**Exhibit 10.1**

**AMERICAN STATES WATERCOMPANY****THREE YEAR DIVIDEND EQUIVALENTRIGHT CERTIFICATESTATEMENT OF TERMS AND CONDITIONS**

**1.****                   ****Crediting of Dividend Equivalents****.**We will maintain abookkeeping account in your name (your “Account”). As of each date (after thedate of grant of this award and in respect of applicable record dates occurringprior to the third anniversary of such grant date, unless your employment by usor one of our subsidiaries is terminated for cause as defined in the 2004 StockIncentive Plan) that we pay a cash dividend or make a cash distribution on ourcommon stock, we will credit your Account with a cash amount equal to the cashdividends or cash distribution that would be payable on that date on a numberof shares of our common stock equal to the number of shares that were subjectto the portion of your Corresponding Option that was outstanding andunexercised at the start of business on the corresponding record date for thedividend payment or other distribution. The cash amount so credited to youraccount is referred to as a “dividend equivalent.” No interest or otherearnings will be credited with respect to your Account. No dividend equivalentswill be credited: (1) with respect to any portion of the Corresponding Optionthat has been exercised, expired, or otherwise terminated; (2) if youremployment by us or one of our subsidiaries terminates for cause as defined inthe 2004 Stock Incentive Plan; (3) to the extent that such dividend equivalentwould duplicate benefits conferred or preserved under the Corresponding Optionby an adjustment in the number of shares or exercise price thereof or theproperty subject thereto made pursuant to the adjustment provisions set forthin the applicable option agreement or option plan; (4) with respect to anynon-cash dividends or distributions on our common stock, or (5) in respect ofdividend or distribution record dates occurring after the third anniversary ofthe date of grant of this award.

**2.****                   ****Payment****.**The dividendequivalents credited to your Account with respect to a share subject to theCorresponding Option will become payable (in an equal amount of cash) on thedate that the cash dividend or distribution is paid on the class of sharescorresponding to such share. We will reduce your Account by the amount ofdividend equivalents that are paid. You may not elect any accelerated paymentsor other payment dates. No interest or other charge will accrue on amountspayable.

Notwithstanding the foregoing, if we determine ingood faith that there is a reasonable likelihood that any benefits paid to youfor a taxable year would not be deductible by us or one of our affiliatessolely by reason of the limitation under Section 162(m) of the Internal RevenueCode of 1986, as amended, then to the extent reasonably deemed necessary by usto ensure that the entire amount of any payment to you pursuant to thisagreement is deductible, we may defer all or any portion of a payment underthis agreement. The amounts so deferred shall be paid (without interest) at theearliest possible date, as determined by us in good faith, on which thedeductibility of compensation paid or payable to you for the taxable year inwhich the payment is made will not be limited by Section 162(m).

**3.****                   ****No Employment/Service Commitment****.**Nothing contained in this agreementconstitutes an employment or service commitment by us or our affiliates,affects your status, if you are an employee, as an employee at will who issubject to termination without cause (subject to any express written employmentagreement, other than this agreement, to the contrary), confers upon you anyright to remain employed by or in service to us or our affiliates, interferesin any way with any right that we or our affiliates may have at any time toterminate your employment or service, or affects our right and our affiliatesrights to increase or decrease your other compensation.

**4.****                   ****Procedure for Exercise****.**You should not have to take any affirmativesteps to exercise this award — your dividend equivalents should be paid to youas described above in Section 2. However, if you believe that you have notreceived a payment to which you are entitled, you should promptly contact theCompany’s Chief Financial Officer’s office at 630 East Foothill Boulevard, SanDimas, California 91773 (telephone number 909-394-3600).

**5.****                   ****Tax Withholding****.**You will be solely responsible for all incomeand employment taxes arising in connection with this agreement and the paymentof benefits hereunder. We may satisfy any state or federal employment tax orincome tax withholding obligation arising from the crediting of dividend 

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equivalents and/or the payment of cash in respect ofthis agreement by deducting such amount(s) from any amount of compensationotherwise payable to you by us or any of our affiliates, by deducting suchamount from your Account, and/or by deducting such amount(s) from any amountotherwise payable to you pursuant to this agreement.

**6.****                   ****Non-Transferability and OtherRestrictions****.**Your dividend equivalentsand other benefits under this agreement are not assignable or transferable andany purported transfer, assignment, pledge or other encumbrance or attachmentof any payments or benefits under this agreement, or any interest therein willnot be permitted or recognized. Notwithstanding the foregoing, your benefitsmay be assigned, in full or in part, pursuant to a domestic relations order ofa court of competent jurisdiction or, following your death, paid as describedin Section 7.

**7.****                   ****Payments in the Event of YourDeath or Incapacity****.**In the event of your death,any dividend equivalents that may become payable under this agreement upon orafter your death will be paid to the duly appointed and currently actingpersonal representative of your estate. In any case where there is no such personalrepresentative of your estate duly appointed and acting in that capacity within90 days after your death (or such extended period as we may determine to bereasonably necessary to allow such personal representative to be appointed, butnot to exceed 180 days after your death), then we will make payment to anyperson or persons who can verify by affidavit or court order to oursatisfaction that they are legally entitled to receive the benefits specifiedhereunder. In the event any amount is payable under this agreement to a minor,payment will not be made to the minor, but instead be paid (a) to that person’sliving parent(s) to act as custodian, (b) if that person’s parents are thendivorced, and one parent is the sole custodial parent, to such custodialparent, or (c) if no parent of that person is then living, to a custodianselected by us to hold the funds for the minor under the Uniform Transfers orGifts to Minors Act in effect in the jurisdiction in which the minor resides.If no parent is living and we decide not to select another custodian to holdthe funds for the minor, then payment will be made to the duly appointed andcurrently acting guardian of the estate for the minor or, if no guardian of theestate for the minor is duly appointed and currently acting within 60 daysafter the date the amount becomes payable, payment will be deposited with thecourt having jurisdiction over the estate of the minor. In the event that anyamount becomes payable to a person who, in our sole judgment, is considered byreason of physical or mental condition to be unable to give a valid receipttherefore, we may make such payment to any person found by us, in our solejudgment, to have assumed the care of such person. Any payment made pursuant tosuch determination shall constitute a full release and discharge of ourobligations under this agreement with respect to the corresponding dividendequivalents.

**8.****                   ****Adjustments****.**We reserve theright to make adjustments to this award and the dividend equivalents credited orto be credited to your Account, in the event of any change in the outstandingshares of our common stock by reason of a stock dividend or split,recapitalization, merger, consolidation, combination, exchange of shares, orother similar corporate change.

**9.****                   ****Compliance With Law; GoverningLaw****.**This agreement and/or thepayment of money under this agreement are subject to compliance with allapplicable federal and state laws, rules and regulations. This agreement shallbe construed, governed and administered in accordance with the laws of theState of California. If any provisions of this instrument shall be held by acourt of competent jurisdiction to be invalid or unenforceable, the remainingprovisions hereof shall continue to be fully effective.

**10.****            ****Limited Rights****.**Your Account will be a memorandum account onour books. Your dividend equivalents credited to your Account will not betreated as property or as a trust fund of any kind. You have no rights as aCompany shareholder with respect to this award. Your rights with respect tothis award are merely those of a general unsecured creditor of the Company toreceive payment as described herein subject to the terms and conditions setforth herein. You and your heirs, successors, and assigns have no legal or equitablerights, claims, or interest in any specific property or assets of the Companyor any of our affiliates. No assets of the Company or any of our affiliateswill be held under any trust or held in any way as collateral security for thefulfilling our obligations under this agreement.

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**AMERICAN STATES WATERCOMPANY****THREE YEAR DIVIDEND EQUIVALENTRIGHT CERTIFICATE**

American States Water Company, a California corporation (“we” or the “Company”),has granted to you, the award recipient identified below, dividend equivalentrights on the terms and conditions set forth in the attached Statement of Termsand Conditions with respect to the stock option identified below (the “CorrespondingOption”).
| **Award Recipient**                         |       |       |
|---------------------------------------------|------------|------------|
| ** **                                  |       |       |
| **Date of Grant of this Award**             |       |       |
| ** **                                  |       |       |
| **Corresponding Option Information —** | ** ** | ** ** |
| ** **                                  | ** ** | ** ** |
| **Date of Grant**                           |       |       |
| ** **                                  |       |       |
| **Number of Shares**                        |       |  *    |

 

Youracceptance of this Certificate constitutes your acknowledgement of andagreement to be bound by the terms and conditions set forth herein and in theattached Statement of Terms and Conditions. The Statement of Terms andConditions is incorporated herein by this reference. You are not required toaccept this award. If you choose not to accept this award or if you do notagree to the terms and conditions of this award, you should, no later than tenbusiness days after the date of grant of this award set forth above, notify theCompany’s Chief Financial Officer at 630 East Foothill Boulevard, San Dimas,California 91773 (telephone number 909-394-3600) that you do not accept thisaward and return this Certificate to the Chief Financial Officer at thataddress. This award is granted as a matter of a separate incentive and is notin lieu of salary or any other compensation for services.

**IN WITNESS WHEREOF**, the Company has caused its duly authorizedofficer to execute this Dividend Equivalent Right Certificate as of the date ofgrant of this award first set forth above.

**AMERICANSTATES WATER COMPANY**,a California corporation
| **By**         | ** ** | ** **                            | ** ** |
|----------------|------------|---------------------------------------|------------|
| ** **     | ** ** | ** **                            | ** ** |
| **Print Name** |       | Floyd E. Wicks                        |       |
| ** **     |       |                                  |       |
| **Its**        |       | President and Chief Executive Officer |       |

 

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*                    Subjectto adjustment for stock splits and similar events in accordance with theapplicable award agreement and option plan.

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