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Employment Transition And Consulting Agreement

This is an actual contract by Basin Water,.

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Sectors: Utilities
Governing Law: California , View California State Laws
Effective Date: May 11, 2006
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Exhibit 10.28

EMPLOYMENT TRANSITION AND CONSULTING AGREEMENT

This Employment Transition and Consulting Agreement (this " Agreement" ) is entered into between Peter L. Jensen, an individual (" Executive" ), and Basin Water, Inc., (the " Company" ), effective as of the Effective Date (as defined below). WHEREAS, Executive is currently employed by the Company as its Chief Executive Officer and serves as Chairman of the Company' s Board of Directors (the " Board" ) pursuant to that certain Employment Agreement dated as of May 11, 2006, between the Company and Executive (the " Employment Agreement" ); WHEREAS, in accordance with the Company' s and the Executive' s transition plans, both the Executive and the Company have determined that it is in their mutual best interests that Executive resign as an employee of the Company, and that their employment relationship be dissolved in the manner set forth in this Agreement; WHEREAS, in accordance with the Company' s and the Executive' s transition plans, both the Executive and the Company have determined that it is in their mutual best interests that Executive continue to provide consulting services to the Company and to serve on the Board following his termination of employment; and WHEREAS, Executive and the Company desire to set forth the terms and conditions of the foregoing arrangement. NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties agree as follows: 1. Effective Date; Termination of Employment .

(a) Effective Date . This Agreement shall become effective upon the occurrence of both of the following events: (a) execution of the Agreement by the Parties; and (b) expiration of the revocation period applicable under the Release (as defined in Section 3(g) below) without any party thereto having given notice of revocation. The date of the last to occur of the foregoing events shall be referred to in this Agreement as the " Effective Date ." Until and unless both of the foregoing events occur, this Agreement shall be null and void.

(b) Termination of Employment Status . Executive' s employment by the Company shall terminate effective as of February 19, 2008 (the " Termination Date" ). Executive hereby resigns from his position as Chief Executive Officer and Chairman (and any other titles or officer positions he may hold) of the Company (and any of its affiliates and subsidiaries) effective as of the Termination Date. Executive shall execute any additional documentation necessary to effectuate such resignations. Executive' s personnel file at the Company will reflect that Executive voluntarily resigned for personal reasons. Notwithstanding the foregoing, the Company shall not oppose Executive' s claim for unemployment benefits on the grounds that he resigned.


2. Consulting Services.

(a) Consulting Period . During the period commencing on the Termination Date and ending on the second anniversary thereof (the " Consulting Period" ), Executive will continue to provide services to the Company.

(b) Status as Consultant . During the Consulting Period, Executive shall be an independent contractor of the Company and not an employee.

(c) Scope of Services During Consulting Period . Executive shall devote such percentage of his business time and effort to the performance of his services hereunder as may be mutually agreed upon by the Chief Executive Officer of the Company and Executive. Executive shall, upon the request or direction of the Board or the Chief Executive Officer of the Company, provide such additional information, advice and assistance concerning matters that are within the scope of Executive' s knowledge and expertise. Executive' s advice shall be of an advisory nature and Company shall not have any obligation to follow such advice.

(d) Availability . Executive shall be available to provide services under this Agreement during normal business hours (" normal business hours" being 9:00 a.m. to 5:00 p.m. Pacific Time on any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of California or is a day on which banking institutions located in California are authorized or required by law or other governmental action to close). If requested by the Board or the Chief Executive Officer of the Company, Executive shall provide the services in person at the principal executive offices of Company or at another location to be mutually agreed by Executive and the Chief Executive Officer of the Company. The Company shall reasonably accommodate Executive' s schedule when requesting Executive' s assistance pursuant to this Section 2(d).

(e) Continued Board Membership . Unless Executive elects to resign, Executive shall continue to serve as a member of the Board following the Termination Date. Following the expiration of the Executive' s current term on the Board, Executive will be considered for continued membership on the Board upon the mutual agreement of the Board and Executive. Following the Termination Date, Executive shall be considered a non-employee member of the Board. For his service as a non-employee member of the Board, Executive shall be eligible to receive director fees and Stock Awards in accordance with standard Company policy regarding such fees and Stock Awards for non-employee members of the Board. For purposes of this Agreement, " Stock Awards" means all stock options, stock appreciation rights, restricted stock and such other awards granted pursuant to the Company' s stock option and equity incentive award plans or agreements and any shares of stock issued upon exercise thereof.

3. Compensation .

(a) Compensation Through Termination Date . On the Termination Date, the Company shall issue Executive his final paycheck, reflecting (a) his earned but unpaid base salary through February 29, 2008, and (b) all accrued, unused PTO (vacation and sick leave) due Executive through the Termination Date. Subject to Sections 3(b) and (c) below, Executive acknowledges and agrees that with his final check, the payment of any outstanding expense reimbursements, and the payment of any amounts payable under any of the employee benefit plans of the Company in accordance with the terms of such plans, Executive will have received all monies, bonuses, commissions, expense reimbursement, vacation pay, or other compensation he earned or was due during his employment by the Company.

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(b) Compensation on Effective Date . On the Effective Date, in consideration for the Release and his continued compliance with Section 4 below, Executive shall be entitled to receive the following compensation and benefits:

(i) a cash lump sum payment of $422,797 (consisting of $398,962 in termination payments and $23,835 for health care expenses following the expiration of the Company' s obligations under Section 3(b)(ii) below); plus (ii) for the period beginning on the Termination Date and ending on the date which is eighteen (18) full months following the Termination Date (or, if earlier, the date on which the applicable continuation period under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (" COBRA" ) expires or the date on which Executive accepts employment with another employer that provides comparable benefits in terms of cost and scope of coverage), the Company shall pay for and provide Executive and his dependents with healthcare insurance benefits which are substantially the same as the benefits provided to Executive immediately prior to the Termination Date, including, if necessary, paying the costs associated with continuation coverage pursuant to COBRA.

(c) Compensation During Consulting Period .

(i) During the Consulting Period, in consideration for the Release and his continued compliance with Section 4 below, Executive shall be entitled to receive a cash retainer of $200,000 per year, payable in twelve (12) equal monthly installments on the first day of each calendar month during the Consulting Period. For purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the " Code" ), and the Treasury Regulations thereunder, Executive' s right to the series of installment payments hereunder shall be treated as a right to a series of separate payments.

(ii) Executive acknowledges that, following the Termination Date, Executive shall not be eligible to participate in any plan or program which, as a condition of eligibility for such plan or program, requires Executive to be an employee of the Company.

(iii) During the Consulting Period, the Company shall reimburse Executive for reasonable and pre-approved out-of-pocket business expenses incurred in connection with the performance of his services hereunder, subject to (i) such policies as the Company may from time to time establish, and (ii) Executive furnishing the Company with evidence in the form of receipts satisfactory to the Company substantiating the claimed expenditures

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(d) Stock Awards . During the Consulting Period, and thereafter for so long as Executive continues to serve as a member of the Board, all of Executive' s unexercised Stock Awards shall continue to vest and be exercisable, if applicable, pursuant to the terms of the Company equity plan(s) and stock award agreements pursuant to which they were granted. Notwithstanding the foregoing, following the Termination Date, Executive shall not be entitled to any additional grants of Stock Awards, except grants to which Executive may be entitled as a non-employee member of the Board. Following the later of (i) termination of the Consulting Period or (ii) termination of Executive' s service as a member of the Board, the vested Stock Awards shall be exercisable by Executive in accordance with the terms of the Company equity plan(s) and stock award agreements pursuant to which they were granted. Executive acknowledges that, to the extent his Stock Awards are " incentive stock options," within the meaning of Section 422 of the Code, to the extent such Stock Awards are exercised more than three months following the Termination Date, such Stock Awards will be treated as non-qualified stock options for tax purposes.

(e) Exclusive Remedy . Except as otherwise expressly required by law (e.g., COBRA) or as specifically provided herein, all of Executive' s rights to compensation, benefits, and other amounts hereunder (if any) accruing after the termination of Executive' s employment by or service to the Company shall cease upon such termination. In the event of a termination of Executive' s employment by or service to the Company under this Agreement or the termination of Executive' s service as a member of the Board, Executive' s sole remedy shall be to receive the payments and benefits described in this Section 3. In addition, Executive acknowledges and agrees that he is not entitled to any reimbursement by the Company for any taxes payable by Executive as a result of the payments and benefits received by Executive pursuant to this Section 3, including, without limitation, any excise tax imposed by Section 4999 of the Code.

(g) No Mitigation . Executive shall not be required to mitigate the amount of any payment provided for in this Section 3 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 3 be reduced by any compensation earned by Executive as the result of employment by another employer or self-employment or by retirement benefits; provided , however , that loans, advances (other than salary advances) or other amounts owed by Executive to the Company under a written agreement may be offset by the Company against amounts payable to Executive under this Section 3; provided , further , that, as provided in Section 3(b), Executive' s right to continued healthcare insurance benefits following the Termination Date will terminate on the date on which the applicable continuation period under COBRA expires.

(h) Company Property . Executive shall be entitled to retain all Company personal property, including, without limitation, all computer equipment (including a Mac Pro CTO 2 GB RAM computer), printers and cameras in his possession as of the Termination Date; provided that Executive shall remove the Company logo from such personal property to the extent possible. In addition, the Company shall transfer ownership of the Company truck in Executive' s possession (from which the Company logo shall be removed) to Executive within thirty (30) days following the Termination Date.


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(g) Release . Executive' s right to receive any of the payments or other compensation to be made to Executive pursuant to Sections 3(b) and 3(c), including any retainer during the Consulting Period, shall be contingent on Executive and Lorna C. Jensen providing to the Company (and failing to revoke) a full and complete general release in the form attached hereto as Exhibit A (the " Release" ) within thirty (30) days following the Termination Date. In the event the Release does not become
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