AMERICAN ETHANOL, INC. ANDREW FOSTER EMPLOYMENT AGREEMENT
AMERICAN
ETHANOL, INC.
XXXXXX
XXXXXX EMPLOYMENT AGREEMENT
This
Agreement is made by and between American Ethanol, Inc. (the “Company”) and
Xxxxxx Xxxxxx (“Employee”) to be effective as of May 22, 2007 (the “Effective
Date”).
1. Duties
and Scope of Employment.
a. Position;
Employment Commencement Date; Duties.
Employee’s employment with the Company pursuant to this Agreement is effective
as of October 1, 2006 (the “Employment Commencement Date”). On and after the
Employment Commencement Date, the Company shall employ the Employee as Chief
Operating Officer of the Company reporting to the Board of Directors of the
Company. During
the Employment Term (as defined in section 2 herein), Employee shall render
such
business and professional services in the performance of his duties as are
consistent with Employee’s position within the Company, and as shall reasonably
be assigned to him by the Board of Directors.
b. Obligations.
During
the Employment Term, Employee shall devote his full business efforts and time
to
the Company. Employee agrees during the Employment Term, not to actively engage
in any other employment, occupation or consulting activity for any direct or
indirect remuneration without the prior approval of the Board; provided,
however, that Employee may serve in any capacity with any civic, educational
or
charitable organization.
2. Employment
Term.
It is
intended that the employment arrangement contemplated by this Agreement shall
continue until the third anniversary of the Effective Date, with automatic
one-year extensions thereafter unless terminated by either party on sixty days
notice prior to the end of each respective extension year (such three-year
period and any extensions being referred to herein as the “Employment Term”).
Notwithstanding the foregoing, the parties agree that neither this Agreement
nor
any provision herein is intended to guarantee the continuation of Employee’s
employment for the duration of the Employment Term. In the event that Employee’s
employment with the Company terminates prior to the expiration of the Employment
Term for any reason, the parties agree that Employee shall be entitled to
receive only those benefits that are expressly provided by this Agreement in
such circumstances.
3. Employee
Benefits.
During
the Employment Term, Employee shall be eligible to participate in the employee
and fringe benefit plans maintained by the Company that are applicable to other
employees of the Company to the full extent provided for under those plans
for
the position held by the Employee.
4. Vacation.
During
the Employment Term, Employee shall have three weeks of paid vacation per year.
In the event of termination, any unused vacation weeks shall be paid as salary
continuation.
5. Expenses.
While
Employee is employed during the Employment Term, the Company will reimburse
Employee for reasonable travel, entertainment or other expenses incurred by
Employee in the furtherance of or in connection with the performance of
Employee's duties hereunder, in accordance with the Company's expense
reimbursement policy as in effect from time to time.
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6. Compensation.
a. Base
Salary.
While
employed by the Company, the Company shall pay the Employee as compensation
for
his services a base salary at the annualized rate of One Hundred Eighty Thousand
($180,000) per year (the “Base Salary”). Such salary shall be paid periodically
in accordance with normal Company payroll practices and subject to required
withholding. Employee’s Base Salary shall be reviewed annually by the Company
for possible adjustments in light of Employee’s performance and competitive
data.
b. Bonus.
Employee shall be entitled to receive, within 90 days after the end of each
year, an annual bonus (the “Bonus”) of up to $50,000 based upon Employee’s
performance and other criteria to be established by the Company. Except as
permitted under Section 7, Employee must be employed by the Company during
the
entire applicable bonus period for the payment of the Bonus. With respect to
any
subjective milestones, the determination of whether Employee has attained the
mutually agreed upon milestones for the Bonus shall be reasonably determined
by
the Employee’s supervisor.
c. Shares/Options.
Employee shall be granted a stock option (the “Stock Option”) to purchase a
total of 300,000 shares of Company common stock with a per share exercise price
equal to the fair market value of the shares on the date of grant. The Stock
Option shall vest as follows: 180,000 shares subject to the Stock Option shall
vest on the Employment Commencement Date, and an additional 10,000 shares
subject to the Stock Option shall vest on the last day of each calendar quarter
thereafter, so as to be one hundred percent (100%) vested on the three (3)
year
anniversary of the Employment Commencement Date, conditioned upon Employee’s
continued employment or service as a director with the Company as of each
vesting date. Except as specified otherwise herein, the Stock Option grant
will
be in all respects subject to the terms, definitions and provisions of any
Company Stock Plan and the standard form of stock option agreement thereunder
(the “Option Agreement”).
x. Xxxxxxxxx.
i. Involuntary
Termination Other Than for Cause; Constructive Termination.
If
Employee’s employment with the Company is Constructively Terminated or
involuntarily terminated by the Company other than for Cause (as defined below),
Employee’s death, or Employee’s Total Disability, then, subject to Employee
executing and not revoking a standard form of mutual release of claims with
the
Company,
Employee
shall be entitled to receive continuing payments of severance pay (less
applicable withholding taxes) at the rate equal to Employee’s Base Salary, as
then in effect, for a period of three (3) months from the date of such
termination in accordance with the Company’s normal payroll practices. In
addition to the foregoing severance benefits, Employee shall receive at the
Company’s expense 100% of Company-paid health, dental and vision insurance
benefits at the same level of coverage as was provided to Employee immediately
prior to the termination of Employee’s employment with the Company
(“Company-Paid Coverage”). If such coverage included Employee’s dependents
immediately prior to Employee’s termination, such dependents shall also be
covered at the Company’s expense. Company-Paid Coverage shall continue until the
earlier of (i) three (3) months following the date of the termination of
Employee’s employment ( the “Benefits Termination Date”), or (ii) the date upon
which Employee or Employee’s dependents become covered under another employer’s
group health, dental and vision insurance benefit plans.
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ii. Involuntary
Termination Other Than for Cause; Constructive Termination On or Following
Change of Control.
If, on
or following a Change of Control, Employee’s employment with the Company is
Constructively Terminated or involuntarily terminated by the Company other
than
for Cause, Employee’s death, or Employee’s Total Disability, then, subject to
Employee executing and not revoking a standard form of mutual release of claims
with the Company, in addition to the severance benefits set forth in Section
6d(i) above, all of Employee’s stock options and restricted stock shall
immediately accelerate vesting as to 100% of the then unvested
shares.
iii. Cause
Definition.
For the
purposes of this Agreement, “Cause” means (1) Employee’s material, willful
and continuing breach of his obligations to the Company after thirty (30)
days written notice from the Company specifying the nature of Employee’s breach
and demanding that such breach be remedied (unless such breach by its nature
cannot be cured, in which case notice and an opportunity to cure shall not
be
required); (2) Employee’s conviction of a felony that is injurious to the
Company or its business; or (3) act or acts of dishonesty by Employee that
are injurious to the Company or its business.
iv. Constructive
Termination Definition.
For the
purposes of this Agreement, “Constructive Termination” means, without Employee’s
written consent, (i) a material reduction in Employee’s salary or benefits;
provided, however, that a reduction in Employee’s salary or benefits will not
constitute a Constructive Termination if it is part of and proportional to
a
reduction in salary or benefits of the Company’s executive staff as a whole,
(ii) a material diminution of Employee’s officer title, duties, authority or
responsibilities as in effect immediately prior to such diminution.
v. Change
of Control Definition.
For the
purposes of this Agreement, “Change of Control” means, in one or a series of
transactions: (1) a reorganization or merger of the Company with or into
any other Company which will result in the Company’s shareholders immediately
prior to such transaction not holding, as a result of such transaction, at
least
50% of the voting power of the surviving or continuing entity or the entity
controlling the surviving or continuing entity; (2) a sale of all or
substantially all of the assets of the Company which will result in the
Company’s shareholders immediately prior to such sale not holding, as a result
of such sale, at least 50% of the voting power of the purchasing entity;
(3) a change in the majority of the Board not approved by at least
two-thirds of the Company’s directors in office prior to such change; or
(4) the adoption of any plan of liquidation providing for the distribution
of all or substantially all of the Company’s assets. It is the intent of the
Company to move into the public arena and such transaction, which may include
the merger or acquisition of the Company, shall not constitute a Change of
Control for purposes of this agreement.
vi. Total
Disability Definition.
For the
purposes of this Agreement, “Total Disability” shall mean Employee’s mental or
physical impairment which has or is likely to prevent Employee from performing
the responsibilities and duties of his position for three (3) months or more
in
the aggregate during any six (6) month period. Any question as to the existence
or extent of Employee’s disability upon which the Employee and the Company
cannot agree shall be resolved by a qualified independent physician who is
an
acknowledged expert in the area of the mental or physical impairment, selected
in good faith by the Board and Employee (or his personal
administrator).
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vii. No
Mitigation.
Except
as specifically provided herein, the Employee shall not be required to mitigate
the value of any severance benefits contemplated by this Agreement, nor shall
any such benefits be reduced by any earnings or benefits that the Employee
may
receive from any other source.
viii. Voluntary
Termination other than pursuant to a Constructive Termination; Involuntary
Termination for Cause.
If,
during the Employment Term, the Employee's employment is terminated by the
Company for Cause, or by Employee for any reason, other than death, Total
Disability or pursuant to a Constructive Termination, then all further vesting
of any option, restricted stock award or other Company equity compensation
held
by Employee will cease immediately (however, Employee shall be permitted to
exercise vested options for the time period specified in his option agreements
and he shall retain all vested restricted shares) and all payments of
compensation by the Company to Employee hereunder will terminate immediately
(except as to amounts already earned).
ix. Involuntary
Termination on Death.
If,
during the Employment Term, the Employee's employment is terminated by the
Company as a result of Employee’s death, then 50% of unvested equity awards from
the Company then held by Employee shall immediately vest, or if Employee is
then
holding unvested shares, the Company’s right to repurchase the then-unvested
shares under each such equity award shall lapse, with respect to 50% of the
shares under each such award.
7. Assignment.
This
Agreement shall be binding upon and inure to the benefit of (a) the heirs,
beneficiaries, executors and legal representatives of Employee upon Employee’s
death and (b) any successor of the Company. Any such successor of the
Company shall be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, “successor” shall include any
person, firm, corporation or other business entity which at any time, whether
by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company.
8. Notices.
All
notices, requests, demands and other communications called for hereunder shall
be in writing and shall be deemed given if (i) delivered personally or by
facsimile, (ii) one (1) day after being sent by Federal Express or a
similar commercial overnight service, or (iii) three (3) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors in interest at the following
addresses, or at such other addresses as the parties may designate by written
notice in the manner aforesaid:
a. If
to the Company:
American
Ethanol, Inc.
00000
X.
Xx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
b. If
to Employee:
or
at the
last residential address known by the Company.
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1. Proprietary
Information Agreement.
Employee agrees to enter into the Company’s standard Employment, Confidential
Information and Invention Assignment Agreement (the “Proprietary Information
Agreement”) upon commencing employment hereunder.
2. Entire
Agreement.
This
Agreement, the Stock Option agreement, the employee benefit plans referred
to in
Section 3 and the Proprietary Information Agreement represent the entire
agreement and understanding between the Company and Employee concerning
Employee’s employment relationship with the Company, and supersede and replace
any and all prior agreements and understandings concerning Employee’s employment
relationship with the Company.
3. No
Oral Modification, Cancellation or Discharge.
This
Agreement may only be amended, canceled or discharged in writing signed by
Employee and the Company’s Executive Chairman.
4. Withholding.
The
Company shall be entitled to withhold, or cause to be withheld, from payment
any
amount of withholding taxes required by law with respect to payments made to
Employee in connection with his employment hereunder.
5. Governing
Law.
This
Agreement shall be governed by the laws of the State of California without
reference to rules relating to conflict of law.
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of May 22,
2007:
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AMERICAN
ETHANOL, INC.
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/s/
Xxxx X. XxXxxx
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Xxxx
X. XxXxxx
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Executive
Chairman
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Date:
May 22, 2007
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EMPLOYEE
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/s/
Xxxxxx Xxxxxx
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Xxxxxx
Xxxxxx
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Date:
May 22, 2007
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