EMPLOYMENT AGREEMENT

Exhibit 10.1

Final

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (“Agreement”) dated as of the 29th day of August 2006, by and between Tom Manuel (“Executive”) and ASAlliances Biofuels, LLC (“the Company”) (the “Effective Date”).

WITNESSETH

WHEREAS, the Company desires to secure the experience, abilities and service of Executive by employing Executive in the position of Chief Executive Officer (“CEO”) of the Company upon the terms and conditions specified herein; and

WHEREAS, Executive desires to accept such employment and service as CEO of the Company and to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants herein set forth, Executive and the Company do agree to the terms of employment as follows:

1. Definitions . The following words and terms shall have the meanings set forth below for the purposes of this Agreement:

(a) Affiliate . Affiliate of any person or entity means any stockholder or person or entity controlling, controlled by under common control with such person or entity, or any director, officer or key executive of such entity or any of their respective relatives. For purposes of this definition, “control,” when used with respect to any person or entity, means the power to direct the management and policies of such person or entity, directly or indirectly, whether through ownership of voting securities, by contracting or otherwise; and the terms “controlling” and “controlled” have meanings that correspond to the foregoing.

(b) Base Salary . “Base Salary” shall have the meaning set forth in Section 3(a) hereof.

(c) Board . The Board of Directors of ASAlliances Biofuels, LLC.

(d) Cause . “Cause” shall mean as determined in good faith by the Board (after first providing Executive thirty (30) days written notice and his failure to cure the act or omission giving rise to the determination), (i) misconduct having a material adverse affect upon the Company, (ii) negligent failure to perform Executive’s duties, provided that a refusal to approve any financials or execute any documents based on such financials shall not be Cause if Executive in good faith believes that the accounting in such financials is not appropriate and so notifies the Chairman of the Audit Committee of the Board, (iii) Executive’s violation of his obligations under the Agreement, and (iv) Executive’s violation of any material policy or code of conduct of the Company. Notwithstanding anything in this Agreement to the contrary, “Cause” shall mean as determined in good faith by the Board (i) with regard to the Company or its Affiliates, dishonesty, theft, fraud, or embezzlement, (ii) breach of fiduciary duty with regard to the

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Company, (iii) conviction of, or pleading guilty or nolo contendere to, any felony involving moral turpitude (other than traffic violations or as a result of vicarious liability); and (iv) a breach by Executive of any of the covenants made by him in Section 6 hereof.

(e) Change in Control. “Change in Control” shall mean the occurrence of any of the following events subsequent to the date of this Agreement:

(i) any person, other than an exempt person (which includes the Company and its subsidiaries and employee benefit plans), becoming a beneficial owner of 50% or more of the shares of common stock or equity interests or voting stock or equity interests of the Company then outstanding;

(ii) the approval by the stockholders or members of the Company of a reorganization, merger or consolidation in which existing Company stockholders or members own less than 50% of the equity of the resulting company;

(iii) the consummation of the sale or other disposition of all or substantially all of the assets of the Company; or

(iv) the approval by the stockholders or members of the company of a liquidation or dissolution of the Company, unless such liquidation or dissolution is part of a plan of liquidation or dissolution involving a sale to an entity of which more than 50% of the stock is owned by existing Company stockholders or members.

(f) Cod e. “Code” shall mean the Internal Revenue Code of 1986, as amended.

(g) Confidential and Proprietary Information . “Confidential and Proprietary Information” shall mean any and all (i) confidential or proprietary information or material not in the public domain about or relating to the business, operations, assets or financial condition of the Company or any Affiliate of the Company or any of the Company’s or any such Affiliate’s trade secrets; and (ii) information, documentation or material not in the public domain by virtue of any action by or on the part of Executive, the knowledge of which gives or may give the Company or any Affiliate of the Company an advantage over any person not possessing such information. For purposes hereof, the term Confidential and Proprietary Information shall not include any information or material (i) that is known to the general public other than due to a breach of this Agreement by Executive or (ii) that was disclosed to Executive by a person who Executive did not reasonably believe was bound to a confidentiality or similar agreement with the Company or (iii) that does not relate to the fuel ethanol industry or to any industry in which the Company is presently, or from time-to-time, conducting business.

(h) Date of Termination . “Date of Termination” shall mean the date the Company terminated Executive’s employment for any reason, including, without limitation, the expiration of the term of this Agreement, or, if Executive’s employment is terminated by Executive, the date on which a notice of termination is given or as specified in such notice.

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(i) Disability . “Disability” shall mean termination because of any physical or mental impairment that has prevented Executive from performing his material duties for the Company for three (3) consecutive months.

(j) Good Reason. Termination by Executive of Executive’s employment for “Good Reason” shall mean termination by Executive because of one of the following, without Executive’s express written consent:

(i) a significant diminution of Executive’s then functions, authority, duties or responsibilities as CEO of the Company;

(ii) any reduction by the Company in Executive’s Base Salary, except to the extent the base salaries of other similarly situated Executives are similarly reduced but not to exceed more than a 20% reduction in the aggregate;

(iii) any other material breach of this Agreement which is not cured within thirty (30) days after written notice of such breach is delivered by Executive to the Company; or

(iv) the failure of the Company to complete an Initial Public Offering within two (2) years of the Effective Date; provided, however, that this Section 1(j)(iv) shall only apply in the event Executive has (A) relocated his family to Dallas, Texas, and (B) provided notice of termination as described in Section 5(c).

(k) Initial Equity Offering Date. The first to occur of (i) the closing date of the first registered underwritten public offering to purchase common stock of the Company, or (ii) the closing date of any offering of equity securities pursuant to Rule 144A of the Securities Act of 1933, as amended, in each case where such offering raises gross proceeds to the Company of at least $100,000,000.

(l) Initial Public Offering . The closing date of the first registered underwritten public offering to purchase common stock of the Company.

(m) Restrictive Period . The two (2) year period following the Date of Termination except that, if the Company fails to complete an Initial Public Offering within one (1) year of the Effective Date and the Company terminates Executive’s employment as described in Section 5(b), the six (6) month period following the Date of Termination.

(n) Waiver and Release . The waiver and release of claims document, in the form attached hereto as Exhibit A or such other form as may be prescribed by the Company, in which Executive, in exchange for the benefits described in Section 5(e) of this Agreement, among other things, releases the Company, its parents, subsidiaries and Affiliates, and their officers, directors, agents, servants, employees, successors, assigns and insurers, and any and all other persons, firms, organizations and corporations from liability and damages in any way related to Executive’s employment with or termination of employment with the Company or Affiliate of the Company.

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(o) Waiver Effective Date . The expiration of seven (7) days after Executive executes and returns to the Company a valid Waiver and Release within the time period prescribed by the Company following the Executive’s Date of Termination, provided that Executive does not revoke such Waiver and Release.

2. Term of Employment .

(a) The Company hereby employs Executive as the CEO of the Company, and Executive hereby accepts said employment and agrees to render such services to the Company, on the terms and conditions set forth in this Agreement. The term of employment under this Agreement shall be for a term of three years, commencing as of the Effective Date, unless such term ends sooner as provided in this Agreement.

(b) During the term of this Agreement, Executive shall report to the Board and perform executive services for the Company as reasonably prescribed by the Board from time to time, consistent with his position as CEO and have the authority, duties and responsibilities commensurate with his position as CEO. Executive agrees that he will at all times faithfully, industriously and to the best of his ability, experience and talents, perform all of the duties that may be required of and from him pursuant to the express and implicit terms hereof. Executive acknowledges and agrees that Executive owes a fiduciary duty to the Company. In keeping with these duties, Executive shall make full disclosure to the Company of all business opportunities pertaining to the Company’s business and shall not appropriate for Executive’s own benefit business opportunities concerning the subject matter of the fiduciary relationship. The fiduciary duty Executive owes to the Company shall not prevent Executive from serving on the board of another company so long as (i) such service is disclosed to the Board (ii) such service is approved by the Board and (iii) the other company does not compete in any manner with the Company or from personal investment activities so long as they don’t interfere with his duties hereunder.

3. Compensation and Benefits .

(a) Compensation.

(i) Base Salary. The Company shall pay Executive for his services during the term of this Agreement a minimum base salary of $500,000 per year (“Base Salary”) which shall be payable semi-monthly or such other payroll period pursuant to the Company’s normal payroll practices for its executives, and shall be subject to withholding for federal, state, city or other taxes as may be required pursuant to any law or governmental regulation or ruling, or as otherwise permissible under Company practices or policies. Base Salary may be increased but may only be reduced in the event Base Salary for all similarly situated executives is also reduced but in no event may such reduction be greater than 25% in the aggregate. The Company shall annually review Executive’s Base Salary.

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(ii) Annual Bonus. For the year commencing 2006 and for each year thereafter, Executive shall have a bonus opportunity target of $500,000 (“Annual Bonus Target”) under terms and conditions determined by the Compensation Committee and in accordance with the provisions of the bonus plan as approved by Compensation Committee. The Annual Bonus Target for 2006 shall be pro-rated as follows: (x) $500,000 multiplied by (y) a fraction, the numerator of which is the number of days elapsed between the Effective Date and the end of the calendar year 2006 and the denominator of which is 365. For the calendar year commencing January 1, 2007, Executive’s actual bonus paid shall not be less than $250,000.

(iii) Long Term Incentive Compensation Beginning in 2006.

(a) Option Award . In addition to the Base Salary set forth in Section 3(a)(i) hereof and the Annual Bonus Target set forth in Section 3(a)(ii) hereof, on the Initial Equity Offering Date, Executive shall be awarded long term incentive compensation having a value of $3,500,000 (“Option Compensation”), such Option Compensation to be granted in the form of an option to purchase a number of shares of stock in the Company. Such options shall have a ten (10) year term and shall in any event expire ninety (90) days after the Date of Termination and have such other terms and conditions as established by the Company. The number of shares of stock of the Company subject to the options shall be determined by the Board in its sole discretion, using Black-Scholes or another generally accepted option valuation methodology. The options shall vest on each anniversary of the Effective Date according to the following schedule:

In the event that the options are granted on or after the first anniversary of the Effective Date, they shall be in part immediately vested determined in accordance with the foregoing schedule.

(b) Stock Award . Executive shall also receive an immediately vested stock award (“Stock Award”) having a value of $1,166,667 on the later to occur of the first anniversary of the Effective Date or the Initial Equity Offering Date. Executive shall receive a Stock Award having a value of $1,166,667 on the later to occur of the second anniversary of the Effective Date or the Initial

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Equity Offering Date. Executive shall also receive a Stock Award having value of $1,166,667 on the later to occur of the third anniversary of the Effective Date or the Initial Equity Offering Date.

During the period in which the Option Compensation vests, it is anticipated Executive may not receive any further awards of restricted stock or options or other long term incentive compensation unless otherwise determined by the Board. An award of additional incentive compensation may be revisited at such time as this Agreement is subject to renewal.

(c) Change in Control .

I. Notwithstanding the above vesting schedule for options, in the event of a Change in Control after the Initial Equity Offering Date, the Option Compensation shall vest (including all previously vested amounts) on an accelerated basis as follows:

II. Notwithstanding the above grant schedule for Stock Awards, in the event of a Change in Control after the Initial Equity Offering Date, any then ungranted Stock Awards shall be granted on the date of such Change in Control.

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(iv) Alternative to Incentive Compensation . In the event of a Change in Control prior to the Initial Equity Offering Date and Executive has not been awarded the Option Compensation described in Section 3(a)(iii)(a), Executive shall be entitled to a cash payment in the amount of the Option Value as reflected in the following schedule. In the event of a Change in Control prior to the Initial Equity Offering Date and Executive has not been awarded the Stock Award described in Section 3(a)(iii)(b), Executive shall be entitled to a cash payment in the amount of the Stock Award Value as reflected in the following schedule.

The payment under this Section 3(a)(iv) will be made within three (3) business days after the effectiveness of the Change in Control.

(v) Signing Bonus . Executive shall be entitled to a payment of $500,000 on November 1, 2006. The payment under this Section 3(a)(v) will be made within three (3) business days after the date on which it is earned.

(d) Vacation.

(i) Except as provided in Section 3(b)(ii) below, during the term of this Agreement, Executive shall accrue four (4) weeks paid vacation each calendar year in accordance with the Company’s established policies. Executive shall not be entitled to receive any additional compensation from the Company for failure to take a vacation, nor shall Executive be able to accumulate unused vacation time from one year to the next, except to the extent authorized by the Company or as Company policies or practice may otherwise provide.

(ii) During the 2006 calendar year, Executive shall be entitled to take the pro-rata portion of four (4) weeks paid vacation earned from the Effective Date through the end of the calendar year.

(e) Benefit Plans. During the term, Executive shall be entitled to participate in such benefit plans, including without limitation: (i) medical, (ii) dental, (iii) life insurance; (iv) short-term disability; (v) long-term disability; and (vi) 401(k), as provided to other senior executives of the Company at a level commensurate with his position.

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4. Expenses. The Company shall reimburse Executive or otherwise provi