Exhibit 10.3


 


[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, 


 


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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;


 


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(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 


 


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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:


 


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(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 therefor, 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 


 


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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 therefor 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
provide 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(c) 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
Section 8, 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 later of the Change in Control Date or the termination of the Executive’s
employment, an amount equal to the product of 


 


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(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 an
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 such
Executive’s employment with AWR or any of its subsidiaries divided by the
number of calendar years of such Executive’s employment with AWR or any of its
subsidiaries); and provided that if 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 


 


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years immediately preceding the date of termination of
employment (or, in the event that an 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 such Executive’s employment with AWR or any of its subsidiaries
divided by the number of calendar years of such 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 later of the Change in Control Date or the date of termination of
employment, an amount equal to the sum of (A) the Executive’s base salary
through the date of termination, plus (B) any compensation previously deferred
by 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 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 later of the Change in
Control Date or the date 


 


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of 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 Southern California Water Company Pension Plan, or any successor thereto, including
any 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 the
Executive’s 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 Executive’s date of
termination, 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 welfare benefits and fringe benefits and other
perquisites to the Executive and/or the Executive’s family at least equal to
those which would 


 


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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 family 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, 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 


 


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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 later of the Change in
Control Date or the 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 


 


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restrictions, unless the
Executive refuses any such acceleration in writing. 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 30 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 


 


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Obligations and
any benefits payable to 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 60 days of
the 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 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 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 such payments or
benefits shall be deferred to the extent necessary until such time as such
payments would be deductible under Section 162(m) 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, of so requested,
such determination shall be made by 


 


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independent legal counsel selected by the Company and
approved by the Executive.  Payment may
be delayed pending any such determination, provided that the Executive shall be
entitled to interest on any delayed payment at the applicable Federal Rate
provided for in Section 7872(f)(2)(A) of the Code. 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.


 


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 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 and when 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 


 


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Executive and which is satisfactory to the Company
(the “Accounting Firm”), which shall provide detailed supporting calculations
both to the Company and to Executive within 15 business days after such
determinations are requested by 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 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 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 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.  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 Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall:


 


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(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(c), 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 Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and 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
Executive to pay such claim and sue for a refund, the Company shall pay the
amount of 


 


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such payment to
Executive, and shall indemnify and hold 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 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 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 the receipt by Executive of an amount paid by the Company pursuant to
Section 9(c), Executive becomes entitled to receive any refund with respect to
such claim, Executive shall (subject to compliance by the Company with the
requirements of Section 9(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto).  If, after the
receipt 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 with
respect to such claim and the Company does not notify 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.


 


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 


 


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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
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 


 


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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 


 


20





















 


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.


 


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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.


 


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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


 


If the Executive is a “specified
employee” for purposes of Section 409A of the Code and the regulations
thereunder, any payments required to be pursuant to Section 6(a) or any other
provision hereunder which are subject to Section 409A shall not be made until
six months from 


 


23





















 


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


 


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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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [                        ]

  



 


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