Exhibit 10.2

LOGO [g174211ex10_2a.jpg]

December 21, 2009

Kellye L. Walker

179 Hillcrest Avenue

Philadelphia, Pa. 19118

Dear Kellye:

On behalf of American Water, I am delighted to confirm our offer of employment
to you as General Counsel, I am confident that you will find your new role to be
personally rewarding and one in which you can make significant contributions to
the Company.

The following represents a summary of this offer.

 

  1. Position and Responsibilities

You shall serve as Senior Vice President, General Counsel and Secretary of the
Company and shall report to the Chief Executive Officer. You serve as the chief
legal officer of the Company, providing oversight, guidance and direction
regarding legal advice on all matters at American Water and its subsidiaries, to
include the hiring, development, promotion, oversight and disposition of its
team of attorneys and staff responsible for all aspects of American Water’s
legal affairs; and the hiring and firing of outside counsel.

 

  2. Base Salary

$340,000.00 per year, payable on the Company’s regular bi-weekly payroll
schedule.

 

  3. 2010 Annual Incentive Plan (AIP)

Target Payout of 55% of your annual base salary. Actual payout of the Annual
Incentive Plan bonus is discretionary and based on factors, including company
performance and individual performance objectives. Further details about the AIP
will be provided to you.

 

  4. 2010 Long Term incentive Plan (LTIP) Eligibility:

Target Payout of 110% of Base Salary. Further details about LTIP will be
provided to you.

 

  5. Benefits

American Water is committed to providing a flexible, comprehensive benefits
package which provides choices. You will have the opportunity to choose benefits
such as medical, dental, and life insurance that makes the most sense for you
and your family. Highlights of some of the benefits are attached. You are also
eligible for the executive physical program.

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

  6. Vacation

You will be entitled to four weeks vacation in a calendar year.

 

  7. Floating Holidays

You will be eligible for six (6) floating holidays in a calendar year.

 

  8. Executive Severance Policy

You will be entitled to the executive severance policy which provides severance
benefits to executives whose employment is involuntarily terminated by American
Water for reasons other than cause. Under the policy, you will receive 12 months
of your base salary, in the form of base salary and prorated annual incentive
payment. Continued health, dental and vision coverage with the maximum benefit
listed below as set forth in the company’s executive severance policy is as
follows:

Health, Dental and Vision Coverage

Provided the Release is executed and not revoked, a Participant will receive
Company-paid COBRA benefits consistent with the chart below.

 

Salary Level       

Minimum

Company-paid

COBRA Benefits

      

At least 5 yrs of

service, but less

than 10 yrs

      

10 or more years of

service

ML1 – L3      8 weeks      12 weeks      16 weeks

At the end of the period of Company-paid COBRA benefits, COBRA coverage may be
continued by the Participant at his or her own expense, for the remaining
balance of the statutory coverage period.

Life insurance coverage and continued participation in the employee assistance
plan run through the severance period.

 

  9. Non Qualified Savings and Deferred Compensation Plan for Employees of
American Water Works, Inc. and Its Designated Subsidiaries

You will be eligible for the Non Qualified Savings Plan which provides a
Deferred Contribution restoration benefit of 5.25% above the IRS pay limits on
base and annual incentive pay as well as a 401k restoration benefit on base and
annual incentive pay above the IRS pay limit.

You will be entitled to participate in the Company’s deferred compensation plan
in the next annual enrollment in December 2010.

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

We are looking forward to a favorable decision from you and the possibility of
you joining the American Water team on January 6, 2010. Please signify your
acceptance of this offer of employment by signing this letter and returning it
to me in the enclosed envelope.

Sincerely yours,

LOGO [g174211ex10_2c.jpg]

Sean Burke

Senior Vice President, Human Resources

American Water

 

This offer of employment extended by American Water is contingent upon
successful completion of a drug screen, applicable background checks,
verification of authorization to work and all information supplied on the resume
and employment application, and the absence of any Non-Compete or
Non-Solicitation Agreement with a prior employer.

I, Kellye L. Walker, understand that my employment will be “at will,” which
means that I am not guaranteed employment or any particular job for any
specified period of time. The Company or I may terminate my employment at any
time, for any or no reason, with or without cause.

 

LOGO [g174211ex10_2d.jpg]

       

12/23/09

Signature    Kellye L. Walker       Date