a5822408ex10_5.htm


    Exhibit
10.5

    [FORM OF
AMENDED AND RESTATED CHANGE-IN-CONTROL AGREEMENT]

    AMENDED AND RESTATED
CHANGE-IN-CONTROL AGREEMENT

     

    This
Amended and Restated Change-in-Control Agreement (the “Agreement”) is dated as
of [   ], is 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 amends and restates in its entirety the Change-in-Control
Agreement dated as of [   ] between the Executive and the
Company.

    


    RECITALS

    


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

    


    TERMS AND
CONDITIONS

    


    The
Executive and the Company hereby 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 this Agreement and while the Executive is still an employee of the
Company, then this Agreement will continue in effect for two years from the date
of such Change in Control and, if the Executive’s employment with the Company is
terminated within such two-year period, this Agreement shall thereafter continue
in effect until all of the obligations of the Company under this Agreement shall
have been fulfilled.  If no Change in Control occurs on or before
December 31,  2010, this Agreement shall expire; provided,
however that this Agreement shall be automatically 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 of Directors of AWR, on or before the
expiration date, or (ii)  the Company has not delivered to you or you
shall have not delivered to the Company written notice at least 60 days prior to
the expiration date that such expiration date shall not be so
extended.  This Agreement shall continue to be automatically extended
for an additional two-year period and each succeeding two-year period if a plan
or agreement for a Change in Control has been approved by the Board of Directors
of AWR, or the Company or the Executive fails 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 Change in Control (as defined in Section 3) occurs;
provided, however, that if a Change in Control occurs and if the Executive’s
employment with the Company is terminated after approval by the Board of
Directors of AWR of a plan or agreement for a Change 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 date of 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 of
transactions) of all or substantially all of the assets of AWR, unless its
business is continued by another entity in which holders of AWR’s voting
securities immediately before the event own, either directly or indirectly, more
than fifty-five percent (55%) of the continuing entity’s voting securities
immediately after the event;

      


      (b)           any
reorganization or merger of AWR, unless the holders of AWR’s voting securities
immediately before the event own, either directly or indirectly, more than
fifty-five percent (55%) of the continuing or surviving entity’s voting
securities immediately after the event, and (ii) at least a majority of the
members of the Board of Directors of the surviving entity resulting from such
reorganization or merger were members of the incumbent Board of Directors of AWR
at the time of the execution of the initial agreement or of the action of such
incumbent Board of Directors providing for such reorganization or
merger;

      


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

      


      (d)           the
consummation of a tender offer or exchange offer by any individual, entity or
group which results in such individual, entity or group beneficially owning
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act
of 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 tender
offer is approved by a majority of the members of the Board of Directors of AWR
who were in office at the beginning of the twelve month period preceding the
commencement of the tender offer; or

      


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

      


      4.      Effective
Period

      


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

      


      5.      Termination
of Employment

      


      (a)           Death or
Disability:  The
Executive’s employment shall terminate automatically upon the Executive’s
death.  If the Disability (as defined below) of the Executive occurs
during the Effective Period, the Company may give the Executive written notice
of its intention to terminate the Executive’s employment.  In such
event, the Executive’s employment with the Company shall terminate effective on the
30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of his or her duties.  For purposes of this Agreement,
“Disability” shall mean the absence of the Executive from his or her duties with
the Company on a full-time basis for 180
consecutive business days as a result of a physical or mental condition which
prevents the Executive from performing the Executive’s normal duties of
employment and which is (i) determined to be total and permanent by a physician
selected by the Company
or its insurers and
acceptable to the Executive or the Executive’s legal representative and/or (ii)
entitles the Executive to the payment of long-term disability benefits from
the Company’s or AWR’s long-term disability plan
commencing no later than the Disability Effective Date.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

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

       

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

      


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

      


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

      


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

       

      (i)           the assignment to the Executive of any
duties inconsistent in any respect with the Executive’s position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as in effect on the Change in Control Date, or any other action
by the Company or
AWR which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company or AWR, as
applicable, promptly, but
in no event more than thirty (30) days after receipt of notice thereof given by
the Executive;

       

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

        


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

         

        
          
            (iv)           elimination
by the Company or AWR of any cash incentive or other cash bonus compensation
plan, without providing substitutes herefore, or any modification of the terms
thereof that would substantially diminish (in the aggregate, taking into
consideration changes in salary, etc.) the aggregate amount of the base salary
and cash incentive or other cash bonus that is reasonably expected to be earned
by the Executive during any calendar year from the aggregate amount that would
reasonably have been expected to be earned by the Executive, assuming the
maintenance of the cash incentive or cash bonus compensation plan or plans in
effect on the Change in Control Date;

             

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

               

              
                
                   

                

                
                   

                  
                    

                  

                

                
                   

                

              

            

          

        

      

    

     

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

      


      (vii)           any
failure by the Company or AWR to comply with and satisfy Section 11© of this
Agreement.

       

      
        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); 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)(v)(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
herefore.  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.

         

        
          7.      Non-Exclusivity
of Rights

          


          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. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice, program, contract or agreement with the Company or any of its
affiliates at or subsequent to the date of termination of the Executive’s
employment shall be payable in accordance with such plan, policy, practice,
program, contract or agreement except as explicitly modified by this
Agreement.

          


          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.

           

          
            
               

            

            
               

              
                

              

            

            
               

            

          

          


          9.      Parachute
Payments

          


          (a)           Gross-Up
Payment.  In the event that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments under this
Section 9(a)) (a “Payment”) is determined to be subject to the excise tax
imposed by Section 4999 of the Code, or any interest or penalties are incurred
by the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Company shall pay promptly to the Executive an
additional payment (a “Gross-Up Payment”) in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
such Payments.

          


          (b)           Accounting
Firm.  Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
PricewaterhouseCoopers LLP or, if that firm declines the engagement, such other
certified public accounting firm as may be designated by the Executive and which
is satisfactory to the Company (the “Accounting Firm”), which shall provide
detailed supporting calculations both to the Company and to the Executive within
15 business days after such determinations are requested by the Executive or the
Company.  All fees and expenses of the Accounting Firm shall be borne
solely by the Company.  The Company shall pay any Gross-Up Payment, as
determined pursuant to this Section 9(b), to the Executive within 5 days after
the receipt by the Company of the Accounting Firm’s determination.  As
a result of the uncertainty in the application of Section 4999 of the Code 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 the Company
should have been made (an “Underpayment”), consistent with the calculations
required to be made hereunder.  In the event that the Company exhausts
its remedies pursuant to Section 9(c) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and the Company shall pay such
Underpayment promptly to or for the benefit of the Executive.

           

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

             

            
              
                 

              

              
                 

                
                  

                

              

              
                 

              

            

          

           

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

            


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

            


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

            


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

            


            provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses.  Without limitation on the foregoing provisions of this
Section 9©, the Company shall control all proceedings taken in connection with
such contests and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall pay the amount of such
payment to the Executive, and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such payment or with
respect to any imputed income with respect to such payment; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount.  Furthermore, the control by the Company of the contest shall
be limited to issues with respect to which the Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

            


            (d)           Refunds. If, after
receipt by the Executive of an amount paid by the Company pursuant to Section
9©, the Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to compliance by the Company with the
requirements of Section 9©) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto).  If, after receipt by the Executive of an amount
paid by the Company pursuant to Section 9©, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such payment shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.

            


            (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.

             

            
              
                 

              

              
                 

                
                  

                

              

              
                 

              

            

          

        

      

    

     

    
      10.           Full
Settlement

      


      The
obligation of the Company to make the payments provided for in this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as provided in Section 6(a)(iv),
such amounts shall not be reduced whether or not the Executive obtains other
employment.

      


      11.           Successors

      


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

      


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

      


      (c)           The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly 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.  As used
in this Agreement, the “Company” shall mean the Company as defined and any
successor to its business and/or assets which assumes and agrees 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 by operation of law or
otherwise.

    

     

    
      12.           Arbitration

      


      (a)           Because
it is agreed that time will be of the essence in determining whether any
payments are due to the Executive under this Agreement, the Executive may submit
any claim for payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration.  This right to select
arbitration shall be solely that of the Executive, and the Executive may decide
whether or not to arbitrate in his or her discretion.  The “right to
select arbitration” is not mandatory on the Executive, and the Executive may
choose in lieu thereof to bring an action in an appropriate civil
court.  Once arbitration is commenced, however, it may not be
discontinued without the mutual consent of both parties to the
arbitration.  During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.

      


      (b)           Any
claim for arbitration may be submitted as follows: If the Executive disagrees
with the Company regarding the interpretation of this Agreement and the claim is
finally denied by the Company in whole or in part, such claim may be filed in
writing with an arbitrator of the Executive’s choice who is selected by the
method described in the next three sentences. The first step of the selection
shall consist of the Executive submitting 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 of California or (2)
a retired California Superior Court or Appellate Court judge.  Within
2 weeks after receipt of the list, the Company shall select one of the five
arbitrators as the arbitrator for the dispute in question.  If the
Company fails to select an arbitrator in a timely manner, the Executive shall
then designate one of the five arbitrators as the arbitrator for the dispute in
question.

      


      (c)           The
arbitration hearing shall be held within 30 days (or as soon thereafter as
possible) after the picking of the arbitrator.  No continuance of the
hearing shall be allowed without the mutual consent of the Executive and the
Company. Absence from or nonparticipation at the hearing by either party shall
not prevent the issuance of an award.  Hearing procedures which will
expedite the hearing may be ordered at the arbitrator’s discretion, and the
arbitrator may close the hearing at his or her discretion when sufficient
evidence to satisfy issuance of an award has been presented.

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      (d)           The
arbitrator’s award shall be rendered as expeditiously as possible and in no
event later than 30 days after the close of the hearing.  In the event
the arbitrator finds that the Company has breached this Agreement, he or she
shall order the Company to immediately take the necessary steps to remedy the
breach. The award of the arbitrator shall be final and binding upon the
parties.  The award may be enforced in any appropriate 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
either party from any decision rendered in such action.

      


      (e)                      Each
party will pay the fees of their respective attorneys, the expenses of their
witnesses, costs of any record or transcript of the arbitration, and any other
expenses connected with the arbitration that such party might be expected to
incur had the dispute been subject to resolution in court, but all costs of the
arbitration that would not be incurred by the parties if the dispute was
litigated in court, including fees of the arbitrator and any arbitration
association administrative fees will be paid by the Company.

      


      13.           Governing
Law

      


      The laws
of California shall govern the validity and interpretation of this Agreement,
with regard to conflicts of laws.

      


      14.           Captions

      


      The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.

      


      15.           Amendment

      


      This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

      


      16.           Notices

      


      All
notices and other communications regarding this Agreement shall be in writing
and shall be hand delivered 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 address as either party shall have furnished to the other in writing.
Notice and communications shall be effective when actually received by the
addressee.

      


      17.           Severability

      


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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      


      18.           Withholding
Taxes

      


      The
Company may withhold required federal, state, local or foreign taxes from any
amounts payable under this Agreement.

      


      19.           No
Waiver

      


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

      


      20.           At-Will
Employment

      


      The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the
employment of the Executive 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 be terminated by either the Executive or the Company at any time,
in which case the Executive shall have no further rights under this Agreement.
From and after the Change in Control Date, this Agreement shall supersede any
other agreement between the parties with respect to the subject matter
hereof.

      


      21.           Counterparts

      


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

      


      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 Agreement to be duly executed and
delivered as of the day and year first written above in San Dimas,
California.

      


      


      [GOLDEN
STATE WATER COMPANY]

      [AMERICAN
STATES UTILITY SERVICES, INC.]

      By           __________________________________

      
           
Title

      

      


      EXECUTIVE

      _________________________________________

      [_____________]