Document:

Executive Service Contract dated May 8, 1998, between Corp. & John S.N. Charlton

 Exhibit 10(xxxix) 
 Executive Service Contract: John Charlton 
 THIS AGREEMENT dated 8th May 1998 is made BETWEEN: 
  

	(A)	The First Employer: Hanson White Group Limited, a company incorporated in England and Wales and registered under number 3220599 whose registered office is at 9th floor, Wettern
House, 56 Dingwall Road, Croydon, CR0 0XH (the “First Employer”); and 

  

	(B)	The Second Employer: UK Greetings Limited, a company incorporated in England and Wales and registered under number 3480710 whose registered office is at Mill Street East, Dewsbury,
West Yorkshire WF12 9AW (c/o Carlton Cards Limited) (the “Second Employer”); and 

  

	(C)	The Employee: John Charlton of Englefield Lodge, Middle Hill, Englefield Green, Surrey TW20 0JR (“You”). 

 WHEREAS 
  

	(1)	UK Greetings Limited has agreed to purchase the entire share capital of Hanson White Group Limited from, inter alia, John Charlton under an agreement of the same date as this
agreement (the “Share Purchase Agreement”). 

  

	(2)	The parties have agreed that conditional on the Closing of the stock purchase (as defined in the Share Purchase Agreement) and following the Closing Date (as defined in the Share
Purchase Agreement), John Charlton will continue to be employed by Hanson White Group Limited as sale Managing Director of that company for a period of six months from the Closing Date or less if agreed between the parties on the terms and
conditions set out below. Thereafter, Hanson White Group Limited will be replaced as John Charlton’s employer by UK Greetings Limited and John Charlton will thereafter instead be employed on the terms and conditions set out below by UK
Greetings Limited as sole Managing Director of UK Greetings Limited (and will no longer be employed by Hanson White Group Limited, whether or not he retains any office in Hanson White Group Limited), without giving rise to any claim on the part of
John Charlton for damages or compensation in respect of this change. 

 IT IS NOW AGREED as follows 
  

	1.	Employment 

  

	1.1	Conditional on Closing pursuant to the Share Purchase Agreement, your employment under this Agreement by the First Employer (the “First Employment”) will commence on the
date hereof (the “Commencement Date”) and (subject to earlier termination as provided in this Agreement) will continue for a fixed period of 6 months or such lesser period as is agreed between you and the First and Second Employers
(together the “Employers”). At the end of this period, the Second Employer will replace the First Employer as your employer and your employment under this Agreement by the Second Employer (the “Second Employment”) will continue
(subject to earlier termination as provided in this Agreement) for a fixed period up to and including the day before the third anniversary of the date hereof (the “Fixed Period”) and thereafter until terminated by you giving the Second
Employer 3 months’ prior written notice or 

			
	Executive Service Contract: John Charlton	  	2

  

	 	by the Second Employer giving you 12 months’ prior written notice, such notice to expire on or after the end of the Fixed Period. Notwithstanding the above, the substitution of
the Second Employer as your employer in place of the First Employer shall not operate so as to transfer any accrued liabilities or rights of the First Employer to the Second Employer. 

  

	1.2	The First and Second Employments together are hereafter referred to as the “Employment”. References hereafter to the “Employer” shall mean the First Employer
during the period of the First Employment and the Second Employer during the period of the Second Employment. 

  

	1.3	Your previous employment with the First Employer, which began on 1st December 1985, counts as part of your period of continuous employment with the Group.

  

	1.4	During the First Employment the First Employer will employ you, and you will work, as the sole Managing Director of the First Employer. During the Second Employment the Second
Employer will employ you, and you will work, as the sole Managing Director of the Second Employer. 

  

	1.5	You will (without further remuneration), if and for as long as the Reporting Officer reasonably requires, during this Agreement: 

  

	 	1.5.1	carry out duties for the benefit of or on behalf of any Group Company; and/or 

  

	 	1.5.2	hold any office and/or other appointment in or on behalf of the Group. 

  

	1.6	You will, at all times during the period of this Agreement: 

  

	 	1.6.1	devote the whole of your time, attention and ability during your hours of work (as set out in Clause 1.7) to the duties of your employment; 

  

	 	1.6.2	faithfully and diligently perform your duties and exercise only such powers as are consistent with them; 

  

	 	1.6.3	obey all and any lawful and reasonable directions of the Reporting Officer; 

  

	 	1.6.4	act in accordance with the Memorandum and Articles of Association of the Employer or, where acting pursuant to Clause 1.5, of the relevant Group Company; 

 

	 	1.6.5	use all reasonable endeavours to promote the interests of the Group; and 

  

	 	1.6.6	keep the Reporting Officer promptly and fully informed (in writing if so requested) of your conduct of the business or affairs of the Group and provide such explanations as the
Reporting Officer may reasonably require. 

			
	Executive Service Contract: John Charlton	  	3

  

	1.7	Your hours of work are the normal hours of business of the Employer together with such additional hours as may be reasonably necessary for you to perform your duties properly.

  

	1.8.	Your normal place of work is the Employer’s head office, initially at 9th floor, Wettern House, 56 Dingwall Road, Croydon, CR0 0XE, and/or such other place(s) of business of
the Employer or Group inside the M25 motorway ring as the Reporting Officer may reasonably require from time to time. You will, if and for as long as reasonably required by the Reporting Officer, make visits in the ordinary course of your duties to
such places anywhere in the world as he may specify to the extent reasonably necessary or expedient for the proper performance of your duties provided that you shall not be required to work outside the United Kingdom for any single period in excess
of 4 weeks or for more than 90 days in aggregate in any single 12 month period. 

  

	1.9	During the Employment you will not without the prior written consent (not to be unreasonably withheld or delayed) of the Reporting Officer be employed, engaged, concerned or
interested directly or indirectly in any trade or business or hold any public office, directorship or occupation other than in the business of the Employer and the Group Companies (provided that you are permitted to hold as a passive investor only
not more than 5% of the issued ordinary shares of any company of a class which are listed or traded on the London Stock Exchange or other investment exchange permitted by the Reporting Officer). 

  

	2.	Pay 

  

	2.1	During the Employment, the Employer will pay you a basic salary at the rate of £135,000 each year (or such higher rate as may be awarded to you pursuant to Clause 2.2) which
will accrue from day to day and be payable in equal monthly or twice-monthly instalments in arrears on such working day or days of each month as are designated for such purposes by the Employer (the “Base Salary”). The Base Salary is
inclusive of all and any fees receivable by you as the holder of offices or appointments within the Group or on behalf of the Employer or any Group Company. 

  

	2.2	On or about 1st May 1999 and each subsequent anniversary, your Base Salary will be reviewed by the Reporting Officer and the rate of Base Salary then payable may be increased
by the Employer with effect from the date of such review by such amount (if any) as the Reporting Officer may recommend. 

  

	2.3	You are also eligible to participate in the American Greetings Key Management Annual Bonus Plan (the “Annual Bonus Plan”) and the Key Management Special Three-Year Super
Bonus Plan (the “Special Three-Year Super Bonus Plan”) and any of their successors from time to time (the “Plans”) in accordance with the rules of such plans as amended from time to time subject to the provisions of Clause 2.4
below. The rules of the Special Three-Year Super Bonus Plan for the fiscal years 1998, 1999 and 2000 (which runs from 1st March 1997 to 28th February 2000) and the present rules of the Annual Bonus Plan as they apply to you are set forth
in Appendix A, save that: 

  

	 	2.3.1	for the fiscal year 1999 (1st March 1998 to 28th February 1999) your target bonus will be 30% of £135,000; 

			
	Executive Service Contract: John Charlton	  	4

  

	 	2.3.2	for fiscal year 2000 (1st March 1999 to 28th February 2000) your target bonus will be 30% of the amount of Base Salary under Clause 2.1 paid during the fiscal year 2000;

  

	 	2.3.3	in relation to the Annual Bonus Plan your target financial goal for fiscal year 1999 will be determined by reference to the performance of Hanson White Group Limited and for fiscal
year 2000 will be determined by reference to the performance of UK Greetings Limited; and 

  

	 	2.3.4	in relation to the Special Three-Year Super Bonus Plan for the fiscal years 1998, 1999 and 2000 your target financial goals for fiscal year 1999 will be determined by reference to
the performance of Hanson White Group Limited and UK Greetings Limited and for fiscal year 2000 will be determined by reference to the performance of UK Greetings Limited and the consolidated American Greetings Corporation. 

 

	2.4	In the event that your Employment is terminated by the Employer (other than pursuant to Clause 10.2) with effect from a date during the First Employment or Fixed Period, your
entitlement under the Plans will be as follows (notwithstanding any rule of the Plans to the contrary): 

  

	 	2.4.1	in relation to the Annual Bonus Plan for the fiscal year during which the Employment is terminated, you will be entitled to 100% of your target bonus whether or not the target
financial goals are achieved or exceeded and notwithstanding the fact that the Employment has terminated prior to the end of the fiscal year and prior to the date on which bonuses are awarded under this Plan, such entitlement accruing and becoming
due on the date of termination of the Employment; 

  

	 	2.4.2	in relation to the Special Three-Year Super Bonus Plan for the fiscal years 1998, 1999 and 2000, if the Employment is terminated during the fiscal year 1999, you will not be
entitled to any bonus. If the Employment is terminated during the fiscal year 2000, it will be deemed that both target financial goals have been met in 2000 and provided each target financial goal is met in 1999, you will be entitled to 60% of the
target bonus, notwithstanding the fact that the Employment has terminated prior to the end of the fiscal year 2000 and prior to the date on which bonuses are awarded under this Plan, such entitlement accruing and becoming due on the date of
termination of the Employment; 

  

	 	and for the avoidance of doubt, the above Clauses 2.4.1 and 2.4.2 will not apply in the event that the Employment is terminated by the Employer in accordance with Clause 10.2 or if
you resign from the Employment. For the avoidance of doubt resignation from the office of director whilst remaining in employment with the Employer shall not constitute resignation from the Employment for these purposes. 

			
	Executive Service Contract: John Charlton	  	5

  

	3.	Fringe Benefits 

  

	3.1	The Employer will provide you (for your business use and your reasonable private use) with a car of such make, model, age and specification as you may select in accordance with the
Employer’s car policy from time to time. The Employer will pay for all standing and running expenses of the car excluding the cost of fuel for private use of the car outside the UK and excluding any additional insurance costs associated with
private use of the car outside the UK (and excluding any income tax payable by you on this benefit). The Employer will replace your company car periodically in accordance with its car policy from time to time. You must comply with all the
Employer’s rules from time to time regarding company cars, hold a current driving licence or ensure that you have available to you during your hours of work for your use on the Employer’s business and at your own expense a driver holding a
current driving licence, notify the Employer immediately of any accidents involving the car and of any charges of driving offences made against you (whether or not while on the Employer’s business) and return the car to the Employer at its head
office in as good a condition as that in which it was originally supplied to you (subject to reasonable wear and tear) immediately when the Employment ends. 

  

	3.2	You are entitled, by written notice given to the Reporting Officer on or within 7 days after the Commencement Date or by giving 3 months’ prior written notice to the Reporting
Officer to expire on the replacement date of any company car provided to you under Clause 3.1, to elect in substitution for your entitlement under Clause 3.1 to receive a non-pensionable, taxable car allowance of £15,000 per annum (or such
higher rate as is payable in accordance with Clause 3.3) paid in equal monthly or twice-monthly instalments with your Base Salary. If you elect to receive this allowance, you agree that you will procure the availability at all times of a car which
is suitable (in terms of age, make, specification and model) for use by you on the Employer’s business, that you will ensure (at your expense) that the car is properly insured, maintained and repaired for such use and that all standing and
running expenses will be for your own account. 

  

	3.3	The car allowance referred to in Clause 3.2 will be altered if and when and by the same percentage as the percentage by which the cost to the Employer of providing such car as you
are entitled to under Clause 3.1 (and if the car is leased, this shall be the invoiced lease cost inclusive of VAT) alters, provided that the allowance will not be reduced below £15,000 per annum. 

  

	3.4	You (and, in the case of private medical expenses insurance, your spouse and dependant children under 25 in full time education) are entitled to participate in the private medical
expenses insurance and any long term incapacity plan provided by the Employer from time to time for the benefit of employees, subject always to the rules of the relevant schemes and provided that such entitlement will be no less favourable than that
provided to you by the First Employer immediately prior to the Commencement Date. 

  

	3.5	The Employer will provide you with death-in-service life assurance cover of four times your Base Salary at the rate payable to you at the date of your death, subject to the terms of
the insurance policy or scheme from time to time. 

			
	Executive Service Contract: John Charlton	  	6

  

	3.6	During the Employment, the Employer will contribute in twelve equal monthly instalments each year an amount equal to the greater of £26,250 and 15% of your Base Salary (at the
rate then payable) for your benefit to any company pension scheme set up by or on behalf of the Employer or the Group (provided you are eligible to be a member) subject to the rules of any such scheme and Inland Revenue contribution limits from time
to time. 

  

	4.	Expenses 

  

	4.1	The Employer will reimburse you in arrears for your ordinary and necessary travelling, telephone, hotel, entertainment and other business expenses incurred in the course of your
duties provided that you comply with the Employer’s regulations from time to time in this respect and provide the Reporting Officer with receipts or other proof of payment as the Reporting Officer may reasonably require.

  

	5.	Holiday 

  

	5.1	In addition to public holidays, you are entitled to 25 working days’ holiday without loss of pay in each holiday year (which runs from 1st January to 31st December) to be
taken at such time or times as may be authorised in advance by the Reporting Officer. You may not, except with prior permission from the Reporting Officer, carry forward any unused part of your holiday entitlement to a subsequent holiday year.

  

	5.2	Your entitlement for the first and last holiday year of your employment under this Agreement will be the number of working days which is the same proportion of 25 as the period of
your employment during that year is of a whole calendar year, rounded down to the nearest whole day. Unless your Employment is terminated pursuant to Clause 10, you will be entitled on termination to pay in lieu of any unused holiday entitlement. If
you have taken holiday in excess of your accrued entitlement on termination of your Employment, you will be required to repay any excess Base Salary you have received for such holiday. The basis for payment and repayment is 1/365th of your Base
Salary for each day. 

  

	6.	Incapacity 

  

	6.1	If you are absent from work because of illness, mental disorder or injury (“Incapacity”), you must report that fact immediately to the Reporting Officer and, after seven
continuous days’ absence, provide medical practitioners’ certificate(s) of your Incapacity and its cause for Statutory Sick Pay purposes covering the whole period of your absence. For Statutory Sick Pay purposes, your qualifying days are
your normal working days. 

  

	6.2	If you are absent from work due to Incapacity and have complied with the provisions of Clause 6.1, you will continue to be paid your Base Salary for up to 130 working days’
absence (excluding Saturdays, Sundays and public holidays) in any period of 12 consecutive months and, thereafter, such part of your Base Salary, if any, as the Reporting Officer, in his/her absolute discretion, determines from time to time provided
that any such payment will not be less than and will be deemed to include all and any Statutory Sick Pay to which you are entitled and any Social Security Sickness Benefit or other state benefits recoverable by you 

			
	Executive Service Contract: John Charlton	  	7

  

	 	(whether or not recovered) may be deducted from such payment. If your absence exceeds 30 consecutive days, the Employer will be entitled to appoint a temporary replacement to cover
your absence. 

  

	6.3	You will, whenever requested by the Reporting Officer, submit to examination by a medical practitioner selected and paid for by the Employer. You hereby authorise such medical
practitioner to disclose to and discuss with the Reporting Officer any matters which, in the medical practitioner’s opinion, might hinder or prevent you (if during a period of Incapacity) from returning to work for any period or (in other
circumstances) from properly performing your duties at any time. 

  

	7.	Confidentiality and Integrity 

  

	7.1	You agree that you will not directly or indirectly solicit, receive, obtain or offer any discount, rebate, commission, entertainment or other inducement (whether in cash or in kind)
to or from any customer, supplier or potential customer or supplier or intermediary which is not authorised by regulations or guidelines from time to time governing dealings by executives on behalf of the Employer or, if you do, that you will
account immediately to the Employer for the amount so received. 

  

	7.2	Without prejudice to your obligations at common law, your obligations concerning the preservation of the confidential information of the Employer and its Group Companies are in the
terms set forth in the Carlton Cards Employee Handbook (as amended from time to time, with reference therein to the “Company” read as referring to the Employer and amended to apply in respect of the confidential information of the Employer
and its Group Companies). 

  

	7.3	You agree not at any time during or after your Employment to make any untrue or misleading statement relating to the Employer or its Group Companies. 

  

	8.	Intellectual Property 

  

	8.1	Subject to sections 39 to 43 of the Patents Act 1977, in relation to each and every invention, copyright work, design or technical know-how conceived or made by you alone or with
others in the course of your employment, you will: 

  

	 	8.1.1	promptly disclose full details, including any drawings and models, of it to the Employer and the Reporting Officer but to no other person; 

  

	 	8.1.2	hold it in trust for the Employer and, at the request of the Reporting Officer and at the Employer’s expense, do all things necessary or desirable to vest property of it fully
in the Employer and/ or to enable the Employer or its nominee to exploit it for commercial purposes and/ or to secure patent or other appropriate forms of protection for it anywhere in the world. Decisions as to its protection and exploitation will
be at the sole discretion of the Reporting Officer; 

  

	 	8.1.3	permit the Reporting Officer (whom you hereby irrevocably appoint as your attorney for this purpose) to execute documents, to use your name and to do all things which may be
necessary or desirable for the 

			
	Executive Service Contract: John Charlton	  	8

  

	 	 	Employer to obtain for itself or its nominee the full benefit of each and every such invention, copyright work, design or technical know-how. A certificate in writing signed by the
Reporting Officer or any Director or the Secretary of the Employer that any instrument or act falls within the authority hereby conferred will be conclusive evidence to that effect so far as any third party is concerned. 

  

	9.	Restrictive Covenants 

  

	9.1	For the period of twelve months after the termination of your Employment under this Agreement, you will not directly or indirectly: 

  

	 	9.1.1	be engaged or concerned or interested in any business carried on within the Restricted Area wholly or partly in competition with any Restricted Business (save for the holding, as a
passive investor only, of not more than 5% of the issued ordinary shares of any company of a class which are listed or traded on the London Stock Exchange or other investment exchange permitted by the Reporting Officer); 

  

	 	9.1.2	seek or accept, in any capacity whatsoever, any business, orders or custom which is in competition with any Restricted Business from any Customer; 

  

	 	9.1.3	induce or attempt to persuade any Employee to leave employment or engagement by the Employer or any Group Company or offer employment or engagement to any Employee; or

  

	 	9.1.4	make or cause to be made any statements which disparage, are inimical to, or damage the reputation or standing of the Employer or any of its Group Companies or any of its or their
agents, officers, directors, or employees. 

  

	9.2	You will not at any time after the termination of your Employment under this Agreement, directly or indirectly: 

  

	 	9.2.1	induce or seek to induce, by any means involving the disclosure or use of Confidential Information, any Customer to cease dealing with the Employer or any Group Company or to
restrict or vary the terms upon which it deals with the Employer or any Group Company; 

  

	 	9.2.2	disclose or make use of any Confidential Information; or 

  

	 	9.2.3	represent yourself or permit yourself to be held out as having any connection with or interest in the Employer or any Group Company. 

  

	9.3	Each restriction in Clause 9 (whether drafted separately or together with another) is independent and severable from the other restrictions and enforceable accordingly. If any
restriction is unenforceable for any reason but would be enforceable if part of the wording were deleted, it will apply with such deletions as may be necessary to make it enforceable. 

			
	Executive Service Contract: John Charlton	  	9

  

	9.4	The Employer may transfer or assign its rights under this Clause 9 to its successors in title. You may not transfer or assign any rights or obligations under this Clause 9.

  

	10.	Termination of Agreement 

  

	10.1	This Agreement will automatically terminate (without any requirement for notice or compensation): 

  

	 	10.1.1	when you reach the normal retirement age for directors of the Employer; or 

  

	 	10.1.2	if you are prohibited by law from being a director. 

  

	10.2	The Employer will be entitled, by the Reporting Officer giving notice, to terminate this Agreement with immediate effect (and without compensation) if you: 

 

	 	10.2.1	commit any act of gross misconduct or repeat or continue after receiving written warning from the Reporting Officer any other breach of your obligations under this Agreement; or

  

	 	10.2.2	engage in such conduct outside work or fall into such disrepute that your continued employment is likely to materially prejudice the interests of the Employer or Group; or

  

	 	10.2.3	are convicted of any criminal offence which is punishable with 6 months or more imprisonment (save for any motoring offence for which you are not sentenced to a term of immediate or
suspended imprisonment); or 

  

	 	10.2.4	commit any criminal offence involving an act of dishonesty, whether or not relating to your employment; or 

  

	 	10.2.5	become bankrupt or make any arrangement or composition with your creditors generally; or 

  

	 	10.2.6	resign of your own volition your office as a director of the Employer or any Group Company (other than at the request of the Reporting Officer or a majority of the shareholders of
the Employer). 

  

	10.3	The Employer will be entitled to terminate this Agreement notwithstanding Clause 6.2 or your entitlement (if any) at that time to sick pay or benefits under any permanent health or
long term incapacity plan, by notice from the Reporting Officer which is not less than your then entitlement to statutory minimum notice plus a week given at any time when you have been absent from work due to Incapacity for a period or periods
aggregating 130 days in the preceding 12 months provided that the Reporting Officer will withdraw any such notice if, before it expires, you resume your duties full time and provide medical evidence satisfactory to the Reporting Officer that you are
fully recovered and that no recurrence of your Incapacity can reasonably be anticipated. 

			
	Executive Service Contract: John Charlton	  	10

  

	10.4	The Employer may, in addition to its rights of termination under Clause 10.2 and Clause 10.3, by the Reporting Officer serving written notice, impose a Garden Leave Period (as
defined in Clause 10.10) on you and/or, at the end of such Garden Leave Period (if any), terminate this Agreement by paying you the Liquidated Damages and Agreed Restriction Payment in extinction of all and any claims against the Employer or any
Group Company which you then have or may in the future have arising out of this Agreement, its termination or your holding or loss of any office (save for any claim you may have for payment of sums which have accrued pursuant to Clauses 2.1, 2.3,
3,4,5 and/or 6 but not been paid to you in respect of any period ending on or prior to the date of termination of this Agreement) and in consideration for the agreed restrictions set out in Clauses 10.7, 10.8 and 10.9. You acknowledge that the
Liquidated Damages and Agreed Restriction Payment set out in Clause 10.5 represents a genuine pre-estimate of your loss on a termination of the Employment pursuant to Clause 10.4 plus a payment in consideration for the agreed restrictions set out in
Clauses 10.7, 10.8 and 10.9. 

  

	10.5	The Liquidated Damages and Agreed Restriction Payment is the amount which (subject to deduction of income tax and/or national insurance contributions as required by law) is equal to
the aggregate of: 

  

	 	10.5.1	the Base Salary (at the rate then payable under Clause 2.1); and 

  

	 	10.5.2	the company pension contributions (at the rate then payable under Clause 3.6); and 

  

	 	10.5.3	the taxable value (at the rate then applicable) of the fringe benefits to which you are entitled under Clause 3.1 or 3.2, and Clauses 3.4 and 3.5; and 

  

	10.5.4	the bonus entitlement (if any) under Clauses 2.3 and 2.4; 

  

	 	which would have been paid to you in respect of the period by which the period set out in Clause 10.6 (the “Relevant Period”) exceeds the length of any Garden Leave Period
imposed, each of the entitlements or instalments of each of the entitlements set out above at sub-clauses 10.5.1 to 10.5.4 (inclusive) to be discounted back for early payment at the rate of LIBOR for the period (the “Discount Period”) from
(a) the relevant dates upon which each of the entitlements or instalments of each of the entitlements set out above at sub-clauses 10.5.1 to 10.5.4 (inclusive) would have accrued (up to and ending on the expiry of the Relevant Period) had
this Agreement not been so terminated to (b) the date of termination of this Agreement. In calculating the discount to be applied to an entitlement or instalment of an entitlement where the Discount Period is less or more than one year, the
method of calculation will be such as ensures that the relevant annualised discount rate will neither exceed nor be less than LIBOR. 

  

	10.6	Where the Employer terminates this Agreement pursuant to Clause 10.4 during the First Employment or the Fixed Period, the Relevant Period for the purposes of Claus 10.5 will be the
period commencing on the date of termination and ending on the date on which the Fixed Period would have ended had the Employment not been terminated or, if greater, 12 months. Where the Employer terminates this Agreement on a date after the expiry
of the Fixed Period, the Relevant Period for the purposes of Clause 10.5 will be 12 months. 

			
	Executive Service Contract: John Charlton	  	11

  

	10.7	Where the Employer terminates this Agreement pursuant to Clause 10.4 during the First Employment or the first 6 months of the Second Employment, you agree to be bound by restrictive
covenants in the same terms as set out in Clause 9.1 hereof for the period commencing on the date of termination and ending on the date on which the Fixed Period would have ended (had the Employment not been terminated). 

  

	10.8	Where the Employer terminates this Agreement pursuant to Clause 10.4 during the second or third 6 months of the Second Employment, you agree to be bound by restrictive covenants in
the same terms as set out in Clause 9.1 hereof for the period commencing on the date of termination and ending on the date 12 months after the date on which the Fixed Period would have ended (had the Employment not been terminated).

  

	10.9	Where the Employer terminates this Agreement pursuant to Clause 10.4 after the third 6 months of the Second Employment, you agree to be bound by restrictive covenants in the same
terms as set out in Clause 9.1 hereof for the period commencing on the date of termination and ending on the date 12 months after the date of termination. 

  

	10.10	The Garden Leave Period is the period after notice has been given by either party under Clause 1.1, commencing on the date specified in the notice referred to in Clause 10.4 (such
date to be on or after the date of that notice) and ending on such date as the Reporting Officer determines (not later than the expiry of the notice given under Clause 1.1), provided that such period shall not exceed 6 months in aggregate, during
which the Employer, by the Reporting Officer serving written notice, may at any time or at all times; 

  

	 	10.10.1	require you to resign (without any claim for compensation) from any offices and/or appointments which you hold as a director, nominee or representative of the Employer or any Group
Company; and/or 

  

	 	10.10.2	require you to transfer, without payment, to the Employer (or as the Employer may direct) any qualifying shares or nominee shareholdings provided to you by or held by you in or on
behalf of any Group Company; and/or 

  

	 	10.10.3	require you to return to the Employer on request any documents, computer disks and tapes and other tangible items in your possession or under your control which belong to the
Employer or any Group Company or which contain or refer to any Confidential Information; and/or 

  

	 	10.10.4	require you to delete all Confidential Information from any computer disks, tapes or other re-usable material in your possession or under your control and destroy all other
documents and tangible items in your possession or under your control which contain or refer to any Confidential Information; and/or 

			
	Executive Service Contract: John Charlton	  	12

  

	 	10.10.5	suspend you from the performance of all or any of your duties under this Agreement (without prejudice to your right, during such period, to carry on or become concerned or
interested in any business activity, trade or hold any public office, directorship or other occupation which you have disclosed to the Reporting Officer and which, in the Reporting Officer’s opinion, is neither similar to nor wholly or partly
in competition with any Restricted Business, does not require you to disclose any Confidential Information and will not otherwise prejudice the Employer’s interests) and/or 

  

	 	10.10.6	appoint a replacement to hold the same or similar job title as you and/or to carry out all or any of your duties instead of you; and/or 

  

	 	10.10.7	exclude you from all or any premises of the Group; and/or 

  

	 	10.10.8	require you not, without the prior consent of the Reporting Officer, to engage in any contact (whether or not at your own instance) with any customer, supplier, employee, director,
officer or agent of any company in the Group which touches and concerns any of the business affairs of the Group. 

  

	10.11	If you fail to comply with Clauses 10.10.1 and/or 10.10.2 within seven days of being so required, the Employer is hereby irrevocably authorised to appoint some person in your name
and on your behalf to sign any document or do any thing necessary or requisite to effect such resignation(s) and/or transfer(s). 

  

	11.	Interpretation 

  

	11.1	The headings to the clauses are for convenience only and shall not affect the construction or interpretation of this Agreement. 

  

	11.2	Any reference in this Agreement to any Act or delegated legislation shall include any statutory modification or re-enactment of it or of the provision referred to.

  

	11.3	In this Agreement: 

  

	 	“Confidential Information” means all and any information (whether or not recorded in documentary form or on computer disk or tape) of the Employer, any Group
Company or any of its or their customers, suppliers or agents which the Employer or the relevant Group Company designates or treats as confidential or in respect of which the Employer or the relevant Group Company owes an obligation of
confidentiality to a third party which is not part of your own stock in trade and which is not readily ascertainable to persons not connected with the Employer, either at all or without a significant expenditure of labour, skill or money, and which
is not generally available to the public (other than through a wrongful act or omission by you). 

  

	 	“Customer” means any person with whom you or anyone working under your supervision or control deals personally who, at the termination of your employment, is
negotiating with the Employer or any Group Company for Restricted Business or with whom the Employer or any Group Company has conducted any Restricted Business at :my time during the final two years of your employment with the Group.

			
	Executive Service Contract: John Charlton	  	13

  

	 	“Employee” means any person who is and was, at any time during the period of two years prior to the termination of your employment, employed or engaged by the
Employer or any Group. Company in a senior management, senior technical or senior sales position and who, by reason of such position, possesses any Confidential Information or is likely to be able to solicit the custom of any Customer or to induce
any Customer to cease dealing with the Employer or any Group Company, were he to accept employment or engagement in a business which is similar to or in competition with any Restricted Business. 

  

	 	“Group Company” means any company which is for the time being (a) a subsidiary of the Employer, (b) a company (other than a subsidiary) in which the
Employer beneficially holds not less than 25% of the share capital, (c) a holding company of the Employer, (d) a holding company of a holding company of the Employer, or (e) a company which is a subsidiary of a holding company of the
Employer or in which a holding company of the Employer beneficially holds not less than 25% of the share capital, and the words “subsidiary” and “holding company” shall have the meanings given to them in Section 736 of the
Companies Act 1985 (as amended by the Companies Act 1989). 

  

	 	“Group” means the Employer and each Group Company. 

  

	 	“LIBOR” means the rate at which Barclays Bank plc is offering to prime banks in the London Interbank Market for one month deposits in Sterling at or about 11am
(London time) on the date of termination of this Agreement (or the following business day if the date of termination is not a business day). 

  

	 	“Reporting Officer” means the individual officer of American Greetings Corporation designated by that company as Reporting Officer for these purposes.

  

	 	“Restricted Area” means England, Scotland, Wales, Northern Ireland and Eire and any other country in which the Employer or any Group Company carries on or has
implemented proposals to carry on any Restricted Business as at the termination of your employment. 

  

	 	“Restricted Business” means the production, marketing, sales and distribution of greeting cards and any other business carried on or proposed to he carried on (to
the extent such proposals to carry on such business have been implemented) by the Employer or any Group Company in which you worked or about which you knew Confidential Information to a material extent at any time during the final two years of your
employment with the Group. 

  

	12.	General 

  

	 	You are not subject to any particular disciplinary rules or procedures but should conduct yourself in a thoroughly professional manner at all times. In order to investigate a
complaint of breach of contract or misconduct against you, the Employer is entitled to suspend you on full pay for so long as the Reporting Officer reasonably considers appropriate in all the circumstances to carry out a disciplinary investigation
and/or hearing. 

			
	Executive Service Contract: John Charlton	  	14

  

	12.2	If you have a grievance relating to your employment (other than one relating to a disciplinary decision), you should refer that grievance to the Reporting Officer whose decision
will be final and binding on you. 

  

	12.3	This Agreement together with the terms of the Carlton Cards Employee Handbook (as amended from time to time and with references therein to the “Company” read as referring
to the Employer, save that where these terms are inconsistent with this Agreement, the terms of this Agreement shall take precedence) any documents referred to in it is in substitution for any representations and warranties made by or on behalf of
the Employer and any previous contracts of employment or for services between you and the Employer or any Group Company (which are deemed to have been terminated by mutual consent). 

  

	12.4	No omission to exercise or delay in exercising any right, power or remedy provided to the Employer by law or under this Agreement will be a waiver of it. 

 

	12.5	No variation to this contract will be of any effect unless it is agreed in writing and signed by or on behalf of both parties. In the case of the Employer no variation shall be
effective unless approved by the Reporting Officer. 

  

	12.6	The termination of this Agreement will not affect such of the provisions of this Agreement as are expressed to operator to have effect after termination and will be without
prejudice to any accrued rights or remedies of the parties. 

  

	12.7	The validity, construction and performance of this Agreement is governed by English law. 

  

	12.8	Any and all disputes and claims between the parties relating to the validity, construction, performance or termination of this Agreement shall be referred to arbitration under the
London Bar Arbitration Scheme by a single arbitrator to be appointed by or on behalf of the Chairman for the time being of the London Common law and Commercial Bar Association. The parties exclude all and any rights of appeal from all and any awards
to the extent that such exclusion may be validly made. 

  

	12.9	Any notice to be given by a party under this Agreement must be in writing in the English language and must be delivered by hand or sent by first class post or equivalent postal
service, telex, facsimile transmission or other means of telecommunication in permanent written form (provided that the addressee has his or its own facilities for receiving such transmissions) to the last known postal address or appropriate
telecommunication number of the other party. Where notice is given by any of the prescribed means, it is deemed to be received when in the ordinary court of that means of transmission, it would be received by the addressee. To prove the giving of a
notice, it is sufficient to show that it has been despatched. A notice has effect from the sooner of its actual or deemed receipt by the addressee. 

			
	Executive Service Contract: John Charlton	  	

  

 IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS DOCUMENT AS A DEED ON THE DATE FIRST ABOVE WRITTEN: 

 

							
	Executed by
                                        
(Director) and	 	)	 		 	 /s/ Kevin Vaux

				
	                                      
   (Director/Secretary) for and on	 	)	 		 	
				
	behalf of HANSON WHITE GROUP LIMITED	 	 )
	 		 	  

  

							
	Executed by
                                        
(Director) and	 	)	 		 	  

				
	                                      
   (Director/Secretary) for and on	 	)	 		 	
				
	behalf of HANSON WHITE GROUP LIMITED	 	 )
	 		 	  

  

									
	Executed by John Charlton	 	)	 		 		 	 /s/ John Charlton

					
	 in the presence of: /s/ Scott Nelson
	 	)	 		 		 	

  

							
	WITNESS NAME:	  	Scott Nelson	  		  	
	WITNESS ADDRESS:	  	London, EC2	  		  	
	WITNESS OCCUPATION:	  	Solicitor2006 Equity Incentive Award Plan

 Exhibit 10.4 
  
 BASIN WATER, INC. 
 2006 EQUITY INCENTIVE AWARD PLAN 
  
 ARTICLE 1

  
 PURPOSE 
  
 The purpose of the Basin Water, Inc. 2006 Equity Incentive Award Plan (the
“Plan”) is to promote the success and enhance the value of Basin Water, Inc., a Delaware corporation (the “Company”), by linking the personal interests of the members of the Board, Employees, and
Consultants to those of Company stockholders and by providing such individuals with an incentive for performance to generate returns to Company stockholders. The Plan is further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent. 
  
 ARTICLE 2 
  
 DEFINITIONS AND CONSTRUCTION 
  

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The
singular pronoun shall include the plural where the context so indicates. 
  
 2.1 “Administrator” means the entity that conducts the general administration of the Plan as provided herein. With reference to the administration of the Plan with respect to Awards granted to
Independent Directors, the term “Administrator” shall refer to the Board. With reference to the administration of the Plan with respect to any other Award, the term “Administrator” shall refer to the
Committee unless the Board has assumed the authority for administration of the Plan generally as provided in Section 13.1. With reference to the duties of the Committee under the Plan which have been delegated to one or more persons pursuant to
Section 13.5, the term “Administrator” shall refer to such person(s) unless the Committee or the Board has revoked such delegation. 
  

2.2 “Award” means an Option, a Restricted Stock award, a Stock Appreciation Right award, a Dividend Equivalents award, a Stock
Payment award, a Restricted Stock Unit award or a Performance-Based Award granted to a Participant pursuant to the Plan. 
  
 2.3 “Award Agreement” means any written or electronic agreement, contract, or other instrument or document evidencing an Award.

  
 2.4 “Board” means the Board of
Directors of the Company. 
  
 2.5 “Cause,”
unless otherwise defined in an employment or services agreement between the Participant and the Company or any Parent or Subsidiary, means a Participant’s dishonesty, fraud, gross or willful misconduct against the Company or any Parent or
Subsidiary, unauthorized use or disclosure of confidential information or trade secrets of the Company or any Parent or Subsidiary, or conviction of, or plea of nolo contendre to, a crime punishable by law (except misdemeanor violations), in
each case as determined by the Administrator, and its determination shall be conclusive and binding.  

 2.6 “Change in Control” means and includes each of the following: 
  
 (a) the acquisition, directly or indirectly, by any
“person” or “group” (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the rules thereunder) of “beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange
Act) of securities entitled to vote generally in the election of directors (“voting securities”) of the Company that represent 50% or more of the combined voting power of the Company’s then outstanding voting securities,
other than: 
  
 (i) an acquisition by a trustee
or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any person controlled by the Company, or 
  
 (ii) an acquisition of voting securities by the Company or a corporation owned, directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company, or 

 
 (iii) an acquisition of voting securities pursuant to a
transaction described in subsection (c) below that would not be a Change in Control under subsection (c), or 
  
 (iv) an acquisition of voting securities pursuant to the Company’s initial public offering of the Stock; 
  
 Notwithstanding the foregoing, the following event shall not
constitute an “acquisition” by any person or group for purposes of this Section 2.6: an acquisition of the Company’s securities by the Company which causes the Company’s voting securities beneficially owned by a person or
group to represent 50% or more of the combined voting power of the Company’s then outstanding voting securities; or 
  
 (b) during any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any
new director(s) (other than a director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in subsections (a) or (c) of this Section 2.6 whose election by the Board or
nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a majority thereof; or 
  
 (c) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more
intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another
entity, in each case other than a transaction: 
  
 (i) which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person
that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such
person, the “Successor Entity”) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and 
  

 2 

 (ii) after which no person or group beneficially owns voting securities representing 50%
or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this paragraph (ii) as beneficially owning 50% or more of combined voting power of the
Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or 
  
 (d) the Company’s stockholders approve a liquidation or dissolution of the Company. 
  
 For purposes of subsection (a) above, the calculation
of voting power shall be made as if the date of the acquisition were a record date for a vote of the Company’s stockholders, and for purposes of subsection (c) above, the calculation of voting power shall be made as if the date of the
consummation of the transaction were a record date for a vote of the Company’s stockholders. 
  
 The Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a
Change in Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change in Control and any incidental matters relating thereto. 
  
 2.7 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the
regulations issued thereunder. 
  
 2.8
“Committee” means the committee of the Board described in Article 13. 
  
 2.9 “Consultant” means any consultant or adviser if: 
  
 (a) The consultant or adviser renders bona fide services to the Company or any Parent or Subsidiary; 
  
 (b) The services rendered by the consultant or adviser are
not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities; and 
  
 (c) The consultant or adviser is a natural person who has
contracted directly with the Company or any Parent or Subsidiary to render such services. 
  
 2.10 “Covered Employee” means an Employee who is, or is likely to become, a “covered employee” within the meaning of Section 162(m)(3) of the Code. 
  
 2.11 “Disability” means a permanent and total
disability within the meaning of Section 22(e)(3) of the Code, as it may be amended from time to time. 
  
 2.12 “Dividend Equivalents” means a right granted to a Participant pursuant to Article 8 to receive the equivalent value (in cash
or Stock) of dividends paid on Stock. 
  
 2.13
“Effective Date” shall mean the date immediately prior to the Public Trading Date. 
  
 2.14 “Eligible Individual” means any person who is a member of the Board, a Consultant or an Employee, as determined by the
Administrator. 
  

 3 

 2.15 “Employee” means any officer or other employee (as defined in accordance
with Section 3401(c) of the Code) of the Company or any Parent or Subsidiary. 
  
 2.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. 
  
 2.17 “Existing Plan” has the meaning set forth in Section 3.1(a). 
  
 2.18 “Expiration Date” has the meaning set forth in
Section 14.3. 
  
 2.19 “Fair Market
Value” means, as of any date, the value of Stock determined as follows: 
  
 (a) If the Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock as quoted on such exchange or system for the last market trading day prior to the date of determination for which
a closing sales price is reported, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 (b) If the 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 Stock on the date prior to the date of determination as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or 
  
 (c) In the absence of an established market for the Stock,
the Fair Market Value thereof shall be determined in good faith by the Administrator. 
  
 2.20 “Incentive Stock Option” means an Option that is intended to be an incentive stock option and meets the requirements of Section 422 of the Code or any successor provision thereto.

  
 2.21 “Independent Director” means a
member of the Board who is not an Employee. 
  
 2.22
“Non-Employee Director” means a member of the Board who qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor rule. 
  
 2.23 “Non-Qualified Stock Option” means an Option
that is not intended to be or otherwise does not qualify as an Incentive Stock Option. 
  
 2.24 “Option” means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number of shares of Stock at a specified price during specified time periods. An
Option may be either an Incentive Stock Option or a Non-Qualified Stock Option. 
  
 2.25 “Parent” means any “parent corporation” as defined in Section 424(e) of the Code and any applicable regulations promulgated thereunder of the Company or any other entity
which beneficially owns, directly or indirectly, a majority of the outstanding voting stock or voting power of the Company. 
  
 2.26 “Participant” means any Eligible Individual who, as a member of the Board, a Consultant or an Employee, has been granted an
Award pursuant to the Plan. 
  
 2.27 “Performance-Based
Award” means an Award granted to selected Covered Employees pursuant to Articles 6 and 8, but which is subject to the terms and conditions set forth in Article 9. 
  

 4 

 2.28 “Performance Criteria” means the criteria that the Administrator selects for
purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period. The Performance Criteria that will be used to establish Performance Goals are limited to the following: net earnings (either before or
after interest, taxes, depreciation and amortization), sales or revenue, net income (either before or after taxes), operating earnings, cash flow (including, but not limited to, operating cash flow and free cash flow), return on net assets, return
on stockholders’ equity, return on sales, gross or net profit margin, working capital, earnings per share and price per share of Stock, any of which may be measured either in absolute terms or as compared to any incremental increase or as
compared to results of a peer group. The Administrator shall, within the time prescribed by Section 162(m) of the Code, define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance
Period for such Participant. 
  
 2.29 “Performance
Goals” means, for a Performance Period, the goals established in writing by the Administrator for the Performance Period based upon the Performance Criteria. Depending on the Performance Criteria used to establish such Performance
Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a Subsidiary, division or other operational unit, or an individual. The Administrator, in its discretion, may, within the time prescribed by
Section 162(m) of the Code, adjust or modify the calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants (i) in the event of, or in anticipation of, any
unusual or extraordinary corporate item, transaction, event, or development, or (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions. 
  
 2.30 “Performance Period” means the one or more periods of time, which may be of varying and overlapping durations, as the
Administrator may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance-Based Award. 
  
 2.31 “Plan” means this Basin Water, Inc. 2006 Equity
Incentive Award Plan, as it may be amended from time to time. 
  
 2.32 “Public Trading Date” means the first date upon which the Company is subject to the reporting requirements of Section 13 or 15(d)(2) of the Exchange Act. 
  
 2.33 “Qualified Performance-Based Compensation” means
any compensation that is intended to qualify as “qualified performance-based compensation” as described in Section 162(m)(4)(C) of the Code. 
  
 2.34 “Restricted Stock” means Stock awarded to a Participant pursuant to Article 6 that is subject to certain restrictions and may
be subject to risk of forfeiture or repurchase. 
  
 2.35
“Restricted Stock Unit” means a right to receive a share of Stock during specified time periods granted pursuant to Section 8.3. 
  
 2.36 “Securities Act” means the Securities Act of 1933, as amended from time to time. 
  
 2.37 “Section 409A Award” has the meaning set forth
in Section 10.1. 
  
 2.38 “Stock”
means the common stock of the Company and such other securities of the Company that may be substituted for Stock pursuant to Article 12. 
  

 5 

 2.39 “Stock Appreciation Right” or “SAR” means a right
granted pursuant to Article 7 to receive a payment equal to the excess of the Fair Market Value of a specified number of shares of Stock on the date the SAR is exercised over the Fair Market Value of such number of shares of Stock on the date the
SAR was granted as set forth in the applicable Award Agreement. 
  
 2.40 “Stock Payment” means (a) a payment in the form of shares of Stock, or (b) an option or other right to purchase shares of Stock, as part of any bonus, deferred compensation or other arrangement, made
in lieu of all or any portion of the compensation, granted pursuant to Section 8.2. 
  
 2.41 “Subsidiary” means any “subsidiary corporation” as defined in Section 424(f) of the Code and any applicable regulations promulgated thereunder of the Company or any other
entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company. 
  
 2.42 “Successor Entity” has the meaning set forth in Section 2.6. 
  
 2.43 “Termination of Consultancy” means the time when
the engagement of a Participant as a Consultant to the Company or a Parent or Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, by resignation, discharge, death or retirement, but excluding
terminations where there is a simultaneous commencement of employment with the Company or any Parent or Subsidiary. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of
Consultancy, including, but not by way of limitation, the question of whether a Termination of Consultancy resulted from a discharge for good cause, and all questions of whether a particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of the Plan, the Company or any Parent or Subsidiary has an absolute and unrestricted right to terminate a Consultant’s service at any time for any reason whatsoever, with or without cause, except to the
extent expressly provided otherwise in writing. 
  
 2.44
“Termination of Directorship” shall mean the time when a Participant who is a Non-Employee Director ceases to be a member of the Board for any reason, including, but not by way of limitation, a termination by resignation,
failure to be elected, death or retirement. The Board, in its sole and absolute discretion, shall determine the effect of all matters and questions relating to Termination of Directorship with respect to Non-Employee Directors. 
  
 2.45 “Termination of Employment” shall mean the time
when the employee-employer relationship between a Participant and the Company or any Parent or Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding: (a) terminations where there is a simultaneous reemployment or continuing employment of a Participant by the Company or any Parent or Subsidiary, (b) at the discretion of the Administrator,
terminations which result in a temporary severance of the employee-employer relationship, and (c) at the discretion of the Administrator, terminations which are followed by the simultaneous establishment of a consulting relationship by the
Company or a Parent or Subsidiary with the former employee. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Employment, including, but not by way of limitation, the
question of whether a Termination of Employment resulted from a discharge for good cause, and all questions of whether a particular leave of absence constitutes a Termination of Employment. 
  
 2.46 “Termination of Service” shall mean the last to
occur of a Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy. A Participant shall not be deemed to have a Termination of Service merely because of a change in the capacity in which the 

  

 6 

 
Participant renders service to the Company or any Parent or Subsidiary (i.e., a Participant who is an Employee becomes a Consultant) or a change in the
entity for which the Participant renders such service (i.e., an Employee of the Company becomes an Employee of a Subsidiary), unless such following such change in capacity or service the Participant is no longer serving as an Employee, Non-Employee
Director or Consultant of the Company or any Parent or Subsidiary. 
  
 ARTICLE 3 
  
 SHARES SUBJECT TO THE PLAN

  
 3.1 Number of Shares. 
  
 (a) Subject to Article 12 and Section 3.1(b), the
aggregate number of shares of Stock which may be issued or transferred pursuant to Awards under the Plan shall be 2,500,000 shares. In addition, subject to Article 12, commencing on January 1, 2007, and on each January 1 thereafter during
the term of the Plan, the number of shares of Stock which shall be made available for sale under the Plan shall be increased by that number of shares of Stock equal to the least of (i) 5% of the Company’s outstanding shares of Stock on
such date, calculated on a fully-diluted basis, (ii) 1,000,000 shares of Stock, or (iii) a lesser amount determined by the Board. Notwithstanding anything in this Section 3.1(a) to the contrary, the number of shares of Stock that may
be issued or transferred pursuant to Awards under the Plan shall not exceed an aggregate of 12,500,000 shares, subject to Article 12 and Section 3.1(b). 
  

(b) To the extent that an Award terminates, expires, or lapses for any reason, any shares of Stock subject to the Award shall again be
available for the grant of an Award pursuant to the Plan. Additionally, any shares of Stock tendered or withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall again be available for the grant of an
Award pursuant to the Plan. If any shares of Restricted Stock are forfeited by a Participant or repurchased by the Company pursuant to Section 6.3 hereof, such shares shall again be available for the grant of an Award pursuant to the Plan. The
payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the shares available for issuance under the Plan. 
  
 (c) Notwithstanding the provisions of this Section 3.1, no shares of Stock may again be optioned,
granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an Incentive Stock Option under Section 422 of the Code. 
  
 3.2 Stock Distributed. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury
stock or Stock purchased on the open market. 
  
 3.3 Limitation
on Number of Shares Subject to Awards. Notwithstanding any provision in the Plan to the contrary, and subject to Article 12, the maximum number of shares of Stock with respect to one or more Awards that may be granted to any one Participant
during any calendar year shall be 2,000,000; provided, however, that the foregoing limitation shall not apply prior to the Public Trading Date and, following the Public Trading Date, the foregoing limitation shall not apply until the earliest
of: (a) the first material modification of the Plan (including any increase in the number of shares reserved for issuance under the Plan in accordance with Section 3.1); (b) the issuance of all of the shares of Stock reserved for
issuance under the Plan; (c) the expiration of the Plan; (d) the first meeting of stockholders at which members of the Board are to be elected that occurs after the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security of the Company under Section 12 of the Exchange Act; or (e) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder. 

 

 7 

 ARTICLE 4 
  

ELIGIBILITY AND PARTICIPATION 
  
 4.1 Eligibility. Persons eligible to participate in this Plan include Employees, Consultants and members of the Board, as determined by the
Administrator. 
  
 4.2 Participation. Subject to the
provisions of the Plan, the Administrator may, from time to time, select from among all Eligible Individuals those to whom Awards shall be granted and shall determine the nature and amount of each Award. No individual shall have any right to be
granted an Award pursuant to this Plan. 
  
 4.3 Foreign
Participants. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Parents or Subsidiaries operate or have Eligible Individuals, the Administrator, in its
sole discretion, shall have the power and authority to: (i) determine which Parents or Subsidiaries shall be covered by the Plan; (ii) determine which Eligible Individuals outside the United States are eligible to participate in the Plan;
(iii) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to
the extent such actions may be necessary or advisable (any such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations
contained in Sections 3.1 and 3.3 of the Plan; and (v) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals.
Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code, any securities law or governing statute or any other applicable law. 
  
 ARTICLE 5 
  
 STOCK OPTIONS 
  
 5.1 General. The Administrator is authorized to grant Options to Eligible Individuals on the following terms and conditions: 
  
 (a) Exercise Price. The exercise price per share of
Stock subject to an Option shall be determined by the Administrator and set forth in the Award Agreement; provided that the exercise price per share for any Option shall not be less than 100% of the Fair Market Value per share of the Stock on
the date of grant. 
  
 (b) Time and Conditions
of Exercise. The Administrator shall determine the time or times at which an Option may be exercised in whole or in part; provided that the term of any Option granted under the Plan shall not exceed ten years. The Administrator shall also
determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised. The Administrator may extend the term of any outstanding Option in connection with any Termination of Service of the
Participant holding such Option, or amend any other term or condition of such Option relating to such a Termination of Service. 
  
 (c) Payment. The Administrator shall determine the methods, terms and conditions by which the exercise price of an Option may be
paid, and the form and manner of payment, including, without limitation, payment in the form of cash, a promissory note bearing interest at no less than such 

  

 8 

 
rate as shall then preclude the imputation of interest under the Code, shares of Stock, or other property acceptable to the Administrator and payment through
the delivery of a notice that the Participant has placed a market sell order with a broker with respect to shares of Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise price; provided that payment of such proceeds is then made to the Company upon settlement of such sale, and the methods by which shares of Stock shall be delivered or
deemed to be delivered to Participants. Notwithstanding any other provision of the Plan to the contrary, no Participant who is a member of the Board or an “executive officer” of the Company within the meaning of Section 13(k) of the
Exchange Act shall be permitted to pay the exercise price of an Option, or continue any extension of credit with respect to the exercise price of an Option with a loan from the Company or a loan arranged by the Company, in any method which would
violate Section 13(k) of the Exchange Act. 
  
 (d) Evidence of Grant. All Options shall be evidenced by an Award Agreement between the Company and the Participant. The Award Agreement shall include such additional provisions as may be specified by the Administrator. 

 
 5.2 Incentive Stock Options. Incentive Stock Options may be granted
only to employees (as defined in accordance with Section 3401(c) of the Code) of the Company or a Subsidiary which constitutes a “subsidiary corporation” of the Company within Section 424(f) of the Code or a Parent which constitutes a
“parent corporation” of the Company within the meaning of Section 424(e) of the Code, and the terms of any Incentive Stock Options granted pursuant to the Plan must comply with the following additional provisions of this Section 5.2 in
addition to the requirements of Section 5.1: 
  
 (a) Ten Percent Owners. An Incentive Stock Option shall be granted to any individual who, at the date of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of Stock of the Company or
any “subsidiary corporation” of the Company or “parent corporation” of the Company (each within the meaning of Section 424 of the Code) only if such Option is granted at an exercise price per share that is not less than 110%
of the Fair Market Value per share of the Stock on the date of the grant and the Option is exercisable for no more than five years from the date of grant. 
  
 (b) Transfer Restriction. An Incentive Stock Option shall not be transferable by the Participant other than by will or by the laws
of descent or distribution. 
  
 (c) Right to
Exercise. During a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant. 
  
 (d) Failure to Meet Requirements. Any Option (or portion thereof) purported to be an Incentive Stock Option which, for any reason, fails
to meet the requirements of Section 422 of the Code shall be considered a Non-Qualified Stock Option. 
  
 5.3 Substitution of Stock Appreciation Rights. The Administrator may provide in the Award Agreement evidencing the grant of an Option that the
Administrator, in its sole discretion, shall have to right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such Option; provided that such Stock Appreciation Right shall be exercisable with
respect to the same number of shares of Stock for which such substituted Option would have been exercisable. 
  

 9 

 ARTICLE 6 
  

RESTRICTED STOCK AWARDS 
  
 6.1 Grant of Restricted Stock. The Administrator is authorized to make Awards of Restricted Stock to any Eligible Individual selected by the
Administrator in such amounts and subject to such terms and conditions as determined by the Administrator. All Awards of Restricted Stock shall be evidenced by an Award Agreement. 
  
 6.2 Issuance and Restrictions. Restricted Stock shall be subject to such repurchase restrictions, forfeiture
restrictions, restrictions on transferability and other restrictions as the Administrator may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These
restrictions may lapse separately or in combination at such times, pursuant to such circumstances or installments or otherwise as the Administrator determines at the time of the grant of the Award or thereafter. Alternatively, these restrictions may
lapse pursuant to the satisfaction of one or more Performance Goals or other specific performance goals as the Administrator determines to be appropriate at the time of the grant of the Award or thereafter, in each case on a specified date or dates
or over any period or periods determined by the Administrator. 
  
 6.3 Repurchase or Forfeiture. Except as otherwise determined by the Administrator at the time of the grant of the Award or thereafter, upon a Participant’s Termination of Service during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be forfeited or subject to repurchase by the Company (or its assignee) under such terms as the Administrator shall determine; provided, however, that the Administrator may
(a) provide in any Restricted Stock Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of a Participant’s Termination of Service under certain circumstances,
and (b) in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock. 
  
 6.4 Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall
determine. If certificates representing shares of Restricted Stock are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock,
and the Company may, at its discretion, retain physical possession of the certificate until such time as all applicable restrictions lapse or the Award Agreement may provide that the shares shall be held in escrow by an escrow agent designated by
the Company. 
  
 ARTICLE 7 
  
 STOCK APPRECIATION RIGHTS 
  
 7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may
be granted to any Eligible Individual selected by the Administrator. A Stock Appreciation Right shall be subject to such terms and conditions not inconsistent with the Plan as the Administrator shall impose and shall be evidenced by an Award
Agreement. 
  
 7.2 Terms of Stock Appreciation Rights.

  
 (a) A Stock Appreciation Right shall have a
term set by the Administrator. A Stock Appreciation Right shall be exercisable in such installments as the Administrator may determine. A Stock Appreciation Right shall cover such number of shares of Stock as the Administrator may determine. 

  

 10 

 
The exercise price per share of Stock subject to each Stock Appreciation Right shall be set by the Administrator. 
  
 (b) A Stock Appreciation Right shall entitle the Participant
(or other person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an
amount determined by multiplying (i) the amount (if any) by which the Fair Market Value of a share of Stock on the date of exercise of the Stock Appreciation Right exceeds the exercise price per share of the Stock Appreciation Right, by
(ii) the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Administrator may impose. 
  
 7.3 Payment and Limitations on Exercise. 
  
 (a) Subject to Sections 7.3(b) and (c), payment of the amounts determined under Sections 7.2(b) above shall
be in cash, in Stock (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised) or a combination of both, as determined by the Administrator. 
  
 (b) To the extent payment for a Stock Appreciation Right is to be made in cash, the Award Agreement shall,
to the extent necessary to comply with the requirements of Section 409A of the Code, specify the date of payment, which may be different than the date of exercise of the Stock Appreciation Right. If the date of payment for a Stock Appreciation
Right is later than the date of exercise, the Award Agreement may specify that the Participant be entitled to earnings on such amount until paid. 
  
 (c) To the extent any payment under Section 7.2(b) is effected in Stock, it shall be made subject to satisfaction of all provisions
of Article 5 above pertaining to Options. 
  
 ARTICLE 8

  
 OTHER TYPES OF AWARDS 
  
 8.1 Dividend Equivalents. 
  
 (a) Any Eligible Individual selected by the Administrator
may be granted Dividend Equivalents based on the dividends on the shares of Stock that are subject to any Award, to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Administrator. Such Dividend Equivalents shall be converted to cash or additional shares of Stock by such formula and at such time and subject to such limitations as may be determined by the
Administrator. 
  
 (b) Dividend Equivalents
granted with respect to Options or SARs that are intended to be Qualified Performance-Based Compensation shall be payable, with respect to pre-exercise periods, regardless of whether such Option or SAR is subsequently exercised. 
  
 8.2 Stock Payments. Any Eligible Individual selected by the
Administrator may receive Stock Payments in the manner determined from time to time by the Administrator; provided, that unless otherwise determined by the Administrator such Stock Payments shall be made in lieu of base salary, bonus, or
other cash compensation otherwise payable to such Eligible Individual. The number of shares shall be determined by the Administrator and may be based upon the Performance Goals or other specific performance goals determined appropriate by the
Administrator. 
  

 11 

 8.3 Restricted Stock Units. The Administrator is authorized to make Awards of Restricted Stock
Units to any Eligible Individual selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator. At the time of grant, the Administrator shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate. Alternatively, Restricted Stock Units may become fully vested and nonforfeitable pursuant to the satisfaction of
one or more Performance Goals or other specific performance goals as the Administrator determines to be appropriate at the time of the grant of the Restricted Stock Units or thereafter, in each case on a specified date or dates or over any period or
periods determined by the Administrator. At the time of grant, the Administrator shall specify the maturity date applicable to each grant of Restricted Stock Units which shall be no earlier than the vesting date or dates of the Award and may be
determined at the election of the Eligible Individual to whom the Award is granted. On the maturity date, the Company shall transfer to the Participant one unrestricted, fully transferable share of Stock for each Restricted Stock Unit that is vested
and scheduled to be distributed on such date and not previously forfeited. The Administrator shall specify the purchase price, if any, to be paid by the Participant to the Company for such shares of Stock. 
  
 8.4 Term. Except as otherwise provided herein, the term of any Award
of Dividend Equivalents, Stock Payments or Restricted Stock Units shall be set by the Administrator in its discretion. 
  
 8.5 Exercise or Purchase Price. The Administrator may establish the exercise or purchase price, if any, of any Award of Stock Payments or
Restricted Stock Units; provided, however, that such price shall not be less than the par value of a share of Stock on the date of grant, unless otherwise permitted by applicable state law. 
  
 8.6 Form of Payment. Payments with respect to any Awards granted under
Sections 8.1, 8.2 or 8.3 shall be made in cash, in Stock or a combination of both, as determined by the Administrator. 
  
 8.7 Award Agreement. All Awards under this Article 8 shall be subject to such additional terms and conditions as determined by the Administrator
and shall be evidenced by a written Award Agreement. 
  
 ARTICLE
9 
  
 PERFORMANCE-BASED AWARDS 
  
 9.1 Purpose. The purpose of this Article 9 is to provide the
Administrator the ability to qualify Awards other than Options and SARs and that are granted pursuant to Articles 6 and 8 as Qualified Performance-Based Compensation. If the Administrator, in its discretion, decides to grant a Performance-Based
Award to a Covered Employee, the provisions of this Article 9 shall control over any contrary provision contained in Articles 6 or 8; provided, however, that the Administrator may in its discretion grant Awards to Covered Employees that are
based on Performance Criteria or Performance Goals but that do not satisfy the requirements of this Article 9. 
  
 9.2 Applicability. This Article 9 shall apply only to those Covered Employees selected by the Administrator to receive Performance-Based Awards.
The designation of a Covered Employee as a Participant for a Performance Period shall not in any manner entitle the Participant to receive an Award for the period. Moreover, designation of a Covered Employee as a Participant for a particular
Performance Period shall not require designation of such Covered Employee as a Participant in any subsequent Performance Period and designation of one Covered Employee as a Participant shall not require designation of any other Covered Employees as
a Participant in such period or in any other period. 
  

 12 

 9.3 Procedures with Respect to Performance-Based Awards. To the extent necessary to comply with
the Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) of the Code, with respect to any Award granted under Articles 6 and 8 which may be granted to one or more Covered Employees, no later than ninety (90) days following
the commencement of any fiscal year in question or any other designated fiscal period or period of service (or such other time as may be required or permitted by Section 162(m) of the Code), the Administrator shall, in writing, (a) designate one or
more Covered Employees, (b) select the Performance Criteria applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period, and (d) specify the
relationship between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period. Following the completion of each Performance Period, the
Administrator shall certify in writing whether the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned by a Covered Employee, the Administrator shall have the right to reduce or eliminate
(but not to increase) the amount payable at a given level of performance to take into account additional factors that the Administrator may deem relevant to the assessment of individual or corporate performance for the Performance Period.

  
 9.4 Payment of Performance-Based Awards. Unless
otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company or a Parent or Subsidiary on the day a Performance-Based Award for such Performance Period is paid to the Participant. Furthermore, a Participant
shall be eligible to receive payment pursuant to a Performance-Based Award for a Performance Period only if the Performance Goals for such period are achieved. 
  

9.5 Additional Limitations. Notwithstanding any other provision of the Plan, any Award which is granted to a Covered Employee and is intended to
constitute Qualified Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified performance-based compensation as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the extent necessary to conform to such requirements.

  
 ARTICLE 10 
  
 COMPLIANCE WITH SECTION 409A OF THE CODE 
  
 10.1 Awards subject to Code Section 409A. Any Award that
constitutes, or provides for, a deferral of compensation subject to Section 409A of the Code (a “Section 409A Award”) shall satisfy the requirements of Section 409A of the Code and this Article 10, to the extent
applicable. The Award Agreement with respect to a Section 409A Award shall incorporate the terms and conditions required by Section 409A of the Code and this Article 10. 
  
 10.2 Distributions under a Section 409A Award. 
  
 (a) Subject to subsection (b), any shares of Stock or other property or amounts to be paid or distributed
upon the grant, issuance, vesting, exercise or payment of a Section 409A Award shall be distributed in accordance with the requirements of Section 409A(a)(2) of the Code, and shall not be distributed earlier than: 
  
 (i) the Participant’s separation from service, as
determined by the Secretary of the Treasury; 
  

 13 

 (ii) the date the Participant becomes disabled; 
  
 (iii) the Participant’s death; 
  
 (iv) a specified time (or pursuant to a fixed schedule)
specified under the Award Agreement at the date of the deferral compensation; 
  
 (v) to the extent provided by the Secretary of the Treasury, a change in the ownership or effective control of the Company or a Parent or Subsidiary, or in the ownership of a substantial portion of the assets of the
Company or a Parent or Subsidiary; or 
  
 (vi)
the occurrence of an unforeseeable emergency with respect to the Participant. 
  
 (b) In the case of a Participant who is a “specified employee,” the requirement of paragraph (a)(i) shall be met only if the distributions with respect to the Section 409A Award may not be made before
the date which is six months after the Participant’s separation from service (or, if earlier, the date of the Participant’s death). For purposes of this subsection (b), a Participant shall be a “specified employee” if such
Participant is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of a corporation any stock of which is publicly traded on an established securities market or otherwise, as determined under
Section 409A(a)(2)(B)(i) of the Code and the Treasury Regulations thereunder. 
  
 (c) The requirement of paragraph (a)(vi) shall be met only if, as determined under Treasury Regulations under
Section 409A(a)(2)(B)(ii) of the Code, the amounts distributed with respect to the unforeseeable emergency do not exceed the amounts necessary to satisfy such unforeseeable emergency plus amounts necessary to pay taxes reasonably anticipated as
a result of the distribution, after taking into account the extent to which such unforeseeable emergency is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the
extent the liquidation of such assets would not itself cause severe financial hardship). 
  
 (d) For purposes of this Section, the terms specified therein shall have the respective meanings ascribed thereto under Section 409A
of the Code and the Treasury Regulations thereunder. 
  
 10.3
Prohibition on Acceleration of Benefits. The time or schedule of any distribution or payment of any shares of Stock or other property or amounts under a Section 409A Award shall not be accelerated, except as otherwise permitted under
Section 409A(a)(3) of the Code and the Treasury Regulations thereunder. 
  
 10.4 Elections under Section 409A Awards. 
  
 (a) Any deferral election provided under or with respect to an Award to any Eligible Individual, or to the Participant holding a
Section 409A Award, shall satisfy the requirements of Section 409A(a)(4)(B) of the Code, to the extent applicable, and, except as otherwise permitted under paragraph (i) or (ii) below, any such deferral election with respect to
compensation for services performed during a taxable year shall be made not later than the close of the preceding taxable year, or at such other time as provided in Treasury Regulations. 
  
 (i) In the case of the first year in which an Eligible Individual or a Participant holding a
Section 409A Award, becomes eligible to participate in the Plan, any such 

  

 14 

 
deferral election may be made with respect to services to be performed subsequent to the election with thirty days after the date the Eligible Individual, or
the Participant holding a Section 409A Award, becomes eligible to participate in the Plan, as provided under Section 409A(a)(4)(B)(ii) of the Code. 
  

(ii) In the case of any performance-based compensation based on services performed by an Eligible Individual, or the Participant
holding a Section 409A Award, over a period of at least twelve months, any such deferral election may be made no later than six months before the end of the period, as provided under Section 409A(a)(4)(B)(iii) of the Code. 
  
 (b) In the event that a Section 409A Award permits,
under a subsequent election by the Participant holding such Section 409A Award, a delay in a distribution or payment of any shares of Stock or other property or amounts under such Section 409A Award, or a change in the form of distribution
or payment, such subsequent election shall satisfy the requirements of Section 409A(a)(4)(C) of the Code, and: 
  
 (i) such subsequent election may not take effect until at least twelve months after the date on which the election is made, 
  
 (ii) in the case such subsequent election relates to a
distribution or payment not described in Section 10.2(a)(ii), (iii) or (vi), the first payment with respect to such election may be deferred for a period of not less than five years from the date such distribution or payment otherwise
would have been made, and 
  
 (iii) in the case
such subsequent election relates to a distribution or payment described in Section 10.2(a)(iv), such election may not be made less than twelve months prior to the date of the first scheduled distribution or payment under
Section 10.2(a)(iv). 
  
 10.5 Compliance in Form and
Operation. A Section 409A Award, and any election under or with respect to such Section 409A Award, shall comply in form and operation with the requirements of Section 409A of the Code and the Treasury Regulations thereunder.

  
 ARTICLE 11 
  
 PROVISIONS APPLICABLE TO AWARDS 
  
 11.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the
Plan may, in the discretion of the Administrator, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the
same time as or at a different time from the grant of such other Awards. 
  
 11.2 Award Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each Award which may include the term of an Award, the provisions
applicable in the event of the Participant’s Termination of Service, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award. 
  

 15 

 11.3 Limits on Transfer. 
  
 (a) Except as otherwise provided by the Administrator pursuant to Section 11.3(b), no right or interest
of a Participant in any Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Parent or Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party
other than the Company or a Parent or Subsidiary. Except as otherwise provided by the Administrator pursuant to Section 11.3(b), no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws
of descent and distribution, unless and until such Award has been exercised, or the shares underlying such Award have been issued, and all restrictions applicable to such shares have lapsed. 
  
 (b) Notwithstanding Section 11.3(a), the Administrator,
in its sole discretion, may permit an Award (other than an Incentive Stock Option) to be transferred to, exercised by and paid to any one or more Permitted Transferees (as defined below), subject to the following terms and conditions: (i) an
Award transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) any Award which is transferred to a Permitted Transferee shall
continue to be subject to all the terms and conditions of the Award as applicable to the original Participant (other than the ability to further transfer the Award); and (iii) the Participant and the Permitted Transferee shall execute any and
all documents requested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable
federal and state securities laws and (C) evidence the transfer. For purposes of this Section 11.3(b), “Permitted Transferee” shall mean, with respect to a Participant, any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s
household (other than a tenant or employee), a trust in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests,
or any other transferee specifically approved by the Administrator. 
  
 11.4 Beneficiaries. Notwithstanding Section 11.3, a Participant may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect
to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to
the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator. If the Participant is married and resides in a community property state, a
designation of a person other than the Participant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’s interest in the Award shall not be effective without the prior written consent of the
Participant’s spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Administrator. 
  

11.5 Stock Certificates; Book-Entry Procedures. 
  
 (a) Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing
shares of Stock pursuant to the exercise of any Award, unless and until the Board has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental
authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed or traded. All 

  

 16 

 
Stock certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or
advisable to comply with federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. The
Administrator may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Administrator may require that a Participant make such reasonable covenants,
agreements, and representations as the Administrator, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any Participant to comply with any timing
or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator. 
  
 (b) Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or
required by applicable law, rule or regulation, the Company shall not deliver to any Participant certificates evidencing shares of Stock issued in connection with any Award and instead such shares of Stock shall be recorded in the books of the
Company (or, as applicable, its transfer agent or stock plan administrator). 
  
 11.6 Paperless Exercise. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Awards, such as a system using an internet website
or interactive voice response, then the paperless exercise of Awards by a Participant may be permitted through the use of such an automated system. 
  
 ARTICLE 12 
  
 CHANGES IN CAPITAL STRUCTURE 
  
 12.1 Adjustments. 
  
 (a) In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization, distribution of Company assets to stockholders (other than normal cash
dividends), or any other corporate event affecting the Stock or the share price of the Stock, the Administrator may make such proportionate adjustments, if any, as the Administrator in its discretion may deem appropriate to reflect such change with
respect to (i) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and conditions of any outstanding Awards
(including, without limitation, any applicable performance targets or criteria with respect thereto); and (iii) the grant, exercise or purchase price per share for any outstanding Awards under the Plan. Any adjustment affecting an Award
intended as Qualified Performance-Based Compensation shall be made consistent with the requirements of Section 162(m) of the Code. 
  
 (b) In the event of any transaction or event described in Section 12.1(a) or any unusual or nonrecurring transactions or events
affecting the Company, any affiliate of the Company, or the financial statements of the Company or any affiliate (including without limitation any Change in Control), or of changes in applicable laws, regulations or accounting principles, and
whenever the Administrator determines that such action is appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such changes in laws, regulations or principles, the Administrator, in its sole discretion and on such terms and conditions as it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such 

  

 17 

 
transaction or event and either automatically or upon the Participant’s request, is hereby authorized to take any one or more of the following actions:

  
 (i) To provide for either
(A) termination of any such Award in exchange for an amount of cash, if any, equal to the amount that would have been received upon the exercise of such Award or realization of the Participant’s rights (and, for the avoidance of doubt, if
as of the date of the occurrence of the transaction or event described in this Section 12.1(b) the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the
Participant’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion; 
  
 (ii) To provide that such Award be assumed by the successor
or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments
as to the number and kind of shares and prices; and 
  
 (iii) To make adjustments in the number and type of shares of Stock (or other securities or property) subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock and/or in the terms and conditions of (including
the grant or exercise price), and the criteria included in, outstanding options, rights and awards and options, rights and awards which may be granted in the future; 
  
 (iv) To provide that such Award shall be exercisable or payable or fully vested with respect to all shares
covered thereby, notwithstanding anything to the contrary in the Plan or the applicable Award Agreement; and 
  
 (v) To provide that the Award cannot vest, be exercised or become payable after such event. 
  
 12.2 Acceleration Upon a Change in Control. Notwithstanding
Section 12.1(b), and except as may otherwise be provided in any applicable Award Agreement or other written agreement entered into between the Company and a Participant, if a Change in Control occurs and a Participant’s Awards are not
continued, converted, assumed, or replaced by (i) the Company or a Parent or Subsidiary of the Company, or (ii) a Successor Entity, such Awards shall become fully exercisable and/or payable, as applicable, and all forfeiture, repurchase
and other restrictions on such Awards shall lapse immediately prior to such Change in Control. Upon, or in anticipation of, a Change in Control, the Administrator may cause any and all Awards outstanding hereunder to terminate at a specific time in
the future, including but not limited to the date of such Change in Control, and shall give each Participant the right to exercise such Awards during a period of time as the Administrator, in its sole and absolute discretion, shall determine.

  
 12.3 No Other Rights. Except as expressly provided in
the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Administrator under the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to an Award or the grant or exercise price of any Award. 
  

 18 

 ARTICLE 13 
  

ADMINISTRATION 
  
 13.1 Administrator. The Administrator of the Plan shall be the Compensation Committee of the Board (or another committee or a subcommittee of the
Board to which the Board delegates administration of the Plan) (such committee, the “Committee”), which Committee shall consist solely of two or more members of the Board each of whom is both an “outside director,”
within the meaning of Section 162(m) of the Code, a Non-Employee Director and an “independent director” under the rules of the Nasdaq Stock Market. Notwithstanding the foregoing: (a) the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with respect to all Awards granted to Independent Directors, and for purposes of such Awards the term “Administrator” as used in this Plan shall be
deemed to refer to the Board,, and (b) the Committee may delegate its authority hereunder to the extent permitted by Section 13.5. Appointment of Committee members shall be effective upon acceptance of appointment. In its sole discretion,
the Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan except with respect to matters which under Rule 16b-3 under the Exchange Act or Section 162(m) of the Code, or any
regulations or rules issued thereunder, are required to be determined in the sole discretion of the Committee. Committee members may resign at any time by delivering written notice to the Board. Vacancies in the Committee may only be filled by the
Board. 
  
 13.2 Action by the Administrator. A majority of
the Administrator shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and, subject to applicable law, acts approved in writing by a majority of the Administrator in lieu of a meeting,
shall be deemed the acts of the Administrator. Each member of the Administrator is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Parent or
Subsidiary, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan. 
  
 13.3 Authority of Administrator. Subject to any specific designation
in the Plan, the Administrator has the exclusive power, authority and discretion to: 
  
 (a) Designate Participants to receive Awards; 
  
 (b) Determine the type or types of Awards to be granted to each Participant; 
  
 (c) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate; 
  
 (d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any reload provision, any restrictions or
limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an Award, based
in each case on such considerations as the Administrator in its sole discretion determines; provided, however, that the Administrator shall not have the authority to accelerate the vesting or waive the forfeiture of any Performance-Based
Awards; 
  
 (e) Determine whether, to what
extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered; 
  

 19 

 (f) Prescribe the form of each Award Agreement, which need not be identical for each
Participant; 
  
 (g) Decide all other matters
that must be determined in connection with an Award; 
  
 (h) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan; 
  
 (i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement; and 
  
 (j) Make all other decisions and determinations that may be
required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan. 
  
 13.4 Decisions Binding. The Administrator’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Award Agreement and all
decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on all parties. 
  
 13.5 Delegation of Authority. To the extent permitted by applicable law, the Committee may from time to time delegate to a committee of one or more
members of the Board or one or more officers of the Company the authority to grant or amend Awards to Participants other than (a) senior executives of the Company who are subject to Section 16 of the Exchange Act, (b) Covered
Employees, or (c) officers of the Company (or members of the Board) to whom authority to grant or amend Awards has been delegated hereunder. Any delegation hereunder shall be subject to the restrictions and limits that the Committee specifies
at the time of such delegation, and the Committee may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 13.5 shall serve in such capacity at the pleasure of the
Committee. 
  
 ARTICLE 14 
  
 EFFECTIVE AND EXPIRATION DATES 
  
 14.1 Effective Date. The Plan will be effective as of the Effective
Date. 
  
 14.2 Approval of Plan by Stockholders. The Plan
will be submitted for the approval of the Company’s stockholders within twelve (12) months after the date of the Board’s initial adoption of the Plan. Awards may be granted or awarded prior to such stockholder approval,
provided, that such Awards shall not be exercisable nor shall such Awards vest prior to the time when the Plan is approved by the stockholders, and provided further, that if such approval has not been obtained at the end of said
twelve-month period, all Awards previously granted or awarded under the Plan shall thereupon be canceled and become null and void. In addition, if the Board determines that Awards other than Options or Stock Appreciation Rights which may be granted
to Section 162(m) Participants should continue to be eligible to qualify as performance-based compensation under Section 162(m)(4)(C) of the Code, the Performance Criteria must be disclosed to and approved by the Company’s
stockholders no later than the first stockholder meeting that occurs in the fifth year following the year in which the Company’s stockholders previously approved the Plan, as amended and restated to include the Performance Criteria. 

 
 14.3 Expiration Date. The Plan will expire on, and no Award may be
granted pursuant to the Plan after, the earlier of the tenth anniversary of (i) the date this Plan is approved by the Board or (ii) the date this Plan is approved by the Company’s stockholders (the “Expiration
Date”). Any Awards that are 

  

 20 

 
outstanding on the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Award Agreement.

  
 ARTICLE 15 
  
 AMENDMENT, MODIFICATION, AND TERMINATION 
  
 15.1 Amendment, Modification, And Termination. The Board may
terminate, amend or modify the Plan at any time and from time to time; provided, however, that (a) to the extent necessary to comply with any applicable law, regulation, or stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as required, and (b) stockholder approval is required for any amendment to the Plan that increases the number of shares available under the Plan (other than any adjustment as
provided by Article 12). Notwithstanding any provision in this Plan to the contrary, absent approval of the stockholders of the Company, no Option may be amended to reduce the per share exercise price of the shares subject to such Option below the
per share exercise price as of the date the Option is granted and, except as permitted by Article 12, no Option may be granted in exchange for, or in connection with, the cancellation or surrender of an Option having a higher per share exercise
price. 
  
 15.2 Awards Previously Granted. No termination,
amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant. 
  
 ARTICLE 16 
  
 GENERAL PROVISIONS 
  
 16.1 No Rights to Awards. No Participant, Employee, or other person shall have any claim to be granted any Award pursuant to the Plan, and neither
the Company nor the Administrator is obligated to treat Participants, Employees, and other persons uniformly. 
  
 16.2 No Stockholders Rights. Except as otherwise provided herein, a Participant shall have none of the rights of a stockholder with respect to
shares of Stock covered by any Award until the Participant becomes the record owner of such shares of Stock. 
  
 16.3 Withholding. The Company or any Parent or Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to
remit to the Company an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s employment tax obligations) required by law to be withheld with respect to any taxable event concerning a Participant
arising as a result of this Plan. The Administrator may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company or a Parent or Subsidiary, as applicable, withhold shares of Stock otherwise
issuable under an Award (or allow the return of shares of Stock) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of shares of Stock which may be withheld with respect
to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award within six months (or such other period as may be determined by the Administrator) after such shares of Stock were acquired by
the Participant from the Company) in order to satisfy the Participant’s federal, state, local and foreign income and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall be limited to the number
of shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax
purposes that are applicable to such supplemental taxable income. 
  

 21 

 16.4 No Right to Employment or Services. Nothing in the Plan or any Award Agreement shall
interfere with or limit in any way the right of the Company or any Parent or Subsidiary to terminate any Participant’s employment or services at any time, nor confer upon any Participant any right to continue in the employ or service of the
Company or any Parent or Subsidiary. 
  
 16.5 Unfunded Status
of Awards. The Plan is intended to be an unfunded plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant
any rights that are greater than those of a general creditor of the Company or any Parent or Subsidiary. 
  
 16.6 Indemnification. To the extent allowable pursuant to applicable law, the Administrator (and each member thereof) shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her;
provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold
them harmless. 
  
 16.7 Relationship to other Benefits. No
payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Parent or Subsidiary except to
the extent otherwise expressly provided in writing in such other plan or an agreement thereunder. 
  
 16.8 Expenses. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries. 
  
 16.9 Titles and Headings. The titles and headings of the Sections in
the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. 
  
 16.10 Fractional Shares. No fractional shares of Stock shall be issued and the Administrator shall determine, in its discretion, whether cash shall
be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up or down as appropriate. 
  
 16.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or
awarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 under the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to
conform to such applicable exemptive rule. 
  
 16.12 Government
and Other Regulations. The obligation of the Company to make payment of awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such 

  

 22 

 
approvals by government agencies as may be required. The Company shall be under no obligation to register pursuant to the Securities Act, any of the shares
of Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act, the Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption. 
  
 16.13 Governing Law. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the conflicts of law principles thereof. 
  
 * * * * * 
  

 23 

 BASIN WATER, INC. 
  
 2006 EQUITY INCENTIVE AWARD PLAN 
  
 STOCK OPTION GRANT NOTICE AND 
 STOCK OPTION AGREEMENT 
  
 Basin Water, Inc., a Delaware corporation (the “Company”), pursuant to its 2006 Equity Incentive Award Plan (the “Plan”), hereby grants to the holder listed below
(“Participant”), an option to purchase the number of shares of the Company’s Stock set forth below (the “Option”). This Option is subject to all of the terms and conditions as set forth herein and
in the Stock Option Agreement attached hereto as Exhibit A (the “Stock Option Agreement”) and the Plan, which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Grant Notice and the Stock Option Agreement. 
  

					
	 Participant:
	  	 _________________________________________

	 Grant Date:
	  	 _________________________________________

	 Exercise Price per Share:
	  	 $________________________________________

	 Total Exercise Price:
	  	 $________________________________________

	 Total Number of Shares Subject to the Option:
	  	 _________________________________________

	 Expiration Date:
	  	 _________________________________________

	 Type of Option:
	  	  ̈ Incentive Stock Option
	  	  ̈ Non-Qualified Stock
Option

	 Vesting Schedule:
	  	[To be specified in individual agreements]

  
 By his or her
signature, Participant agrees to be bound by the terms and conditions of the Plan, the Stock Option Agreement and this Grant Notice. Participant has reviewed the Stock Option Agreement, the Plan and this Grant Notice in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Stock Option Agreement and the Plan. Participant hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan or the Option. 
  

									
	BASIN WATER, INC.	 	 	 	PARTICIPANT
					
	 By:
	 	 	 	 	 	 By:
	 	 
	 Print Name:
	 	 	 	 	 	 Print Name:
	 	 
	 Title:
	 	 	 	 	 	 	 	 
	 Address:
	 	 8731 Prestige Court
	 	 	 	 Address:
	 	 
	 	 	 Rancho Cucamonga, CA 91730
	 	 	 	 	 	 

  
 EXHIBIT A 

 
 TO STOCK OPTION GRANT NOTICE 
  
 STOCK OPTION AGREEMENT 
  
 Pursuant to the Stock Option Grant Notice (“Grant
Notice”) to which this Stock Option Agreement (this “Agreement”) is attached, Basin Water, Inc., a Delaware corporation (the “Company”), has granted to Participant an option under the
Company’s 2006 Equity Incentive Award Plan (the “Plan”) to purchase the number of shares of Stock indicated in the Grant Notice. 
  
 ARTICLE I 
  
 GENERAL 
  
 1.1 Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice. 
  
 1.2 Incorporation of Terms of Plan. The Option is subject to the terms and conditions of the Plan which are incorporated herein by reference.

  
 ARTICLE II 
  
 GRANT OF OPTION 
  
 2.1 Grant of Option. In consideration of Participant’s past
and/or continued employment with or service to the Company or a Parent or Subsidiary and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”), the Company
irrevocably grants to Participant the Option to purchase any part or all of an aggregate of the number of shares of Stock set forth in the Grant Notice, upon the terms and conditions set forth in the Plan and this Agreement. Unless designated as a
Non-Qualified Stock Option in the Grant Notice, the Option shall be an Incentive Stock Option to the maximum extent permitted by law. 
  
 2.2 Exercise Price. The exercise price of the shares of Stock subject to the Option shall be as set forth in the Grant Notice, without commission
or other charge; provided, however, that if this Option is designated as an Incentive Stock Option, the price per share of the shares subject to the Option shall not be less than the greater of (i) 100% of the Fair Market Value of
a share of Stock on the Grant Date, or (ii) 110% of the Fair Market Value of a share of Stock on the Grant Date in the case of a Participant then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company (each within the meaning of Section 424 of the Code). 
  
 2.3 Consideration to the Company. In consideration of the grant of the
Option by the Company, Participant agrees to render faithful and efficient services to the Company or any Parent or Subsidiary. Nothing in the Plan or this Agreement shall confer upon Participant any right to (a) continue in the employ of the
Company or any Parent or Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Parents and Subsidiaries, which are hereby expressly reserved, to discharge Participant, if Participant is an Employee, or
(b) continue to provide services to the Company or any Parent or Subsidiary or shall interfere with or restrict in any way the rights of the Company or its Parents and Subsidiaries, which are hereby expressly reserved, to terminate the services
of Participant, if Participant is a consultant, at any time for any reason whatsoever, with or without Cause, except to the 

  

 A-1 

 
extent expressly provided otherwise in a written agreement between the Company, a Parent or a Subsidiary and Participant, or (c) continue to serve as a
member of the Board or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge Participant in accordance with the Company’s Bylaws. 
  
 ARTICLE III 
  
 PERIOD OF EXERCISABILITY 
  
 3.1 Commencement of Exercisability. 
  
 (a) Subject to Sections 3.3 and 5.8, the Option shall become
vested and exercisable in such amounts and at such times as are set forth in the Grant Notice. 
  
 (b) No portion of the Option which has not become vested and exercisable at the date of Participant’s Termination of Service shall
thereafter become vested and exercisable, except as may be otherwise provided by the Administrator or as set forth in a written agreement between the Company and Participant. 
  
 3.2 Duration of Exercisability. The installments provided for in the vesting schedule set forth in the Grant Notice
are cumulative. Each such installment which becomes vested and exercisable pursuant to the vesting schedule set forth in the Grant Notice shall remain vested and exercisable until it becomes unexercisable under Section 3.3. 
  
 3.3 Expiration of Option. The Option may not be exercised to any
extent by anyone after the first to occur of the following events: 
  
 (a) The expiration of ten years from the Grant Date; 
  
 (b) If this Option is designated as an Incentive Stock Option and Participant owned (within the meaning of Section 424(d) of the
Code), at the time the Option was granted, more than 10% of the total combined voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or “parent corporation” of the Company (each within
the meaning of Section 424 of the Code), the expiration of five years from the date the Option was granted; or 
  
 (c) Except as set forth in a written agreement with the Company, the expiration of three months following the date of Participant’s
Termination of Service, unless such termination occurs by reason of Participant’s death, Disability or Participant’s discharge for Cause; 
  
 (d) The expiration of one year following the date of Participant’s Termination of Service by reason of Participant’s death or
Disability; or 
  
 (e) The date of
Participant’s Termination of Service by the Company or any Parent or Subsidiary by reason of Participant’s discharge for Cause. 
  
 Participant acknowledges that an Incentive Stock Option exercised more than three months after Participant’s termination of status as an Employee,
other than by reason of death or Disability, will be taxed as a Non-Qualified Stock Option. 
  
 3.4 Special Tax Consequences. Participant acknowledges that, to the extent that the aggregate Fair Market Value (determined as of the time the Option is granted) of all shares of Stock with 

  

 A-2 

 
respect to which Incentive Stock Options, including the Option, are exercisable for the first time by Participant in any calendar year exceeds $100,000 (or
such other limitation as imposed by Section 422(d) of the Code), the Option and such other options shall be treated as not qualifying under Section 422 of the Code but rather shall be considered Non-Qualified Stock Options. Participant
further acknowledges that the rule set forth in the preceding sentence shall be applied by taking Options and other “incentive stock options” into account in the order in which they were granted, as determined under Section 422(d) of
the Code and the Treasury Regulations thereunder. 
  
 ARTICLE IV

  
 EXERCISE OF OPTION 
  
 4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b)
and 5.2(c), during the lifetime of Participant, only Participant may exercise the Option or any portion thereof. After the death of Participant, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under
Section 3.3, be exercised by Participant’s personal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution. 
  
 4.2 Partial Exercise. Any exercisable portion of the Option or the
entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.3. 
  
 4.3 Manner of Exercise. The Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary of the Company or the Secretary’s office of all of the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3: 

 
 (a) An Exercise Notice in writing signed by Participant
or any other person then entitled to exercise the Option or portion thereof, stating that the Option or portion thereof is thereby exercised, such notice complying with all applicable rules established by the Administrator. Such notice shall be
substantially in the form attached as Exhibit B to the Grant Notice (or such other form as is prescribed by the Administrator); and 
  
 (b) Subject to Section 5.1(c) of the Plan: 
  

(i) Full payment (in cash or by check) for the shares with respect to which the Option or portion thereof is exercised; or 

 
 (ii) Such payment may be made, in whole or in part,
through the delivery of shares of Stock which have been owned by Participant for at least six months, duly endorsed for transfer to the Company with a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof; or 
  
 (iii) Through
the delivery of a notice that Participant has placed a market sell order with a broker with respect to shares of Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds
of the sale to the Company in satisfaction of the Option exercise price; provided, that payment of such proceeds is made to the Company upon settlement of such sale; or 
  
 (iv) Subject to any applicable laws, any combination of the consideration provided in the foregoing
paragraphs (i), (ii) and (iii); and 
  

 A-3 

 (c) A bona fide written representation and agreement, in such form as is prescribed by
the Administrator, signed by Participant or the other person then entitled to exercise such Option or portion thereof, stating that the shares of Stock are being acquired for Participant’s own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may be permitted under the Securities Act and then applicable rules and regulations thereunder and any other applicable law, and that Participant or other person then
entitled to exercise such Option or portion thereof will indemnify the Company against and hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the shares by such person is
contrary to the representation and agreement referred to above. The Administrator may, in its absolute discretion, take whatever additional actions it deems appropriate to ensure the observance and performance of such representation and agreement
and to effect compliance with the Securities Act and any other federal or state securities laws or regulations and any other applicable law. Without limiting the generality of the foregoing, the Administrator may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of shares acquired on an Option exercise does not violate the Securities Act, and may issue stop-transfer orders covering such shares. Share certificates evidencing Stock issued on exercise
of the Option shall bear an appropriate legend referring to the provisions of this subsection (c) and the agreements herein. The written representation and agreement referred to in the first sentence of this subsection (c) shall, however,
not be required if the shares to be issued pursuant to such exercise have been registered under the Securities Act, and such registration is then effective in respect of such shares; and 
  
 (d) The receipt by the Company of full payment for such shares, including payment of any applicable
withholding tax, which may be in the form of consideration used by Participant to pay for such shares under Section 4.3(b), subject to Section 16.3 of the Plan; and 
  
 (e) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person
or persons other than Participant, appropriate proof of the right of such person or persons to exercise the Option. 
  
 4.4 Conditions to Issuance of Stock Certificates. The shares of Stock deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any shares of Stock purchased
upon the exercise of the Option or portion thereof prior to fulfillment of all of the following conditions: 
  
 (a) The admission of such shares to listing on all stock exchanges on which such Stock is then listed; and 
  
 (b) The completion of any registration or other
qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem
necessary or advisable; and 
  
 (c) The obtaining
of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and 
  
 (d) The receipt by the Company of full payment for such shares, including payment of any applicable
withholding tax, which may be in the form of consideration used by Participant to pay for such shares under Section 4.3(b), subject to Section 16.3 of the Plan; and 
  

 A-4 

 (e) The lapse of such reasonable period of time following the exercise of the Option as
the Administrator may from time to time establish for reasons of administrative convenience. 
  
 4.5 Rights as Stockholder. The holder of the Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of
the Option unless and until such shares shall have been issued by the Company to such holder (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment will be made for a
dividend or other right for which the record date is prior to the date the shares are issued, except as provided in Article 12 of the Plan. 
  
 ARTICLE V 
  
 OTHER PROVISIONS 
  
 5.1 Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Participant, the Company and all other interested
persons. No member of the Administrator shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Option. In its absolute discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Administrator under the Plan and this Agreement. 
  
 5.2 Option Not Transferable. 
  
 (a) Subject to Section 5.2(b), the Option may not be sold, pledged, assigned or transferred in any manner other than by will or the
laws of descent and distribution, unless and until the shares underlying the Option have been issued, and all restrictions applicable to such shares have lapsed. Neither the Option nor any interest or right therein shall be liable for the debts,
contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent
that such disposition is permitted by the preceding sentence. 
  
 (b) Notwithstanding any other provision in this Agreement, with the consent of the Administrator and to the extent the Option is not intended to qualify as an Incentive Stock Option, the Option may be transferred to
one or more Permitted Transferees, subject to the terms and conditions set forth in Section 11.3(b) of the Plan. 
  
 (c) Unless transferred to a Permitted Transferee in accordance with Section 5.2(b), during the lifetime of Participant, only
Participant may exercise the Option or any portion thereof. Subject to such conditions and procedures as the Administrator may require, a Permitted Transferee may exercise the Option or any portion thereof during Participant’s lifetime. After
the death of Participant, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3, be exercised by Participant’s personal representative or by any person empowered to do so under
the deceased Participant’s will or under the then applicable laws of descent and distribution. 
  
 5.3 Lock-Up Period. Participant hereby agrees that, if so requested by the Company or any representative of the underwriters (the
“Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, Participant shall not sell or 

  

 A-5 

 
otherwise transfer any shares of Stock or other securities of the Company during such period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company (which period shall not be longer than one hundred eighty days) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. 
  
 5.4 Restrictive Legends and Stop-Transfer Orders. 
  
 (a) The share certificate or certificates evidencing the shares of Stock purchased hereunder shall be endorsed with any legends that may be required by state or federal securities laws. 
  
 (b) Participant agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same
effect in its own records. 
  
 (c) The Company
shall not be required: (i) to transfer on its books any shares of Stock that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such shares of Stock or to accord
the right to vote or pay dividends to any purchaser or other transferee to whom such shares shall have been so transferred. 
  
 5.5 Shares to Be Reserved. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Stock
as will be sufficient to satisfy the requirements of this Agreement. 
  
 5.6 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the address given beneath the signature of the Company’s
authorized officer on the Grant Notice, and any notice to be given to Participant shall be addressed to Participant at the address given beneath Participant’s signature on the Grant Notice. By a notice given pursuant to this Section 5.6,
either party may hereafter designate a different address for notices to be given to that party. Any notice which is required to be given to Participant shall, if Participant is then deceased, be given to the person entitled to exercise his or her
Option pursuant to Section 4.1 by written notice under this Section 5.6. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal Service. 
  
 5.7 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 
  
 5.8 Stockholder Approval. The Plan will be submitted for approval by the Company’s stockholders within twelve
months after the date the Plan was initially adopted by the Board. The Option may not be exercised to any extent by anyone prior to the time when the Plan is approved by the stockholders, and if such approval has not been obtained by the end of said
twelve month period, the Option shall thereupon be canceled and become null and void. 
  
 5.9 Governing Law; Severability. This Agreement shall be administered, interpreted and enforced under the laws of the State of Delaware, without regard to the conflicts of law principles thereof. 

  

 A-6 

 
Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain
effective and shall remain enforceable. 
  
 5.10 Conformity to
Securities Laws. Participant acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and
Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. 
  
 5.11 Amendments. This Agreement may not be modified, amended or
terminated except by an instrument in writing, signed by Participant or such other person as may be permitted to exercise the Option pursuant to Section 4.1 and by a duly authorized representative of the Company. 
  
 5.12 Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon
Participant and his or her heirs, executors, administrators, successors and assigns. 
  
 5.13 Notification of Disposition. If this Option is designated as an Incentive Stock Option, Participant shall give prompt notice to the Company of any disposition or other transfer of any shares of Stock
acquired under this Agreement if such disposition or transfer is made (a) within two years from the Grant Date with respect to such shares or (b) within one year after the transfer of such shares to him. Such notice shall specify the date
of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant in such disposition or other transfer. 
  
 5.14 Limitations Applicable to Section 16 Persons.
Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Option and this Agreement shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be
deemed amended to the extent necessary to conform to such applicable exemptive rule. 
  
 5.15 Entire Agreement. The Plan and this Agreement (including all Exhibits hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the
Company and Participant with respect to the subject matter hereof. 
  

 A-7 

  
 EXHIBIT B 

 
 TO STOCK OPTION GRANT NOTICE 
  
 FORM OF EXERCISE NOTICE 
  
 Effective as of today,
                    ,
                     the undersigned (“Participant”) hereby elects to exercise Participant’s option
to purchase                      shares of the Stock (the “Shares”) of Basin Water, Inc., a Delaware
corporation (the “Company”), under and pursuant to the Basin Water, Inc. 2006 Equity Incentive Award Plan (the “Plan”) and the Stock Option Grant Notice and Stock Option Agreement dated
                     (the “Option Agreement”). Capitalized terms used herein without definition shall have the
meanings given in the Option Agreement. 
  

			
	 Grant Date:
	 	 
	 Number of Shares as to which Option is Exercised:
	 	 
	 Exercise Price per Share:
	 	$_______________
	 Total Exercise Price:
	 	$_______________
	 Certificate to be issued in name of:
	 	 
	 Payment delivered herewith:
	 	 $________________ (Representing the full Exercise Price for the Shares, as well as any applicable withholding tax)
 Form of Payment:______________________________
 (Please
specify)

					
			
	 Type of Option:
	  	  ̈ Incentive Stock Option
	  	  ̈ Non-Qualified Stock
Option

  
 Participant
acknowledges that Participant has received, read and understood the Plan and the Option Agreement. Participant agrees to abide by and be bound by their terms and conditions. Participant understands that Participant may suffer adverse tax
consequences as a result of Participant’s purchase or disposition of the Shares. Participant represents that Participant has consulted with any tax consultants Participant deems advisable in connection with the purchase or disposition of the
Shares and that Participant is not relying on the Company for any tax advice. The Plan and Option Agreement are incorporated herein by reference. This Agreement, the Plan and the Option Agreement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. 
  

									
	 ACCEPTED BY:
 BASIN WATER,
INC.
	 	 	 	SUBMITTED BY:
					
	 By:
	 	 	 	 	 	 By:
	 	 
	 Print Name:
	 	 	 	 	 	 Print Name:
	 	 
	 Title:
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 Address:
	 	 
	 	 	 	 	 	 	 	 	 

  
 BASIN WATER, INC.

  
 2006 EQUITY INCENTIVE AWARD PLAN 
  
 RESTRICTED STOCK AWARD GRANT NOTICE AND 
 RESTRICTED STOCK AWARD AGREEMENT 
  
 Basin Water, Inc., a Delaware corporation (the “Company”), pursuant to its 2006 Equity Incentive Award Plan (the
“Plan”), hereby grants to the individual listed below (“Participant”), the right to purchase the number of shares of the Company’s Stock set forth below (the “Shares”) at
the purchase price set forth below. This Restricted Stock award is subject to all of the terms and conditions as set forth herein and in the Restricted Stock Award Agreement attached hereto as Exhibit A (the “Restricted Stock
Agreement”) and the Plan, which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Restricted Stock Agreement.

  

			
	 Participant:
	 	 
	 Grant Date:
	 	 
	 Vesting Commencement Date:
	 	 
	 Purchase Price per Share:
	 	$___________ per share
	 Total Number of Shares of Restricted Stock:
	 	 
	 Vesting Schedule:
	 	[To be specified in individual agreements]

  
 By his or her
signature, Participant agrees to be bound by the terms and conditions of the Plan, the Restricted Stock Agreement and this Grant Notice. Participant has reviewed the Restricted Stock Agreement, the Plan and this Grant Notice in their entirety, has
had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Restricted Stock Agreement and the Plan. Participant hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan, this Grant Notice or the Restricted Stock Agreement. If Participant is married, his or her spouse has signed the
Consent of Spouse attached to this Grant Notice as Exhibit B. 
  

									
	BASIN WATER INC.	 	 	 	PARTICIPANT
					
	 By:
	 	 	 	 	 	 By:
	 	 
	 Print Name:
	 	 	 	 	 	 Print Name:
	 	 
	 Title:
	 	 	 	 	 	 	 	 
	 Address:
	 	 8731 Prestige Court
	 	 	 	 Address:
	 	 
	 	 	 Rancho Cucamonga, CA 91730
	 	 	 	 	 	 

  
 EXHIBIT A 

 
 TO RESTRICTED STOCK AWARD GRANT NOTICE 
  
 RESTRICTED STOCK AWARD AGREEMENT 
  
 Pursuant to the Restricted Stock Award Grant Notice (“Grant
Notice”) to which this Restricted Stock Award Agreement (this “Agreement”) is attached, Basin Water, Inc., a Delaware corporation (the “Company”), has granted to Participant the right to
purchase the number of shares of Restricted Stock under the Company’s 2006 Equity Incentive Award Plan (the “Plan”) indicated in the Grant Notice. 
  
 ARTICLE I 
  
 GENERAL 
  
 1.1 Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice.

  
 1.2 Incorporation of Terms of Plan. The Shares are
subject to the terms and conditions of the Plan which are incorporated herein by reference. 
  
 ARTICLE II 
  
 GRANT OF
RESTRICTED STOCK 
  
 2.1 Grant of Restricted Stock.
consideration of Participant’s past and/or continued employment with or service to the Company or a Parent or Subsidiary and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the
“Grant Date”), the Company irrevocably grants to Participant the right to purchase the number of shares of Stock set forth in the Grant Notice (the “Shares”), upon the terms and conditions set forth in
the Plan and this Agreement. 
  
 2.2 Purchase Price. The
purchase price per Share (the “Purchase Price”) shall be as set forth in the Grant Notice, without commission or other charge. The payment of the Purchase Price shall be paid by cash or check. 
  
 2.3 Issuance of Shares. The issuance of the Shares under this
Agreement shall occur at the principal office of the Company, upon payment of the Purchase Price by Participant, simultaneously with the execution of this Agreement by the parties (the “Issuance Date”). Subject to the
provisions of Article IV below, on the Issuance Date, the Company shall issue the Shares (which shall be issued in Participant’s name). 
  
 2.4 Conditions to Issuance of Stock Certificates. The Shares, or any portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such Shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any Shares prior to fulfillment of all of the following conditions: 
  
 (a) The admission of such Shares to listing on all stock
exchanges on which such Stock is then listed; and 
  
 (b) The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any 

  

 A-1 

 
other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable; and 
  
 (c) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and 
  
 (d) The receipt by the Company of full payment for such shares, including payment of all amounts which, under federal, state, local or
foreign tax law, the Company (or other employer corporation) is required to withhold upon issuance of such Shares; and 
  
 (e) The lapse of such reasonable period of time following the Issuance Date as the Administrator may from time to time establish for
reasons of administrative convenience. 
  
 2.5 Rights as
Stockholder. Except as otherwise provided herein, upon delivery of the Shares to the escrow holder pursuant to Article IV, Participant shall have all the rights of a stockholder with respect to said Shares, subject to the restrictions herein,
including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares; provided, however, that any and all cash dividends paid on such Shares and any and all shares of Stock,
capital stock or other securities received by or distributed to Participant with respect to the Shares as a result of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification, or similar change in the
capital structure of the Company shall also be subject to the Repurchase Option (as defined in Section 3.1 below) and the restrictions on transfer in Section 3.4 below until such restrictions on the underlying Shares lapse or are removed
pursuant to this Agreement. 
  
 2.6 Consideration to the
Company. In consideration of the issuance of the Shares by the Company, Participant agrees to render faithful and efficient services to the Company or any Parent or Subsidiary. Nothing in the Plan or this Agreement shall confer upon Participant
any right to (a) continue in the employ of the Company or any Parent or Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Parents and Subsidiaries, which are hereby expressly reserved, to discharge
Participant, if Participant is an Employee, or (b) continue to provide services to the Company or any Parent or Subsidiary or shall interfere with or restrict in any way the rights of the Company or its Parents and Subsidiaries, which are
hereby expressly reserved, to terminate the services of Participant, if Participant is a consultant, at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the
Company, a Parent or a Subsidiary and Participant, or (c) continue to serve as a member of the Board or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge Participant in
accordance with the Company’s Bylaws. 
  
 ARTICLE III

  
 RESTRICTIONS ON SHARES 
  
 3.1 Repurchase Option. Subject to the provisions of Section 3.2
below, if Participant has a Termination of Service before all of the Shares are released from the Company’s Repurchase Option (as defined below), the Company shall, upon the date of such Termination of Service (as reasonably fixed and
determined by the Company), have an irrevocable, exclusive option, but not the obligation, for a period of ninety days after the date Participant has a Termination of Service, to repurchase all or any portion of the Unreleased Shares (as defined
below in Section 3.3) at such time (the “Repurchase Option”) at the Purchase Price per Share (the “Repurchase Price”). The Repurchase Option shall lapse and terminate ninety days after the
Participant’s Termination of Service. The Repurchase Option shall be 

  

 A-2 

 
exercisable by the Company by written notice to Participant or Participant’s executor (with a copy to the escrow agent appointed pursuant to
Section 4.1 below) and, at the Company’s option, by delivery to Participant or Participant’s executor with such notice of payment in cash or a check in the amount of the Repurchase Price times the number of Shares to be repurchased
(the “Aggregate Repurchase Price”). Upon delivery of such notice and the payment of the Aggregate Repurchase Price, the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and
interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Shares being repurchased by the Company. In the event the Company repurchases any Shares under this Section 3.1,
any dividends or other distributions paid on such Shares and held by the escrow agent pursuant to Section 4.1 and the Joint Escrow Instructions shall be promptly paid by the escrow agent to the Company. 
  
 3.2 Release of Shares from Repurchase Restriction. The Shares shall be
released from the Company’s Repurchase Option on such dates and in such amounts as the Shares become vested in accordance with the vesting schedule set forth in the Grant Notice. Any of the Shares released from the Company’s Repurchase
Option shall thereupon be released from the restrictions on transfer under Section 3.4. In the event any of the Shares are released from the Company’s Repurchase Option, any dividends or other distributions paid on such Shares and held by
the escrow agent pursuant to Section 4.1 and the Joint Escrow Instructions shall be promptly paid by the escrow agent to Participant. 
  
 3.3 Unreleased Shares. Any of the Shares which, from time to time, have not yet been released from the Company’s Repurchase Option are
referred to herein as “Unreleased Shares.” 
  
 3.4 Restrictions on Transfer. 
  
 (a) Subject to repurchase by the Company pursuant to Section 3.1 and Section 3.4(b), no Unreleased Shares or any dividends or other distributions thereon or any interest or right therein or part thereof, shall be liable for the
debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to sale or other disposition by Participant or his or her successors in interest by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such sale or other disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted
sale or other disposition thereof shall be null and void and of no effect. 
  
 (b) Notwithstanding any other provision in this Agreement, with the consent of the Administrator, the Unreleased Shares may be transferred to certain Permitted Transferees, subject to the terms and conditions set
forth in Section 11.3(b) of the Plan. 
  
 ARTICLE IV

  
 ESCROW OF SHARES 
  
 4.1 Escrow of Shares. To ensure the availability for delivery of
Participant’s Unreleased Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 3.1, Participant hereby appoints the Secretary of the Company, or any other person designated by the Administrator as escrow
agent, as his or her attorney-in-fact to assign and transfer unto the Company, such Unreleased Shares, if any, repurchased by the Company pursuant to the Repurchase Option pursuant to Section 3.1 and any dividends or other distributions
thereon, and shall, upon execution of this Agreement, deliver and deposit with the Secretary of the Company, or such other person designated by the Administrator, any share certificates representing the Unreleased Shares, together with the stock
assignment duly endorsed in blank, attached to the Grant Notice as Exhibit C to the Grant Notice. The 

  

 A-3 

 
Unreleased Shares and stock assignment shall be held by the Secretary of the Company, or such other person designated by the Administrator, in escrow,
pursuant to the Joint Escrow Instructions of the Company and Participant attached as Exhibit D to the Grant Notice, until the Company exercises its Repurchase Option as provided in Section 3.1, until such Unreleased Shares are released
from the Company’s Repurchase Option, or until such time as this Agreement no longer is in effect. Upon release of the Unreleased Shares from the Company’s Repurchase Option, the escrow agent shall deliver to Participant the certificate or
certificates representing such Shares in the escrow agent’s possession belonging to Participant in accordance with the terms of the Joint Escrow Instructions attached as Exhibit D to the Grant Notice, and the escrow agent shall be
discharged of all further obligations hereunder. If the Shares are held in book entry form, then such entry will reflect that the Shares are subject to the restrictions of this Agreement. If any dividends or other distributions are paid on the
Unreleased Shares held by the escrow agent pursuant to this Section 4.1 and the Joint Escrow Instructions, such dividends or other distributions shall also be subject to the restrictions set forth in this Agreement and held in escrow pending
release of the Unreleased Shares with respect to which such dividends or other distributions were paid from the Company’s Repurchase Option. 
  
 4.2 Transfer of Repurchased Shares. Participant hereby authorizes and directs the Secretary of the Company, or such other person designated by the
Administrator, to transfer the Unreleased Shares as to which the Repurchase Option has been exercised from Participant to the Company. 
  
 4.3 No Liability for Actions in Connection with Escrow. The Company, or its designee, shall not be liable for any act it may do or omit to do with
respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment. 
  
 ARTICLE V 
  
 OTHER PROVISIONS 
  
 5.1 Adjustment for Stock
Split. In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification, or similar change in the capital structure of the Company, the Administrator shall make appropriate and equitable
adjustments in the Unreleased Shares subject to the Repurchase Option and the number of Shares, consistent with any adjustment under Section 12.1 of the Plan. The provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Shares, to any and all shares of capital stock or other securities or other property or cash which may be issued in respect of, in exchange for, or in substitution of the Shares, and shall be appropriately adjusted for any stock
dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof. 
  
 5.2 Taxes. Participant has reviewed with Participant’s own tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by the Grant Notice and this Agreement. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Participant understands that
Participant (and not the Company) shall be responsible for Participant’s tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. Participant understands that Participant will recognize
ordinary income for federal income tax purposes under Section 83 of the Code as and when the Repurchase Option lapses. Participant understands that Participant may elect to be taxed for federal income tax purposes at the time the Shares are
purchased by Participant rather than as and when the Repurchase Option lapses by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days from the date of purchase. A form of election
under Section 83(b) of the Code is attached to the Grant Notice as Exhibit E. 
  

 A-4 

 PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO
TIMELY FILE THE ELECTION UNDER SECTION 83(B), AND THE COMPANY AND ITS REPRESENTATIVES SHALL HAVE NO OBLIGATION OR AUTHORITY TO MAKE THIS FILING ON PARTICIPANT’S BEHALF. 
  
 5.3 Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator in good
faith shall be final and binding upon Participant, the Company and all other interested persons. No member of the Administrator shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Shares. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan and this Agreement. 
  
 5.4 Restrictive Legends and Stop-Transfer Orders. 
  
 (a) Any share certificate(s) evidencing the Shares issued
hereunder shall be endorsed with the following legend and any other legends that may be required by state or federal securities laws: 
  
 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF REPURCHASE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE
TERMS AND CONDITIONS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. 
  
 (b) Participant agrees that, in order to ensure compliance with the restrictions referred to herein, the
Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. 
  
 (c) The Company shall not be required: (i) to transfer
on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such shares shall have been so transferred. 
  
 5.5 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the address given beneath the signature of an authorized officer of the
Company on the Grant Notice, and any notice to be given to Participant shall be addressed to Participant at the address given beneath Participant’s signature on the Grant Notice. By a notice given pursuant to this Section 5.5, either party
may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal Service. 
  
 5.6 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 
  
 5.7 Construction. This Agreement shall be administered, interpreted and enforced under the laws of the State of
Delaware without regard to conflicts of laws thereof. Should any provision of this 

  

 A-5 

 
Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain
enforceable. 
  
 5.8 Conformity to Securities Laws.
Participant acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission
thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Shares are to be issued, only in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. 
  

5.9 Amendments. This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by Participant and by a
duly authorized representative of the Company. 
  
 5.10
Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on
transfer herein set forth, this Agreement shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns. 
  
 5.11 Entire Agreement. The Plan and this Agreement (including all Exhibits hereto) constitute the entire agreement of the parties and supersede in
their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. 
  

 A-6 

  
 EXHIBIT B 

 
 TO RESTRICTED STOCK AWARD GRANT NOTICE 
  
 CONSENT OF SPOUSE 
  
 I,
                , spouse of                     , have
read and approve the foregoing Restricted Stock Grant Notice and Restricted Stock Award Agreement (the “Agreement”). In consideration of issuing to my spouse the shares of the common stock of Basin Water, Inc., a Delaware
corporation (the “Company”), set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement
insofar as I may have any rights in said Agreement or any shares of the common stock of the Company issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of
the date of the signing of the foregoing Agreement. 
  

									
					
	Dated:	 	                    ,
        	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Signature of Spouse

  

 B-1 

  
 EXHIBIT C 

 
 TO RESTRICTED STOCK AWARD GRANT NOTICE 
  
 STOCK ASSIGNMENT 
  
 FOR VALUE RECEIVED, the
undersigned,            , hereby sells, assigns and transfers unto Basin Water, Inc., a Delaware corporation (the “Company”),
             shares of the common stock of the Company standing in its name of the books of said corporation represented by Certificate No.
             herewith and do hereby irrevocably constitute and appoint             to transfer the said stock on
the books of the within named corporation with full power of substitution in the premises. 
  
 This Stock Assignment may be used only in accordance with the Restricted Stock Award Agreement between the Company and the undersigned dated
                    ,     . 
  

									
					
	Dated:	 	                    ,     	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	[Name of Participant]

  
 INSTRUCTIONS:
Please do not fill in the blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its “Repurchase Option,” as set forth in the Restricted Stock Award Agreement, without requiring additional
signatures on the part of Participant. 
  

 C-1 

  
 EXHIBIT D 

 
 TO RESTRICTED STOCK AWARD GRANT NOTICE 
  
 JOINT ESCROW INSTRUCTIONS 
  
                     ,      
  
 Secretary 
 Basin Water, Inc. 
 8731 Prestige Court 
 Rancho Cucamonga, CA 91730 
  
 Ladies and Gentlemen: 
  
 As escrow agent (the “Escrow Agent”) for both Basin Water, Inc., a Delaware corporation (the
“Company”), and the undersigned recipient of shares of common stock of the Company (the “Participant”), you are hereby authorized and directed to hold in escrow the documents delivered to you pursuant
to the terms of that certain Restricted Stock Award Agreement (“Agreement”) between the Company and the undersigned (the “Escrow”), including the stock certificate and the Assignment in Blank, in
accordance with the following instructions: 
  
 1. In the event
the Company and/or any assignee of the Company (referred to collectively for convenience herein as the “Company”) exercises the Company’s Repurchase Option as defined in the Agreement), the Company shall give to
Participant and you a written notice specifying the number of shares of stock to be purchased, the purchase price and the time for a closing hereunder at the principal office of the Company. Participant and the Company hereby irrevocably authorize
and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice. 
  
 2. As of the date of closing of the repurchase indicated in such notice, you are directed (a) to date the stock assignments necessary for the
repurchase and transfer in question, (b) to fill in the number of shares being repurchased and transferred, and (c) to deliver the same, together with the certificate evidencing the shares of stock to be repurchased and transferred, to the
Company or its assignee. 
  
 3. Participant irrevocably authorizes
the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement. Participant does hereby irrevocably constitute and appoint you as
Participant’s attorney-in-fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to, or notice of transfer of, the securities. Subject to the provisions of this paragraph and the Agreement, Participant
shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you. 
  
 4. Upon written request of Participant, but no more than once per calendar month, unless the Company’s Repurchase Option has been exercised, you will
deliver to Participant a certificate or certificates representing so many shares of stock as are not then subject to the Repurchase Option. Within one hundred twenty days after the termination of the Company’s Repurchase Option in accordance
with the terms of the Agreement, you will deliver to Participant a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not repurchased pursuant to the Repurchase Option set forth in
Section 3.1 of the Agreement. 
  

 D-1 

 5. If at the time of termination of this escrow you should have in your possession any documents,
securities, or other property belonging to Participant, you shall deliver all of the same to the Participant and shall be discharged of all further obligations hereunder. 
  
 6. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

  
 7. You shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Participant while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be
conclusive evidence of such good faith. 
  
 8. You are hereby
expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders,
judgments or decrees of any court. In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 
  
 9. You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called for hereunder. 
  
 10. You shall not be liable for the expiration of any rights under any applicable state, federal or local statute of limitations or similar statute or regulation with respect to these Joint Escrow Instructions or any
documents deposited with you. 
  
 11. You shall be entitled to
employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor. The
Company will reimburse you for any reasonable attorneys’ fees with respect thereto. 
  
 12. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party. In the event of any such
termination, the Company shall appoint a successor Escrow Agent. 
  
 13. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 
  
 14. It is understood and agreed that should any dispute arise with respect to
the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have
been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no
duty whatsoever to institute or defend any such proceedings. 
  

 D-2 

 15. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the
Company in care of the Secretary of the Company, and any notice to be given to the Participant or you shall be addressed to the address given beneath Participant’s and your signatures on the signature page to this Agreement. By a notice given
pursuant to this Section 15, any party may hereafter designate a different address for notices to be given to that party. Any notice, which is required to be given to Participant, shall, if the Participant is then deceased, be given to
Participant’s designated beneficiary, if any by written notice under this Section 15. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid)
in a post office or branch post office regularly obtained by the United States Postal Service. 
  
 16. By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement. 
  
 17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns. 
  
 18. These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to conflicts of law thereof. 
  
 (Signature Page Follows) 
  

 D-3 

 IN WITNESS WHEREOF, the parties have executed these Joint Escrow Instructions as of the date first
written above. 
  

			
	Very truly yours,
	
	BASIN WATER, INC.
		
	By:	 	 
	 	 	Name:
	 	 	Title:

  

			
	Address:  	 	 8731 Prestige Court
 Rancho Cucamonga, CA
91730

  

			
	PARTICIPANT:
	 
		
	Address	 	 
	 	 	 

  

			
	ESCROW AGENT:
		
	By:	 	 
	 	 	Secretary, Basin Water, Inc.

  

			
	Address:  	 	 8731 Prestige Court
 Rancho Cucamonga, CA
91730

  

 D-4 

  
 EXHIBIT E 

 
 TO RESTRICTED STOCK AWARD GRANT NOTICE 
  
 FORM OF 83(B) ELECTION AND INSTRUCTIONS 
  
 These instructions are provided to assist you if you choose to make an
election under Section 83(b) of the Internal Revenue Code, as amended, with respect to the shares of common stock of Basin Water, Inc. transferred to you. Please consult with your personal tax advisor as to whether an election of this nature
will be in your best interests in light of your personal tax situation. 
  
 The executed original of the Section 83(b) election must be filed with the Internal Revenue Service not later than thirty days after the date the shares were transferred to you. PLEASE NOTE: There is no remedy
for failure to file on time. The steps outlined below should be followed to ensure the election is mailed and filed correctly and in a timely manner. ALSO, PLEASE NOTE: If you make the Section 83(b) election, the election is irrevocable.

  

	1.	Complete Section 83(b) election form (attached as Attachment 1) and make four copies of the signed election form. (Your spouse, if any, should sign Section 83(b)
election form as well.) 

  

	2.	Prepare the cover letter to the Internal Revenue Service (sample letter attached as Attachment 2). 

  

	3.	Send the cover letter with the originally executed Section 83(b) election form and one copy via certified mail, return receipt requested to the Internal Revenue Service at the
address of the Internal Revenue Service where you file your personal tax returns. We suggest that you have the package date-stamped at the post office. The post office will provide you with a white certified receipt that includes a dated postmark.
Enclose a self-addressed, stamped envelope so that the Internal Revenue Service may return a date-stamped copy to you. However, your postmarked receipt is your proof of having timely filed the Section 83(b) election if you do not receive
confirmation from the Internal Revenue Service. 

  

	4.	One copy must be sent to Basin Water, Inc. for its records and one copy must be attached to your federal income tax return for the applicable calendar year.

  

	5.	Retain the Internal Revenue Service file stamped copy (when returned) for your records. 

  
 Please consult your personal tax advisor for the address of the office of the Internal Revenue Service to which you should
mail your election form. 
  

 E-1 

  
 ATTACHMENT 1 TO EXHIBIT E

  
 ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(B)

  
 The undersigned taxpayer hereby elects, pursuant to
Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of shares (the
“Shares”) of Common Stock of Basin Water, Inc., a Delaware corporation (the “Company”). 
  

	1.	The name, address and taxpayer identification number of the undersigned taxpayer are: 

  

							
	 	  	 	  	 
	 	  	 	  	 
				
	SSN:	  	 	  	 	  	 
	
	The name, address and taxpayer identification number of the Taxpayer’s spouse are (complete if applicable):
			
	 	  	 	  	 
	 	  	 	  	 
	 	  	 	  	 
				
	SSN:	  	 	  	 	  	 

  

	2.	Description of the property with respect to which the election is being made: 

  

                                
(            ) shares of Common Stock of the Company. 
  

	3.	The date on which the property was transferred was
                                . The taxable year to which this election relates
is calendar year             . 

  

	4.	Nature of restrictions to which the property is subject: 

  
 The Shares are subject to repurchase at their original purchase price if unvested as of the date of termination of employment, directorship or consultancy
with the Company. 
  

	5.	The fair market value at the time of transfer (determined without regard to any lapse restrictions, as defined in Treasury Regulation Section 1.83-3(a)) of the Shares was
$                     per Share. 

  

	6.	The amount paid by the taxpayer for Shares was per share. 

  

	7.	A copy of this statement has been furnished to the Company. 

  
 Dated:                         ,
                                     Taxpayer Signature
                                        
     
  

 E-1-1 

 The undersigned spouse of Taxpayer joins in this election. (Complete if applicable). 
  
 Dated:
                        ,             
                         Spouse’s Signature
                                        
     
  
 Signature(s)
Notarized by: 

							
	 	  	 	  	 
	 	  	 	  	 

  

 E-1-2 

  
 ATTACHMENT 2 TO EXHIBIT E

  
 SAMPLE COVER LETTER TO INTERNAL REVENUE SERVICE

  
                                       
  ,              
  
 VIA CERTIFIED MAIL 
 RETURN RECEIPT REQUESTED 
  
 Internal Revenue Service 
 [Address where taxpayer files returns] 
  

			
	Re:	  	Election under Section 83(b) of the Internal Revenue Code of 1986
	 	  	Taxpayer:
                                        
                                        
                                        
                        
	 	  	Taxpayer’s Social Security Number:
                                        
                                        
                    
	 	  	Taxpayer’s Spouse:
                                        
                                        
                                        
        
	 	  	Taxpayer’s Spouse’s Social Security Number:
                                        
                                        
    

  
 Ladies and Gentlemen: 
  
 Enclosed please find an original and one copy of an Election under
Section 83(b) of the Internal Revenue Code of 1986, as amended, being made by the taxpayer referenced above. Please acknowledge receipt of the enclosed materials by stamping the enclosed copy of the Election and returning it to me in the
self-addressed stamped envelope provided herewith. 
  

	
	Very truly yours,
	
	  
	 

  
 Enclosures 
  

	cc:	Basin Water, Inc. 

  

 E-2-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]