Exhibit 10.1
INDEMNIFICATION
AGREEMENT
This Indemnification Agreement
(“ Agreement ”) is made as of
, 2006 by and between Basin Water, Inc., a Delaware corporation
(the “Company”), and
(“ Indemnitee ”).
RECITALS
WHEREAS , highly competent persons have become more
reluctant to serve corporations as directors or in other capacities
unless they are provided with adequate protection through insurance
and adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to and activities
on behalf of the corporation;
WHEREAS , the Board of Directors of the Company (the
“ Board ”) has determined that, in order to
attract and retain qualified individuals, the Company will attempt
to maintain on an ongoing basis, at its sole expense, liability
insurance to protect persons serving the Company and its
subsidiaries from certain liabilities. Although the furnishing of
such insurance has been a customary and widespread practice among
United States-based corporations and other business enterprises,
the Company believes that, given current market conditions and
trends, such insurance may be available to it in the future only at
higher premiums and with more exclusions. At the same time,
directors, officers and other persons in service to corporations or
business enterprises are being increasingly subjected to expensive
and time-consuming litigation relating to, among other things,
matters that traditionally would have been brought only against the
Company or business enterprise itself. The certificate of
incorporation and bylaws of the Company require indemnification of
the officers and directors of the Company. Indemnitee may also be
entitled to indemnification pursuant to the General Corporation Law
of the State of Delaware (“ DGCL ”). The
certificate of incorporation, bylaws and the DGCL expressly provide
that the indemnification provisions set forth therein are not
exclusive and thereby contemplate that contracts may be entered
into between the Company and members of the Board, officers and
other persons with respect to indemnification;
WHEREAS , the uncertainties relating to such insurance
and to indemnification have increased the difficulty of attracting
and retaining such persons;
WHEREAS , the Board has determined that the increased
difficulty in attracting and retaining such persons is detrimental
to the best interests of the Company’s stockholders and that
the Company should act to assure such persons that there will be
increased certainty of such protection in the future;
WHEREAS , it is reasonable, prudent and necessary for
the Company contractually to obligate itself to indemnify, and to
advance expenses on behalf of, such persons to the fullest extent
permitted by applicable law so that they will serve or continue to
serve the Company free from undue concern that they will not be so
indemnified;
WHEREAS , this Agreement is a supplement to and in
furtherance of the certificate of incorporation and bylaws of the
Company and any resolutions adopted pursuant thereto and shall not
be deemed a substitute therefor, nor to diminish or abrogate any
rights of Indemnitee thereunder; and
WHEREAS , Indemnitee does not regard the protection
available under the Company’s certificate of incorporation,
bylaws and insurance as adequate in the present circumstances and
may not be willing to serve as an officer or director without
adequate protection, and the Company desires Indemnitee to
serve
in such capacity. Indemnitee is willing to
serve, to continue to serve and to take on additional service for
or on behalf of the Company on the condition that he or she be so
indemnified.
NOW, THEREFORE
, in consideration of the promises
and the covenants contained herein, the Company and Indemnitee do
hereby covenant and agree as follows:
1. Services to the Company.
Indemnitee will serve or continue to serve as an officer, director
or key employee of the Company for so long as Indemnitee is duly
elected or appointed or until Indemnitee tenders his or her
resignation.
2. Definitions. As used in
this Agreement:
(a) “ Beneficial Owner
” shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act; provided ,
however , that Beneficial Owner shall exclude any Person
otherwise becoming a Beneficial Owner by reason of the stockholders
of the Company approving a merger of the Company with another
entity.
(b) A “ Change in
Control ” shall be deemed to occur upon the earliest to
occur after the date of this Agreement of any of the following
events:
(i) Acquisition of Stock by Third
Party . Any Person (as defined below) is or becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding
securities;
(ii) Change in Board of
Directors . During any period of two (2) consecutive years
(not including any period prior to the execution of this
Agreement), individuals, who at the beginning of such period
constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in Sections 2(b)(i),
2(b)(iii) or 2(b)(iv)) 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 period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the
members of the Board;
(iii) Corporate Transactions
. The effective date of a merger or consolidation of the Company
with any other entity, other than a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50.1% of
the combined voting power of the voting securities of the surviving
entity outstanding immediately after such merger or consolidation
and with the power to elect at least a majority of the board of
directors or other governing body of such surviving
entity;
(iv) Liquidation . The
approval by the stockholders of the Company of a complete
liquidation of the Company or an agreement or series of agreements
for the sale or disposition by the Company of all or substantially
all of the Company’s assets; or
(v) Other Events . There
occurs any other event of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or a response to any similar item on any similar
schedule or form) promulgated under the Exchange
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Act (as defined below), whether or
not the Company is then subject to such reporting
requirement.
(c) “ Corporate Status
” describes the status of a person who is or was a director,
officer, trustee, general partner, managing member, fiduciary,
employee or agent of the Company or of any other Enterprise (as
defined below) which such person is or was serving at the request
of the Company.
(d) “ Disinterested
Director ” means a director of the Company who is not and
was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(e) “ Enterprise
” shall mean the Company and any other corporation, limited
liability company, partnership, joint venture, trust, employee
benefit plan or other enterprise of which Indemnitee is or was
serving at the request of the Company as a director, officer,
trustee, general partner, managing member, fiduciary, employee or
agent.
(f) “ Exchange Act
” shall mean the Securities Exchange Act of 1934, as
amended.
(g) “ Expenses ”
shall include all reasonable attorneys’ fees, retainers,
court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees and all other
disbursements or expenses of the type customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding. Expenses also shall
include expenses incurred in connection with any appeal resulting
from any Proceeding, including, without limitation, the premium,
security for and other costs relating to any cost bond, supersedeas
bond or other appeal bond or its equivalent. Expenses, however,
shall not include amounts paid in settlement by Indemnitee or the
amount of judgments or fines against Indemnitee.
(h) “ Independent
Counsel ” means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to
represent: (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters
concerning Indemnitee under this Agreement, or of other indemnitees
under similar indemnification agreements), or (ii) any other
party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term “
Independent Counsel ” shall not include any person
who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement. The Company agrees
to pay the reasonable fees and expenses of the Independent Counsel
referred to above and to fully indemnify such counsel against any
and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant
hereto.
(i) “ Person ”
shall have the meaning set forth in Sections 13(d) and 14(d) of the
Exchange Act; provided , however , that Person shall
exclude (i) the Company, (ii) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company and (iii) any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the
Company.
(j) The term “
Proceeding ” shall include any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, formal or informal, inquiry,
administrative hearing or any other actual, threatened or completed
proceeding, whether brought in the right of the Company or
otherwise and whether of a civil, criminal, administrative or
investigative nature,
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in which Indemnitee was, is or will be involved
as a party, witness or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Company, by
reason of any action taken (or failure to act) by him or her or of
any action (or failure to act) on his or her part while acting as a
director or officer of the Company, or by reason of the fact that
he or she is or was serving at the request of the Company as a
director, officer, trustee, general partner, managing member,
fiduciary, employee or agent of any other Enterprise, in each case
whether or not serving in such capacity at the time any liability
or Expense is incurred for which indemnification, reimbursement or
advancement of Expenses can be provided under this
Agreement.
(k) References to “ other
enterprise ” shall include employee benefit plans;
references to “ fines ” shall include any excise
tax assessed with respect to any employee benefit plan; references
to “ serving at the request of the Company ”
shall include any service as a director, officer, employee or agent
of the Company which imposes duties on, or involves services by,
such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner “ not opposed to the best interests of
the Company ” as referred to in this
Agreement.
3. Indemnity in Third-Party
Proceedings. The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 3 if Indemnitee
is, or is threatened to be made, a party to or a participant (as a
witness or otherwise) in any Proceeding, other than a Proceeding by
or in the right of the Company to procure a judgment in its favor.
Pursuant to this Section 3, Indemnitee shall be indemnified
against all Expenses, judgments, fines, penalties and amounts paid
in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such
Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee or on
his or her behalf in connection with such Proceeding or any claim,
issue or matter therein, if Indemnitee acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the
best interests of the Company and, in the case of a criminal
proceeding, he or she had no reasonable cause to believe that his
or her conduct was unlawful.
4. Indemnity in Proceedings by or
in the Right of the Company. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 4
if Indemnitee is, or is threatened to be made, a party to or a
participant (as a witness or otherwise) in any Proceeding by or in
the right of the Company to procure a judgment in its favor.
Pursuant to this Section 4, Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by Indemnitee
or on his or her behalf in connection with such Proceeding or any
claim, issue or matter therein, if Indemnitee acted in good faith
and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Company. No indemnification
for Expenses shall be made under this Section 4 in respect of
any claim, issue or matter as to which Indemnitee shall have been
finally adjudged by a court to be liable to the Company, unless and
only to the extent that any court in which the Proceeding was
brought or the Delaware Court of Chancery shall determine upon
application that, despite the adjudication of liability but in view
of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnification.
5. Indemnification for Expenses
of a Party Who is Wholly or Partly Successful. Notwithstanding
any other provisions of this Agreement, to the extent that
Indemnitee is a party to (or a participant in) and is successful,
on the merits or otherwise, in any Proceeding or in defense of any
claim, issue or matter therein, in whole or in part, the Company
shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or her in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less
than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee against all
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Expenses actually and reasonably incurred by him
or her or on his or her behalf in connection with each successfully
resolved claim, issue or matter. If Indemnitee is not wholly
successful in such Proceeding, the Company also shall indemnify
Indemnitee against all Expenses reasonably incurred in connection
with a claim, issue or matter related to any claim, issue or matter
on which Indemnitee was successful. For purposes of this Section
and without limitation, the termination of any claim, issue or
matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
6. Indemnification For Expenses
of a Witness. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, he shall be indemnified against all Expenses
actually and reasonably incurred by him or her or on his or her
behalf in connection therewith.
7. Additional
Indemnification.
(a) Notwithstanding any limitation
in Sections 3, 4 or 5, the Company shall indemnify Indemnitee to
the fullest extent permitted by law if Indemnitee is a party to or
threatened to be made a party to any Proceeding (including a
Proceeding by or in the right of the Company to procure a judgment
in its favor) against all Expenses, judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and
other charges paid or payable in connection with or in respect of
such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in
connection with the Proceeding. No indemnity shall be made under
this Section 7(a) on account of Indemnitee’s conduct
which constitutes a breach of Indemnitee’s duty of loyalty to
the Company or its stockholders or is an act or omission not in
good faith or which involves intentional misconduct or a knowing
violation of the law.
(b) For purposes of
Section 7(a), the meaning of the phrase “ to the
fullest extent permitted by law ” shall include, but not
be limited to:
(i) the fullest extent permitted by
the provision of the DGCL that authorizes or contemplates
additional indemnification by agreement or the corresponding
provision of any amendment to or replacement of the DGCL;
and
(ii) the fullest extent authorized
or permitted by any amendments to or replacements of the DGCL
adopted after the date of this Agreement that increase the extent
to which a corporation may indemnify its officers and
directors.
8. Exclusions.
Notwithstanding any other provision in this Agreement, the Company
shall not be obligated under this Agreement to indemnify Indemnitee
in connection with any claim made against Indemnitee:
(a) for which payment has actually
been received by or on behalf of Indemnitee under any insurance
policy or other indemnity provision, except with respect to any
excess beyond the amount actually received under any insurance
policy or other indemnity provision;
(b) for an accounting of profits
made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of
Section 16(b) of the Exchange Act or similar provisions of
state statutory law or common law; or
(c) except as otherwise provided in
Sections 13(d)-(f) hereof, prior to a Change in Control, in
connection with any Proceeding (or any part of any Proceeding)
initiated by Indemnitee,
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including any Proceeding (or any part of any
Proceeding) initiated by Indemnitee against the Company or its
directors, officers, employees or other indemnitees, unless
(i) the Board of Directors of the Company authorized the
Proceeding (or any part of any Proceeding) prior to its initiation
or (ii) the Company provides the indemnification,
