|
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.
2
(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
3
(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.
4
(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
effective (and the revocation period thereunder expired) within the
thirty (30) day period following the Termination Date,
Executive shall not be entitled to the aforesaid payments and
benefits.
(h) Delay of Payments
. If at the Termination Date, Executive is a “specified
employee” as defined in Section 409A of the Code, as
determined by the Company in accordance with Section 409A of
the Code, and the deferral of the commencement of any payments or
benefits otherwise payable hereunder is necessary in order to
prevent any accelerated or additional tax under Section 409A
of the Code, then the Company will defer the commencement of the
payment of any such payments or benefits hereunder (without any
reduction in such payments or benefits ultimately paid or provided
to Executive) until the date that is at least six (6) months
following the Termination Date (or the earliest date as is
permitted under Section 409A of the Code).
4. Certain Covenants .
Executive hereby expressly reaffirms his obligations under
Section 6 of the Employment Agreement, a copy of which is
attached to this Agreement as Exhibit B and incorporated
herein by reference, and agrees that such obligations shall survive
the Termination Date and any termination of his services to the
Company; provided that, it is understood that Executive shall
become an employee, officer and/or director of Empire Water
Corporation and that such service shall not be prohibited by the
provisions of Section 6(a) of the Employment Agreement. The
Company shall be entitled to cease all severance payments to
Executive in the event of his or his or her breach of this
Section 4.
5. Nondisparagement;
Confidentiality . Executive agrees that neither he nor anyone
acting by, through, under or in concert with him shall disparage or
otherwise communicate negative statements or opinions about the
Company, its Board members, officers, employees or business. The
Company agrees that neither its Board members nor officers shall
disparage or otherwise communicate negative statements or opinions
about Executive. Except as may be required by law, neither
Executive, nor any member of Executive’s family, nor anyone
else acting by, through, under or in concert with Executive will
disclose to any individual or entity (other than Executive’s
legal or tax advisors) the terms of this Agreement.
6. Release of Claims by
the Company .
(a) Release . As of
the Effective Date, the Company hereby releases and forever
discharges Executive and his wife, Lorna C. Jensen, and their
executors, heirs, representatives, successors and assigns, from any
and all claims, debts, demands, accounts, judgments, rights, causes
of action, equitable relief, damages, costs, charges, complaints,
obligations, promises, agreements, controversies, suits, expenses,
compensation, responsibility and liability of every kind and
character whatsoever (including attorneys�
|
