Exhibit
10.28


February 8, 2007


Mr. Michael Patrick
George

P.O. Box 1722

Ross, CA  94957


Dear Michael:


Please consider this
letter a formal offer of employment with American States Water Company (“ASW”). 
In this letter, I will address each of the issues we have verbally discussed
regarding your employment, as follows:


·                  You will become
an at-will, regular employee of ASW, in the position of Executive Vice
President of Corporate Development. As such, you will be covered under all
company compensation and benefit plans customary for someone in a senior
executive position including base salary, long-term incentives, such as stock
options and restricted stock, and change-in-control plans. You will also be
covered under the company’s §401(k) and medical plans, as well as the pension
plan including the SERP, as amended in 2006. 
Subject to Board approval, the vesting requirement for the SERP will be
waived, although you will not receive any additional service credit. Please note
that the granting of options and/or restricted stock can only be authorized by
the Board’s Compensation Committee, but both the Chairman of the Board (Lloyd
Ross) and the Chairman of the Compensation Committee (Jim Anderson) have agreed
to my forwarding this offer to you.


·                  You will receive
an annual base salary of $375,000 (this amounts to $14,423.08 on a bi-weekly
basis, which is the normal pay period), to manage ASW’s corporate development
activities.


·                  Our Code of
Conduct will not permit you to be employed by another party.  In recognition of your willingness to resign
from your position with Western Water Company, I have recommended to the
Board’s Compensation Committee that you be provided Long Term Incentives in the
amount of $125,000 annually for each of the next three years, beginning with
the first grant in early 2007 and the two subsequent grants in early 2008 and
2009; all grant dates to be determined by the Board’s Compensation
Committee.  Option exercise prices will
equal fair market value on the date granted. 
Please note that half of each grant’s value will be in stock options and
the other half in restricted stock, both of which will vest over a three-year
period from the grant date, one-third on each of the first, second and third
anniversary of the grant date.













·                  It is understood
that you may be called to assist Western Water Company following your
resignation from Western Water and your subsequent employment with ASW.
 It is also understood that you own an option to purchase 20% of the stock
of Western Water Company.  Your decision with respect to exercise of such
option is at your own discretion, but you agree to avoid taking on any duties,
obligations, or responsibilities related to Western Water Company that
interfere in any way with your ability to perform your responsibilities as an
officer of ASW.  Your decision with respect to exercising the option and
your possible future ownership of stock in Western Water Company is not
connected in any way to this offer of employment.


·                  It is further
understood that you are a member of the Board of Directors of the Natomas
Mutual Water Company and that you are a candidate for re-election to that Board
at the annual meeting scheduled for February 13, 2007.  During your service on the Natomas Board, it
is understood that you will recuse yourself from voting on matters in which ASW
has a financial interest and you will observe all conflict-of-interest rules of
Natomas.  Your service on the Natomas
Board is at your own discretion and is unrelated to this offer of
employment.  However, it will be your
duty to manage your service on the Natomas Board so that such service does not
interfere with your responsibilities as an officer of ASW.


·                  Our ability to
allow your continued activity with Western Water and Natomas is predicated on
the assumptions that it will not interfere with your responsibilities to ASW. If,
upon experience, we conclude otherwise, you agree, at our request, to resign
from any offices then held by you at either entity.  Of course, ASW is not responsible for your
activities at Western Water Company and Natomas Mutual Water Company, so the
company’s insurance, indemnity and other customary employee protections are not
applicable to these activities.  You
acknowledge that the only remuneration that you will receive (other than as a
sole result of your potential equity holdings in Western Water Company) for
your activities with either Western Water Company or Natomas Mutual Water
Company will be  customary board member
fees and out of pocket expense reimbursement.   
The company will not be responsible for any travel or other costs
incurred in connection with your activities for Western Water Company or
Natomas Mutual Water Company, and you agree to hold the company harmless from
any claims, losses and damages incurred in such activities.


·                  Your past years
of experience as an officer in the water business have been taken into account
in calculating your vacation and sick leave benefits, and as such, you will
have the maximum annual vacation allotted under ASW’s vacation policy.


·                  As you know,
your position is located at the headquarters of American States Water Company
in San Dimas, CA.  You will have a reasonable period of time to arrange
and manage your relocation from Ross, California.  To assist with your
relocation, ASW will pay up to $2,200/month for temporary housing in the San
Dimas area as well as reasonable commuting expenses between San Dimas and Ross
for up to one year from













your
start date.  ASW will also pay reasonable and customary expenses for
relocating you and your family to Southern California, up to a maximum of
$75,000.


·                  As part of your
2007-8 gross income, the company will provide a tax gross-up payment(s) to
cover the amount of moving cost reimbursement you would have to show as
additional income.


The company has completed
its background checks, as you authorized in your employment application, and
the results of those checks are satisfactory to the company.  It is my sincere hope that you will view this
proposal as an attractive offer of employment. I am also hopeful that your
prospective role as Executive Vice President of Corporate Development will
result in a lasting relationship with the company, with the target start date
of February 12, 2007.


If this offer is
acceptable to you, please countersign and return a copy of this letter in the
enclosed envelope.   In the meantime, I
am available at any time to answer questions you may have.


Sincerely,


/s/ Floyd E. Wicks


Floyd E. Wicks

President & C.E.O.


FEW:ckc


	
  

  	
  Accepted and Agreed To,

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Michael Patrick
  George

  	
   

  	
  February 8, 2007

  	
   

  
	
   

  	
  Michael Patrick George

  	
   

  	
  Dated