Document:

Basin Water, Inc. 2008 Annual Incentive Plan adopted on April 23, 2008

 Exhibit 10.37 
 BASIN WATER, INC. 
 2008 Annual Incentive Plan 
 1. Introduction 
 This Basin Water, Inc. 2008 Annual
Incentive Plan (the “Plan”) is designed to offer incentive compensation to key personnel by rewarding the achievement of corporate and business unit or functional goals and specifically measured individual goals that are
consistent with and support overall corporate goals. The Plan is intended to create an environment where participants are focused on the achievement of both corporate and business unit objectives. Cooperation between departments and individuals will
be required to achieve corporate and business unit or functional objectives. Hence, corporate and business unit or functional objectives represent a significant portion of the Plan in order to help foster improved teamwork and a more cohesive
management team. 
 For purposes of this Plan, Cash Bonus Awards, Spot Bonuses and Stock Option Awards are referred to herein as
“Awards.” 
 2. General Provisions 
 2.1 Purpose of the Plan. The Plan is designed to: 
  

	 	•	 	 Provide an incentive program to achieve overall corporate objectives and to enhance shareholder value. 

  

	 	•	 	 Reward those individuals who significantly impact corporate results, including operational personnel, middle-level managers and senior management.

  

	 	•	 	 Encourage increased teamwork among all disciplines within Basin Water, Inc. (the “Company”). 

  

	 	•	 	 Incorporate an incentive program in the Company’s overall compensation program to help attract and retain key employees. 

  

	 	•	 	 Incentivize employees to remain employed by the Company throughout the Plan year and until the time incentive awards are paid. 

 2.2 Plan Governance. The Plan will be governed by the Compensation Committee (the “Compensation Committee”) of the Board
of Directors of the Company (the “Board”). The Compensation Committee will be responsible for administration of the Plan. 
 3.
Cash Bonus Awards 
 3.1 Cash Bonus Awards. The executive officers of the Company will recommend to the Compensation Committee for
approval a list of the employees who will be eligible to receive cash bonus awards (each, a “Cash Bonus Award”) under the Plan on the terms and conditions set forth below. This portion of the Plan is intended to provide
incentive for the achievement of approved annual corporate goals, business unit or functional goals and individual performance objectives through Cash Bonus Awards. 

 3.2 Eligibility. Employees who may be eligible to participate in the Plan shall be selected by the
Company’s executive management, which selection shall be approved by the Compensation Committee. To receive a Cash Bonus Award under this Plan, a participant: (a) must have been selected to receive a Cash Bonus Award by the Company’s
executive management, which selection must be approved by the Compensation Committee; (b) must have been in an eligible position for at least three (3) consecutive months prior to the end of the Plan year and must remain continuously
employed through the end of the Plan year and until Cash Bonus Awards are paid; (c) must be performing at a “Meets Expectations” level or higher at the time Cash Bonus Awards are paid; and (d) must not be on probation at the time
Cash Bonus Awards are paid. 
 3.3 Performance Objectives. 
 Corporate Goals. The executive officers of the Company will present to the Compensation Committee a proposed list of the corporate goals for
the year, which are subject to approval by the Compensation Committee. It is intended that the goals be objectively determinable and based upon financial metrics set forth in the Company’s annual budget, as approved by the Board, with weighting
of the financial metrics to be approved by the Compensation Committee. 
 Business Unit/Functional Goals. The executive officers of
the Company will present to the Compensation Committee a proposed list of the business unit/functional goals for the executive officers of the Company for the year, which are subject to approval by the Compensation Committee. Business
unit/functional goals for other employees will be approved by the Chief Executive Officer and President of the Company. 
 Individual
Performance Objectives. All participants in the Plan will develop a list of key individual performance objectives. The individual performance goals for the executive officers of the company will be submitted to the Compensation Committee for
approval. Individual performance goals for other employees will be approved by the Chief Executive Officer and President of the Company. 
 3.4 Award Targets. A “Target Bonus” for a Plan participant will be determined by multiplying his or her “Target Bonus Percentage” by his or her base salary. The following
“Target Bonus Percentages” will be used in implementing the Plan: 
  

			
	 Position
	  	Target Bonus Percentage
(% of base
salary)
	 Executive Officers
	  	50%
	 Regional Vice Presidents
	  	30%
	 Senior Corporate Managers
	  	25%
	 Key Managers
	  	20%
	 Department Heads/Managers
	  	15%
	 Key Support Personnel
	  	10%

 If a Plan participant has been promoted or demoted during the year, his or her position as of
December 31, 2008 shall be the relevant position for purposes of determining his or her Target Bonus Percentage for purposes of determining his or her Cash Bonus Award. 
 3.5 Weightings. A portion of each Plan participant’s Cash Bonus Award will be based on corporate goal achievement, a portion will be based on
business unit/functional goal achievement and a portion will be based on individual achievement. The relative weight between these goals will vary based on levels within the organization. The weighting will be reviewed annually and be adjusted, as
necessary or appropriate. 
 The weighting for 2008 will be as follows: 
  

							
	 	  	Corporate	 	Business
Unit/Functional	 	Individual
	 Executive Officers
	  	80%	 	10%	 	10%
				
	 Regional Vice Presidents/
	  	30%	 	60%	 	10%
	 Senior Corporate Managers
	  	60%	 	30%	 	10%
				
	 Key Managers
	  	30% to 50%*	 	30% to 50%*	 	10%
	 Department Heads/Managers
	  		 		 	
	 Key Support Personnel
	  		 		 	

	 	

	 	*	Range will be set and submitted annually to the Compensation Committee for its approval by the executive officers of the Company based on the individual’s scope of
responsibility and impact on corporate and business unit/functional performance. 

 3.6 Performance Measurement.
Separate “Achievement Multipliers” will be established for each of the corporate, business unit/functional and individual components of each Cash Bonus Award. 
 The executive officers of the Company will present to the Compensation Committee for its approval their assessment of the level of the Company’s achievement of its corporate goals, in its sole discretion, which
achievement level shall be within the range of 80% to 120%. The same Achievement Multiplier, as approved by the Compensation Committee, shall be used for the corporate component of each eligible employee’s Cash Bonus Award. 
 If the Company’s Achievement Multiplier for the Plan year with respect to the corporate goals is less than 80%, Plan participants will not be
entitled to any Cash Bonus Awards under the Plan; provided that, the Compensation Committee may in its discretion grant Cash Bonus Awards to Plan participants in the event the Company’s Achievement Multiplier with respect to the corporate goals
is less than 80%. If the Achievement Multiplier for the Plan year with respect to the corporate goals is 80% or more, then each eligible participant shall earn and be paid a Cash Bonus Award as a percentage of base salary set forth below under
“Calculation of Awards.” 
 The executive officers of the Company will present to the Compensation Committee for its approval
proposed Achievement Multipliers with respect to all business unit/functional and individual performance goals for the executive officers of the Company. Achievement Multipliers with respect to all business unit/functional and individual performance
goals for other employees will be approved by the Chief Executive Officer and President of the Company. 

 3.7 Calculation of Awards. The actual Cash Bonus Award for a Plan participant will be calculated
by allocating the Target Bonus between the corporate, business unit/functional and individual goals, and then applying the corresponding Achievement Multiplier to each such amount. 
 The examples below show a sample Cash Bonus Award calculation under the Plan. First, a total Target Bonus is calculated by multiplying the Plan
participant’s base salary by the target award multiplier. This amount is then divided into its corporate component, its business unit/functional component and its individual component based on the relative weightings for that participant’s
specific position. This calculation establishes specific dollar target awards for the Plan year for each component of the Cash Bonus Award. 
 At the end of the Plan year, corporate, business unit/functional and individual Achievement Multipliers will be established using the criteria described above. The corporate Achievement Multiplier will also be applied to the business
unit/functional and individual components of each participant’s Cash Bonus Award, as illustrated in the following examples. 
  

									
	Example 1:	  	 Position:
	  	 	Executive Officer	 	 	
		  	 Base Salary:
	  	$	200,000	 	 	
		  	 Target Bonus Percentage:
	  	 	50	%	 	
		  	 Target Bonus (in dollars):
	  	$	100,000	 	 	
				
		  	 Cash Bonus Award components (based on weightings):
	  				 	
		  	 Corporate performance (80%):
	  	$	80,000	 	 	
		  	 Business Unit/Functional performance (10%):
	  	$	10,000	 	 	
		  	 Individual performance (10%):
	  	$	10,000	 	 	
				
		  	 Cash Bonus Award Calculation
	  				 	
		  	 Assumed achievement multipliers based on the following assessment of corporate, business unit/functional and individual
performance:
	  				 	
		  	 Corporate multiplier
	  	 	110	%	 	
		  	 Business Unit/Functional multiplier
	  	 	80	%	 	
		  	 Individual multiplier
	  	 	100	%	 	
				
		  	 Cash Bonus Award:
	  				 	
		  	 Corporate component
	  	$	88,000	 	 	($80,000 x 110%)
		  	 Business Unit/Functional component
	  	$	8,800	 	 	($10,000 x 80% x 110%)
		  	 Individual component
	  	$	11,000	 	 	($10,000 x 100% x 110%)
		  		  	 	 	 	 	
				
		  	 Total Cash Bonus Award:
	  	$	107,800	 	 	
				
	Example 2:	  	 Position:
	  	 	Senior Manager	 	 	
		  	 Base Salary:
	  	$	100,000	 	 	
		  	 Target Bonus Percentage:
	  	 	25	%	 	
		  	 Target Bonus (in dollars):
	  	$	25,000	 	 	
				
		  	 Cash Bonus Award components (based on weightings):
	  				 	
		  	 Corporate performance (60%):
	  	$	15,000	 	 	
		  	 Business Unit/Functional performance (30%):
	  	$	7,500	 	 	
		  	 Individual performance (10%):
	  	$	2,500	 	 	
				
		  	 Cash Bonus Award Calculation
	  				 	
		  	 Assumed achievement multipliers based on the following assessment of corporate, business unit/functional and individual
performance:
	  				 	
		  	 Corporate multiplier
	  	 	80	%	 	
		  	 Business Unit/Functional multiplier
	  	 	100	%	 	
		  	 Individual multiplier
	  	 	50	%	 	
				
		  	 Cash Bonus Award:
	  				 	
		  	 Corporate component
	  	$	12,000	 	 	($15,000 x 80%)
		  	 Business Unit/Functional component
	  	$	6,000	 	 	($7,500 x 100% x 80%)
		  	 Individual component
	  	$	1,000	 	 	($2,500 x 50% x 80%)
		  		  	 	 	 	 	
				
		  	 Total Cash Bonus Award:
	  	$	19,000	 	 	

 3.8 Payment of the Awards. Payment of Cash Bonus Awards will be made as soon as practicable
following the completion of annual performance reviews for 2008, but not later than December 31, 2009. Cash Bonus Award calculations will be based on the participant’s base salary as of December 31, 2008. For purposes of this Plan,
“base salary” will mean a participant’s regular base salary, excluding bonuses, expense reimbursements, moving expenses, fringe benefits, stock options, restricted stock, other stock-based awards, and other payments which are not
considered part of regular base salary, payable during 2008, determined prior to any reduction under a plan subject to Section 125 or 401(k) of the Internal Revenue Code or any deferral under a non-qualified deferred compensation plan. A Plan
participant’s entitlement to a Cash Bonus Award under this Plan does not vest until the Cash Bonus Award is actually paid. 
 Participants who have been in an eligible position for less than a year, but who hold an eligible position for at least three months prior to the end of the Plan year and remain continuously employed through the end of the Plan year, will
receive a pro-rata Cash Bonus Award based on the portion of the Plan year they hold an eligible position. Other than as stated above, Cash Bonus Awards will not be prorated for partial year service. 
 3.9 Form of Cash Bonus Award Payments. Cash Bonus Award payments shall be paid in cash. Each Cash Bonus Award payment will be subject to any
applicable tax or other withholding. 
 4. Spot Bonus Program 
 4.1 Spot Bonuses. The executive officers of the Company shall have the authority to approve “spot” bonuses for employees of the Company for performance above and beyond the call of duty (each, a
“Spot Bonus”). Spot Bonuses shall be proposed by Key Managers and Supervisors. All employees of the Company shall be eligible to receive Spot Bonuses. 
 4.2 Spot Bonus Pool. The available pool for Spot Bonuses during 2008 shall be equal to 0.5% of the approved gross margin from system sales during
2008. Each Spot Bonus may not exceed the greater of $5,000 or 5% of the recipient’s then-current annual base salary rate. 
 4.3 Form
of Spot Bonus Payments. The Spot Bonuses may be paid at any time during the year, subject to the availability of funds from the Spot Bonus pool for such Plan Year, but no later than March 15, 2009. Spot Bonus payments shall be paid in cash.
Each Spot Bonus payment will be subject to any applicable tax or other withholding. 
 4.4 Documentation of Spot Bonus Payments. The
executive officers of the Company shall ensure that written documentation of each Spot Bonus, including a written rationale for the payment of such Spot Bonus, is retained in the Company’s files. 

 5. Stock Option Grant Guidelines 
 5.1 Stock Option Awards. The Compensation Committee may grant stock options (each a “Stock Option Award”) to purchase shares of the Company’s common stock on an annual basis
pursuant to this Plan to existing employees of the Company. Such Stock Option Awards shall be granted under the terms of the Company’s 2006 Equity Incentive Award Plan and the Company’s Policy Regarding Equity Awards. 
 5.2 Determination of Stock Option Awards. The number of shares of the Company’s common stock subject to each Stock Option Award shall be
determined by dividing (1) the product of (A) the recipient’s then-current annual base salary rate multiplied by (B) the “Stock Option Award Percentage” for such recipient’s job classification,
divided by (2) the “Fair Market Value” of the Company’s common stock on the date of grant of such Stock Option Award, as determined under the Company’s 2006 Equity Incentive Award Plan. The following
“Stock Option Award Percentages” will be used in implementing the Plan: 
  

			
	 Position
	  	Stock Option Award Percentage
(% of base salary)
	 Executive Officers
	  	70%
	 Regional Vice Presidents
	  	50%
	 Senior Corporate Managers
	  	25%
	 Key Managers
	  	15%
	 Department Heads/Managers
	  	10%

 Notwithstanding the foregoing, the executive officers of the Company will present to the
Compensation Committee for its approval the determination of the number of shares of the Company’s common stock to be subject to each Stock Option Award issued pursuant to this Plan. The Compensation Committee may adjust the number of shares
downward or upward based on its subjective assessment of the Company’s or an employee’s individual performance. 
 For purposes of
clarity, the term “Fair Market Value” is defined in the Company’s 2006 Equity Incentive Award Plan, as of any date, as the value of the Company’s common stock determined as follows: 
 (1) If the Company’s common stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq
Global Market or The Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of
determination, as reported in The Wall Street Journal or such other source as the Compensation Committee deems reliable; 
 (2) If
the Company’s common stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Company’s common stock on the date of
determination as reported in The Wall Street Journal or such other source as the Compensation Committee deems reliable; or 

 (3) In the absence of an established market for the Company’s common stock, the Fair Market Value
thereof shall be determined in good faith by the Compensation Committee. 
 5.3 Terms of Stock Option Awards. Each Stock Option Award
shall have a ten year term. Each Stock Option Award shall vest in three equal installments on each of the first three anniversaries of the date of grant, unless otherwise determined by the Compensation Committee and set forth in the applicable stock
option agreement. 
 Any Stock Option Award issued will be subject to the terms and conditions of the Company’s 2006 Equity Incentive
Award Plan, as amended from time to time by the Company, or any other equity incentive award plan that may subsequently be established by the Company and the terms and conditions of the stock option agreement pursuant to which it is granted.

 6. Miscellaneous 
 6.1
Termination. A Plan participant whose employment terminates voluntarily prior to the payment of the Awards will not be eligible to receive an Award. Continued employment until payment of the Awards is a condition of vesting in such Awards. If
a participant’s employment is terminated involuntarily during the calendar year, or prior to payment of Awards, it will be at the absolute discretion of the Company whether or not any Award payment is made. 
 6.2 Company’s Absolute Right to Alter or Abolish the Plan. The Company reserves the right in its absolute discretion to abolish the Plan at
any time or to alter the terms and conditions under which incentive compensation will be paid. Such discretion may be exercised any time. No employee shall have any vested right to receive any payment until actual delivery of such compensation. The
Plan shall not be the exclusive means for the Compensation Committee to award incentive compensation to eligible participants. 
 6.3
Employment Duration/Employment Relationship. This Plan does not, and Company policies and practices in administering this Plan do not, constitute an express or implied contract or other agreement concerning the duration of any employee’s
employment with the Company. The employment relationship of each employee is “at will” and may be terminated at any time by the Company or by the employee, with or without cause. 
 6.4 Unfunded Obligations. The rights of participants under the Plan shall be unfunded and unsecured. Amounts payable under the Plan are not and
will not be transferred into a trust or otherwise set aside. Neither the Company nor any subsidiary shall be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Award under the
Plan. 
 6.5 Rights Not Transferable. No rights of any participant to payments of any amounts under the Plan shall be sold, exchanged,
transferred, assigned, pledged, hypothecated or otherwise disposed of other than by will or by laws of descent and distribution, and any such purported sale, exchange, transfer, assignment, pledge, hypothecation or disposition shall be void.

 6.6 Governing Law. The Plan and the rights and obligations of the parties to the Plan shall be
governed by, and construed and interpreted in accordance with, the law of the State of California (without regard to principles of conflicts of law). 
 *  *  * 
  

			
	BASIN WATER, INC.
		
	By:	 	 /s/    W. Christopher Chisholm

	Name:	 	W. Christopher Chisholm
	Title:	 	Vice President and Chief Financial OfficerSecond Amended and Restated Director Compensation Policy

 Exhibit 10.38 
 BASIN WATER, INC. 
 SECOND AMENDED AND RESTATED 
 DIRECTOR COMPENSATION POLICY 
 Non-employee members of the board of directors (the “Board”) of Basin Water, Inc. (the “Company”) shall be eligible to receive cash and equity compensation effective as of May 6, 2008 (the
“Effective Date”) as set forth in this Amended and Restated Director Compensation Policy (“Director Compensation Policy”). The cash compensation and equity awards described in this Director Compensation Policy shall
be paid or be made, as applicable, automatically and without further action of the Board, to each non-employee director who may be eligible to receive such cash compensation or equity awards unless such non-employee director declines the receipt of
such cash compensation or equity awards by notice to the Company. This Director Compensation Policy shall remain in effect until it is revised or rescinded by further action of the Board. 
 1. Cash Compensation. 
 (a) Non-Executive Chairman of the Board Retainer. The Chairman of the Board who shall not be an executive officer or employee of the Company (the “Chairman of the Board”) shall be eligible to receive an annual
retainer for service on the Board as determined by the Board from time to time. 
 (b) General Board Retainer. Each
non-employee director other than the Chairman of the Board shall be eligible to receive an annual retainer of $24,000 for service on the Board. 
 (c) Audit Committee Chair Retainer. Each non-employee director who serves as chair of the Audit Committee of the Board shall be eligible to receive an additional annual retainer of $7,500 for such service.

 (d) Compensation Committee Chair Retainer. Each non-employee director who serves as chair of the Compensation
Committee of the Board shall be eligible to receive an additional annual retainer of $5,000 for such service. 
 (e)
Nominating and Governance Committee Chair Retainer. Each non-employee director who serves as chair of the Nominating and Governance Committee of the Board shall be eligible to receive an additional annual retainer of $5,000 for such service.

 (f) Meeting Stipends. Each non-employee director, including the Chairman of the Board, shall be eligible to receive
an additional stipend of $2,000 for each Board meeting attended in-person or $1,000 for each Board meeting attended by telephone ($1,500 if such telephonic meeting lasts more than three hours). Each non-employee director other than the Chairman of
the Board (to the extent that the Chairman of the Board is not a member of any committees) shall be eligible to receive an additional stipend of $1,250 for each committee meeting attended in person or $750 for each committee meeting attended by
telephone ($1,000 if such telephonic meeting lasts more than three hours). Non-employee directors shall not be eligible for any stipend for attending meetings of committees of which they are not members, unless attendance at such meeting is
otherwise requested by the Company, the chair of the Committee or the Chairman of the Board. 
 (g) Special Projects.
Each non-employee director working on special projects that are approved by the Board shall be eligible to receive an additional stipend of $1,000 per day for such services. 

 (h) Expense Reimbursements. The Company shall reimburse non-employee directors for
reasonable expenses incurred to attend meetings of the Board or its committees. 
 (i) Travel Allowance and Expenses.
Non-employee directors shall be paid $500 for each day of travel ($750 if the travel time exceeds 3 hours) in connection with attendance at a Board or committee meeting. Any travel expenses shall be reimbursed in accordance with the Company’s
standard travel policy. 
 2. Equity Compensation. The stock options described below shall be granted under and shall be subject to
the terms and provisions of the Company’s 2006 Equity Incentive Award Plan (the “2006 Plan”), as amended from time to time, and shall be granted subject to the execution and delivery of award agreements, including attached
exhibits, in substantially the same forms approved by the Board, setting forth the vesting schedule applicable to such awards and such other terms as may be required by the 2006 Plan. 
 (a) Annual Awards. On the date of each annual meeting of the Company’s stockholders on or after the Effective Date, a person
who is a non-employee director automatically shall be granted a non-qualified stock option and restricted stock as follows: 
 (i) On the first annual meeting of the Company’s stockholders that takes place after the Effective Date, (A) an option to purchase that number of shares of Company common stock (subject to adjustment as provided in the 2006 Plan)
as is equal to the quotient of (x) the Option Multiple times the Initial Cash Compensation divided by (y) the fair market value of a share of common stock on the date of grant (as determined under the 2006 Plan, the “Fair Market
Value”) and (B) a restricted stock award of that number of shares of common stock as is equal to the quotient of (x) the Restricted Stock Multiple times the Initial Cash Compensation divided by (y) the Fair Market Value.

 (ii) On each subsequent annual meeting of the Company’s stockholders, with respect to any non-employee director that
was not a director as of the date of the prior year’s annual meeting of the Company’s stockholders, (A) an option to purchase that number of shares of Company common stock (subject to adjustment as provided in the 2006 Plan) as is
equal to the quotient of (x) Option Multiple times the Initial Cash Compensation divided by (y) the Fair Market Value and (B) a restricted stock award of that number of shares of common stock as is equal to the quotient of
(x) the Restricted Stock Multiple times the Initial Cash Compensation divided by (y) the Fair Market Value. 
 (iii)
On each subsequent annual meeting of the Company’s stockholders, with respect to any non-employee director that was a director as of the date of the prior year’s annual meeting of the Company’s stockholders, (A) an option to
purchase that number of shares of Company common stock (subject to adjustment as provided in the 2006 Plan) as is equal to the quotient of (x) Option Multiple times the Prior Year Cash Compensation divided by (y) the Fair Market Value and
(B) a restricted stock award of that number of shares of common stock as is equal to the quotient of (x) the Restricted Stock Multiple times the Prior Year Cash Compensation divided by (y) the Fair Market Value. 

 For purposes of this Section 2(a): 
 “Initial Cash Compensation” shall mean the sum of (a) the General Board Retainer to be paid to such non-employee director in accordance with Section 1(a) in the year of determination
plus (b) all retainers to be received in such year, if any, pursuant to Sections 1(b), 1(c) and 1(d) for such non-employee director’s service as chair of the Audit Committee, Compensation Committee and/or Nominating and Governance
Committee in the year of determination. 
 “Prior Year Cash Compensation” shall mean, for any year in which the
determination is made, the total cash compensation earned by a non-employee director in the prior fiscal year pursuant to Sections 1(a) through 1(f) of this Director Compensation Policy. 
 “Option Multiple” shall be a number determined by the Board on an annual basis at or around the time of the annual meeting of the
Company’s stockholders and shall be in effect until the end of the fiscal year. The Option Multiple for 2008 shall be 2.0. 
 “Restricted Stock Multiple” shall be a number determined by the Board on an annual basis at or around the time of the annual meeting of the Company’s stockholders and shall be in effect until the end of the fiscal
year. The Restricted Stock Multiple for 2008 shall be 1.5. 
 (b) Terms of Awards Granted to Independent Directors.  
 (i) Exercise Price of Options. The per share price of each option granted to a non-employee director shall equal 100% of the fair
market value of a share of common stock on the date the option is granted (as determined under the 2006 Plan). 
 (ii)
Price of Restricted Stock. The per share price of each share of restricted stock granted to a non-employee director shall equal $0.001 per share. 
 (iii) Vesting. 
 (A) Options granted to non-employee directors shall become 100%
vested on the first anniversary of the date of grant, subject to a director’s continuing service on the Board through such date. No portion of an option which is unexercisable at the time of a non-employee director’s termination of
membership on the Board shall thereafter become exercisable. 
 (B) Restricted stock granted to non-employee directors shall
become 100% vested on the first anniversary of the date of grant, subject to a director’s continuing service on the Board through such date. No portion of a restricted stock grant which is restricted at the time of a non-employee
director’s termination of membership on the Board shall thereafter become unrestricted. 
 (iv) Term. The term of
each option and restricted stock award granted to a non-employee director shall be ten years from the date the option is granted. 
 (v) Accelerated Vesting. In the event of a Change in Control (as defined in the 2006 Plan) while a non-employee director is still serving as a member of the Board, or in the event of a non-employee director’s Termination of
Directorship (as defined in the 2006 Plan) by reason of his or her death or Disability, all options and restricted stock granted to a non-employee director pursuant to this Director Compensation Policy shall become fully exercisable immediately
prior to such Change in Control or Termination of Directorship, as applicable.

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