**Exhibit10.1**

**AMERICAN STATES WATER COMPANY**(“Company”)

**NONQUALIFIED STOCK OPTION AGREEMENT(Non-Employee Director Grant)**

THIS OPTIONAGREEMENT is between the Company and the Optionee named below and evidences theCompany’s grant to the Optionee of a Nonqualified Stock Option to purchaseauthorized but unissued shares of the Company’s Common Shares.  The Option is granted pursuant to and subjectto the Company’s 2003 Non-Employee Directors Stock Plan (the “**Plan**”) and the Terms and Conditions for Nonqualified StockOptions Granted Under the 2003 Non-Employee Directors Stock Plan (the “**Terms**”), incorporated herein by this reference.
| **Optionee:**         | ** ** | ** **                    | ** ** | **Exercise Price** | ** **              |
|-----------------------|------------|-------------------------------|------------|--------------------|-------------------------|
| ** **            | ** ** | ** **                    |       | **Per Share:**     | **$_______**1           |
| **Number of Shares:** |       | 3,0001                        |       |               |                    |
| ** **            |       |                          |       |               |                    |
| **Grant Date:**       | ** ** | **_____________ , ____**      | ** ** | **Expires:**       | **____________,_____**2 |
| ** **            | ** ** | ** **                    | ** ** | ** **         | ** **              |
| **Vesting Schedule:** |       | 100% Vested on the Grant Date |       |               |                    |

 

Optionee has beenelected, and has agreed, to serve as a director of the Company for anadditional year.  Optionee accepts theOption and agrees to (and acknowledges receipt of a copy of) the Plan and theTerms.
| **AMERICAN STATES WATER COMPANY** | ** ** | **AGREED AND ACKNOWLEDGED:** |
|-----------------------------------|------------|------------------------------|
| (a California corporation)        |       |                         |
|                              |       |                         |   |
| By:                               |       |                         | (Optionee’s Signature) |
| Its:                              |       |                         |   |
|                              |       |                         | (Address) |
|                              |       |                         |   |
|                              |       |                         |   |
|                              |       |                         | (City, State, Zip Code) |

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1                     Subjectto adjustment under Section 6 of the Plan.

2                     Subject toearly termination if the Optionee’s service is terminated for Cause (as definedin Section 2 of the Plan).

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**CONSENT OF SPOUSE**

In consideration of the execution of the foregoingStock Option Agreement by the Company, I, the spouse of the Optionee namedabove, join with my spouse in executing this Agreement and agree to be bound byall of the terms and provisions of this Agreement and of the Plan.
| Date:  |   |   |   |                 |
|--------|--------|--------|--------|----------------------|
|   |   |   |   | Signature of  Spouse |

 

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**TERMS AND CONDITIONS FORNONQUALIFIED STOCK OPTIONSGRANTED UNDER THE2003 NON-EMPLOYEE DIRECTORS STOCK PLAN**

1.             **Exercisability of Option**.  The Option shall be fully vested andexercisable on the Grant Date set forth on the facing page of this OptionAgreement.  During the Optionee’slifetime, the Option may be exercised only by the Optionee, with limitedexception pursuant to Section 10.3 of the Plan.

(a)           **Cumulative Exercisability**.  To the extent the Optionee does not in anyyear purchase all the shares that the Optionee may then exercise, the Optioneehas the right thereafter to purchase such remaining shares until the Optionterminates or expires.

(b)           **No Fractional Shares**.  Fractional share interests shall bedisregarded, but may be cumulated.

(c)           **Minimum Exercise**.  No fewer than 100 shares may be purchased atany one time, unless the number purchased is the total number at the timeexercisable under the Option.

2.             **Method of Exercise of Option**.  The Option may be exercised by the Optionee’sdelivery to the Company of a properly completed and executed exercise form asfrom time to time approved by the Committee stating the number of shares to bepurchased pursuant to the Option and accompanied by payment in the full amountof the purchase price of the shares in one or a combination of the followingmethods:

(a)           by cash, electronic funds transfer orby check payable to the order of the Company; and

(b)           by the delivery of shares that havebeen held by the Optionee for at least six months, in accordance with Section4.3 of the Plan.

3.             **Effect of Termination of Directorship**.  If the Optionee’s services as a directorterminate for any reason other than Cause as determined under Section 304 ofthe California Corporations Code or any successor thereof, then the Optionshall remain exercisable for the period of time set forth on the face of thisAgreement.

4.             **Optionee not a Shareholder**.  Neither the Optionee nor any other personentitled to exercise the Option shall have any of the rights or privileges of ashareholder of the Company as to any Common Shares until the issuance anddelivery to him or her of the shares acquired upon exercise of the Option.  No adjustment will be made for dividends orother rights as to a shareholder for which a record date is prior to such dateof delivery.

5.             **Notices**.  Any notice to be given shall be in writingand addressed to the Company at its principal office, to the attention of theCorporate Secretary, and to the Optionee at his or her

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last address of record, or at such other address aseither party may hereafter designate in writing to the other for purposes ofnotices in respect of the Option.

6.             **Effect of Award Agreement**.  The Option Agreement shall be binding uponand inure to the benefit of any successor or successors of the Company, exceptto the extent the Committee determines otherwise.

7.             **Choice of Law**.  The constructive interpretation, performanceand enforcement of the Option Agreement and the Option shall be governed by thelaws of the State of California.

8.             **Defined Terms**.  Capitalized terms used herein and nototherwise defined herein shall have the meaning assigned by the Plan.

9.             **Plan**.  The Option and all rights of Optioneethereunder are subject to, and the Optionee agrees to be bound by, all of theterms and conditions of the provisions of the Plan.  Unless otherwise expressly provided in theseTerms and Conditions, provisions of the Plan that confer discretionaryauthority on the Committee do not (and shall not be deemed to) create anyadditional rights in the Optionee not expressly set forth in the Optionee’sOption Agreement or in a written amendment thereto.  If there is any conflict or inconsistencybetween the terms and conditions of this Option Agreement and of the Plan, theterms and conditions of the Plan shall govern. The Participant acknowledges receipt of a complete copy of the Plan andagrees to be bound by its terms.

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**AMERICAN STATES WATER COMPANY2003 NON-EMPLOYEE DIRECTORS STOCK PLANOPTION EXERCISE AGREEMENT**

Theundersigned (the “**Purchaser**”)hereby irrevocably elects to exercise his/her right, evidenced by that certainNonqualified Stock Option Agreement dated as of ______________ (the “**Option Agreement**”) under the American States Water Company2003 Non-Employee Directors Stock Plan, as amended (the “**Plan**”),as follows:

·                  the Purchaserhereby irrevocably elects to purchase __________________ shares of CommonShares (the “**Shares**”), of American States WaterCompany (the “**Corporation**”), and

·                  such purchaseshall be at the price of $__________________ per share, for an aggregate amountof $__________________.

Capitalizedterms are defined in the Plan if not defined herein.

**Deliveryof Shares**.  ThePurchaser requests that (1) a certificate representing the Common Shares beregistered to Purchaser and delivered to: _____________________________ or (2)that the Common Shares be registered in the Purchaser’s name and electronicallydelivered to:____________________________________________________.

**Plan andOption Agreement**.  ThePurchaser acknowledges that all of his/her rights are subject to, and thePurchaser agrees to be bound by, all of the terms and conditions of the Planand the Option Agreement, both of which are incorporated herein by thisreference.  If a conflict orinconsistency between the terms and conditions of this Exercise Agreement andof the Plan or the Option Agreement shall arise, the terms and conditions ofthe Plan and/or the Option Agreement shall govern.  The Purchaser acknowledges receipt of a copyof all documents referenced herein and acknowledges reading and understandingthese documents and having an opportunity to ask any questions that he/she mayhave had about them.
| **“PURCHASER”** | ** ** | **ACCEPTED BY:  AMERICAN STATES WATER COMPANY,**a California corporation                                         |
|---------------------------|------------|------------------------------------------------------------------------------------------------------------------|
| ** **                | ** ** | ** **                                                                                                       | ** ** |
| ** **                | ** ** | ** **                                                                                                       | ** ** |
| *Signature*               |       | By:                                                                                                              | ** ** |
| ** **                | ** ** | ** **                                                                                                       | ** ** |
| *Print  Name*             |       | Print Name:                                                                                                      | ** ** |
| ** **                | ** ** | ** **                                                                                                       | ** ** |
| *Address*                 |       | Title:                                                                                                           | ** ** |
| ** **                | ** ** | ** **                                                                                                       | ** ** |
| *City,  State, Zip Code*  | * *   | *(To be completed by the Corporation after the  price, value (if applicable) and receipt of funds is verified.)* |

 

 

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