearing procedures which will expedite the hearing may be ordered at thearbitrator’s discretion, and the arbitrator 

 

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may close thehearing at his or her discretion when sufficient evidence to satisfy issuanceof an award has been presented.

 

(d)           The arbitrator’s award shall berendered as expeditiously as possible and in no event later than 30 days afterthe close of the hearing.  In the eventthe arbitrator finds that the Company has breached this Agreement, he or sheshall order the Company to immediately take the necessary steps to remedy thebreach. The award of the arbitrator shall be final and binding upon theparties.  The award may be enforced in anyappropriate court as soon as possible after it is rendered.  If an action is brought to confirm the award,the Company and the Executive agree that no appeal shall be taken by eitherparty from any decision rendered in such action.

 

(e)           Each party will pay the fees of theirrespective attorneys, the expenses of their witnesses, costs of any record ortranscript of the arbitration, and any other expenses connected with thearbitration that such party might be expected to incur had the dispute beensubject to resolution in court, but all costs of the arbitration that would notbe incurred by the parties if the dispute was litigated in court, includingfees of the arbitrator and any arbitration association administrative fees willbe paid by the Company.

 

**13.  Governing Law**

 

The laws of Californiashall govern the validity and interpretation of this Agreement, with regard toconflicts of laws.

 

**14.  Captions**

 

The captions of thisAgreement are not part of the provisions hereof and shall have no force oreffect.

 

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**15.  Amendment**

 

This Agreement may not beamended or modified otherwise than by a written agreement executed by theparties hereto or their respective successors and legal representatives.

 

**16.  Notices**

 

All notices and othercommunications regarding this Agreement shall be in writing and shall be handdelivered to the other party or sent by prepaid registered or certified mail,return receipt requested, addressed as follows:

 
| If to the Executive: | [                                  ] |
|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 | [                                  ] |
|                 | [                                  ] |
| If to the Company:   | [                                  ] |
|                 | [                                  ] |
|                 | [                                  ] |

 

or to such other addressas either party shall have furnished to the other in writing. Notice andcommunications shall be effective when actually received by the addressee.

 

**17.  Severability**

 

The lack of validity orenforceability of any provision of this Agreement shall not affect the validityor enforceability of any other provision of this Agreement.

 

**18.  Withholding Taxes**

 

The Company may withholdrequired federal, state, local or foreign taxes from any amounts payable underthis Agreement.

 

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**19.  No Waiver**

 

The Executive’s or theCompany’s failure to insist upon strict compliance with any provision of thisAgreement or the failure to assert any right the Executive or the Company mayhave under this Agreement, including, without limitation, the right of theExecutive to terminate employment for Good Reason, shall not be deemed to be awaiver of such provision or right or any other provision or right under thisAgreement.

 

**20.  At-Will Employment**

 

The Executive and theCompany acknowledge that, except as may otherwise be provided under any otherwritten agreement between the Executive and the Company, the employment of theExecutive by the Company prior to the Change in Control Date is “at will” and,prior to the Change in Control Date, the Executive’s employment may beterminated by either the Executive or the Company at any time, in which casethe Executive shall have no further rights under this Agreement. From and afterthe Change in Control Date, this Agreement shall supersede any other agreementbetween the parties with respect to the subject matter hereof.

 

**21.  Counterparts**

 

                This Agreement may be executed simultaneously in oneor more counterparts, each of which shall be deemed an original, but all ofwhich shall together constitute one and the same Agreement.

 

**22.  Section 409A**

 

If the Executive is a “specifiedemployee” for purposes of Section 409A of the Code and the regulationsthereunder, any payments required to be pursuant to Section 6(a) or any otherprovision hereunder which are subject to Section 409A shall not be made untilsix months from 

 

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the date of termination of employment. In no eventshall any payment be made under this Agreement that would cause the Executiveor the executive’s spouse or estate to be subject to additional taxes andinterest penalties under Section 409A of the Code.

 

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IN WITNESS WHEREOF, theparties hereto have caused this Agreement to be duly executed and delivered as ofthe day and year first written above in San Dimas, California.

 
|   | **[GOLDEN STATE WATER COMPANY]**                                                                                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ** **                                                                                                                                         |
|   | **[AMERICAN STATES UTILITY SERVICES, INC.]**                                                                                                       |
|   | ** **                                                                                                                                         |
|   | By                                                                                                                                                 |   |   |
|   | Title                                                                                                                                              |   |   |
|   |                                                                                                                                               |   |   |
|   |                                                                                                                                               |   |   |
|   | **EXECUTIVE**                                                                                                                                      |
|   |                                                                                                                                               |   |   |
|   |                                                                                                                                               |   |
|   | [                        ] |

 

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