SERVICES AGREEMENT
THIS
SERVICES AGREEMENT (this “Agreement”)
effective as of February 5, 2007, is made by and between Allegro Biodiesel
Corporation, a Delaware corporation (“Allegro”
and,
together with its subsidiaries now or hereafter existing, the “Company”)
and PV
Asset Management LLC, a California limited liability company (“PVAM”).
RECITALS
WHEREAS,
the Company desires to obtain from PVAM certain services; and
WHEREAS,
the parties hereto desire to enter into this Agreement to set forth the basis
on
which PVAM will deliver services to the Company, all as set forth more fully
in
this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and covenants set forth herein,
and
intending to be legally bound hereby, the parties to this Agreement hereby
agree
as follows:
1. Effectiveness
of the Agreement.
This
Agreement shall be effective as of February 5, 2007.
2. Engagement.
The
Company hereby engages PVAM to deliver services for the benefit of the Company
on the terms and conditions set forth in this Agreement. The Company is hereby
obtaining from PVAM services as reasonably requested for the benefit of the
Company by the Chief Executive Officer of the Company (the “Services”).
Except as otherwise provided herein, all compensation for provision of the
Services by PVAM and the persons utilized by PVAM to provide the Services shall
be paid to PVAM, and PVAM shall indemnify the Company against any claims by
any
individual for unpaid services.
3. Duties.
(a) The
provision of Services by PVAM shall be subject to Allegro’s Charter, Bylaws
(including without limitation the provision that the business and affairs of
Allegro shall be managed by its Board of Directors (the “Board”))
and
other governing documents, including committee charters, as any of them may
be
amended from time to time, as well as applicable laws and regulations, including
the regulations of any securities exchange on which Allegro’s securities are
listed or traded.
(b) PVAM
shall cause Xxxx Xxxxxxxxx, a principal of PVAM (“Galleberg”),
to
furnish approximately 20 hours per week (on average) at such locations as are
reasonably necessary to perform the Services. Consequently, it is hereby
understood and agreed that Galleberg and other PVAM personnel are not required
to devote their full time to this engagement.
(c) In
undertaking to provide the services set forth herein, none of PVAM or any other
person or entity guarantees or otherwise provides any assurances that their
efforts to build the Company’s operational and financial health and stability
will be successful and, except for the amount referenced in Section
5(b),
Allegro’s obligation to provide the compensation specified under Section
5
hereof
shall not be conditioned upon any particular results being
obtained.
4. Term.
(a) The
term
of PVAM’s engagement hereunder (the “Term”)
shall
be for six months commencing on February 5, 2007 and ending on August 3, 2007.
The Company shall be entitled to extend the Term of this Agreement by an
additional sixty (60) days upon written notice to PVAM, provided, that during
any such extended Term the Base Fees (as defined below) shall be increased
by
sixty-seven percent (67%).
(b) Allegro
shall have the right to terminate the Services, effective upon 15 days advance
written notice, if Galleberg is not actively engaged in the provision of
Services whether due to death, disability or by reason of a material breach
of
this Agreement by PVAM.
5. Compensation.
The
following compensation shall be payable to PVAM for provision of the Services
by
PVAM:
(a) Base
Fee.
Allegro
shall pay PVAM a monthly fee (the “Base
Fee”)
of
$10,000, pro-rated for partial months and payable in advance no later than
the
first day of every month during the Term.
(b) Allegro
shall pay to PVAM the following bonuses (collectively, the “Bonus
Fees”).
(i) PVAM
is
eligible to receive bonus fees (the “Initial
Bonus Fees”)
based
on achievement of the performance criteria set forth on Schedule
1.
The
Initial Bonus Fees, which, in aggregate, shall not exceed $75,000, shall be
paid
as set forth on Schedule
1.
(c) Stock
Option Grant.
On each
of April 5, 2007, June 5, 2007 and August 5, 2007, PVAM shall be entitled to
an
additional fee in an amount equal to the value of a non-qualified stock option
to purchase ninety-one thousand six hundred and sixty-six (91,666) shares of
the
Company’s common stock on terms consistent with Section 5(d) below (a
“Stock
Option”)
for
the Services. The Company and PVAM agree that for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, all
of
the amounts payable to PVAM pursuant to this Section 5(c) shall be paid in
the
form of Stock Options granted directly to Galleberg. The Company and PVAM
further agree that, notwithstanding the foregoing, the Company shall not grant
any such Stock Options until the eleventh (11th)
day
following the effectiveness of a registration statement filed under the
Securities Act of 1933, as amended, by the Company after the Effective Date
(such eleventh day, the “Initial
Grant Date”).
On
the Initial Grant Date, the Company shall grant to Galleberg the Stock Options,
if any, that have accrued prior to or are payable on such date, and that
following the Initial Grant Date the Stock Options shall be granted to Galleberg
on the first day the value of such Stock Option would otherwise be payable
to
the PVAM.
2
(d) Each
Stock Option shall be immediately vested as of the date of grant and shall
expire five years following the date of grant. The Stock Option shall be
exercisable at a price per share equal to the fair market value of the Company’s
common stock on the date of grant as determined pursuant to the Company’s 2006
Incentive Compensation Plan. Other terms of the Stock Option shall be set forth
in the Company’s 2006 Incentive Compensation Plan and in a stock option
agreement to be entered into between Galleberg and the Company, the form of
which is substantially as set forth in Schedule
3
hereto.
The grant of the Stock Option and its terms are subject in all respects to
the
approval of the Company’s Board of Directors. During the Term, including any
extension of the Term, PVAM may be eligible but shall not be entitled to
additional compensation in the form of options or other equity compensation
awards granted directly to Galleberg, as determined by the Board in its sole
discretion.
(e) Expenses.
During
the Term, Allegro shall reimburse PVAM for all reasonable business expenses
incurred in connection with the provision of Services in accordance with
Allegro’s policies in effect from time to time with respect to travel,
entertainment and other business expenses for senior executives, provided that
business travel shall be approved in writing by the Company in advance. The
Company shall provide office space and parking at its Los Angeles offices (being
as of the date hereof at 0000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000) that shall be
made
available for use, at the Company’s cost, by PVAM in connection with the
provision of the Services.
(f) Other
Benefits.
Galleberg and other persons, if any, performing Services shall also be entitled
to coverage for services rendered to the Company while they serve as directors
or officers of the Company under director and officer liability insurance
policy(ies) maintained by the Company from time to time. Except as set forth
in
this Agreement or as agreed by the Company’s Board of Directors, no person
rendering Services on behalf of PVAM shall be entitled to receive other benefits
(including, without limitation, employee welfare benefits) by virtue of this
Agreement.
(g) In
the
event of any breach of this Agreement by the Company, the aggregate amount
of
(i) unpaid Base Fees, Bonus Fees and any other earned but unpaid compensation,
(ii) unpaid expense reimbursements or other cash entitlement, (iii) Base Fees
for the remaining Term and (iv) the aggregate of all unpaid Bonus Fees shall
become immediately due and payable to PVAM, irrespective of whether the
corresponding milestones have been achieved. In addition, in such event, all
Allegro stock options issued to PVAM shall become immediately vested
notwithstanding the terms thereof.
3
6. Confidentiality.
PVAM
shall cause each person engaged by it to perform Services, including, without
limitation, Galleberg, to enter into Allegro’s form of Confidentiality and
Invention Assignment Agreement attached hereto as Schedule
2
prior to
performing any Services.
7. Representations
and Warranties.
Each
party represents and warrants to the other party as follows:
(a) It
is a
legal entity duly organized and validly existing under the laws of the
jurisdiction in which it was organized and has all requisite corporate power
to
enter into this Agreement.
(b) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein nor compliance by it with any of the provisions
hereof will: (i) violate any order, writ, injunction, decree, law, statute,
rule
or regulation applicable to it or (ii) require the consent, approval, permission
or other authorization of, or qualification or filing with or notice to, any
court, arbitrator or other tribunal or any governmental, administrative,
regulatory or self-regulatory agency or any other third party.
(c) This
Agreement has been duly authorized, executed and delivered by it and constitutes
its legal, valid and binding agreement.
8. Indemnification.
(a) The
Company shall indemnify and hold PVAM, its principals, officers, shareholders,
employees, members and agents harmless from and against any and all liability,
demands, claims, actions, losses, interest, costs of defense and expenses
(including, without limitation, reasonable attorneys’ fees) which arise out of
or in connection with the acceptance of this Agreement and the performance
of
its duties hereunder except such acts or omissions as may result from the
willful misconduct or gross negligence of PVAM. Promptly after receipt by PVAM
of notice of any demand or claim or the commencement of any action, suit or
proceeding relating to this Agreement, PVAM shall promptly notify the Company
in
writing. IT IS EXPRESSLY THE INTENT OF THE COMPANY TO INDEMNIFY PVAM AND ITS
DIRECTORS, OFFICERS, SHAREHOLDERS, MEMBERS, EMPLOYEES AND AGENTS FROM ERRORS
IN
JUDGMENT OR OTHER ACTS OR OMISSIONS NOT AMOUNTING TO WILFULL MISCONDUCT OR
GROSS
NEGLIGENCE.
(b) The
parties acknowledge that Galleberg has entered into an Indemnification Agreement
with Allegro dated as of August 4, 2006, in connection with his service as
a
director of Allegro (the “Indemnification
Agreements”).
Further, Allegro shall, upon the execution and delivery of this Agreement,
enter
into an indemnification agreement with PVAM for the benefit of PVAM and all
persons employed by PVAM who render Services on substantially similar terms
as
the Indemnification Agreements.
4
9. Insurance.
(a) Allegro
has furnished to PVAM a true, correct and complete copy of the following:
Allegro Biodiesel Corporation D&O 2/2000 Executive and Organization
Liability Insurance Policy #009656623 issued by National Union Fire Insurance
Company of Pittsburgh, Pa (policy period 12/02/2006 to 12/02/2007) and has
informed PVAM that Allegro also has in place certain “runoff” D&O liability
policies (collectively, the "Policies"
or
individually referred to as a "Policy")
issued
to Allegro by various insurers as set forth herein (collectively, the
"Insurer"). Allegro represents that, to the best of Allegro's knowledge, the
Policies are in full force and effect and that no event has occurred that
constitutes or, with the passage of time or giving of notice would constitute,
an event of default thereunder or that would otherwise give the Insurer any
right to cancel such Policies. Promptly after PVAM’s written request, Allegro
shall notify the Insurer of the appointment of any person performing Services
who becomes an officer of Allegro. Allegro shall cause its insurance broker
to
send copies of all documentation and other communications regarding the
Policies, including without limitation any renewal or cancellation thereof,
to
the attention of PVAM, in the manner set forth herein, and PVAM, Galleberg
and
any person performing Services who becomes an officer of Allegro shall have
all
indemnities available to the officers of Allegro pursuant to Allegro's Charter
and Bylaws. As long as the same can be done at a commercially reasonable cost,
during the Term, Allegro shall maintain directors and officers liability
insurance coverage, employment practices insurance coverage and fiduciary
liability insurance coverage comparable as to terms (including without
limitation the provisions or any similar provision regarding extension of the
discovery period thereunder) and amounts not lower than those provided under
the
Policies, with any such replacement coverage being obtained from an insurer
with
a rating from a nationally recognized rating agency not lower than that of
the
Insurer presently providing such coverage. Upon any cancellation or nonrenewal
of any Policies by any Insurer, as long as the same can be done at a
commercially reasonable cost, Allegro shall exercise its rights under the
applicable clause of the relevant Policy to extend the claim period for a
one-year "discovery period" and shall exercise such rights and pay the premium
required thereunder within the 30-day period specified therein. Allegro shall
use commercially reasonable efforts, in connection with the next renewal of
each
Policy, to negotiate to obtain an option to extend the discovery period set
forth in such Policies from one to three years, as long as the same can be
obtained at a commercially reasonable cost.
10. Limitations
on Liability.
The
Company agrees that PVAM and its personnel will not be liable to the Company
for
any claims, liabilities, or expenses relating to this engagement in excess
of
the fees paid by them to PVAM pursuant to this Agreement, unless there is a
final, nonappealable order of a Court of competent jurisdiction finding PVAM
or
its personnel performing Services liable for gross negligence or willful
misconduct. In no event will PVAM or any person or entity, or their personnel
be
liable for consequential, special, indirect, incidental, punitive or exemplary
loss, damages or expenses relating to the provision of Services. These
limitations on liability provisions extend to the employees, representatives,
agents and counsel of PVAM. The limitation on liability contained in this
Agreement and the indemnification agreements referenced in Section
8
shall
survive the completion or termination of this Agreement.
5
11. Independent
Contractor; Taxes.
The
parties intend that PVAM shall render services hereunder as an independent
contractor, and nothing herein shall be construed to be inconsistent with this
relationship or status. PVAM and any person providing Services shall be solely
responsible for any tax consequences by reason of this Agreement and the
relationship established hereunder, and the Company shall not be responsible
for
the payment of any federal, state or local taxes or contributions imposed under
any employment insurance, social security, income tax or other tax law or
regulation with respect to PVAM’s performance of services hereunder.
Notwithstanding anything in this Agreement to the contrary, the Company shall
be
entitled to effect any withholding from any amount payable by it pursuant to
this Agreement to the extent required by law.
12. Non-Solicitation.
(a) PVAM
shall cause each person providing Services, including, without limitation,
Galleberg, to agree in writing for the benefit of the Company that, during
the
Term and for one year thereafter (the “Restricted
Period”),
he or
she shall not directly or indirectly through another person or entity
(i) induce, solicit, encourage or attempt to induce, solicit or encourage
any employee of the Company (excluding any employee of PVAM, each of whom,
for
the avoidance of doubt, is not an employee of the Company) to leave the employ
of the Company, or in any way interfere with the relationship between the
Company and any employee thereof; or (ii) induce, solicit, encourage or
attempt to induce, solicit or encourage any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company to cease doing
business with the Company, or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation of the Company
(including, without limitation, making any negative or disparaging statements
or
communications regarding the Company). PVAM covenants that it will not, and
it
will advise members of senior management of PVAM not to, make any negative
or
disparaging statements or communications regarding the Company or its employees
or directors.
(b) During
the Restricted Period, the Company shall not directly or indirectly through
another person or entity (i) induce, solicit, encourage or attempt to
induce, solicit or encourage any employee of PVAM (including, without
limitation, Galleberg) to leave the employ of PVAM, or in any way interfere
with
the relationship between PVAM and any employee thereof; or (ii) induce,
solicit, encourage or attempt to induce, solicit or encourage any customer,
supplier, licensee, licensor, franchisee or other business relation of PVAM
to
cease doing business with PVAM, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation of PVAM
(including, without limitation, making any negative or disparaging statements
or
communications regarding PVAM). The Company covenants that it will not, and
it
will advise members of senior management of the Company and its board of
directors not to, make any negative or disparaging statements or communications
regarding PVAM or any person performing Services, including, without limitation,
Galleberg.
6
(c) If,
at
the time of enforcement of this Section 12,
a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall
be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Each party acknowledges that the
restrictions contained in this Section 12
are
reasonable and that it has reviewed the provisions of this Agreement with its
legal counsel.
(d) Each
party acknowledges that in the event of the breach or a threatened breach by
the
other party or any person performing Services of any of the provisions of this
Section 12,
the
other party would suffer irreparable harm, and, in addition and supplementary
to
other rights and remedies existing in its favor, the non-breaching party shall
be entitled to specific performance and/or injunctive or other equitable relief
from a court of competent jurisdiction in order to enforce or prevent any
violations of the provisions hereof (without posting a bond or other security).
In addition, in the event of a breach or violation by the Company, PVAM or
any
person of this Section 12,
the
Restricted Period shall be automatically extended by the amount of time between
the initial occurrence of the breach or violation and when such breach or
violation has been duly cured.
13. Jurisdiction.
Each of
PVAM and the Company hereby irrevocably and unconditionally (a) submits for
itself and its property in any legal action or proceeding relating to this
Agreement, to the non-exclusive general jurisdiction of the State of California,
the Courts of the United States of America for the Central District of
California located in Los Angeles County, California, and appellate courts
from
any thereof; (b) consents that any such action or proceeding may be brought
in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action
or
proceeding was brought in an inconvenient court and agrees not to plead or
claim
the same; (c) agrees that service of process in any such action or proceeding
may be effected in any manner permitted by law and agrees that nothing herein
shall affect the right to effect service of process in any manner permitted
by
law or shall limit the right to xxx in any other jurisdiction; and (d) waives,
to the maximum extent not prohibited by law, any right it may have to claim
or
recover in any legal action or proceeding referred to in this subsection any
special, exemplary or punitive or consequential damages.
14. Survival
of Agreement.
Except
as provided in this Agreement, the obligations set forth Sections
5, 8, 9, 10, 12, 13 and 17
shall
survive the expiration, termination, or supersession of this
Agreement.
15. Amendments.
Any
amendment to this Agreement shall be made in writing and signed by the parties
hereto.
16. Enforceability.
If any
provision of this Agreement shall be invalid or unenforceable, in whole or
in
part, then such provision shall be deemed to be modified or restricted to the
extent and in the manner necessary to render the same valid and enforceable,
or
shall be deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by
law
as if such provision had been originally incorporated herein as so modified
or
restricted or as if such provision had not been originally incorporated herein,
as the case may be.
7
17. Construction.
This
Agreement shall be construed and interpreted in accordance with the internal
laws of the State of California.
18. Notices.
All
notices, requests, consents and other communications hereunder to any party
shall be deemed to be sufficient if contained in a written instrument delivered
in person or duly sent by certified mail, postage prepaid or by an overnight
delivery service, charges prepaid; addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing
by
the addressee to the addressor:
|
If
to the Company:
|
Allegro
Biodiesel Corporation
0000
Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Chairman of the Board
|
|
If
to PVAM:
|
PV
Asset Management LLC
0000
Xxx Xxxxxxx
Xxxxx
Xxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn:
Xxxx Xxxxxxxxx
|
Any
party
may from time to time change its address for the purpose of notices to that
party by a similar notice specifying a new address, but no such change shall
be
deemed to have been given until it is actually received by the party sought
to
be charged with its contents.
19. Waivers.
No
claim or right arising out of a breach or default under this Agreement shall
be
discharged in whole or in part by a waiver of that claim or right unless the
waiver is supported by consideration and is in writing and executed by the
aggrieved party hereto or his or its duly authorized agent. A waiver by any
party hereto of a breach or default by the other party hereto of any provision
of this Agreement shall not be deemed a waiver of future compliance therewith,
and such provisions shall remain in full force and effect.
20. Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and all of which shall together constitute one and the same
instrument.
8
21. Entire
Agreement.
This
Agreement and the other documents delivered pursuant hereto constitute the
full
and entire understanding and agreement among the parties hereto with regard
to
the subjects hereof and thereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
22. No
Third Party Beneficiaries.
This
Agreement is for the sole and exclusive benefit of the Parties hereto and
nothing herein, expressed or implied, shall give or be construed to give any
person or entity, other than the parties hereto, any legal or equitable rights
hereunder.
23. Assignment.
Except
as
specifically stated in this Agreement, neither this Agreement nor any of the
rights, interests or obligations of any party hereunder shall be assigned or
delegated by either party without the prior written consent of the other party,
not to be unreasonably withheld. Any unauthorized assignment or delegation
shall
be null and void. Notwithstanding the foregoing, PVAM may assign this Agreement
to an affiliated entity for tax or organizational reasons, so long as the
Services and the principal individuals providing such services (that is,
Galleberg) shall be as contemplated herein. Furthermore, either party may,
without the other’s consent, assign this Agreement to a present or future
affiliate, successor in a merger or similar transaction or purchaser of all
or
substantially all of such party’s assets.
[Signature
page follows]
9
IN
WITNESS WHEREOF, this Agreement has been executed by the parties as of the
date
first above written.
| ALLEGRO BIODIESEL CORPORATION | ||
| |
|
|
| By: | /s/ W. Xxxxx Xxxxx III | |
|
Name: W. Xxxxx Xxxxx III |
||
| Title: Chief Executive Officer | ||
| PV ASSET MANAGEMENT LLC | ||
| |
|
|
| By: | /s/ Xxxx Xxxxxxxxx | |
|
Name: Xxxx Xxxxxxxxx |
||
| Title: President | ||
Signature
Page to
PVAM Services Agreement
Schedule
1
Initial
Bonus Fees
PVAM
understands and agrees that not all of these Initial Bonus Fees are under the
unilateral control of PVAM, but it agrees to use its reasonable commercial
efforts to achieve each milestone as promptly as commercially
practical.
|
Milestone
Number
|
Milestone
|
Applicable
Initial
Bonus
Fee
|
Achievement
Criterion
|
|
1.
|
Corporate
Governance program to meet requirements for national stock market
listing
|
$37,500
|
Effectiveness
of listing on NASDAQ, AMEX, NYSE or other major market
|
|
2.
|
Design
and implementation of compensation program (employee stock plan,
project
development pool, 2007 management and employee bonuses, board
compensation, etc.)
|
$37,500
|
Board
approval of all components of compensation
program
|
| · |
Each
Applicable Initial Bonus Fee shall be payable within five business
days
after fulfillment of the applicable Achievement Criterion, after
direction
by the Compensation Committee of the Allegro Board of
Directors.
|
| · |
In
order to receive each Applicable Initial Bonus Fee, fulfillment of
the
applicable Achievement Criterion must occur during the
Term.
|
| · |
Milestones
may be achieved in any order.
|
Schedule
2
Schedule
2
Form
Of Confidentiality And Invention Assignment Agreement
Schedule
2
Schedule
3
Form
of Stock Option Agreement
Schedule
3
