INDEPENDENT CONTRACTOR AGREEMENT
EXHIBIT
10.12
THIS
INDEPENDENT CONTRACTOR AGREEMENT ("Agreement")
is
made
and entered into
on
November 6, 2007, between EAST COAST ETHANOL, LLC ("Company"),
a
Delaware limited
liability company having principal office at ______________________ and
XXXXXXXX, XXXXXXX & COMPANY ("Consultant"),
a
Georgia
corporation with principal
offices at 0000 Xxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Attn: Xxxxx
Xxxxxxxx.
Statement
of Background
The
Predecessor Companies (as defined hereafter) have merged with and into Company
(the
"Transaction").
The
Predecessor Companies were each in the process of developing a corn-based
ethanol production facility (each of the four facilities, a "Facility"
and
collectively, the "Facilities").
The
Company, through such merger, is now in the process of developing the
Facilities.
Atlantic
Ethanol, LLC, a Georgia limited liability company ("AE"), Florida Ethanol,
LLC,
a
Florida
limited liability company ("FE"). Mid-Atlantic Ethanol, LLC, a North Carolina
limited liability
company ("MAE"), and Palmetto Agri-Fuels, LLC, a South Carolina limited
liability company ("PAF") are each referred to as a "Predecessor
Company" and
are
collectively referred to
as the
"Predecessor
Companies".
Consultant
executed an Independent Consulting Agreement with AE dated May, 2006 and
that
certain First Amendment to Memorandum of Understanding (as amended, the "AE
Agreement"),
a Memorandum of Understanding with PAF dated August 31, 2006 and that certain
First Amendment to Memorandum of Understanding dated December 15, 2006 (as
amended, the "PAF
Agreement"), a Memorandum of Understanding with MAE dated May 24, 2007 and
that
certain
First Amendment to Memorandum of Understanding dated December 30, 2006 (as
amended,
the "MAE Agreement") and a Memorandum of Understanding with FE dated June 29,
2007
(the
"FE Agreement"; together with the AE Agreement, PAF Agreement and MAE
Agreement,
each a "MOU" and collectively, the "MOUs").
The
Company has, through merger, succeeded to the Predecessor Companies' rights
and
obligations under the MOUs and Consultant and Company desire to terminate the
MOUs and Company desires to engage Consultant as an independent contractor
to
perform certain consulting services
and assist Company in the construction and operation of the Facilities at
locations to in Georgia, North Carolina, South Carolina and Florida as more
particularly to be identified by Company (the "Sites").
Company
is willing to engage Consultant and Consultant is willing to undertake the
engagement with Company subject to the terms and conditions set forth in this
Agreement.
Statement
of Agreement
NOW,
THEREFORE, in consideration of the mutual agreements, representations,
warranties
and covenants set forth herein, and other good and valuable consideration,
the
receipt and
sufficiency of which are hereby acknowledged, Company and Consultant hereby
agree as follows:
1. Engagement.
(a) Services.
From
the
date hereof and until completion of the following or the termination of this
Agreement (whichever occurs first). Consultant agrees to make commercially
reasonable
efforts to perform the following (the "Services"):
(i) If
requested by Company, recommend a firm ("Study
Firm") that
Company
may engage to perform one or more feasibility studies as Company may require
to
determine
the likelihood of success of the construction and operation a corn-based ethanol
production
facility at each of the Sites;
(ii) If
requested by Company, assist Company in identifying and engaging
an accounting firm or consulting firm ("Business
Planner"), if
required by the Equity Partner
(defined below), to prepare a business plan for the Projects (as defined
hereafter) suitable for
use
with the Equity Partner;
(iii) Assist
in
introducing Company to an equity capital consultant ("Equity
Partner") that Company may, in its sole discretion, engage to conduct local
equity drives or
identify other equity investors, and/or lenders (collectively, "Lenders")
willing
to supply capital,
on terms acceptable to Company in its sole discretion, that may be required
to
construct and
initially operate the Facilities;
(iv) Assist
in
locating and introducing to Company an entity or entities to
be
engaged by the Company who has/have the ability to construct the Facilities
(collectively, the
"Design-Builder");
(v) Identify
candidates for Company to hire as general managers or chief
executive officers ("Managers")
of
the
Facilities, who will be responsible for the operation of
the
Facility; and
(vi) Until
a
Manager is hired for a Facility, lead and guide resources hired
by
Company through the process of development at each Site (each a "Project").
Company
and
Consultant will cooperate to develop and approve a Project timeline for each
Project and, until
the
Manager is hired, Consultant shall make commercially reasonable efforts to
keep
each Project on its timeline.
(b) Independent
Contractor. Consultant
will be an independent contractor and not
an
employee of Company. Neither Consultant nor Company shall represent directly
or
indirectly
that Consultant is an agent, employee, or legal representative of Company.
Consultant shall
not
have the right, power or authority to incur any liabilities or
obligations,
-
2
-
express
or implied, or make any representations of any kind in the name of or on behalf
of Company. Consultant
and Company agree that Company will treat Consultant as an independent
contractor for
purposes of all local, state and federal tax laws and file forms consistent
with
that status.
Consultant
will be solely responsible to pay any and all local, state, and/or federal
income, Social Security
and unemployment taxes for Consultant and its personnel. Consultant acknowledges
and agrees
that it and its personnel shall not receive any employee benefits of any kind
from Company as
a
result of providing services under this Agreement. Consultant will provide,
pay,
or satisfy at its
own
expense its own offices, office supplies, telecommunications, and all other
tangible and intangible
needs connected with performing this Agreement and all matters related hereto,
and shall
not
be entitled to any reimbursement from Company therefor except that all
reasonable expenses
for travel and lodging shall be reimbursed by the Company upon submission of
receipts confirming
such expenses. Consultant's compensation expressly provided for in Section
2
below is
Consultant's only compensation for performing this Agreement and for all matters
related hereto.
Notwithstanding anything contained to the contrary herein, neither Consultant,
its shareholders,
officers, directors, employees nor its agents shall itself or themselves be
asked to, or actually,
solicit an offer to buy, or accept an offer to sell, any equity security to
be
issued by Company.
2. Excluded
Site Areas. Notwithstanding anything contained to the contrary herein,
Company
agrees that it shall not locate any Site within any area which is within
seventy-five (75) miles of the intersection of Highways 15 and 24 in
Sandersville. Georgia.
3. Compensation.
(a) The
Company agrees to pay Consultant the following amounts and in the following
manner:
(i) $100
per
hour for Services rendered at Company's request until the earlier
of the engagement of the Manager or Start-Up (defined below);
(ii) For
each
Facility, $750,000 upon the latter of Company closing a loan, receiving equity
or otherwise securing funding, necessary to complete construction and
operate
such Facility through Start-Up. The parties agree and understand that the fees
set forth in this
subsection are part of the overall compensation plan of the Consultant and
shall
not be characterized
as brokerage fees, finder's fees, loans from Company to Consultant, or any
type
of loan
commitment fees and they are being paid at the time specified in this Section
3(a)(ii) as a convenience
to the Company in that Company should have funds more readily available to
pay
such
amounts then-owed. For the absence of confusion, the fees set forth in this
subsection shall be paid entirely to Consultant without any obligation on behalf
of Consultant to pay any fees, costs
or
expenses of Company, any Facility or any Project.
(iii) For
each
Facility:
(a) within
ninety
(90) days after the second full calendar year
-
3
-
after
Start-Up of such Facility, an amount equal to 2.0% of Net Income (as defined
hereafter); generated
by such Facility in such second year;
(b) within
ninety (90) days after the third full calendar year after Start-Up
of such Facility, an amount equal to 2.0% of Net Income generated by such.
Facility in such
third year;
(c) within
ninety (90) days after the fourth full calendar year after
Start-Up of such Facility, an amount equal to 2.0% of Net Income generated
by
such.
Facility
in
such
fourth year;
(d) within
ninety (90) days after the fifth full calendar year after Start-Up
of such Facility, an amount equal to 2.0% of Net Income generated by such
Facility in such
fifth year; and
(e) within
ninety (90) days after the sixth full calendar year after Start-Up
of such Facility, an amount equal to 2.0% of Net Income generated by such
Facility in such
sixth year;
(f) within
ninety (90) days after the seventh full calendar year after
Start-Up of such Facility, an amount equal to 2.0% of Net Income generated
by
such Facility in
such
seventh year;
(g) within
ninety (90) days after the eighth full calendar year after Start-Up of such
Facility, an amount equal to 2.0% of Net Income generated by such Facility
in
such
eighth year;
(h) within
ninety (90) days after the ninth full calendar year after
Start-Up of such Facility, an amount equal to 2.0% of Net Income generated
by
such Facility in
such
ninth year; and
(i) within
ninety (90) days after the tenth full calendar year after
Start-Up of such Facility, an amount equal to 2.0% of Net Income generated
by
such Facility
in such tenth year.
"Net
Income" as
used
herein shall mean gross revenues of the Facility for the period in question
less
Costs Per Facility (as defined hereafter) for the period in question less the
Corporate Overhead
Factor (as defined hereafter) for the period in question.
"Costs
Per Facility" shall
mean the total costs of operating the Facility and generating product incurred
in accordance with the Xxxxxxxxxxxx and Associate Financial Forecast utilized
in
the East Coast Ethanol Business Plan including but not limited to costs for
corn, chemicals & enzymes, denaturant,
electricity, natural gas, direct production costs, indirect production costs,
depreciation and
amortization, general and administrative expenses of the Facilities and interest
expense of the Company
related to such Facility.
"Corporate
Overhead Factor" shall
mean the result obtained by dividing: (i)hard overhead costs for services or
facilities shared by the Facilities including, without limitation, marketing,
human resource and technology expenses and support staff and management salaries
and other
-
4
-
business
expenses
and costs that cannot be allocated to a particular Facility or business venture
or segment of
the
Company but instead represent costs and expenses associated with operating
all
of the Company's
ethanol plants and other Company business ventures or segments (the "Hard
Costs") by
(ii)the total number of the Company's ethanol plants plus other Company ventures
and segments
that require the use of the hard overhead. The Hard Costs shall only include
reasonable, ordinary
course costs and expenses and shall not include any soft costs such as plant
write-offs or other
similar costs or expenses that may, for accounting purposes, be allocated at
the
Company level
accounted for at the Company level but are specifically attributable to a
particular plant, business
venture or business segment of the Company. Along with each payment made under
Section
3(a)(iii), Company shall provide Consultant with an accounting showing the
detail of the calculation
of Net Income, Costs Per Facility and Corporate Overhead Factor.
"Start-Up"
means a
Facility's being placed into service and actually producing ethanol in any
commercial
quantity.
4. Term
and Termination.
(a) Term.
The
term of this Agreement shall commence on the effective date hereof
and shall continue until the earlier of the following (the "Expiration
Date"): (i)
thirty (30) years from the effective date hereof; or (ii) the date which is
(91)
days after the tenth full calendar year
after the last Start-Up of a Facility; provided that this Agreement may be
terminated earlier pursuant
to the terms of Section 4(b).
(b) Termination.
This Agreement may be terminated prior to the Expiration Date
by
either party in the event of a material breach of the terms of this Agreement
by
the other party
and
the failure of the breaching party to cure such material breach within
seventy-five (75) days
after receiving written notice identifying the breach and demanding its
cure.
(c) Effect
of
Termination or Expiration. Notwithstanding the termination or expiration
of this Agreement: (i) no party shall be released from any obligation that
accrued prior to
the
date of termination or expiration, including without limitation any payment
obligations under
Section 3, (ii) if this Agreement is terminated or expires on or after Start-Up
of a Facility or Facilities,
the payments set forth in Section 3. including without limitation those set
forth in Sections
3(a)(iii) with respect to such Facility or Facilities which have achieved
Start-Up prior to the
termination or expiration of this Agreement, shall continue regardless of
termination or expiration, and (iii) each party shall remain bound by the
provisions of this Agreement that by their terms impose upon such party
obligations extending beyond the date of termination or expiration.
5. Company's
Obligations. Company
agrees not to engage another consultant to perform
the Services during the term of this Agreement. Notwithstanding the foregoing,
Company
may engage consultants, independent contractors, or advisors, and/or hire
employees, to
perform services that are the same as some or all of and in addition to the
Services. Unless terminated
pursuant to Section 4(b), Company agrees to use commercially reasonable efforts
to cooperate
with Consultant in the performance of the Services, to
-
5
-
undertake
the Projects and construct
and operate the Facilities.
(a) Company
agrees to indemnify, defend and hold harmless Consultant, its employees,
shareholders, officers and directors (collectively, "Consultant Indemnitees")
from and against
any and all claims, demands and actions, and any liabilities, damages or
expenses resulting therefrom,
including court costs and reasonable attorneys' fees and other expenses of
litigation actually incurred by Consultant Indemnitees at standard hourly rates
without reference to any statutory reference or percentage, arising out of
or
related to: (i) any claims made by MEM Commercial
Funding, LLC ("MEM") in connection with Consultant's contacts, discussions
and/or
negotiations with potential equity, debt or other financing sources for the
Company (ii) breach
by
Company of its obligations hereunder, (iii) any Project; or (iv) the
construction or operation
of any Facility, except to the extent that the foregoing claims in subsections
(ii)-(iv) are caused
by
Consultant's gross negligence, willful misconduct, or violation of applicable
law
(b) The
indemnities contained in this Section 5 shall survive termination or
expiration
of this Agreement.
6. Consultant's
Obligations. (a)
Consultant agrees to indemnify, defend, and hold Company,
its officers, directors, managers, members and agents, harmless from any and
all
claims, liabilities,
losses, actions, causes of action, damages, legal costs, and expenses, including
and actual
reasonable attorneys' fees and other expenses of litigation actually incurred
by
Company at standard
hourly rates without reference to any statutory reference or percentage arising
out of or resulting
in any manner in whole or in part to Consultant's gross negligence, willful
misconduct, or violation of applicable law.
(b) The
indemnities contained in Section 6(a) shall survive termination of this
Agreement.
7. Notices.
All
notices under this Agreement shall be in writing and shall be deemed
to
have
been sufficiently given or served and effective for all purposes when presented
personally, or
when
transmitted by telex or facsimile telecopier with receipt confirmed on the
transmitting machine,
or three (3) days after being deposited in a United States postal receptacle
for
registered or
certified mail addressed, return receipt requested, postage prepaid, or one
(l)
business day after delivery to a small package air courier offering service
to
the address of the intended recipient
with shipping prepaid, to any person at the address set forth in the first
paragraph of this Agreement
or at such other address as said person shall subsequently designate in a
writing delivered
in the form of notice.
8. Termination
of MOUs. The
terms
of all of the MOUs are hereby terminated and Consultant, the Company and the
Predecessor Companies shall not owe each other any obligations under their
respective MOUs. Company does hereby remise, release, acquit and forever
discharge Consultant of and from all manner of actions, causes of action, suits,
debts, covenants,
accounts, trespasses, contracts, agreements, damages, judgments, liabilities,
losses, costs,
expenses, obligations, demands, actions, dues, any accrued and unpaid interest,
claims for relief,
attorneys fees, demands and claims of any nature whatsoever, in law or equity,
whether
-
6
-
or
not
now
or hereafter known, fixed or contingent, suspected or claimed, (a "Claim")
which
Company
or any Predecessor Company ever had, now has, or which it hereafter can, shall
or may have
or
allege against Consultant arising from or in connection with any of the MOUs,
provided, however,
such release shall not apply to any acts by Consultant constituting fraud.
Consultant does
hereby remise, release, acquit and forever discharge Company of and from any
and
all Claims
which Consultant ever had, now has, or which it hereafter can, shall or may
have
or allege against
Company or a Predecessor Company arising from or in connection with any of
the
MOUs, provided,
however, such release shall not apply to any acts by Company or any Predecessor
Company
constituting fraud. The parties hereto further covenant and agree not to bring,
commence,
prosecute, maintain or cause or permit to be brought, commenced, prosecuted
or
maintained
any suit or action, either at law or in equity, in any court or before any
other
administrative
or judicial authority regarding the MOUs. This covenant not to xxx xxx be
pleaded
as an affirmative defense to any action or other proceeding which may be
brought, instituted
or taken by any party or its predecessors, successors or assigns and all past
and present shareholders,
directors, officers, employees, agents, affiliates, heirs, and personal
representatives, in
breach
of this covenant.
9. Miscellaneous.
(a) This
Agreement is the sole agreement between the parties relating to the subject
matter hereof and supersedes all prior understandings, writings, proposals,
representations or
communications, oral or written, of either party.
(b) To
the
extent that Company or Consultant is required to approve, accept or
consent to any matter or thing related to this Agreement or a Project in
general, such consent shall
not
be unreasonably withheld or delayed.
(c) Neither
this Agreement nor any provision hereof, may be changed, waived, discharged,
or terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought.
(d) Neither
party may assign or delegate any of its rights, duties or obligations
under
this Agreement without the other party's prior written consent.
(e) This
Agreement and all obligations of the parties hereunder shall be interpreted,
construed, and enforced in accordance with the laws of the State of Georgia;
provided,
however, that if Georgia's conflict or choice of law rules, statutes or
constitutional provisions would choose the law of another state, each party
waives such rules, statutes or constitutional
provisions and agrees that Georgia substantive, procedural and constitutional
law shall
nonetheless govern.
(f) No
failure or delay of either party to exercise any right or power given it
herein
or
to insist upon strict compliance by the other party of any obligation imposed
on
it herein and
no
custom or practice of either party hereto at variance with any item hereto
shall
constitute a modification
or a waiver of either party's right to demand strict compliance with the terms
of this Agreement.
-
7
-
(g) Time
is
of the essence.
(h) This
Agreement may be executed in any number of counterparts and by different
parties hereto, and separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute but one and the same
instrument. Further, the signature of any party to any counterpart hereof shall
be deemed to be
a
signature to, or may be appended to, any other counterpart.
(i) If
any
term, covenant, or condition of this Agreement or the application thereof
to any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder
of this Agreement, or the application of such term, covenant, or condition
to
persons or circumstances
other than those to which it is held invalid or unenforceable, shall not be
affected thereby,
and each term, covenant, or condition of this Agreement shall be valid and
be
enforced to the
fullest extent permitted by law.
(j) The
headings used herein are for purposes of convenience only and should
not
be
used in construing the provisions hereof.
(k) Should
any provision of this Agreement require judicial interpretation, it is
agreed
that the court interpreting or construing the same shall not apply a presumption
that the terms
hereof shall be more strictly construed against one party by reason of the
rule
of construction that a document is to be construed more strictly against the
party who itself or through
its agent prepared same, it being agreed that the agents of all parties have
participated in the
preparation hereof.
(l) All
of the
conditions, representations, and obligations imposed hereunder are
imposed or made solely and exclusively for the benefit of the parties to this
Agreement. No other
person shall, under any circumstances, be deemed to be a beneficiary
hereunder.
(m) The
parties hereby agree to execute such other documents, instruments, affidavits,
or certificates and to perform such other acts as may be necessary or desirable,
to carry out
the
purposes of this Agreement.
(n) Should
either party hereto, or any successor or assign of either party hereto,
resort to litigation to enforce this Agreement, the party or parties prevailing
in such litigation
shall be entitled, in addition to such other relief as may be granted, to
recover its or their reasonable
attorneys' fees (actually incurred by Company at standard hourly rates without
reference
to any statutory reference or percentage) and costs in such litigation from
the
party or parties against whom enforcement was sought.
[SIGNATURES
BEGIN ON NEXT PAGE]
-
8
-
IN
WITNESS WHEREOF, the undersigned have executed this Independent Contractor
Agreement as of the following effective date: November 6, 2007.
THE
COMPANY:
A
Delaware limited liability company
By:
/s/
Xxxxx
X. Xxxxxx
Xxxxx
Xxxxxx, Chairman and Chief Executive
Officer
CONSULTANT:
XXXXXXXX,
XXXXXXX & COMPANY,
a
Georgia
corporation
By:
/s/
Xxxxx
Xxxxxxxx
Xxxxx
Xxxxxxxx, President
- 9
-
