Document:

Exhibit
10.2

AMERICAN
STATES WATER COMPANY

2000 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS
RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) is dated as of January 30, 2006 by and between American
States Water Company, a California corporation (the “Corporation”),
and [                 ] (the “Participant”).

W
I T N E S S E T H

WHEREAS,
pursuant to the American States Water Company 2000 Stock Incentive Plan, as
amended (the “Plan”), the Corporation has
granted to the Participant effective as of the date hereof (the “Award Date”), an award of restricted stock units under the
Plan (the “Award”), upon the terms and
conditions set forth herein and in the Plan.

NOW
THEREFORE, in consideration of services rendered and to be
rendered by the Participant, and the mutual promises made herein and the mutual
benefits to be derived therefrom, the parties agree as follows:

1.     Defined Terms. 
Capitalized terms used herein and not otherwise defined herein shall
have the meaning assigned to such terms in the Plan.

2.     Grant. 
Subject to the terms of this Agreement, the Corporation hereby grants to
the Participant an Award with respect to an aggregate of [                      ]
stock units (subject to adjustment as provided in Section 5.2 of the Plan) (the
“Stock Units”).  As used herein, the term “stock unit” means a
non-voting unit of measurement which is deemed for bookkeeping purposes to be
equivalent to one outstanding share of the Corporation’s Common Shares (subject
to adjustment as provided in Section 5.2 of the Plan) solely for purposes of
the Plan and this Agreement.  The
Corporation will maintain a Stock Unit bookkeeping account for the Participant
(the “Account”).  The Stock Units granted to the Participant
under this Agreement will be credited to the Participant’s Account as of the
Award Date.  The Stock Units shall be
used solely as a device for the determination of the payment to eventually be
made to the Participant if such Stock Units vest pursuant to Section 3.  The Stock Units shall not be treated as
property or as a trust fund of any kind. 

3.     Vesting.  

(a)   General.  The Award shall vest and become
nonforfeitable with respect to [  ] percent
([  ]%) of the total number of Stock
Units on [   ], [  ] ([  ]%)
of the total number of Stock Units on [ 
] and [   ] percent ([  ]%) of the total number of Stock Units on [  ] (each, an “Installment
Vesting Date”) (subject to adjustment under Section 5.2 of the
Plan), provided the Participant is still employed by the Corporation or a
Subsidiary on the applicable Installment Vesting Date, subject to earlier
termination as provided herein or in the Plan.

(b)   Termination of Employment
Prior to Vesting.  Notwithstanding
Section 3(a), the Participant’s Stock Units (and any Stock Units credited as dividend
equivalents) shall terminate to the extent such Stock Units have not become
vested prior to the first date the Participant is no longer employed by the
Corporation or one of its Subsidiaries, regardless of the 

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reason for the
termination of the Participant’s employment with the Corporation or a
Subsidiary; provided, however,
that if the Participant’s employment is terminated by the Corporation or a
Subsidiary as a result of the Participant’s death or Total Disability, the
Participant’s Stock Units, to the extent such units are not then vested, shall
become fully vested as of the date of termination of the Participant’s
employment.  If the Participant is
employed by a Subsidiary and that entity ceases to be a Subsidiary, such event
shall be deemed to be a termination of employment of the Participant for
purposes of this Agreement (unless the Participant otherwise continues to be
employed by the Corporation or another of its Subsidiaries following such
event).  If any unvested Stock Units are
terminated hereunder, such Stock Units (and any Stock Units credited as
dividend equivalents) shall automatically terminate and be cancelled as of the
applicable termination date without payment of any consideration by the
Corporation and without any other action by the Participant, or the Participant’s
beneficiary or personal representative, as the case may be.

(c)   Early Vesting Upon
Retirement Age. 
Notwithstanding Section 3(a), the Participant’s Stock Units (and any
Stock Units credited as dividend equivalents), to the extent such Stock Units are
not then vested, shall become fully vested as of the date such Participant attains
Retirement Age.  For purposes of this
Agreement, a Participant shall attain “Retirement Age”
at the time that the Participant both (1) is at least age 55 and (2) the sum of
the age of the Participant and the Participant’s years of service with this
Corporation and/or one of its wholly owned subsidiaries is at least 75.

(d)   Early Vesting Upon Change
of Control. 
Notwithstanding Section 3(a), the Participant’s Stock Units (and any
Stock Units credited as dividend equivalents), to the extent such Stock Units are
not then vested, shall become fully vested upon the occurrence of a Change of
Control.  For purposes of this Agreement
(and notwithstanding the definition of “Change of Control Event” set forth in
the Plan), a “Change of Control” shall mean any
of the following events:

(1)           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 the Corporation, unless its business is
continued by another entity in which holders of the Corporation’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;

(2)           any reorganization or merger of the
Corporation, unless the holders of the Corporation’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 the
Corporation 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;

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(3)           an acquisition by any person, entity
or group acting in concert of more than fifty-five percent (55%) of the voting
securities of the Corporation, unless the holders of the Corporation’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; 

(4)           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 the Corporation, unless the tender
offer is made by the Corporation or any of its subsidiaries or the tender offer
is approved by a majority of the members of the Board of Directors of the
Corporation who were in office at the beginning of the twelve month period
preceding the commencement of the tender offer; or

(5)           a change of one-half or more of the
members of the Board of Directors of the Corporation 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.     Continuance of Employment.  The vesting schedule requires continued
employment or service through each applicable vesting date as a condition to
the vesting of the applicable installment of the Award and the rights and
benefits under this Agreement.  Partial
employment or service, even if substantial, during any vesting period will not
entitle the Participant to any proportionate vesting or avoid or mitigate a
termination of rights and benefits upon or following a termination of
employment or services as provided in Section 3(b) or under the Plan.

Nothing contained in this
Agreement or the Plan constitutes an employment or service commitment by the
Corporation, affects the Participant’s status as an employee at will who is
subject to termination without cause, confers upon the Participant any right to
remain employed by or in service to the Corporation or any Subsidiary,
interferes in any way with the right of the Corporation or any Subsidiary at
any time to terminate such employment or services, or affects the right of the
Corporation or any Subsidiary to increase or decrease the Participant’s other
compensation or benefits.  Nothing in
this paragraph, however, is intended to adversely affect any independent
contractual right of the Participant without his consent thereto.

5.     Dividend and Voting Rights.

(a)   Limitation on Rights
Associated with Units.  The
Participant shall have no rights as a shareholder of the Corporation, no
dividend rights (except as expressly provided in Section 5(b) with respect to dividend
equivalent rights) and no voting rights, with respect to the Stock Units and
any Common Shares underlying or issuable in respect of such Stock Units until
such Common Shares are actually issued to and held of record by the
Participant.  No

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adjustments will be made
for dividends or other rights of a holder for which the record date is prior to
the date of issuance of the stock certificate.

(b)   Dividend Equivalents.  The Participant shall be entitled to receive
dividend equivalents in the form of additional Stock Units with respect to the
Stock Units credited to his or her Account as the Corporation declares and pays
dividends on its Common Shares in the form of cash.  The number of Stock Units to be credited to
the Participant’s Account as a dividend equivalent will equal (1) the per share
cash dividend to be paid by the Corporation on its Common Shares multiplied by
the number of Stock Units then credited to the Participant’s Account on the
record date for that dividend divided by (2) the Fair Market Value of the Common
Shares on the related dividend payment date. 
The Corporation shall credit such additional Stock Units to the
Participant’s Account as of the related dividend payment date.  Stock Units credited as dividend equivalents
will become vested to the same extent as the Stock Units to which they relate.  For purposes of clarity, no dividend
equivalents shall be credited for a dividend record date with respect to any
Stock Units that were paid or terminated prior to such dividend record date.

6.     Timing and Manner of Payment.

(a)   General.  On or as soon as administratively practicable
following each Installment Vesting Date pursuant to Section 3(a), but in no
event later than March 15 of the year following the Installment Vesting Date,
the Corporation shall deliver to the Participant a number of Common Shares
equal to the number of Stock Units subject to this Award that become vested on such
Installment Vesting Date (including any Stock Units credited as dividend
equivalents with respect to such vested Stock Units), unless such Stock Units
terminate prior to such Installment Vesting Date pursuant to Section 3(b).

(b)   Payment of Stock Units
upon Termination of Employment as a Result of Death or Disability or upon a
Change of Control. 
Notwithstanding Section 6(a), upon a termination of the Participant’s
employment as a result of his or her death or Disability or upon the occurrence
of a Change of Control, the Corporation shall deliver to the Participant a
number of Common Shares equal to the number of Stock Units subject to this
Award that became vested in accordance with Section 3(b) or Section 3(d), as
applicable, (including any Stock Units credited as dividend equivalents with
respect to such Stock Units) as soon as administratively practicable following such
termination of employment or Change of Control, as applicable (but in no event
later than March 15 of the year following the year in which such termination of
employment or Change of Control occurs).

(c)   Payment of Stock Units
Following Retirement Age. 
Notwithstanding Section 6(a), if any portion of the Participant’s Stock
Units subject to this Award (and any Stock Units credited as dividend equivalents
with respect to such Stock Units) vest prior to the applicable Installment
Vesting Date as a result of the Participant’s termination of employment after attaining
Retirement Age pursuant to Section 3(c), then on or as soon as administratively
practicable following the date of termination of employment, but in no event
later than March 15 of the year following the date of termination of employment,
the Corporation shall deliver to the Participant a number of Common Shares
equal to the number of Stock Units subject to this

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Award that would have
otherwise vested on the applicable Installment Vesting Date (including any
Stock Units credited as dividend equivalents with respect to such vested Stock
Units).

(d)   Termination of Stock Units
Upon Payment.  A Stock
Unit will terminate upon the payment of that Stock Unit in accordance with the
terms hereof, and the Participant shall have no further rights with respect to
such Stock Unit.

(e)   Form of Payment.  The Corporation may deliver the Common
Shares payable to the Participant under this Section 6 either by delivering one
or more certificates for such shares or by entering such shares in book entry
form, as determined by the Corporation in its discretion.

7.     Restrictions on Transfer.  Neither the Award, nor any interest therein
or amount or shares payable in respect thereof may be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily.  The
transfer restrictions in the preceding sentence shall not apply to (a)
transfers to the Corporation, (b) transfers by will or the laws of descent and
distribution, or (c) transfers pursuant to a QDRO order if approved or ratified
by the Committee.

8.     Adjustments Upon Specified Events.  Upon the occurrence of certain events
relating to the Corporation’s stock contemplated by Section 5.2 of the Plan,
the Administrator shall make adjustments if appropriate in the number of Stock
Units then outstanding and the number and kind of securities that may be issued
in respect of the Award.

9.     Tax Withholding. 
Upon the vesting and/or distribution of Common Shares in respect of the
Stock Units, the Corporation (or the Subsidiary last employing the Participant)
shall have the right at its option to (a) require the Participant to pay or
provide for payment in cash of the amount of any taxes that the Corporation or
the Subsidiary may be required to withhold with respect to such vesting and/or
distribution, or (b) deduct from any amount payable to the Participant the
amount of any taxes which the Corporation or the Subsidiary may be required to
withhold with respect to such vesting and/or distribution.  In any case where a tax is required to be
withheld in connection with the delivery of Common Shares under this Agreement,
the Administrator may, in its sole discretion, direct the Corporation or the
Subsidiary to reduce the number of shares to be delivered by (or otherwise
reacquire) the appropriate number of whole shares, valued at their then Fair Market
Value (with the “Fair Market Value” of such shares determined in accordance
with the applicable provisions of the Plan), to satisfy such withholding
obligation at the minimum applicable withholding rates.

10.  Notices.  Any
notice to be given under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal office to the attention of the
Secretary, and to the Participant at the Participant’s last address reflected
on the Corporation’s records, or at such other address as either party may
hereafter designate in writing to the other. 
Any such notice shall be given only when received, but if the Participant
is no longer an employee of the Corporation, shall be deemed to have been duly
given by the Corporation when enclosed in a properly sealed envelope addressed
as aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.

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11.  Plan.  The
Award and all rights of the Participant under this Agreement are subject to,
and the Participant agrees to be bound by, all of the terms and conditions of
the provisions of the Plan, incorporated herein by reference.  In the event of a conflict or inconsistency
between the terms and conditions of this Agreement and of the Plan, the terms
and conditions of the Plan shall govern. 
The Participant agrees to be bound by the terms of the Plan and this
Agreement.  The Participant acknowledges
having read and understanding the Plan, the Prospectus for the Plan, and this
Agreement.  Unless otherwise expressly
provided in other sections of this Agreement, provisions of the Plan that
confer discretionary authority on the Administrator do not (and shall not be
deemed to) create any rights in the Participant unless such rights are
expressly set forth herein or are otherwise in the sole discretion of the Administrator
so conferred by appropriate action of the Administrator under the Plan after
the date hereof.

12.  Entire Agreement. 
This Agreement and the Plan together constitute the entire agreement and
supersede all prior understandings and agreements, written or oral, of the
parties hereto with respect to the subject matter hereof.  The Plan and this Agreement may be amended
pursuant to Section 5.6 of the Plan. 
Such amendment must be in writing and signed by the Corporation.  The Corporation may, however, unilaterally
waive any provision hereof in writing to the extent such waiver does not
adversely affect the interests of the Participant hereunder, but no such waiver
shall operate as or be construed to be a subsequent waiver of the same
provision or a waiver of any other provision hereof.

13.  Limitation on Participant’s Rights.  Participation in the Plan confers no rights or
interests other than as herein provided. 
This Agreement creates only a contractual obligation on the part of the
Corporation as to amounts payable and shall not be construed as creating a
trust.  Neither the Plan nor any
underlying program, in and of itself, has any assets.  The Participant shall have only the rights of
a general unsecured creditor of the Corporation with respect to amounts
credited and benefits payable, if any, with respect to the Stock Units, and
rights no greater than the right to receive the Common Shares as a general
unsecured creditor with respect to Stock Units, as and when payable
hereunder.  

14.  Counterparts. 
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. 

15.  Section Headings. 
The section headings of this Agreement are for convenience of reference
only and shall not be deemed to alter or affect any provision hereof.

16.  Governing Law. 
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of California without regard to conflict
of law principles thereunder.

17.  Construction. 
It is intended that the terms of the Award will not result in the
imposition of any tax liability pursuant to Section 409A of the Code.  This Agreement shall be construed and
interpreted consistent with that intent.

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IN
WITNESS WHEREOF, the Corporation has caused this Agreement to
be executed on its behalf by a duly authorized officer and the Participant has
hereunto set his or her hand as of the date and year first above written.

	
  AMERICAN STATES WATER

  COMPANY,

  	
   

  	
  PARTICIPANT

  
	
  a
  California corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Print Name

  
						

 

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CONSENT
OF SPOUSE

In consideration
of the execution of the foregoing Restricted Stock Unit Award Agreement by American
States Water Company, I,                                           ,
the spouse of the Participant therein named, do hereby join with my spouse in
executing the foregoing Restricted Stock Unit Award Agreement and do hereby
agree to be bound by all of the terms and provisions thereof and of the Plan.

 

	
  Dated:

  	
   

  	
  , [      ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
  Signature
  of Spouse

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print
  Name

  

 

 8Exhibit 10.1

AMENDMENT
NO. 2 TO EMPLOYMENT AGREEMENT

This Amendment No. 2
to Employment Agreement (this “Amendment”) attaches to and forms part of that
certain Employment Agreement, effective as of January 1, 2001, and amended
as of September 29, 2004 (the “Agreement”), between Aon Corporation (the “Company”)
and Michael D. O’Halleran (the “Executive”).

WHEREAS, the Company and
the Executive mutually desire to further amend this Agreement, as provided in
this Amendment;

NOW, THEREFORE, in
consideration of the premises and the mutual agreements contained herein, the
parties hereby agree as follows:

1.             The last sentence of Section 1, “Employment,” is
hereby deleted and replaced with the following:

“The term of employment of the Executive pursuant to
this Agreement (the “Employment Period”) shall commence effective as of
January 1, 2001 (the “Effective Date”) and shall end on January 1,
2013.”

2.             Subsection 3(a), “Base Salary,” is hereby deleted
in its entirety and replaced with the following:

“(a) Base Salary.  From April 1, 2006 through the end of
the Employment Period, the Company shall pay to the Executive a base salary at
a rate of $1,000,000 per annum (“Base Salary”), payable in accordance with the
Company’s executive payroll policy.  Such
Base Salary shall be subject to increase (but not decrease) at the discretion
of the Company’s Chief Executive Officer and the Board.”

3.             Subsection 3(b), “Annual Bonus,” is hereby deleted in
its entirety and replaced with the following:

“(b)         Annual Bonus.  For each calendar year of the Employment
Period beginning with 2006, the Executive shall be eligible to participate in
the Senior Officer Incentive Compensation Plan, as approved by Aon’s
stockholders in 2001 (the “Plan”) and as amended or replaced from time to time thereafter.  For each calendar year of the Employment
Period beginning with 2006, the Executive’s target annual bonus shall be 100%
of Base Salary and his maximum annual bonus shall be not less than 200% of Base
Salary.”

4.             The following paragraph shall be added at the end of
Subsection 3(c), “Stock Awards”:

“Notwithstanding the foregoing, beginning with
calendar year 2007 the Executive shall not be entitled to receive any
additional grants of the contractual awards described immediately above.  In lieu thereof, effective May 18, 2006, the
Organization and Compensation Committee of the Company’s Board of Directors
(the “Committee”) awarded the Executive 83,964 target performance share units 

 

subject to the terms and conditions set forth
herein.  The award provides the Executive
with the opportunity to earn performance share units based on the achievement
of specified pre-tax net income targets for the Global Reinsurance Segment for
the performance period beginning on the first day of the second quarter of 2006
and ending on December 31, 2008. 
Performance shall be measured on a cumulative basis during the
performance period such that, to the extent that any such targets are not
satisfied for any year, the Executive may make up such shortfall in subsequent
years during the performance period.  The
earned performance share units shall be settled and paid in fully vested shares
of common stock of the Company as soon as is practicable after the last day of
the performance period, but not later than March 31, 2009, or such earlier date
as is necessary to comply with Section 409A of the Internal Revenue Code of
1986, as amended. The unearned performance share units shall be forfeited at
such time.  Other than as set forth
herein, the terms and conditions of the Company’s “Leadership Performance
Program” (“LPP”), a sub-plan of the Aon Stock Incentive Plan as approved and
adopted by the Company’s stockholders in 2001, as in effect on the effective
date hereof, shall govern the earning and settlement of the Executive’s performance
share units, including in the event of the Executive’s termination of
employment prior to the last day of the performance period and in the event of
a change in control of the Company.

The Executive shall be
eligible to receive awards under the LPP or successor program(s) for future
performance periods in accordance with the terms and conditions generally
applicable to similarly-situated senior executives.

5.             The Agreement is amended by adding after the last
section thereof the following:

“18.         Indemnification.  The Company shall maintain, for the benefit of
the Executive, director and officer liability insurance in form at least as
comprehensive as, and in an amount that is at least equal to, that maintained
by the Company for any other officer or director.  In addition, the Executive shall be
indemnified by the Company against liability as an officer and director of the
Company and any subsidiary or affiliate of the Company to the maximum extent
permitted by applicable law.  The
Executive’s rights under this Section 18 shall continue so long as he may be
subject to such liability, whether or not this Agreement may have terminated
prior thereto.

19.           No Mitigation; No Offset.  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 such amounts shall not be reduced whether or not the Executive obtains
other employment.”

6.             This Amendment is effective as of May 18, 2006.

 

IN WITNESS WHEREOF, the
parties hereto have executed this Amendment No. 2 to the Employment
Agreement as of May    , 2006.

	
  AON CORPORATION

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Gregory C.
  Case

  	
   

  	
   

  	
  /s/ Michael D.
  O’Halleran

  
	
   

  	
   

  	
   

  	
   

  	
  Michael D.
  O’Halleran

  
	
  Title:

  	
  President and
  Chief Executive Officer

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