Exhibit 10.2
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT
(“Agreement”) dated as
of the 21st day of August 2006, by and between George Schaefer
(“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 Financial Officer (“CFO”) of the
Company upon the terms and conditions specified herein;
and
WHEREAS, Executive desires to accept such employment and
service as CFO 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, in its sole and absolute discretion, (i) with regard to
the Company or its Affiliates, dishonesty, theft, fraud, or
embezzlement, (ii) misconduct having a material adverse affect
upon the Company, (iii) breach of fiduciary duty with regard
to the Company, (iv) 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,
(v) 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); (vi) Executive’s
violation of his obligations under the Agreement; (vii) a
breach by Executive of any of the covenants made by him in
Section 6 hereof; and/or (viii) Executive’s
violation of any material
1
policy or code of conduct of the
Company. The Company shall not be entitled to terminate Executive
for Cause pursuant to clauses (vi) or (viii) unless the
Company provides written notice stating in reasonable detail the
basis for the determination of Cause and Executive shall have a
30-day opportunity to cure the reasons for the determination of
Cause (or to take reasonable steps to cure, in the event that the
basis for termination is not able to be cured within 30 days);
provided, however, that if (x) the facts and circumstances
underlying such termination are not able to be cured or
(y) the Company has previously delivered a notice under this
paragraph and the facts and circumstances were not cured, the
Company may terminate without providing an opportunity to
cure.
(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 voting stock of the Company then
outstanding;
(ii) the approval by the
stockholders of the Company of a reorganization, merger or
consolidation in which existing Company stockholders own less than
50% of the stock of the resulting company; or
(iii) the approval by the
stockholders 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.
(f) Code. “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.
2
(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.
(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; or
(ii) any material reduction by the
Company in Executive’s Base Salary, except to the extent the
base salaries of other similarly situated Executives are similarly
reduced.
(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) 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(c) 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.
(m) 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 CFO 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. In the
3
event a Change in Control occurs,
the Company and Executive agree that the term shall thereupon be
the period of time that is the longer of the time remaining for the
then remaining term under this Agreement or one year.
During the term of this Agreement,
Executive shall report generally to the Chief Executive Officer
(the “CEO”) and perform executive services for the
Company as reasonably prescribed by the CEO from time to time,
consistent with his position or positions and have the authority,
duties and responsibilities commensurate with his position or
positions. 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 terms hereof, to the reasonable satisfaction of
the Company. Executive acknowledges and agrees that Executive owes
a fiduciary duty to the Company. In regard to these duties, during
the term of this Agreement, Executive shall report exclusively to
the Board. 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.
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 $300,000 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. The Company shall
annually review Executive’s Base Salary.
(ii) Annual Bonus. For the
year commencing 2006 and for each year thereafter, Executive shall
have a bonus opportunity target (“Annual Bonus Target”)
of $150,000 under terms and conditions determined by the
Compensation Committee and in accordance with the provisions of the
bonus plan as approved by Compensation Committee.
(iii) Long Term Incentive
Compensation Beginning in 2006. 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 an
4
aggregate value of $3.0 million
(“Incentive Compensation”), such Incentive Compensation
to be granted (x) one-half in the form of restricted stock,
which shares shall vest, contingent on Executive’s continued
employment, in equal parts over five years beginning as of the date
of this Agreement, and (y) one-half in the form of an option
to purchase a number of shares of stock of the Company, which
option shall vest, contingent on Executive’s continued
employment, in equal parts over five years beginning as of the date
of this Agreement. Upon a Change in Control, the tranche of options
scheduled to vest in the year succeeding the year the Change in
Control occurs shall vest immediately. The number of shares of
stock of the Company subject to the option described in item
(y) above shall be determined by the Board in its sole
discretion, using Black-Scholes or another generally accepted
option valuation methodology. During the period which the Incentive
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.
(iv) Guaranteed Payment . If
Executive is employed by the Company on March 5, 2007,
Executive shall be paid $375,000 which shall be payable in one lump
sum payment and in the immediately succeeding payroll period, 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.
(b) 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.
(c) 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.
4. Expenses.
The Company shall reimburse
Executive or otherwise provide for or pay for all reasonable
expenses incurred by Executive in furtherance of or in connection
with the business of the Company, subject to such reasonable
documentation and other limitations as may
5
be established by the Company. If such expenses
are paid in the first instance by Executive, the Company shall
reimburse Executive therefor. In addition, the Company shall pay
directly or reimburse Executive for his reasonable expenses not to
exceed in the aggregate $140,000 for (i) travel for Executive
and his family to and from Boonton, NJ to Dallas, Texas,
(ii) temporary accommodations in Dallas, Texas and
(iii) certain transportation expenses, including the cost of a
rental vehicle. The Company’s obligations pursuant to this
Section 4 shall survive until the earlier to occur of
(x) termination of Executive and (y) exhaustion of the
$140,000 amount.
5. Termination.
(a) The Company shall have the
right, at any time, to terminate Executive’s employment
hereunder for any reason, including, without limitation,
termination for Cause or for Disability and Executive shall have
the right to terminate his employment hereunder for any reason or
no reason.
(b) In the event that
(i)
