Document:

2001 Amended and Restated Stock Option Plan

 Exhibit 10.2 
  
 Basin Water, Inc. 
 2001 Stock Option Plan 
 As Amended and Restated 
 August 24, 2005 
  
 1. Establishment, Purpose and Term of Plan. 
  
 1.1 Establishment. The Basin Water Technology Group, Inc. 2001 Stock Option Plan (the “Plan”) established effective as of August 27, 2001, (the “Effective Date”) is hereby amended and restated in its
entirety as of August 24, 2005 and shall hereafter be known as the Basin Water, Inc. 2001 Stock Option Plan. 
  
 1.2 Purpose. The purpose of the Plan is to advance the interests of Basin Water, Inc., a California corporation (hereinafter referred to as
the “Company”) by providing an incentive to attract, retain and reward officers, directors, key employees and other persons performing significant services to the Company and by motivating such persons to remain in the employ of the
Company and contribute to the growth and profitability of the Company. 
  
 The Plan authorizes a grant of: (a) Nonstatutory Stock Options (hereinafter known as “Nonstatutory Options”) for officers (including officers who are members of the Board of Directors), other key Employees, non-Employee
Directors, and non-Employee Consultants (including non-Employee Consultants who are members of the Board of Directors) of the Company, or any subsidiary of the Company; and (b) Incentive Stock Options (hereinafter known as “Incentive
Options”) as defined by Section 422A of the Code, to all officers (including officers who are members of the Board of Directors) and other key Employees of the Company and any subsidiary of the Company. The Nonstatutory Options and the
Incentive Options sometimes collectively hereinafter are referred to as the “Options.” 
  
 1.3 Term of Plan. The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. However, all Options shall be granted, if at
all, within ten (10) years from the Effective Date. Notwithstanding the foregoing, if the maximum number of shares of Stock issuable pursuant to the Plan as provided in Section 4.1 has been amended at any time, all Options shall be
granted, if at all, no later than the last day preceding the tenth (10th) anniversary of the earlier of: (a) the latest date on which any amendment of the maximum number of shares of Stock issuable under the Plan was approved by the
shareholders of the Company; or (b) the date such amendment was adopted by the Board. 
  
 2. Definitions and Construction. 
  
 2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below: 
  

2.1.1 “Board” means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to
administer the Plan, “Board” also means such Committee(s). 
  

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 2.1.2 “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder. 
  
 2.1.3 “Committee” means the Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. Unless the powers of the Committee have been
specifically limited, the Committee shall have all of the powers of the Board granted herein, including but not limited to, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed
by law. 
  
 2.1.4 “Consultant” means
any person, including an advisor, engaged by a Company to render services other than as an Employee or a Director. 
  
 2.1.5 “Director” means a member of the Board. 
  
 2.1.6 “Employee” means any person treated as an employee (including an officer or a Director who
is also treated as an employee) in the records of the Company; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for this purpose. 
  
 2.1.7 “Exchange Act” means the Securities Exchange
Act of 1934, as amended. 
  
 2.1.8 “Fair
Market Value” means, as of any date, the value of a share of stock or other property as determined by the Board, in its sole discretion, or by the Company, in its sole discretion, if such determination is expressly allocated to the Company
herein. 
  
 2.1.9 “Insider” means an
officer or a Director of the Company or any other person whose transactions in Stock are subject to Section 16 of the Exchange Act. 
  
 2.1.10 “Option” means a right to purchase Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms
and conditions of the Plan. Except for Nonstatutory Options, each Option is intended (as set forth in the Option Agreement) to qualify as an “Incentive Stock Option” within the meaning of Section 422 (b) of the Code. 

 
 2.1.11 “Optionees” means a person who has been
granted one or more Options. 
  
 2.1.12
“Option Agreement” means, as the context requires, either that certain Incentive Stock Option Purchase Agreement or that certain Non-Statutory Stock Option Purchase Agreement, or both, copies of which are attached hereto, designated
Exhibit “A” and incorporated herein by reference, setting forth the terms, conditions and restrictions of the Option granted to the Optionee. 
  

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 2.1.13 “Rule 16b-3” means Rule 16b-3 as promulgated under the Exchange Act, as
amended from time to time, or any successor rule or regulation. 
  
 2.1.14 “Stock” means the common stock, without par value, of the Company, as adjusted from time to time in accordance with Section 4.2. 
  
 2.1.15 “Subsidiary” means the definition set forth in Section 424(f) of the Code. 

 
 2.1.16 “Ten Percent Owner Optionee” means an
Optionee who, at the time an Option is granted to the Optionee, owns Stock possessing more than ten percent (10%) of the total combined voting power of all classes of Stock of the Company within the meaning of Section 422(b)(6) of the
Code. 
  
 2.2 Construction. Captions and titles
contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural, and the plural shall include the
singular. Use of the term “or” is intended to include the conjunctive as well as the disjunctive. 
  
 3. Administration. 
  
 3.1 Administration by the Board. The Plan shall be administered by the Board, including any duly appointed Committee of the Board. All questions of interpretation of the Plan or of any Option shall be determined by the Board,
and such determinations shall be final and binding upon all persons having an interest in the Plan or such Option. Any officer of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, determination or election. 
  
 3.2 Powers of the Board. In addition to any other powers set
forth in the Plan and subject to the provisions of the Plan, the Board shall have full and final power and authority, in its sole discretion: (a) to determine the persons to whom, and the time or times at which, Options shall be granted and the
number of shares of Stock to be subject to each Option; (b) to determine the Fair Market Value of shares of Stock or other property; (c) to determine the terms and conditions of each Option (which need not be identical), including but not
limited to, the exercise price of the Option, the method of payment for shares purchased upon exercise of the Option, the timing and terms of the exercisability or vesting of the Option, the time of the expiration of the Option, and all other terms
and conditions of the Option not inconsistent with the terms of the Plan; (d) to approve one or more forms of Option Agreement; (e) to amend, modify, extend, or renew, or grant a new Option in substitution for, any Option or to waive any
restrictions or conditions applicable to any Option or any shares acquired upon the exercise thereof; (f) to amend the exercisability or vesting of any Option or any shares acquired upon the exercise thereof, including with respect to the
period following an Optionee’s termination of employment or service with the Company; (g) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan;
and (h) to 

  

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correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Option Agreement and to make all other determinations and take such
other actions with respect to the Plan or any Option as the Board may deem advisable to the extent consistent with the Plan and applicable law. 
  
 3.3 Disinterested Administration. With respect to participation by Insiders in the Plan, at any time that any class of equity security of
the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered by the Board in compliance with the “disinterested administration” requirements of Rule 16b-3. 
  
 4. Shares Subject to Plan. 
  
 4.1 Maximum Number of Shares Issuable. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be Two Million, One Hundred Thousand (2,100,000) and shall consist of authorized but unissued shares of Stock. If any
outstanding Option for any reason expires or is terminated or canceled or shares of Stock acquired, subject to repurchase, upon the exercise of an Option are repurchased by the Company, the shares of Stock allocable to the unexercised portion of
such Option, or such repurchased shares of Stock, shall again be available for issuance under the Plan. 
  
 4.2 Adjustments for Changes in Capital Structure. In the event of any Stock dividend, Stock split, reverse Stock split, recapitalization,
reorganization, combination, reclassification or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number and class of shares subject to the Plan and to any outstanding Options and in the exercise
price of any outstanding Options. Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded up or down to the nearest whole number, as determined by the Board, and in no event
may the exercise price of any Option be decreased to an amount less than the par value, if any, of the Stock subject to the Option. The determination of the Board shall be conclusive. The Board shall give prompt notice to each Optionee of any
adjustments pursuant to this Section. 
  
 5. Eligibility and Option
Limitations. 
  
 5.1 Persons Eligible for
Options. Incentive Options may be granted to Employees and Employee-Directors of the Company. Nonstatutory Options may be granted to non-Employees of the Company, such as Consultants and non-Employee Directors. Eligible persons may be
granted more than one (1) Option. 
  
 5.2 Directors Serving
on Committee. At any time that any class of equity securities of the Company is registered pursuant to Section 12 of the Exchange Act, no member of a Committee established to administer the Plan in compliance with the
“disinterested administration” requirements of Rule 16b-3, while a member, shall be eligible to be granted an Option. 
  
 5.3 Fair Market Value Limitation. Subject to the overall limitations of Section 4.1 hereof (relating to the aggregate shares subject to
the Plan), the aggregate Fair Market Value 

  

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(determined at the time the Option is granted) of Stock with respect to which Incentive Stock Options are exercisable by an Optionee for the first time
during any calendar year (under all Stock Option plans of the Company, including the Plan) shall not exceed One Hundred Thousand Dollars ($100,000). 
  
 6. Terms and Conditions of Options. Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form
as the Board shall from time to time establish. Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the terms and conditions otherwise set forth in this Section 6.

  
 6.1 Exercise Price. The exercise price for each
Option shall be established in the sole discretion of the Board; provided, however, that: (a) the exercise price per share for an Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the
Option; and (b) no Option granted to a Ten Percent Owner Optionee shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option.
Notwithstanding the foregoing, an Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another Option in a manner qualifying under
the provisions of Section 424(a) of the Code. 
  
 6.2
Exercise Period. Options shall be exercisable at such time or times and subject to such terms, conditions, performance criteria, and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such
Option; provided, however, that: (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option; and (b) no Option granted to a Ten Percent Owner Optionee shall be
exercisable after the expiration of five (5) years after the effective date of grant of such Option. 
  
 6.3 Payment of Exercise Price. 
  
 6.3.1 Forms of Payment Authorized. Except as otherwise provided below, payment of the exercise price for the number of
shares of Stock being purchased pursuant to any Option shall be made: (a) in cash, by check, or cash equivalent; (b) by tender to the Company of shares of Stock owned by the Optionee having a Fair Market Value (as determined by the Company
without regard to any restrictions on transferability applicable to such Stock by reason of federal or state securities laws or agreements with an underwriter for the Company) not less than the exercise price; (c) subject to Section 6.3.3
below, by the assignment of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Same-Day Sale”); (d) subject to Section 6.3.4 below, by the Optionee’s promissory note in a form approved by the Company; (e) by
such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law; or (f) by any combination thereof. The Board may at any time or from time to time, by adoption of or by amendment to the
standard forms of Option Agreement described in Section 7, or by other 

  

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means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict
one or more forms of consideration. 
  
 6.3.2
Tender of Stock. Notwithstanding the foregoing, an Option may not be exercised by tender to the Company of shares of Stock to the extent such tender of Stock would constitute a violation of the provisions of any law, regulation or
agreement restricting the redemption of the Company’s Stock. Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company of shares of Stock unless such shares either have been owned by the Optionee for more
than six (6) months or were not acquired, directly or indirectly, from the Company. 
  
 6.3.3 Same-Day Sale. The Company reserves, at any and all times, the right, in the Company’s sole and absolute
discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Same-Day Sale. 
  
 6.3.4 Payment by Promissory Note. No promissory note shall be permitted if the exercise of an Option using a promissory note
would be a violation of any law. Any permitted promissory note shall be due and payable not more than ten (10) years after the Option is exercised, and interest shall be payable at least annually and at a rate at least equal to the minimum
interest rate necessary to avoid imputed interest pursuant to all applicable sections of the Code. The Board shall have the authority to permit or require the Optionee to secure any promissory note used to exercise an Option with the shares of Stock
acquired upon the exercise of the Option or with other collateral acceptable to the Company. Unless otherwise provided by the Board, in the event the Company at any time is subject to the regulations promulgated by the Board of Governors of the
Federal Reserve System or any other governmental entity affecting the extension of credit in connection with the Company’s securities, any promissory note shall comply with such applicable regulations, and the Optionee shall pay the unpaid
principal and accrued interest, if any, to the extent necessary to comply with such applicable regulations. 
  
 6.4 Vesting. Under this Plan Options shall be vested at a rate which is at least equal to twenty percent (20%) per year for a maximum
period of five (5) years. The Board in its discretion may accelerate the schedule as to any Optionee, but such vesting schedule may not exceed twenty percent (20%) per year for five (5) years as aforesaid. The failure to exercise this
Option with respect to any shares for which the right accrued during any one-year period shall not result in the termination of the Option with respect to such shares, but rather this Option shall be cumulative and any shares for which the right to
exercise has accrued shall be eligible for exercise during the remainder of the Option term. After all shares have become fully vested, the Option shall remain wholly exercisable until and including the day before the tenth anniversary of the date
hereof (or the fifth anniversary of the date hereof if Optionee is a Ten Percent Owner Optionee), provided that in the case of an Employee, the Optionee is then and has continuously been in the employ of the Company, a Parent or a Subsidiary;
subject, however, to the provisions of Paragraph 5 hereof. 
  
 6.5 Repurchase Rights. Shares issued under the Plan may be subject to a right of first refusal, one more repurchase Options, or other conditions and restrictions as determined by the Board in its sole discretion at the time
the Option is granted. Notwithstanding the foregoing, if the Company shall have the right to repurchase shares upon termination of employment, the repurchase price shall be determined in accordance with Section 260.140.41(k) of Chapter 3 of

  

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Title 10 of the California Code of Regulations. Subject to Section 12 below, the Company shall have the right to assign at any time any repurchase right
it may have, regardless of whether such right is then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Optionee shall execute any agreement evidencing such transfer restrictions prior to the
receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer
restrictions. 
  
 6.6 Tax Withholding. As a
condition to exercise of an Option or otherwise, the Company may require an Optionee to pay over to the Company all applicable federal, state and local taxes which the Company is required to withhold with respect to the exercise of an Option granted
hereunder. At the discretion of the Board and upon the request of an Optionee, the minimum statutory withholding tax requirements may be satisfied by the withholding of shares of Stock otherwise issuable to the Optionee upon the exercise of an
Option. 
  
 7. Standard Forms of Option Agreement. Each Option
granted under the Plan shall be evidenced by a written agreement designated either as an “Incentive Stock Option” or a “Nonstatutory Stock Option” executed by the Company and the Optionee, which: (a) shall comply with and be
subject to the terms and conditions set forth in the form of Incentive Stock Option Agreement and/or Nonstatutory Stock Option Agreement adopted by the Board concurrently with its adoption of the Plan and as amended from time to time; and
(b) if an Incentive Stock Option, shall contain such provisions as are necessary for such Option to qualify for treatment as an Incentive Stock Option pursuant to Section 422 of the Code. 
  
 8. Merger, Consolidation, or Dissolution of Corporation. Following the merger
of one or more corporations into the Company, or any consolidation of the Company and one or more corporations in which the Company is the surviving corporation, the exercise of Options under this Plan shall apply to the shares of the surviving
corporation. Upon any merger or consolidation in which the Company is not the surviving corporation, or upon the sale of all or substantially all of the assets or stock of the Company, or upon a change in control of the Company, all Options under
this Plan shall immediately vest and become exercisable. 
  
 9. Provision of
Information. At least annually, copies of the Company’s balance sheet and income statement for the just completed fiscal year shall be made available to each Optionee and purchaser of shares of Stock upon the exercise of an Option. The
Company shall not be required to provide such information to persons whose duties in connection with the Company assure them access to equivalent information. 
  

10. Nontransferabilitv of Options. During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of descent and distribution. 
  

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 11. Termination of Employment or Other Relationship. Upon termination of the Optionee’s employment or
other relationship with the Company, his rights to exercise Options then held by him shall be only as follows (in no case do the time periods referred to below extend the term specified in any Option): 
  
 11.1 Death or Disability. Upon the death of an Optionee, any
Option which he holds may be exercised (to the extent exercisable at his death), unless it otherwise expires, within such period after the date of his death (not to exceed twelve (12) months) as the Board shall prescribe in his Option
agreement, by the employee’s representative or by the person entitled hereto under his will or the laws of intestate succession. Upon the disability (within the meaning of Section 22(e)(3) of the Code) of an employee, any Option which he
holds may be exercised (to the extent exercisable as of the date of disability), unless it otherwise expires, within such period after the date of his disability (not to exceed twelve (12) months) as the Board shall prescribe in his Option
agreement. 
  
 11.2 Retirement. Upon the retirement
of an officer, Director or Employee or the cessation of services provided by a nonemployee (either pursuant to a retirement plan of the Company, if any, or pursuant to the approval of the Board), an Option may be exercised (to the extent exercisable
at the date of such termination or cessation) by him within such period after the date of his retirement or cessation of services (not to exceed three (3) months) as the Board shall prescribe in his Option agreement. 
  
 11.3 Other Termination. If an officer, Director or Employee
ceases to serve as an officer or Director or leaves the employ of the Company or a nonemployee ceases to provide services to the Company for any reason other than as set forth in Sections 11.2 and 11.3 above, any Option which he holds shall
terminate at: (a) the earlier of 30 days after the date (i) his employment terminates, or (ii) he ceases providing services to the Company or the date he receives written notice that his employment or rendering of services is or will
be terminated; or (b) such later date as determined by the Board not to exceed the maximum period under Section 11.2 hereof with respect to Incentive Stock Options. The foregoing shall not extend any Option beyond the term specified
therein and such Option shall be exercisable only to the extent exercisable at the date of termination of employment or cessation of services. 
  
 11.4 Board Discretion. The Board may in its sole discretion accelerate the exercisability of any or all Options upon termination of
employment or cessation of services. 
  
 12. Transfer of Company’s
Rights. If the Company assigns, other than by operation of law, to a third person, any of the Company’s rights to repurchase any shares of Stock acquired upon the exercise of an Option, the assignee shall pay to the Company the value of
such right as determined by the Company in the Company’s sole discretion. Such consideration shall be paid in cash. In the event such repurchase right is exercisable at the time of such assignment, the value of such right shall be not less than
the Fair Market Value of the shares of Stock which may be repurchased under such right (as determined by the Company) minus the repurchase price of such shares. The requirements of this Section 12 regarding the minimum consideration to be
received by the Company shall not inure to the benefit of the Optionee whose shares of Stock are being repurchased. Failure of the Company to comply with the provisions of this Section 12 shall not constitute a defense or otherwise prevent the
exercise of the repurchase right by the assignee of such right. 
  

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 13. Indemnification. In addition to such other rights of indemnification as they may have as members of the
Board or officers or employees of the Company, members of the Board and any officers or employees of the Company to whom authority to act for the Board is delegated shall be indemnified by the Company against all reasonable expenses, including
attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure
to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct
in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.

  
 14. Securities Law Requirements. The Company’s obligation
to issue shares of its Stock upon exercise of an Option is expressly conditioned upon the completion by the Company of any registration or other qualification of such shares under any state and/or federal law or rulings and regulations of any
government regulatory body or the making of such investment representations or other representations and undertakings by the Optionee (or his legal representative, heir or legatee, as the case may be) in order to comply with the requirements of any
exemption from any such registration or other qualification of such shares which the Company in its sole discretion shall deem necessary or advisable. The Company may refuse to permit the sale or other disposition of any shares acquired pursuant to
any such representation until it is satisfied that such sale or other disposition would not be in contravention of applicable state or federal securities law. 
  

15. Termination or Amendment of Plan. The Board may terminate or amend the Plan at any time. However, subject to changes in the law or other legal
requirements that would permit otherwise, without the approval of the Company’s shareholders: (a) the total number of shares of Stock that may be issued under the Plan shall not be increased (except by operation of the provisions of
Section 4.2); (b) the class of persons eligible to receive Incentive Stock Options shall not be expanded; (c) the Option price per share of Stock subject to Incentive Stock Options may not be fixed at less than 100% of the Fair Market
Value of a share of Stock on the date the Option, is granted; (d) the maximum period of ten (10) years during which Options may be exercised may not be extended; and (e) the Plan may not be amended in a manner that limits or reduces
the amendments which require shareholder approval. In any event, no termination or amendment of the Plan may adversely affect any then-outstanding Option or any unexercised portion thereof, without the consent of the Optionee, unless such
termination or amendment is required to enable an Option designated as an Incentive Stock Option to qualify as an Incentive Stock Option or is necessary to comply with any applicable law or government regulation. 
  

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 16. Termination. Subject to Section 8 hereof, the Plan shall terminate automatically as of the close
of business on the day preceding the tenth anniversary date of the earlier of: (a) its adoption by the Board; or (b) its approval by the shareholders. Unless otherwise provided herein, the termination of the Plan shall not affect the
validity of any Option agreement outstanding at the date of such termination. 
  
 17. Shareholder Approval. The Plan or any increase in the maximum number of shares of Stock issuable thereunder as provided in Section 4.1 (the “Maximum Shares”) shall be approved by the shareholders of the
Company within twelve (12) months of the date of adoption thereof by the Board. Options granted prior to shareholder approval of the Plan or in excess of the Maximum Shares previously approved by the shareholders shall become exercisable no
earlier than the date of shareholder approval of the Plan or such increase in the Maximum Shares, as the case may be. 
  
 18. No Right to Employment. Nothing in this Plan or in any Option granted hereunder shall confer upon any Optionee any right to continue in the employ of
the Company or to continue to perform services for the Company or any Parent or Subsidiary, or shall interfere with or restrict in any way the rights of the Company to discharge or terminate any officer, director, employee, independent contractor or
consultant at any time for any reason whatsoever, with or without good cause. 
  
 IN WITNESS WHEREOF, the undersigned President of the Company certifies that the foregoing amended and restated Plan was duly adopted by the Board on April 27, 2005 and approved by the shareholders on
June 28, 2005. 
  

	
	
	/s/    PETER L. JENSEN        
	Peter L. Jensen, President

  

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 INCENTIVE STOCK OPTION PURCHASE AGREEMENT 
  
 THIS INCENTIVE STOCK OPTION AGREEMENT (“Agreement”), dated as of
                    , 200  , is entered into by and between Basin Water, Inc., a California corporation (the “Company”), and
                     (“Optionee”), with respect to the following facts: 
  
 RECITALS 
  
 A. Pursuant to the Basin Water, Inc.’s 2001 Stock Option Plan (the “Plan”) and by Action By Directors, dated August 24, 2001, to provide Optionee with an
added incentive as an                     , the Board of Directors of the Company (the “Board”) authorized the granting to Optionee of an
Incentive Stock option to purchase the number of shares of Common Stock of the Company specified in Paragraph 1 hereof, at the price specified therein, for the term and upon the terms and conditions hereinafter stated. Capitalized terms that are
used herein without definition and that are defined in the Plan are used herein as so defined. 
  
 B. Optionee desires to accept the grant of an Incentive Stock option for the term and upon the terms and conditions hereinafter stated. 
  
 NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 
  
 OPERATIVE PROVISIONS 
  
 1. Number of Shares; Option Price. Pursuant to said action of the Board, the Company hereby grants to Optionee the option (“Option”) to purchase, upon and subject to the terms and conditions of said
Plan, all or any part of                      (        ) shares of Common Stock of the Company for cash at
the price of                      ($    ) per share. 
  
 2. Term. This Option shall expire on the day before the
             (        ) anniversary of the date hereof [or the         
(        ) anniversary hereof if Optionee is a Ten Percent Owner Optionee] unless such Option shall have been terminated prior to that date in accordance with the provisions of the Plan or this Agreement.

  
 3. Vesting.
                     (        ) shares are vested as of the date of this Agreement. Subject to the terms and
conditions of the Plan, the remaining                      (        ) shares shall vest as follows: (a)
                     (        ) shares shall vest on
                    , 200  ; and (b)
                     (    ) shares shall vest on
                    , 200  . Optionee’s right to purchase shares subject to this Agreement is cumulative; the failure to exercise this
Option with respect to any shares for which the right accrued during any one-year period shall not result in the termination of the Option with respect to such shares, but rather this Option shall be cumulative and any shares for which the right to
exercise has accrued shall be eligible for exercise during the remainder of the Option term. After              (    ) years, the Option shall remain wholly exercisable
until and including the day before the        (    ) anniversary of 
  

 1 

                     ,
200   [or the                  (        ) anniversary of the date hereof if Optionee is a Ten Percent Owner Optionee],
provided that Optionee is then and has continuously been in the employ of or is then and has continuously provided services to the Company, a Parent or a Subsidiary; subject, however, to the provisions of Paragraph 5 hereof. 
  
 4. Exercise. The Option may be exercised by written notice delivered
to the Company stating the number of shares with respect to which the Option is being exercised, together with a check made payable to the Company. Not less than ten (10) shares may be purchased at any one time unless the number purchased is the
total number purchasable under such Option at the time. Only whole shares may be purchased. Promptly upon receipt of such notice and payment, the Company shall deliver to Optionee the stock certificate(s) representing the shares purchased.

  
 5. Exercise on Termination of Relationship with the
Company. If Optionee shall cease to be employed by or provide services to the Company, a Parent or a Subsidiary, Optionee’s right to exercise his Option, if any, shall be governed by Section 11 of the Plan. 
  
 6. Nontransferability. This Option may not be assigned or transferred
except by will or by the laws of descent and distribution, and may be exercised only by Optionee during his lifetime or after his death, by his personal representative or by the person entitled thereto under his will or the laws of intestate
succession, all in accordance with the terms conditions more particularly set forth in the Plan. 
  
 7. Optionee Not a Shareholder. Optionee shall have no rights as a shareholder with respect to the Common Stock of the Company covered by the Option
until the date of issuance of a stock certificate or stock certificates to Optionee upon exercise of the Option. No adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or
certificates are issued, except as provided in Section 4 of the Plan. 
  
 8. Modification and Termination. The rights of Optionee are subject to modification and termination in certain events as more particularly provided in the Plan. 
  
 9. Plan Governs. This Agreement and the Option evidenced hereby are made and granted pursuant to the Plan and are in
all respects limited by and subject to the express terms and provisions of that Plan, as it may be amended from time to time and construed by the Board. 
  
 10. Notices. All notices to the Company shall be addressed to the President of the Company,
                    , at
                                        
        , and all notices to Optionee shall be addressed to Optionee at the address of Optionee on file with the Company, or to such other address as either may designate to the other in writing. A notice shall
be deemed to be duly given if and when enclosed in a properly addressed sealed envelope deposited, postage prepaid, with the United States Postal Service. In lieu of giving notice by mail as aforesaid, written notices under this Agreement may be
given by personal delivery to Optionee or to the chairman of the Board of Directors of the Company (as the case may be). 
  

 2 

 11. Sale or Other Disposition. If Optionee at any time contemplates the disposition (whether by
sale, gift, exchange, or other form or transfer) of any shares acquired by exercise of this Option, he or she will first notify the Company in writing of such proposed disposition and cooperate with the Company in complying with all applicable
requirements of law, which, in the judgment of the Company, must be satisfied prior to such disposition. 
  
 12. Miscellaneous. This Agreement is entered into and delivered in the State of California and shall be construed and enforced under the laws
thereof, without giving effect to any choice-of-law or conflicts-of-law rules or principles that would result in the application of any other law. The provisions hereof shall inure to the benefit of and be binding upon the parties hereto and their
respective heirs, executors, administrators, successors and assigns. 
  
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. 
  

			
	 “Company”

	
	 Basin Water, Inc.,
 a California corporation

		
	By:	 	 
	 	 	Keith R. Solar, Director

  

			
	 “Optionee”

	
	 
	 Name:
	 	 

  

	
	 Address

	
	 
	
	 

  

 3Employment Agreement

 Exhibit 10.6 
  
 EMPLOYMENT AGREEMENT 
  
 THIS EMPLOYMENT AGREEMENT (the “Agreement”) dated as of October 1, 2005, is entered into by and between Basin Water, Inc., a California
corporation (the “Company”), and Peter L. Jensen (the “Employee”), with respect to the following facts. 
  
 R E C I T A L S 
  
 A. The Company is in the business of designing and building equipment to produce potable water from contaminated wells. 
  
 B. The Employee has special knowledge and expertise in the business conducted
by the Company and by this Agreement is being employed on a full-time basis as the President and Chief Executive Officer of the Company. 
  
 NOW, THEREFORE in consideration of the mutual promises and conditions hereinafter set forth, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties, intending to be legally bound, do hereby agree as follows: 
  
 ARTICLE 1 
  
 EMPLOYMENT AND TERM 
  
 1.1 Employment/Duties. The Company hereby agrees to employ the Employee and the Employee hereby accepts employment as the President and Chief Executive Officer of the Company under the terms and
conditions set forth in this Agreement. Employee shall be responsible to the Company’s Board of Directors for the performance of his duties. Employee shall have responsibility for such duties as are customarily associated with this position and
such other duties and responsibilities as may be assigned by the Company’s Board of Directors. During the Term, Employee shall devote all of his working time, attention and skill to the business affairs of the Company. 
  
 1.2 Effective Date. This Agreement shall become effective
immediately upon the date this Agreement is fully executed (the “Effective Date”). 
  
 1.3 Term. This Agreement is effective from the Effective Date and shall continue for a period of two (2) years, unless earlier terminated as provided in ARTICLE 6 (the “Term”). At the end
of the two-year period, unless previously terminated, this contract may be renewed for an additional twelve months with no action on the part of either party, and may continue each subsequent year being automatically renewed. If either party desires
not to renew this agreement, such party must indicate in writing no later than sixty (60) days prior to the expiration of this agreement that they intend to allow this agreement to terminate at the end of the current twelve-month period.

  
 Jensen Employment Agreement – Oct 2005 
  
  

 1 

 ARTICLE 2 
  

COMPENSATION 
  
 2.1 Base Salary. The Employee shall be paid a monthly base salary of Ten Thousand Four Hundred Sixteen Dollars and Sixty-Seven Cents
($10,416.67), payable in two (2) equal monthly installments on the 1st and 15th day of each month. As used in this Agreement, the term “Salary” shall mean the amount payable to Employee pursuant to this Section 2.1. 

 
 2.2 Merit Review. The Employee shall be eligible for an
annual merit review based on performance and profitability of the Company. 
  
 2.3 Annual Bonus. The Employee shall be eligible for an annual bonus based on the Company’s attainment of certain performance and profitability objectives as determined and approved by the
Company’s Board of Directors. 
  
 2.4 Benefits.
The Company currently offers health insurance coverage, a Section 529 Flex Plan and a 401K plan for all employees. Employee will be eligible to participate in the Company’s health plan, Flex plan and the 401K plan on the same terms and
conditions available to other employees of the Company. The Company currently offers no other benefits to its employees. If the Company in the future decides to offer benefits during the Term, the Company shall provide the Employee with benefits
comparable to those provided to its other employees, provided that provision of such benefits by the Company is legal and is not unreasonably burdensome to the Company. Participation shall be subject to the terms of the applicable plan documents.
The Company may alter, modify, add to or delete its employee benefit plans as they apply to the Company’s employees at such times and in such manner as the Company determines appropriate, without recourse by Employee. 
  
 2.5 Stock Options. The Company has established that certain
Basin Water Technology Group, Inc. 2001 Stock Option Plan (the “Plan”), pursuant to which stock options may be authorized and granted to the executive officers, directors, employees and key consultants of the Company. Periodically, the
Board of Directors of the Company shall grant Employee options (the “Options”) to purchase shares of the Company’s common stock; the number of options shall be determined at the Board’s discretion. Any such options shall vest as
follows, (unless such vesting is modified by the Company’s Board of Directors): One Third (1/3rd) of the Options shall vest on the first anniversary of the Effective Date, One Third (1/3rd) of the Options shall vest on the second anniversary of the Effective Date and One Third (1/3rd) of the Options shall vest on the third anniversary of the Effective Date. The exercise price for the Options shall be the most recent market price per share.
Notwithstanding the foregoing, the Options shall be granted pursuant to the Plan and shall in all respects be limited by and subject to the express terms and provisions of that Plan, as it may be amended from time to time and construed by the Board
of Directors of the Company. 
  
 2.6 Vacation.
During each year of the Term of this Agreement, Employee shall accrue twenty (20) days (i.e., 3.0696 hours per forty (40) hour week, or one hundred sixty (160) hours) of vacation time. Payments for vacation time shall be calculated
based on Employee’s Salary. Any accrued but unused vacation time shall accumulate and carry forward during subsequent 
  
 Jensen Employment Agreement – Oct 2005 
  

 2 

 years of the Term; provided, however, that no more than one hundred sixty (160) hours of vacation time shall carry
forward to subsequent years of the Term; provided further, however, that in no event shall Employee accrue more than two hundred (200) hours of unused vacation time, and if Employee accrues a total of two hundred (200) hours of unused
vacation time, Employee shall cease accruing vacation time until Employee’s accrued but unused vacation time again drops below two hundred (200) hours. Employee agrees to seek approval of the Company prior to scheduling any vacation days,
and agrees that any scheduled vacation days shall be rescheduled at the Company’s request to accommodate the reasonable needs of the Company. 
  
 2.7 Business Expenses. The Company will pay or reimburse Employee for all reasonable business expenses incurred or paid by him in the
performance of his duties and responsibilities hereunder subject to and in accordance with a pre-approved budget, subject to any restrictions on such expenses set by the Company and to such reasonable substantiation requirements as may be specified
by the Company from time to time. 
  
 ARTICLE 3 

 
 PROPRIETARY INFORMATION 
  
 3.1 Proprietary Information. 
  
 (a) Confidentiality Required. Employee acknowledges that the Company
and each person or entity which controls, is controlled by, or is under common control with the Company (collectively the “Affiliates”) possess, are developing and acquiring and will continue to possess, develop and acquire valuable
Proprietary Information (as defined below), including information that Employee may acquire, develop or discover during Employee’s employment with the Company. The value of that Proprietary Information depends, in part, on it remaining
confidential. The Company and its Affiliates depend on Employee to maintain that confidentiality, and Employee accepts that position of trust. 
  
 (b) Proprietary Information, Defined. As used in this Agreement, “Proprietary Information” means or includes, without limitation:

  
 (1) Any information, ideas, and materials (including any
formula, pattern, compilation, device, method, technique or process) that derives, in part, independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its
disclosure or use, and includes information of or about the Company, its Affiliates, its clients, employees, customers, suppliers, joint venturers, licensors, licensees, distributors and other persons and entities with whom the Company does or may
do business; 
  
 (2) Any ideas or materials, such as know-how,
show-how, research and development results, software design and specifications, source and object code, training and training materials, invention disclosures, patent applications, trade secrets, blueprints, models, and other materials and concepts
relating to products and processes; and 
  
 Jensen Employment Agreement – Oct
2005 
  
  

 3 

 (3) Any information, ideas, or materials of a business nature including without limitation non-public
financial information, information relating to profits, costs, marketing, strategy, purchasing, sales, customers, suppliers, pricing, bidding, customer information, contract terms, employees, salaries, product development plans, business and
financial plans, forecasts and projections, client information, marketing and sales plans and forecasts, any or all non-public internal functionality, design parameters, and other proprietary features of the Company’s current and future
business activities, and similar internal data. 
  
 (c)
Non-Disclosure, Etc. Employee will not disclose, disseminate, publish, copy or otherwise make available for use (collectively “Use”) at any time, either during or after Employee’s employment with the Company, any or all
Proprietary Information except for the exclusive benefit of the Company and its Affiliates, as required by Employee’s duties for the Company, or as the Company expressly may consent to in writing. Employee will cooperate with the Company and
its Affiliates, and use Employee’s best efforts to prevent the unauthorized Use of any or all Proprietary Information. Employee understands that this prohibition on Use prevents Employee from discussing Proprietary Information, even in general
terms, with persons outside the Company, except if (1) the Use is authorized or required in connection with Employee’s duties of employment for the Company or its Affiliates during the Term, (2) the Company expressly consents in
writing to the Use of Proprietary Information, or (3) the Use is required pursuant to any applicable judgment, order or decree of any court or governmental body or agency having jurisdiction, or by any law, rule or regulation (collectively
“Legal Process”). If Employee becomes subject to Legal Process, Employee shall give the Company reasonable prior written notice of the Legal Process and a written description of the Proprietary Information being sought, and shall obtain,
to the maximum extent possible, confidential treatment for the Proprietary Information sought to be obtained through the Legal Process. Employee shall cooperate fully with the Company in its efforts to prevent unauthorized Use of Proprietary
Information. 
  
 (d) Return of Proprietary Information.
Upon leaving employment with the Company for any reason, Employee shall immediately deliver to the Company all tangible, written, graphical, machine readable, computer tapes, diskettes, hard drives, and all other materials, including without
limitation all copies and excerpts, in Employee’s possession, custody, or control containing or disclosing any or all Proprietary Information. 
  
 (e) Civil Remedies, Criminal Penalties. In addition to any civil remedies available to the Company in the event of Employee’s unauthorized
disclosure or use of any or all Proprietary Information, Employee acknowledges that the unauthorized taking, carrying away, or use of a trade secret may constitute a criminal act under California Penal Code Section 499c. 
  
 3.2 Disclosure and Assignment of Information. Employee agrees
promptly to disclose to the Company all information pertaining to the Company’s business and collected or learned by Employee, either alone or jointly with others, in the course of his employment with the Company. In addition, Employee hereby
assigns to the Company any rights he may have or acquire in the Proprietary Information, and promises that during the duration of his employment with the Company and thereafter, he will assist the Company in the enforcement and protection of the
Proprietary Information. The Company shall promptly reimburse Employee for any reasonable expenses incurred in complying with the provisions of this Section 3.2. 
  
 Jensen Employment Agreement – Oct 2005 
  
  

 4 

 3.3 Innovations and Improvements. Employee agrees that all inventions, innovations or
improvements in the Company’s method of conducting its business conceived by him during his employment with the Company belong to the Company. Employee will promptly disclose such inventions, innovations or improvements to the Company, and
perform all actions reasonably requested by the Company to establish and confirm such ownership. Any such actions required to be performed by Employee shall be at the expense of the Company. 
  
 3.4 Moral Rights Waiver. Employee also hereby forever waives
and agrees never to assert against Company, its successors or licensees, any and all rights to claim authorship of a work, any rights to object to any distortion or other modification of a work, and any similar rights provided for by any state,
federal or international law or treaty, that Employee has, had or may have in any Proprietary Information of the Company. 
  
 3.5 Appointment of Attorney in Fact. Employee hereby irrevocably designates and appoints the President of the Company as Employee’s
agent and attorney-in-fact to act for and in Employee’s behalf and stead to execute and file any document and to do all other lawfully permitted acts to further the prosecution, issuance, and enforcement of patents, copyrights and other
proprietary rights with the same force and effect as if executed and delivered by Employee. 
  
 ARTICLE 4 
  
 NONSOLICITATION AND NONCOMPETITION 
  
 4.1
Nonsolicitation. Employee hereby agrees that for as long as he is employed by the Company, and for a period of one (1) year thereafter, Employee shall not, directly or indirectly, for Employee’s behalf or for or on behalf of any
person, firm, corporation, business, partnership, or other organization other than the Company, (a) induce any employee of the Company or its Affiliates to leave such employment, or (b) solicit the business of any person or entity that is
a Prospective Customer (as defined below) or a customer or client of the Company or its Affiliates on the date of such termination or during the twelve (12) month period immediately preceding such termination. As used herein, “Prospective
Customer” shall mean any person or entity whose business is being actively sought or in any way solicited, or known by Employee to be a person or entity whose business is the subject of possible solicitation by the Company or its Affiliates.
Employee expressly acknowledges that the length of time involved in soliciting and obtaining the business of new customers can be as long as two (2) years. 
  

4.2 Noncompetition. 
  
 (a) Unique Technology. Employee acknowledges that the Company and its Affiliates currently are engaged in the development and manufacturing of
unique technology (the “Unique Technology”), including without limitation the BASIN WATER IXTM ion
exchange process which removes from groundwater certain chemical contaminants, including without limitation nitrates, arsenic, perchlorates, chromium 6 and fluoride. 
  
 (b) Marketing Efforts. Employee further acknowledges that the Company and its 
  
 Jensen Employment Agreement – Oct 2005 
  

 5 

 Affiliates are currently in the process of marketing the Unique Technology to various cities, counties, municipal
corporations, government agencies, joint powers agencies, water agencies, water districts, private companies, joint ventures, and private individuals throughout the State of California, and that the Company is planning on expanding its marketing
efforts to encompass the United States and the world. 
  
 (c)
Confidential Relationship. Employee acknowledges that Employee will be in a confidential relationship with the Company, wherein Employee will receive access to the Unique Technology, and that Employee will receive specialized training from
the Company or its Affiliates. 
  
 (d) No Unauthorized
Uses. Given the status of the Unique Technology, Employee’s access to the Unique Technology and the vast potential market for the Company’s Unique Technology, Employee hereby covenants and agrees that, for the duration of the
Non-Compete Term (as defined below), Employee will not make any Use, or authorize anyone else to make any Use for or on behalf of any other person, organization or company, of any or all information pertaining in any way to the Unique Technology,
except as required by Employee’s duties for the Company or its Affiliates, or as the Company expressly authorizes in writing. 
  
 (e) No Competition and No Engaging in Restricted Activities. Employee further covenants and agrees that for the duration of the Non-Compete Term,
Employee shall not, either directly or indirectly, solely or jointly with any person or persons, as an employee, consultant, advisor, independent contractor (regardless of whether engaged in a business for profit) or as an individual proprietor,
owner, partner, shareholder, director, officer, joint venturer, investor, lender or in any other capacity, compete with the Company or its Affiliates in, or engage in, the Restricted Activities (as defined below). Notwithstanding the foregoing,
Employee acknowledges that this covenant does not prevent Employee from owning up to five percent (5%) of the stock in any publicly-traded company which may be engaged in the Restricted Activities. 
  
 (f) Non-Compete Term, Defined. The term “Non-Compete Term”
means that period of time commencing on the effective date of Employee’s employment with the Company and continuing for a period of two (2) years following the last day of Employee’s employment with the Company or its Affiliates.

  
 (g) Restricted Activities, Defined. The term
“Restricted Activities” means any or all of Employee’s primary duties, obligations and daily activities for the Company or its Affiliates during the three (3) years immediately preceding the expiration or termination of
Employee’s employment with the Company, and all other activities which the Company or its Affiliates actively pursued, researched or engaged in, including without limitation the Unique Technology, during the three (3) years immediately
preceding such expiration or termination. 
  
 (h) Reform.
Employee hereby acknowledges and agrees that the Company has attempted to limit Employee’s rights to compete only to the extent necessary to protect the Company from, among other things, unfair competition. Employee further acknowledges and
agrees that Employee is a key employee of the Company and that in light of the current and future activities of the Company, the restrictions set forth in this Agreement are fair and 
  
 Jensen Employment Agreement – Oct 2005 
  

 6 

 reasonable as of the date hereof. The Parties further hereby agree that if the scope or enforceability of any provisions
of this Agreement are in any way disputed, a court having appropriate jurisdiction shall reform any such unenforceable provision in a manner which provides the Company with the greatest level of protection permissible at law, without barring
Employee from engaging in lawful conduct not otherwise prohibited by these restrictions. 
  
 ARTICLE 5 
  
 INDEMNIFICATION 
  
 5.1 Indemnification
of Employee. The Company agrees to indemnify Employee in connection with the performance of his duties and obligations hereunder in accordance with the Bylaws of the Company. 
  
 ARTICLE 6 
  
 TERMINATION OF EMPLOYMENT 
  
 6.1 Events of Termination by the Company. 
  
 (a) Death or Disability. In the event Employee dies or becomes permanently disabled during the term of the Agreement, his employment
hereunder shall automatically terminate. In such case, the Company shall pay to Employee or his beneficiary, as the case may be, in addition to such amounts as may be payable to Employee pursuant to Article 2 of the Agreement, any earned but unpaid
Salary as of the date of his death or disability. For the purpose of the Agreement, “permanent disability” or “permanently disabled” shall mean the inability of the Employee, due to physical or mental illness or disease, to
perform the functions then performed by such Employee for ninety (90) substantially consecutive days, accompanied by the likelihood, in the opinion of a physician chosen by the Company, that the Employee will be unable to perform such functions
within the reasonably foreseeable future; provided, however, that the foregoing definition shall not include a disability for which the Company is required to provide reasonable accommodation pursuant to the Americans with Disabilities Act or other
similar statute or regulation. 
  
 (b) By the
Company. The Company may terminate Employee’s employment hereunder for “Cause” at any time upon notice to Employee setting forth in reasonable detail the nature of such cause. The following shall constitute “Cause” for
termination. 
  
 (1) Employee’s falsification of the
accounts of the Company, embezzlement of funds of the Company or other material dishonesty with respect to the Company; 
  
 (2) Conviction of, or plea of nolo contendere to, a felony or other crime involving moral turpitude (it being understood that violation of a motor
vehicle code does not constitute such a crime); 
  
 Jensen Employment Agreement
– Oct 2005 
  

 7 

 (3) Conduct engaged in or action taken or omitted to be taken by Employee which is in material
breach of the Agreement, other than a breach of Articles 3 or 4 of this Agreement, which breach continues for more than seven (7) days after written notice of such breach is given to Employee; 
  
 (4) Breach or threatened breach of any of the provisions of Articles
3 or 4 of this Agreement; 
  
 (5) Failure to
satisfactorily perform a material and substantial portion of Employee’s duties and responsibilities hereunder which failure continues for more than thirty (30) days after written notice of such failure is given to Employee; 
  
 (6) Gross or willful misconduct of Employee with respect to the
Company or any subsidiary or affiliate thereof which misconduct continues for more than ten (10) days after written notice of such misconduct is given to Employee; or 
  
 (7) Change in the Company’s economic circumstances, such that it would not be economically feasible to retain
Employee. 
  
 Upon the giving of notice of termination of
Employee’s employment hereunder for cause, the Company shall have no further obligation or liability to Employee, other than the payment of Salary earned but unpaid at the date of termination and providing Employee with the right to participate
(subject to payment by Employee of any premiums for coverage) in the Company’s group medical and dental insurance plans as the same are in effect from time to time for so long as Employee is entitled to continue such participation under
applicable law and plan terms. 
  
 6.2 Termination By
Employee. Employee, at his option, may terminate his employment thereunder upon: (a) the sale of all or substantially all of the assets of the Company; or (b) the sale of a controlling interest in the issued and outstanding shares of
the Company; or (c) any other change in control of the Company. If Employee desires to terminate his employment pursuant to this Section 6.2, Employee shall notify the Company’s Board of Directors within sixty (60) days of the
occurrence of an event described in clauses (a) through (c) above. 
  
 6.3 Survival. Notwithstanding the expiration of the Term of this Agreement or the termination of this Agreement as provided in the Article 6, the obligations of Employee and the Company under Article 3,
Article 4 and Article 5 shall survive such expiration of the Term or such termination and remain in full force and effect. 
  
 ARTICLE 7 
  
 REMEDIES 
  
 7.1 Specific Performance; Injunctive Relief. Employee acknowledges and agrees that any violation of the provisions of Articles 3 or 4 of this Agreement will cause irreparable damage to the Company. Accordingly, in the event of
a breach or threatened breach by Employee of such provisions, the Company shall be entitled to obtain specific performance of such provisions through injunction or other equitable relief from a court of competent jurisdiction, without proof of
actual damages and without being required to post bond or other security. 
  
 Jensen Employment Agreement – Oct 2005 
  

 8 

 7.2 Remedies Cumulative. All rights and remedies provided by this Agreement or existing at
law or in equity shall be cumulative of all other rights and remedies, and shall not be exclusive of each other. No delay or omission by a party in the exercise of any right or remedy shall constitute a waiver of such right or remedy, and pursuit of
one right or remedy shall not in any way operate as an exclusive election or otherwise preclude or limit either party from pursuing any other or additional right or remedy. 
  
 ARTICLE 8 
  
 CONCLUDING PROVISIONS 
  
 8.1 Effective Date of Notice. The effective date of any offer, demand, notice or instrument shall be the date of delivery to the addressee.

  
 8.2 Resolution of Disputes. Except as provided
in Article 7 hereof, any controversy or claim arising out of or relating to this Agreement, or any breach thereof, shall be settled by arbitration in accordance with the rules of the American Arbitration Association now in force and hereafter
adopted. This Section 8.2 shall apply to any claim by Employee of employment discrimination under federal or state law, and Employee and Company each hereby waives the right to litigate such claim in state or federal court. Any arbitration
shall take place in San Diego, California, or at such other location as the Parties may agree upon, and judgment on the award rendered may be entered in any court having jurisdiction. Any arbitration pursuant to this Section 8.2 shall be held before
one arbitrator selected by the Employee and the Company, and if the Employee and the Company are unable to agree on such arbitrator, the Presiding Judge of the California Superior Court, County of San Diego shall select such arbitrator. The fees and
disbursements of such arbitrator shall be borne equally by the Parties. The Parties agree that, in any arbitration the parties shall, to the maximum extent possible, have such rights as to the scope and manner of discovery as are permitted in the
Federal Rules of Civil Procedure and consent to the entry of any order of any court of competent jurisdiction to enforce such discovery. The arbitrator shall make his or her award in accordance with and based upon all the provisions of the Agreement
and judgment upon any award rendered by the arbitrator shall be entered in any court have jurisdiction thereof. The arbitrator shall award costs and reasonable attorneys’ fees, including costs and attorneys’ fees incurred in enforcing any
arbitration award, to the Party substantially prevailing in the arbitration. 
  
 8.3 Withholding. All payments made by Company to Employee hereunder shall be subject to applicable withholding. 
  
 8.4 Further Actions. At any time and from time to time after the date hereof, each party agrees to take such actions and to execute and
deliver such documents as the other party may reasonably request to effectuate the purposes of this Agreement. 
  
 8.5 Amendment. Except as otherwise provided in this Agreement, neither this Agreement nor any provision hereof may be waived, modified,
amended, discharged, or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such
writing. 
  
 Jensen Employment Agreement – Oct 2005 
  

 9 

 8.6 Entire Agreement. This Agreement and the agreements provided for herein constitute the
entire understanding between the parties with respect to the matters set forth herein, and they supersede all prior or contemporaneous understandings or agreements between the parties with respect to the subject matter hereof, whether oral or
written. 
  
 8.7 Notices. Any notice, approval,
consent, waiver or other communication required or permitted to be given or to be served upon either party in connection with this Agreement shall be in writing. Such notice shall be personally served, sent by facsimile, telegram, or cable, or sent
prepaid by registered or certified mail with return receipt requested, or sent by reputable overnight delivery service, such as Federal Express, and shall be deemed given: (a) if personally served, when delivered to the party to whom such
notice is addressed; (b) if given by facsimile, telegram, or cable, when sent; (c) if given by prepaid or certified mail with return receipt requested, on the date of execution of the return receipt; or (d) if sent by reputable
overnight delivery service, such as Federal Express, when received. Any notice given by facsimile, telegram, or cable shall be confirmed in writing, and such confirmation shall be sent or delivered by any of the other means of delivery set forth in
this Section, within forty-eight (48) hours after notice was sent by facsimile, telegram or cable. Such notices shall be addressed to the party to whom such notice is to be given at the party’s address set forth below or as such party
shall otherwise direct in a writing to the other party delivered or sent in accordance with this Section. 
  

			
	If to Employee:	  	Peter L. Jensen
	 	  	 P.O. Box 70000
 San Diego, California 92167
 Phone No. 619-222-1493
 Fax No. 619-222-3393

		
	If to Company:	  	Basin Water, Inc.
	 	  	 8731 Prestige Court
 Rancho Cucamonga, CA
91730
 Attn: Peter L. Jensen, President
 Phone:
909-481-6800
 Fax No.: 909-481-6801

		
	With a copy to:	  	Alhadeff & Solar, LLP
	 	  	 707 Broadway, Suite 800
 San Diego, California
92101
 Attn: Keith R. Solar, Esq.
 Phone: (619)
239-8700
 Fax No.: (619) 702-3898

  
 8.8
Controlling Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of California, without giving effect to any choice-of-law or conflicts-of-laws rule or principle that would result
in the application of any other laws. 
  
 8.9
Headings. Headings, titles and captions are for convenience only and shall not constitute a portion of this Agreement or be used for the interpretation thereof. 
  
 Jensen Employment Agreement – Oct 2005 
  

 10 

 8.10 Cumulative Rights; Waiver. The rights created under this Agreement, or by law
or equity, shall be cumulative and may be exercised at any time and from time to time. No failure by either party to exercise, and no delay in exercising any rights, shall be construed or deemed to be a waiver thereof, nor shall any single or
partial exercise by either party preclude any other or future exercise thereof or the exercise of any other right. Any waiver of any provision or of any breach of any provision of this Agreement must be in writing, and any waiver by either party of
any breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Agreement. The failure of either party to insist upon strict
adherence to any term of the Agreement on one or more occasions shall not be considered or construed or deemed a waiver of any provision or any breach of any provision of this Agreement or deprive that party of the right thereafter to insist upon
strict adherence to that term or provision or any other term or provision of this Agreement. No delay or omission on the part of either party in exercising any right under this Agreement shall operate as a waiver of any such right or any other right
under this Agreement. 
  
 8.11 Liberal
Construction. This Agreement constitutes a fully-negotiated agreement between commercially sophisticated parties, each assisted by legal counsel, and the terms of this Agreement shall not be construed or interpreted for or against either party
hereto because that party or its legal representative drafted or prepared such provision. 
  
 8.12 Severability. If any provision of this Agreement is invalid, illegal or unenforceable, such provision shall be deemed to be severed or deleted from this Agreement and the balance of this
Agreement shall remain in full force and effect notwithstanding such invalidity, illegality or unenforceability. 
  
 8.13 Good Faith and Fair Dealing. The parties hereto acknowledge and agree that the performances required by the provisions of this
Agreement shall be undertaken in good faith, and with both parties dealing fairly with each other. 
  
 8.14 No Third Party Beneficiaries. This Agreement does not create, and shall not be construed to create, any rights enforceable by
any person, partnership, corporation, joint venture, limited liability company or other form of organization or association of any kind that is not a party to this Agreement. 
  
 8.15 Execution in Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon,
provided such signature page is attached to any other counterpart identical thereto except for having an additional signature page executed by the other party. Each party agrees that the other party may rely upon the facsimile signature of the other
party on this Agreement as constituting a duly authorized, irrevocable, actual, current delivery of this Agreement as fully as if this Agreement contained the original ink signature of the party supplying a facsimile signature. 
  
 8.16 Time of the Essence. Time is of the essence of each
and every provision of this Agreement. Unless business days are expressly provided for, all references to “days” herein 
  
 Jensen Employment Agreement – Oct 2005 
  

 11 

 shall refer to consecutive calendar days. If any date or time period provided for in this Agreement is or ends on a
Saturday, Sunday or federal, state or legal holiday, then such date shall automatically be extended to the next day which is not a Saturday, Sunday or federal, state or legal holiday. 
  
 8.17 Number, Gender. As used herein, and as the circumstances require, the plural term shall include the
singular, the singular shall include the plural, the neuter term shall include the masculine and feminine genders, the masculine term shall include the neuter and the feminine genders, and the feminine term shall include the neuter and the masculine
genders. 
  
 IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first set forth above. 
  

			
	“Company”
	
	Basin Water, Inc.
		
	By:	 	 /s/ Thomas C. Tekulve

	Name:	 	Thomas C. Tekulve
	Title:	 	 Chief Financial Officer
 On behalf of the Board of
Directors

	
	“Employee”
	
	 /s/ Peter L. Jensen

	Peter L. Jensen

  
 Jensen Employment Agreement
– Oct 2005 
  

 12

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