CONSULTING AGREEMENT
THIS
CONSULTING AGREEMENT
(the
“Agreement”) is made as of the 28th
day of
February,
2007
(the “Effective Date”) between Third Inning Solutions, Inc., an Iowa corporation
(the “Consultant”), and Southern
Iowa BioEnergy,
an Iowa
Limited Liability Company (the “Client”).
W
I T N E S S E T H :
WHEREAS,
Client
intends to develop, finance, start-up and construct a 30 million gallon per
year
biodiesel manufacturing facility plant in southern Iowa (the “Project”), as more
specifically defined on EXHIBIT
A
attached
hereto and by this reference incorporated herein; and,
WHEREAS,
Client
desires to engage Consultant to provide project coordination, consulting and
advice concerning the development, financing, start-up and construction of
the
Plant pursuant to the terms set forth herein.
NOW,
THEREFORE, for
good
and valuable consideration, the parties agree as follows:
1.
Engagement;
Term.
Client
hereby engages Consultant as a consultant and advisor in connection with the
development, financing, start-up and construction of the Project; and Consultant
hereby accepts such engagement, upon the terms and conditions hereinafter set
forth. The term of Consultant’s engagement shall commence as of the Effective
Date, and unless sooner terminated by either party as provided in Section three
(3) below, shall continue in full force and effect until construction of the
Project is substantially complete (or such other term as may be used therein)
within the meaning of the construction agreement relating to the Project.
| 2. |
Duties.
During the term of this Agreement, Consultant shall devote commercially
reasonable efforts to providing project coordination, consulting and
advisory services to Client in connection with the development, financing,
start-up and construction of the Project, including, without
limitation:
|
| a. |
Analyze
equity and debt goals; assist with debt and equity financing structure
and
revisions thereto, if necessary;
|
| b. |
Serve
as project lead coordinator to secure build commitments from the various
professional disciplines comprising the design team;
|
| c. |
Assist
with review and analysis of all written proposals for debt financing;
assist client with review and approval of debt commitments; assistance
with senior loan closing;
|
| d. |
Assist
with oversight and monitoring of construction team, including, but
not
limited to, the oversight, monitoring and analysis of draw requests,
change order requests, etc.;
|
| e. |
Assist
Client in establishing relationships and negotiating contracts with
various product and service providers, including, without limitation,
procurement agents, risk managers and marketing companies,
etc;
|
| f. |
Assist
client in finalizing Client’s equity marketing effort;
|
1
Notwithstanding
any provision herein to the contrary, Consultant covenants and agrees that
neither Consultant nor its officers, directors or employees shall solicit or
accept an offer to buy or sell any securities of or on behalf of Client or
engage in any activity on behalf of Client that would be in violation of any
federal or state securities law or regulations. FURTHERMORE,
NEITHER CONSULTANT NOR ITS OFFICERS, DIRECTORS OR EMPLOYEES SHALL BE RESPONSIBLE
FOR RENDERING OR SHALL RENDER LEGAL, SECURITIES OR TAX ADVICE TO
CLIENT.
CONSULTANT
HAS ADVISED CLIENT AND CLIENT ACKNOWLEDGES THAT IT HAS RECEIVED ADVICE FROM
THE
CONSULTANT TO SEEK THE ADVICE OF INDEPENDENT COUNSEL REGARDING ENTERING INTO
THIS AGREEMENT; CONSULTANT IS NOT BEING PAID IN ANY MANNER TO PROVIDE ANY LEGAL
ADVICE HEREUNDER; CLIENT ACKNOWLEDGES IT HAS HAD THE OPPORTUNITY TO SEEK THE
ADVICE OF INDEPENDENT COUNSEL; AND THE PARTIES HAVE RECEIVED NO LEGAL ADVICE
FROM CONSULTANT.
3.
Termination.
Notwithstanding any other provision herein to the contrary, either party shall
have the right, but not the obligation, to immediately terminate this Agreement
for “cause”, which shall mean and be limited to the following:
a. Either
party shall have cause to terminate this Agreement in the event the other party
hereto commits a material breach of any material covenant, term or condition
contained herein and such material breach continues for a period of Sixty (60)
days from the date of the breaching party’s receipt of written notice from the
non-breaching party specifically identifying the alleged material
breach.
b. Either
party shall have cause to terminate this Agreement in the event of an act or
omission by the other party hereto constituting fraud, gross negligence, willful
misconduct, or knowing violation of the law with respect to the transactions
that are the subject matter of this Agreement.
c. Either
party shall have cause to terminate this Agreement in the event any of the
following occurs with respect to the other party hereto: (i) such party becomes
insolvent; (ii) such party files a voluntary
termination of its business operations; (iii) such party files a voluntary
petition to effect a plan or other arrangement with, or makes an assignment
for
the benefit of, its creditors; (iv) such party files
an
answer admitting jurisdiction and the material allegations of an involuntary
petition filed under the Bankruptcy Code, as amended, or is adjudicated
bankrupt; (v) such party applies for or consents to the appointment of a
receiver, liquidator or trustee of all or part of its property
or
assets; (vi) an
order
is entered approving an involuntary petition to reorganize such party or to
effect a plan or other arrangement with its creditors;
or
(vii) upon the institution of any liquidation or dissolution proceedings by
or
against such party, or any other proceedings seeking the dissolution or winding
up of its business.
d. Consultant
shall have cause to terminate this Agreement in the event: (i) Client fails
to
make any payment due hereunder within Ten (10) days of the date such payment
is
due; (ii) construction financing for the Project has not been obtained within
Twenty-four (24) months of the Effective Date; (iii) Client at any times ceases
using its good faith best efforts to complete the Project on a timely basis;
or
(iv) Client engages in a single transaction or series of transactions, the
result of which is the sale, lease, transfer, conveyance or other disposition
of
all or substantially all of the assets of Client to any person or entity or
the
merger or consolidation of Client with or into any other entity.
2
e. Client
shall have cause to terminate this Agreement upon Sixty (60) days notice in
the
event Client, despite its best efforts determines that it will be unable to
obtain the senior loan financing or substantially complete the construction
as
respectively described in Sections 4.a(ii) and (iii) below.
The
termination of this Agreement shall not affect either party’s right to any
payments accruing hereunder prior to the effective date of such termination,
nor
shall it affect any right or obligation of either party relating to
confidentiality, indemnification or insurance, all of which shall survive such
termination.
4.
Consulting
Fees and Bonuses.
Client
shall pay Consultant a consulting fee equal to One and One-half Percent (1.5%)
of the total construction and development cost. The payment under Section Four
(4) hereunder shall not exceed the $1.50 per gallon cost estimate for
construction and development unless Client opts to build a larger facility.
The
fees hereunder shall be paid as follows:
a. Client
shall pay Consultant the consulting fee as follows:
| (i) |
$50,000,
payable upon execution of this Agreement;
|
| (ii) |
$325,000,
payable at
the time, and only if, Client executes Senior Loan financing documents
enabling the groundbreaking for the Project; and
|
| (iii) |
$300,000,
payable at
the time, and only if, construction
of the Project is substantially complete (or such other term as may
be
used therein) within the meaning of the construction agreement relating
to
the Project.
|
In
the
event Client
terminates this Agreement at any time “for cause,” Consultant terminates this
Agreement at any time other than “for cause” as defined in Sectionsv3(a-d)above,
Client shall be under no obligation to pay any portion of the consulting fee,
except for any payments, to be prorated, accruing hereunder prior to the
effective date of such termination.
The
entire consulting fee described in Section 4(a) and (b) shall be immediately
due
and payable to Consultant in the event Client terminates this Agreement for
reasons that are not “for cause” or if Consultant terminates this Agreement “for
cause” as defined in Sections 3(a-d) above.
5.
Expense
Reimbursement.
In
addition to the consulting fees described in Section 4 above, Consultant will
be
entitled to reimbursement of all
reasonable, ordinary and necessary expenses incurred by Consultant in the
performance of its duties hereunder;
provided, however, that any expense in excess of One Thousand Dollars ($1,000)
or any weekly expenses in excess of Two Thousand Dollars ($2,000), shall be
subject to prior approval by Client. Such reimbursable expenses include, but
are
not limited to, the following:
| (i) |
Any
applicable federal, state or local filing
fees;
|
| (ii) |
Any
legal, accounting or other professional service expenses paid by
Consultant on behalf of the Client or for the benefit of the
Client;
|
| (iii) |
Any
reasonable and necessary travel expenses incurred for the benefit of
the
Client. Travel expenses may include air, rail or bus expense, as the
situation may deem reasonable, or if travel is done by car, reimbursement
for auto rental expenses or mileage at the standard mileage rate. Travel
expenses do not include normal commuting to and from the office on
a daily
basis;
|
3
| (iv) |
Any
specialty printing, binding or other document reproduction cost,
specifically excluding normal office/computer
printing;
|
| (v) |
Any
long distance telephone and/or facsimile charges that are directly
attributable to Client.
|
Consultant
shall provide to Client within Ten (10) days of the end of each calendar month,
an itemized listing of any reimbursable expenses incurred on behalf of the
Client and receipts therefore, and such expenses shall be reimbursed to
Consultant within Ten (10) days of Client’s receipt of such
materials.
6.
Insurance.
From
and after the Effective Date and continuing throughout the term of this
Agreement, Client and Consultant shall each, at its sole cost and expense,
carry
and maintain in full force and effect: (i) workers’ compensation and employers’
liability insurance in the minimum amounts required by law; (ii) Comprehensive
General Liability Insurance in
the
minimum amount of One Million Dollars ($1,000,000.00) combined single limit
for
injury to persons or property; and (iii) business automobile liability insurance
covering owned, non-owned and hired vehicles in the minimum amount of One
Million Dollars ($1,000,000.00) combined single limit. Such policies shall
be
written by companies reasonably acceptable to other party, name the other party
as an additional insured party (other than the workers’ compensation/employers’
liability insurance), and shall not be subject to cancellation or any material
change except after Thirty (30) days’ prior written notice to the other party.
As
of or
prior to the Effective Date, and from time to time throughout the term of this
Agreement upon the other party’s request, each party shall deliver to the other
party certificates of insurance evidencing the coverages required by this
Section.
7.
Indemnification.
a. Consultant
shall defend, indemnify and hold harmless Client and its affiliates’ officers,
directors, shareholders, employees and agents from and against any and all
claims, suits, demands, losses, liabilities, costs, damages and expenses,
including attorneys’ fees and court costs, suffered or incurred by any such
party arising from or relating to: (i) the material breach of any warranty,
representation, term, covenant or condition by Consultant under this Agreement;
and (ii) Consultant’s fraud, gross negligence, willful misconduct, or knowing
violation of the law in the performance of its obligations under this
Agreement.
b.
Client
shall defend, indemnify and hold harmless Consultant and its affiliates’
officers, directors, shareholders, employees and agents from and against any
and
all claims, suits, demands, losses, liabilities, costs, damages and expenses,
including attorneys’ fees and court costs, suffered or incurred by any such
party arising from or relating to: (i) the material breach of any warranty,
representation, term, covenant or condition by Client under this Agreement;
and
(ii) any claim brought against Consultant by reason of Consultant’s performance
of its duties under this Agreement, except for any such claim arising from
Consultant’s fraud, gross negligence, willful misconduct, or knowing violation
of the law in the performance of its obligations under this Agreement.
In
any
instance where either party is entitled to claim indemnity under the provisions
of this Section, such party shall provide reasonable notice to the indemnifying
party that a claim has been made or a lawsuit has been filed and of its demand
to defend. If the indemnifying party fails to provide a reasonable and timely
defense as contemplated herein, the party entitled to indemnification may
undertake its own defense and hold the indemnifying party responsible for the
costs and results thereof.
4
8.
Standard
of Care; No Assurance of Success.
Consultant covenants and agrees that Consultant will provide the consulting
services described herein in good faith, in a commercially reasonable manner,
and with the care and diligence of a reasonably prudent consultant providing
similar services to a similarly situated client. Except as expressly provided
in
the preceding sentence, consultant makes no warranties or representations of
any
kind or nature, express or implied, relating to consultant’s services hereunder.
Consultant specifically disclaims all such warranties or representations,
including without limitation, any warranty or representation regarding client’s
ability to raise the necessary equity, obtain the necessary financing, complete
the project, or operate the project profitably.
9.
Limitation
of Liability.
Notwithstanding any provision in this Agreement to the contrary, the parties
acknowledge and agree that Consultant’s total liability for any breach of this
Agreement shall be limited to the amount of consulting fees actually paid by
Client and received by Consultant pursuant to Section three (3) above.
Furthermore, and not in limitation thereof, in no case shall Consultant be
liable to any party for any special, indirect, incidental, consequential or
other damages, with respect to any services performed by Consultant hereunder.
10.
Confidentiality.
The
parties hereto may, in the course of performing their obligations hereunder,
be
provided with or otherwise receive or have access to certain “Confidential
Information” (as hereafter defined) of or relating to the other party hereto.
Both parties acknowledge and agree that such Confidential Information of the
other party is sensitive and proprietary in nature, and its disclosure would
cause irreparable harm to the other party. Consequently, the parties shall
utilize such Confidential Information solely for the purpose of their duties
and
obligations hereunder. Additionally, the parties covenant and agree, at all
times during the term of this Agreement and for a period of Three (3) years
thereafter, to treat such Confidential Information of the other party as
strictly confidential and sensitive proprietary business information, and to
maintain policies and procedures designed to ensure the confidentiality and
safekeeping thereof. The parties shall not, unless compelled by legal process,
except with other party’s prior written consent, disclose or permit the
disclosure of any Confidential Information of such other party to any person
or
entity other than their respective employees responsible for performing their
obligations hereunder, each of which will be bound by the confidentiality
provisions of this Section. The parties further acknowledge and agree that
any
breach, attempted breach or repudiation by either party of the confidentiality
requirements set forth in this Section would produce irreparable harm and injury
to the other party and, therefore, specific performance and/or injunctive
relief, in addition to any other remedies available under this Agreement, at
law
or in equity, shall be remedies available to prevent the breach, attempted
breach or repudiation of this Section.
For
purposes of this Agreement, the term “Confidential Information” shall mean any
information provided by either party hereto to the other party for any reason
whatsoever, including, without limitation, conceptions, innovations, trade
secrets, inventions, designs, product ideas, production processes and methods,
software, ideas, data, production schedules and/or quantities, pricing
information, customer information, financial information, product
specifications, and other technology, whether or not patentable, copyrightable,
or susceptible to any other form of protection. Notwithstanding the foregoing,
however, the following types of information shall not be deemed to be
“Confidential Information” within the meaning hereof: (i) information which was
rightfully in the receiving party’s possession prior to disclosure; (ii)
information which was in the public domain prior to disclosure, or which becomes
part of the public domain by any means other than an unauthorized act or
omission by a party hereto; or (iii) information supplied to the receiving
party
without restriction by a third party under no obligation to maintain such
information in confidence.
5
11.
Dispute
Resolution.
If a
dispute, controversy, or claim arises out of or relates to this Agreement,
its
termination or non-renewal, or the alleged breach thereof, and if said dispute
cannot be settled through direct discussions, the parties agree to first
endeavor to settle the dispute in an amicable manner by mediation with an
independent mediator selected by mutual agreement of the parties. If the parties
are unable to agree on a mediator, mediation shall be administered by the
American Arbitration Association under its Commercial Mediation Rules. If the
matter has not been resolved pursuant to mediation within thirty (30) days
of
the commencement of such mediation (which period may be reduced or extended
by
mutual agreement in writing), then any unresolved dispute, controversy, or
claim, shall be settled by arbitration administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules, and judgment
upon the award rendered by the arbitrator, may be entered in the Iowa District
Court in Polk County or the highest state court having jurisdiction. The
arbitration shall be conducted by a sole arbitrator. The arbitration proceedings
shall be governed by and conducted in accordance with Iowa Code Chapter 679A
(2005), as amended from time to time, as supplemented by the Commercial
Arbitration Rules of the American Arbitration Association, to the extent not
inconsistent with Chapter 679A. The arbitrator shall allow each party to conduct
limited relevant discovery. The arbitrator shall have no authority to award
punitive damages or any damages not measured by the prevailing party’s actual
damages, and may not, in any event, make any ruling, finding or award that
does
not conform to this Agreement. All fees and expenses of the arbitration shall
be
borne by the parties equally. However, each party shall bear the expenses of
its
own counsel, experts, witnesses, and preparation and presentation of the
arbitration matters. Any such arbitration shall be conducted in Polk County,
Iowa. The provisions of this Agreement shall be a complete bar and defense
to
any suit, action or proceeding instituted in any court or administrative
tribunal with respect to any controversy or dispute which is arbitrable as
set
forth herein.
12.
Governing
Law; Jurisdiction/Venue.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Iowa. The parties, by their execution of this Agreement, irrevocably
submit to the jurisdiction of the courts and arbitration tribunals of the State
of Iowa and irrevocably agree that venue for any dispute between the parties
shall be in Polk County, Iowa.
13.
Relationship
of the Parties.
The
parties’ relationship hereunder is that of independent contracting parties.
Neither this Agreement nor the parties’ performance hereunder shall be
interpreted or construed as creating any other relationship, including, without
limitation, that of principal-agent, franchisor-franchisee, employer-employee,
or any dealership, distributorship, partnership or joint venture relationship.
Each party shall be responsible for payment of, and shall defend, indemnify
and
hold the other party hereto harmless from and against, any and all fees and
taxes arising out of or in connection with such party’s performance hereunder,
including, without limitation, all federal, state and local income taxes, social
security taxes, unemployment insurance taxes, workers’ compensation expenses,
and any other taxes or business license fees. Neither party shall have the
right
or authority, express or implied, to assume or create any duty, responsibility,
obligation or liability, contractual or otherwise, for, on behalf of, or in
the
name of, the other party hereto, or to otherwise bind such other party in any
respect.
14.
No
Third Party Beneficiaries.
This
Agreement is not intended to confer, nor shall it be asserted or construed
as
conferring, any rights or benefits upon any person or entity other than the
parties hereto, including, but not limited to, any such rights or benefits
which
may be asserted by any person or entity as a purported third party
beneficiary.
15.
Notice.
Any
notice required by this Agreement, or given in connection with it, shall be
in
writing and shall be given to the appropriate party by personal delivery or
by
certified mail, postage prepaid, or recognized overnight delivery services.
Such
notice shall be addressed as follows:
6
If
to
Consultant:
Xxxx
Xxxxxx, General Counsel
Third
Inning Solutions, Inc.
0000
Xxxxxxxx Xxxxxx, Xxxxx #000
Xxx
Xxxxxx, XX 00000
If
to the
Client:
Xxxx
Xxxxxx, President
000
Xxxxx
Xxxxxx Xxxxxx
Xxxxxx,
XX 00000
16.
Review
By Counsel; Construction.
Client
acknowledges and agrees that: (i) it has carefully
read and fully understand the terms, provisions and legal effect of this
Agreement; (ii) it has been advised to seek, and has had the opportunity to
seek
the advice of independent legal counsel in connection with the execution of
this
Agreement, and (iii)
the
fact that Consultant initially drafted this Agreement shall not, in any dispute
over the terms, construction or meaning of this Agreement, be held, interpreted
or construed against Consultant.
17.
Miscellaneous.
This
Agreement, together with all exhibits hereto and any documents incorporated
herein, constitutes the entire understanding between the parties concerning
the
subject matter hereof. No prior course of dealing, usage of trade or other
prior
or contemporaneous representations, inducements, promises or agreements between
the parties not embodied in this Agreement shall be of any force or effect.
This
Agreement shall not be modified except in a writing signed by both parties,
and
shall not be assigned by or delegated by either party, in whole or in part,
without the prior written consent of the other, which shall not be unreasonably
withheld. Notices required or permitted hereunder shall be in writing and shall
be delivered to the other party’s last known address. If any provision of this
Agreement shall for any reason be held to be invalid, unenforceable, or contrary
to public policy, whether in whole or in part, the remaining provisions shall
not be affected by such holding. No omission or delay by either party in
enforcing any right or remedy hereunder or in requiring performance of any
term,
covenant or provision herein shall constitute a waiver of any such right or
remedy, nor shall it in any way effect the right of either party to enforce
such
provisions. The remedies set forth in this Agreement are cumulative and in
addition to all other remedies available under this Agreement, at law and in
equity. All covenants, warranties, representations and indemnification
obligations set forth in this Agreement shall survive the termination or
expiration hereof. This Agreement may be executed in counterparts.
[SIGNATURE
PAGE FOLLOWS]
7
IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Agreement effective as of the day and
year first above written.
|
CLIENT:
|
CONSULTANT:
|
|
Southern
Iowa BioEnergy
|
Third
Inning Solutions, Inc.
|
|
/s/
Xxxxxxx
Xxxxxx
|
/s/
Xxxxx X.
Xxxxx
|
|
Xxxxxxx
Xxxxxx, President and Director
|
Xxxxx
X. Xxxxx, President
|
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