This
Employment
Agreement (the “ Agreement ”)
is effective as of one o’clock a.m. Central Daylight Time
August 8, 2008, by and between Red Trail Energy, LLC (the
“ Company ”), and Mark Klimpel (the
“ Executive ”).
Whereas , the Company is
engaged in the business of owning and operating a corn-based
ethanol plant;
Whereas, Executive and
Company recognize and acknowledge that Executive’s executive
responsibilities will give Executive knowledge of all aspects of
the Company’s operations, including its business plans and
strategies, current and contemplated ethanol projects and ventures,
customers, and other proprietary information, which information
would seriously harm Company if provided to a
competitor.
Whereas , the Company desires
to employ the Executive and the Executive desires to be employed by
the Company; and
Whereas , the Company and the
Executive desire to enter into this Agreement to set forth the
rights, duties, benefits and obligations with respect to the
employment of the Executive by the Company under the terms and
conditions herein provided.
Now, Therefore , in
consideration of the Executive’s employment with the Company,
and the mutual and respective covenants and agreements of the
parties herein contained, and other good and valuable consideration
present but not specifically set forth, the parties hereto agree as
follows:
1.
Employment . The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the
Company, on the terms and conditions set forth herein. This
Agreement and Executive’s duties hereunder shall commence on
one o’clock p.m. Central Daylight Time August 8, 2008
(the “ Start Date ”) and this Agreement
and Executive’s employment hereunder shall end on the fifth
anniversary thereafter, unless sooner terminated in accordance with
the provisions of Section 6 hereof (the “ Term
”). Thereafter, the Term and any extension of this Agreement
shall be automatically extended for successive one year periods
unless either party gives the other party written notice at least
sixty (60) days in advance of the anniversary date that the
Agreement shall expire on the next anniversary date or the
Agreement is terminated as provided in Section 6 of this
Agreement.
2.
Position and Duties . During the Term and any extension of
this Agreement, the Executive shall serve as Chief Financial
Officer of the Company or such other executive position as assigned
by the Company. The Executive shall perform those job duties
customary to his position and as assigned by the Company’s
Board of Governors (the “ Board ”) to the
extent such other duties assigned by the Board are consistent with
Executive’s position.
3.
Compensation and Related Matters.
(a)
Base Salary . The Executive shall receive an annual base
salary of One Hundred Fifteen Thousand Dollars ($115,000.00), less
required and authorized withholding and
deductions
(“Base Salary”) . The Base Salary shall
increase a minimum of 6% per year, on the anniversary date of the
Executive’s original date of hire, during the term and any
extension of this Agreement.
(b)
Bonus . During the Term and any extension of this Agreement,
in addition to the Base Salary, the Executive may be eligible to
earn an annual bonus of up to 20% of the Base Salary in effect at
the time the Bonus is calculated. The Bonus is due and payable to
the Executive on or before January 15 of the year following
the year for which the Bonus is being calculated (i.e.
January 15, 2009 for the year ended December 31, 2008).
The following criteria will be evaluated by the Compensation
Committee of the Board in determining the bonus
percentage:
(1)
Bonus Criteria: The Executive’s Bonus shall be based
on the following criteria:
(a) The
Executive shall be awarded 50% of the Bonus (10% of Base Salary
then in effect) each year as long as the Executive is employed on
December 31 of the year for which the Bonus is calculated
(i.e. employed on December 31, 2008 for the year ended
December 31, 2008).
(b) The
remaining 50% of the Bonus (10% of the Base Salary) shall be
determined by the performance of the Executive. The Compensation
Committee, with input from the President and CEO of the Company,
shall rate the Executive’s performance upon the completion of
each calendar year. If less than the full 10% of Base Salary, the
Compensation Committee shall provide written documentation of the
areas they felt the Executive underperformed and should work to
improve.
(c)
Benefits . Executive shall be entitled to all rights and
benefits for which he is eligible under the terms and conditions of
the Company’s standard employee handbook and the benefits and
compensation practices that may be in effect from time to time and
provided by the Company to its employees generally. In addition to,
and not in limitation of, the foregoing, during the Term and any
extension of this Agreement, the Executive started employment with
three (3) weeks (15 business days) of paid vacation per year
exclusive of any business day with respect to which the Company is
closed for business due to any federal, state or local holiday or
any day off generally granted by the Company to its employees,
subject to the Company’s then-current vacation policy (which
shall not have the effect of reducing said three (3) weeks (15
business days) of paid vacation. The Executive shall earn one
additional day of vacation for each year employed with the Company,
so noted on January 1 of each successive year of employment. In
addition to, and not in limitation of the foregoing, during the
Term and any extension of this Agreement the Executive shall
receive any additional benefits generally provided by the Company
to executive employees of the Company.
(d)
Expense Reimbursement . The Company will reimburse the
Executive for reasonable business expenses in accordance with the
Company’s standard expense account and reimbursement
policies.
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(e)
Vehicle Allowance. During the Term and any extension of this
Agreement, in addition to the Base Salary, Bonus and Benefits, the
Executive shall receive $500 per month as a vehicle allowance. The
Company also agrees to pay for fuel used by the Executive for
commuting to work at the Plant site.
4.
Representations and Warranties of Executive . In order to
induce the Company to employ the Executive, the Executive hereby
represents and warrants to the Company as follows:
(a)
Binding Agreement . This Agreement has been duly executed
and delivered by the Executive and constitutes a legal, valid and
binding obligation of the Executive and is enforceable against the
Executive in accordance with its terms.
(b)
No Violations of Law . The execution and delivery of this
Agreement and the other agreements contemplated hereby by the
Executive do not, and the performance by the Executive of his
obligations under this Agreement and the other agreements
contemplated hereby will not, violate any term or provision of any
law, or any writ, judgment, decree, injunction, or similar order
applicable to the Executive.
(c)
Litigation . The Executive is not involved in any
proceeding, claim, lawsuit, or investigation alleging wrongdoing by
the Executive before any court or public or private arbitration
board or panel or governmental department, commission, board,
bureau, agency or instrumentality.
(d)
No Conflicting Obligations. Executive is not under, or bound
to be under in the future, any obligation to any person or entity
that is or would be inconsistent or in conflict with this Agreement
or would prevent, limit, or impair in any way the performance by
him of his obligations hereunder, including but not limited to any
duties owed to any former employers not to compete or use or
disclose Confidential Information. Executive represents and agrees
that he will not disclose to the Company or use on behalf of the
Company any Confidential Information or trade secrets belonging to
a third party, including any former employer. Executive further
represents and agrees that he has returned, or will return before
his last day of employment with his current employer, all property
belonging to Executive’s current and previous employers,
including but not limited to any and all Confidential Information.
Provided these representations are met by Executive and Executive
has acted in good faith and has not otherwise violated any
contractual or legal obligations, the Company will provide and pay
for legal services to defend the Executive in the event of
litigation initiated by Executive’s preceding employer. In
the event the Company is required to defend Executive pursuant to
this Section, the Company and Executive shall be represented by the
same legal counsel as chosen by the Company.
(e)
Opportunity to Review. Executive has carefully read and
fully understands all provisions of this Agreement, and Executive
has had a full opportunity to review this Agreement before signing
and to have all the terms of this Agreement explained to him by
counsel.
5.
Confidentiality, Assignment of Inventions and
Copyrights.
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(a)
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Confidential Information.
Executive expressly
agrees that he will not, during the term of employment or at any
time thereafter, divulge, furnish or make accessible to anyone or
use in any way, on behalf of himself or others, any Confidential
Information, others than for the benefit of the Company in the
ordinary course of the business of the Company.
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“Confidential
Information” means any information not generally known in the
Company’s line of business or readily ascertainable by proper
means by others, including the Company’s competitors or the
general public, and includes trade secrets. Confidential
Information includes information about processes, manufacturing,
products and services of the Company, including information
relating to research, development, engineering, software
development, and marketing, selling to and servicing of the Company
customers. Confidential Information also includes, but is not
limited to, information about the Company’s customers,
customer lists, suppliers, pricing, costing, purchasing, profits,
markets, product capabilities, marketing, business ventures,
manufacturing plans, merchandising plans or ideas, sales, data
processing, compensation, finances, methods, know-how, formulas,
drawings, blueprints, inventions, processes, discoveries,
equipment, machines, algorithms, computer programs, software and
software development and documentation.
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(b)
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Assignment of Inventions
. (i) Executive
hereby irrevocably assigns to the Company and its successors,
assigns, and legal representatives:
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A) Except as
provided by any statutory notice provided herewith, the entire
right, title and interest to all Inventions;
“Inventions”, as used herein, means
all inventions conceived or made or reduced to practice in whole or
in part by Employee after being employed by the Company, including
discoveries, improvements, designs, processes, techniques,
equipment, trademarks, and ideas (whether patentable or not and
including, without limitation, those that might be
copyrightable).
B) The entire
right, title and interest to any United States or foreign Letters
Patents which may issue or that has issued with respect to
Inventions;
C) The entire
right, title and interest to any renewals, reissues, extensions,
substitutions, continuations, continuations-in-part, or divisions
that may be filed with respect to the Inventions, applications, and
patents;
D) The right to
apply for Letters Patents in foreign countries in its own name and
to claim any priority rights to which such foreign applications are
entitled under international conventions, treaties or otherwise;
and
E) The right to
sue for past, present, and future infringement of such Inventions
and Letters Patent.
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(ii) Executive further agrees to
keep accurate, complete and timely records of all such Inventions,
which records shall be Company’s property, and promptly and
fully disclose and describe in writing all Inventions in which
Executive has any involvement to Company and to no one else, even
if an Invention is not assigned according to terms of any statutory
notice provided herewith.
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(iii) Executive hereby authorizes
and requests the Commissioner of Patents and Trademarks to issue to
the Company any Letters Patents which may be granted in accordance
with this Assignment.
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i)
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Executive hereby acknowledges and
agrees that, to the extent any work performed by Executive for the
Company gives rise to the creation of any copyrightable material
(“Work”), all such Work, including all text, software,
source code, scripts, designs, diagrams, documentation, writings,
visual works, or other materials shall be deemed to be a work made
for hire for the Company.
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ii)
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To
the extent that title to any Work may not, by operation of law,
vest in the Company or such Work may not be considered work made
for hire for the Company, all rights, title and interest therein
were assigned and are hereby irrevocably assigned to the Company,
including but not limited to the right to sue for past, present,
and future infringement of any Work. All such Work shall belong
exclusively to the Company, with the Company having the right to
obtain and to hold in its own name, copyrights, registrations or
such other protection as may be appropriate to the subject matter,
and any extensions and renewals thereof.
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iii)
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To
the extent that title to any Work may not be assigned to the
Company, Executive hereby grants the Company a worldwide,
nonexclusive, perpetual, irrevocable, fully paid-up, royalty-free,
unlimited, transferable, sublicensable license, without right of
accounting, in such Work.
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d)
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Executive agrees to execute and
deliver without further consideration such documents and to perform
such other lawful acts as the Company, its successors and assigns
may deem necessary to fully secure the Company’s rights,
title or interest in all Works and Inventions as set forth in this
Agreement.
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e)
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This Agreement does not apply to an
invention for which no equipment, supplies, facility or trade
secret information of the Company was used and which was developed
entirely on Executive’s own time, and (1) which does not
relate (a) directly to the business of the Company or
(b) to the Company’s actual or demonstrably anticipated
research or development, or (2) which does not result from any
work performed by Executive for the Company.
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f)
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Return of Confidential Information
and Other Property. Executive specifically acknowledges
that all of the records of any and all business
conducted
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by
or related to the Company, including but not limited to records and
files pertaining to products, services, suppliers, the
Company’s customers, practices, techniques, licensors, and
licensees are the property of the Company and not that of
Executive. Upon the termination of his employment, or upon the
Company’s earlier request, Executive agrees to deliver
promptly to the Company all of the Company’s property,
including all Works, Inventions, and copies thereof, work in
progress, research data, equipment, drawings, photographs, graphs,
tables, charts, documents, correspondence, specifications,
blueprints, notebooks, reports, sketches, formulas, computer
programs, software, software documentation, sales data, business
manuals, price lists, customer lists, supplier information, samples
and all other materials and copies thereof relating any in any way
to the business of the Company.
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g)
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Injunctive Relief.
The Executive
acknowledges and agrees that any breach by him of any of the
covenants and agreements contained in this Section 5 would
give rise to irreparable injury and would not be adequately
compensable in damages. Accordingly, the Executive agrees that the
Company may seek and obtain injunctive relief against the breach or
threatened breach of any of the provisions of this Agreement in
addition to any other legal remedies available.
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h)
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Survival. The provisions of this
Section 5 shall survive the termination of this Agreement and
the Executive’s employment, regardless of the reason for such
termination, whether voluntary or involuntary.
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(a)
Termination upon Death . If the Executive dies during the
Term or any extension of this Agreement, this Agreement shall
terminate, except that the Executive’s legal representatives
shall be entitled to receive the Base Salary and other accrued
benefits earned up to the date of the Executive’s
death.
(b)
Termination By The Company With Cause . The Company has the
right, at any time during the Term and any extension of this
Agreement, to terminate the Executive’s employment with the
Company for Cause (as defined below) by giving written notice to
the Executive as described in this Section 6(b) below. Prior to the
effectiveness of termination for Cause under subclause (i), (ii),
(iii) or (iv) below, the Executive shall be given thirty
(30) calendar days’ prior written notice from the
Company, specifically identifying the reasons which are alleged to
constitute Cause for any termination pursuant to the aforementioned
subclauses, and an opportunity to cure in the event the Executive
disputes such allegations; provided , however , that
the Company shall have no obligation to continue to employ the
Executive following such thirty (30) calendar day notice
period unless the Executive’s cure meets the Company’s
reasonable satisfaction. The Company’s termination of the
Executive’s employment for Cause under subclause (v) or
(vi) below shall be effective immediately upon the
Company’s written notice to the Executive. If the Company
terminates Executive’s employment for Cause, the
Company’s obligation to the Executive shall be limited solely
to the payment of unpaid Base Salary accrued up to the effective
date of termination plus any accrued but unpaid bonus and
benefits.
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As used in this
Agreement, the term “ Cause ” shall mean
and include (i) the Executive’s abuse of alcohol that
affects Executive’s performance of Executive’s duties
under this Agreement, or misuse of any controlled substance;
(ii) a willful act of fraud, dishonesty or breach of fiduciary
duty on the part of the Executive with respect to the business or
affairs of the Company; (iii) material failure by the Executive to
comply with applicable laws and regulations or professional
standards relating to the business of the Company;
(iv) material failure by the Executive to satisfactorily
perform his duties hereunder, a material breach by the Executive of
this Agreement, or Executive engaging in conduct that materially
conflicts with the best interests of the Company or that may
materially harm the Company’s reputation; (v) the
Executive being subject to an inquiry or investigation by a
governmental authority or self-regulatory organization such that
the existence of such inquiry or investigation may result in damage
to the Company’s business interests, licenses, reputation or
prospects; or (vi) conviction of a felony.
(c)
Termination By The Company Without Cause . The Company shall
have the right, at any time during the Term and any extension of
this Agreement, to terminate the Executive’s employment with
the Company without Cause by giving written notice to the
Executive, which termination shall be effective thirty
(30) calendar days from the date of such written notice. The
Company may provide 30 days pay in lieu of notice. If the
Company terminates the Executive’s employment without Cause,
the Company’s obligation to the Executive shall be limited
solely to (i) unpaid Base Salary plus any bonus and benefits
accrued up to the effective date of termination; and
(ii) payments equal to the Executive’s then-current Base
Salary for a period of six (6) months payable on the
Company’s then current payroll pract
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