EXHIBIT 10.4
FINDER'S FEE AGREEMENT
This Finder's Fee Agreement (this "Agreement") is entered into by and
among Illinois River Energy, LLC ("Illinois River"), a Delaware limited
liability company, and Producers Alliance ("Producers Alliance"), an Illinois
cooperative association, on this 5th day of July, 2002.
1. MUTUAL UNDERSTANDINGS
1.1 ILLINOIS RIVER'S PURPOSE. Illinois River was formed to develop, own and
operate a dry mill, ethanol plant in the State of Illinois, to process corn into
ethanol, distillers grains, CO2, and other by-products (the "Project").
Feedstocks will be primarily corn and farmers will be the primary intended
beneficiaries.
1.2 PRODUCERS ALLIANCE'S PURPOSE. Producers Alliance's membership consists
primarily of farmers and other agribusiness people and its purpose is to
facilitate the development of value-added agricultural ventures.
1.3 CONFIDENTIALITY. Both Illinois River and Producers Alliance agree to
treat as confidential any information that the other party expressly identifies
as confidential. Producers Alliance further agrees to treat as confidential any
information it receives regarding the Project, and to use such information for
the sole purposes provided herein.
2. OBLIGATIONS OF PRODUCERS ALLIANCE
2.1 FINDER'S SERVICES. Producers Alliance shall assist Illinois River in
attempting to locate a person or persons (a "Potential Investor") who may be
interested in making an investment in limited liability company units of
Illinois River (the "Units") by: (i) providing to Illinois River a list of all
members of Producers Alliance who are in good standing as of June 1, 2002, who
may thereafter be contacted by Illinois River regarding a potential investment
in the Units; (ii) introducing Illinois River to 21st Century Alliance, an
agricultural cooperative with which Producers Alliance maintains a pre-existing
relationship; and (iii) introducing Illinois River to Growmark and its
affiliates, with which Producers Alliance maintains a pre-existing relationship.
Producers Alliance shall not provide, and is not authorized by Illinois River to
provide, any services to Illinois River or Potential Investors other than those
set forth in this SECTION 2.1, in connection with the issuance and sale of the
Units. The right of Illinois River to use the list of Producers Alliance's
members shall terminate on the Investment Date (as hereinafter defined).
2.2 PROHIBITED CONDUCT. Notwithstanding any terms to the contrary set forth
herein, Producers Alliance shall not, and shall not allow any third party
(whether a representative, consultant, advisor or otherwise) acting on its
behalf to:
1
(a) Discuss with any Potential Investor the advantages or
disadvantages of investments in general or of an investment in the
Units;
(b) Provide any advice or analyses or make any recommendations to
Potential Investors with respect to an investment in the Units;
(c) Take part in any negotiations between Illinois River and a
Potential Investor or such Potential Investor's representative;
(d) Assist any Potential Investor in making a decision whether to
purchase Units;
(e) Deliver any offering document of Illinois River to a Potential
Investor;
(f) Receive or handle any Potential Investor's subscription agreement
or any funds used by a Potential Investor in purchasing Units;
(g) Maintain any discretion with respect to the Illinois River's
acceptance or rejection of a Potential Investor's subscription to
purchase Units;
(h) Participate in any advertisement, endorsement or general
solicitation regarding an investment in the Units;
(i) Participate in the preparation of materials (including financial
data or sales literature) relating to the sale or purchase of Units or
in the distribution of these materials to any Potential Investor;
(j) Perform any independent analysis of the sale of Units by Illinois
River or engage in any due diligence activities;
(k) Engage in any other communication with a Potential Investor
regarding a possible investment in Units.
2.3 NO AGENCY. Producers Alliance is not and shall not be an agent of
Illinois River. Unless specifically authorized to do so in writing, Producers
Alliance shall not have the power to act on behalf of Illinois River or to bind
Illinois River by any representation, promise or commitment, and Producers
Alliance shall make no representation to the contrary to any third party. The
relationship which Producers Alliance holds as to Illinois River is that of an
independent contractor, and this agreement is not intended to create, and shall
not be construed as creating, between Producers Alliance and Illinois River the
relationship of principal and agent, joint venturer, copartners, or any other
similar relationship, the existence of which is hereby expressly denied.
2.4 COMPLIANCE WITH LAWS. Producers Alliance shall comply with all
applicable laws and regulations in the performance of its obligations under this
Agreement.
2
2.5 EXCLUSIVITY. Other than the Project, Producers Alliance or its
affiliates and its officers and directors will not discuss, solicit, negotiate,
promote or enter into any discussion or agreement in connection with any ethanol
project or facility or plant for the period from the date of this Agreement
until April 30, 2003.
3. OBLIGATIONS OF ILLINOIS RIVER ENERGY, LLC
3.1 FINDER'S FEES. For purposes of this Agreement, the term "Prospective
Member" shall mean and shall be limited to 21st Century Alliance and to those
members in good standing of Producers Alliance listed on its membership roster
as of June 1, 2002. As consideration for the services provided by Producers
Alliance herein, Illinois River agrees to pay Producers Alliance:
(a) a fee in an amount equal to 4.0% of the amounts received by
Illinois River from any Prospective Member's initial purchase of Units
(the "Initial Finder's Fee"), which Initial Finder's Fee shall be due
and payable on or before the date (the "Investment Date") that is 30
days after the Financial Closing Date (as hereinafter defined);
(b) an annual finder's fee payable on or before the first day of the
calendar month immediately following each of the first five (5) yearly
anniversaries of the Investment Date (each, an "Annual Finder's Fee
Payment"), each of which Annual Finder's Fee Payments shall be in an
amount equal to 0.8% of the amounts received by Illinois River from all
Prospective Members' initial purchases of Units; PROVIDED, HOWEVER, that
the Annual Finder's Fee Payment shall not exceed Fifty Thousand Dollars
($50,000.00); and
(c) a fee equal to 2.0% of the amounts received by Illinois River
from Growmark's initial purchase of Units ("Growmark Finder's Fee"),
which Growmark Finder's Fee shall be due and payable on or before the
Investment Date.
Producers Alliance understands and agrees that no fee of any kind shall be owing
under the foregoing provisions on any amount received by Illinois River from any
initial purchase of Units unless and until such amounts become or are available
to Illinois River for expenditure on the Project (i.e., become "at-risk"
capital). For purposes of this Agreement, "Financial Closing Date" shall mean
the date upon which Illinois River secures an executed commitment letter from a
lender for debt financing which, together with the available net proceeds from
the closing on Illinois River's issuance and sale of Units prior to such date,
will be sufficient to finance the Project.
3.2 PAYMENT OF FEES. Subject to the provisions of this SECTION 3.2, in lieu
of receiving a cash payment of the Initial Finder's Fee and the Growmark
Finder's Fee under SECTIONS 3.1(a) and (b) hereof (but not any Annual Finder's
Fee Payment), Producers Alliance may elect at its discretion to receive all or a
part of such Initial Finder's Fee and Growmark Finder's Fee, if any, owing to it
in the form of Illinois River Class A Common Xxxxx,
0
provided that Producers Alliance meets the membership eligibility criteria
established in or pursuant to Illinois River's organic documents and limited
liability company agreement. Producers Alliance shall receive one (1) Illinois
River Class A Unit for every $1.00 in Initial Finder's Fees and Growmark
Finder's Fees it elects to receive in the form of Illinois River Class A Units.
The minimum number of Illinois River Class A Units that Producers Alliance may
elect to receive in lieu of a cash payment of the Initial Finder's Fee and the
Growmark Finder's Fee is Twenty-Five Thousand (25,000), and Producers Alliance
may only elect to forego cash payment of the Initial Finder's Fee and Growmark
Finder's Fee in favor of Illinois River Class A Units in increments of one
thousand dollars. In the event that Producers Alliance elects to receive all or
a part of the Initial Finder's Fee and the Growmark Finder's Fee owing to it
hereunder in the form of Illinois River Class A Units, Producers Alliance must
notify Illinois River of such election prior to the Financial Closing Date and
must execute and deliver to Illinois River, on or before the Financial Closing
Date, such subscription agreements and other agreements as Illinois River deems
necessary or desirable for membership in Illinois River and purchase of the
Illinois River Class A Units. Producers Alliance understands that Illinois River
will issue Producers Alliance a Form 1099 for the payment of fees to Producers
Alliance under this Agreement regardless of whether such fees are paid in cash
or by the issuance of Illinois River Class A Units. Producers Alliance further
understands that its ownership of Illinois River Class A Units may from time to
time require it to make filings with the Securities and Exchange Commission.
3.3 NO SOLICITATION OF SUBSCRIBERS. Illinois River will retain sole
responsibility and authority to solicit potential subscribers and members. In
addition, any negotiation between Illinois River and Potential Investors is the
sole responsibility of Illinois River and its authorized officers and directors.
Producers Alliance is not authorized to provide or distribute any information
regarding Illinois River. Producers Alliance is not authorized to give any
information or to make any oral or written statements or representations with
respect to Illinois River or participation in Illinois River. Producers Alliance
and its officers, directors and representatives (i) may not solicit potential
subscribers for membership or participation in Illinois River, (ii) may not
handle funds in connection with any subscription for membership or participation
in Illinois River, (iii) may not extend credit or other financial accommodations
necessary to allow any prospective subscriber or member to participate in
Illinois River; and (iv) may not make any recommendations to any party regarding
the advisability of participating in Illinois River or subscribing to acquire
any interest in Illinois River. Instead, Producers Alliance's authorized scope
of activity includes only those actions intended to introduce Illinois River to
Prospective Members residing in the area in which Producers Alliance conducts
its operations. Producers Alliance will not be actively involved in any
negotiations between Illinois River and prospective members or subscribers.
Producers Alliance shall send all Potential Investors' questions concerning a
purchase or potential purchase of Units, and all requests for information, to
Illinois River. When introducing Illinois River to Potential Investors,
Producers Alliance shall inform the Potential Investors that such introduction
is being done pursuant to a finder's agreement and that Illinois River will be
the provider of any and all securities services.
4
3.4 MUTUAL INDEMNIFICATION. Illinois River hereby agrees to indemnify
Producers Alliance and hold Producers Alliance harmless with respect to the
costs and expenses of any third party claims, demands, or actions arising from
or relating to any offering of Illinois River securities or any project or
operation of Illinois River, except any claim, demand, or action which occurs as
a result of or is caused by statements, action or other activities of Producers
Alliance or its representatives that are a breach of this agreement. If a claim,
demand or suit is made against Illinois River as a result of a breach by
Producers Alliance of this agreement, Producers Alliance shall indemnify
Illinois River for any costs or expenses of third party claims, demands, or
actions arising from or relating to Producers Alliance's breach of this
agreement. Cost and expenses of third party claims, demands or actions include,
but are not limited to, costs and attorneys fees related to the claim, demand or
action.
3.5 NO OTHER AGREEMENTS. Producers Alliance has not entered into any
agreement with any third party or made arrangements with any third party to
assist Producers Alliance in performing its duties and obligations hereunder,
and Producers Alliance shall not enter into any such agreement or make any such
arrangement following the date hereof.
4. TERMINATION
4.1 TERMINATION OF THIS AGREEMENT. This agreement may be terminated by
either party upon [ninety] days' written notice to the other party. Termination
shall not void any financial or other obligations accruing or arising prior to
the date of termination, or any obligations of confidentiality as described
elsewhere in this agreement or any other agreement of confidentiality entered
into by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ILLINOIS RIVER ENERGY, LLC PRODUCERS ALLIANCE
By /s/ Xxx Xxxxxxx By /s/ Xxxxxxx Xxxxxxx
---------------------------------- -----------------------------------
Its Vice President Its President
--------------------------------- ----------------------------------
Date 7/5/02 Date 7/5/02
-------------------------------- ---------------------------------
5
