CONSULTING AGREEMENT
EXHIBIT 10.4
This Consulting Agreement (the “Agreement”) is made this 6 day of July
, 2005 (the “Effective Date”), by and between BioEnergy Capital Consultants, LLC, a South
Dakota limited liability company, with an address of 00000 000xx Xxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxxxx
00000 (“BioEnergy”), and Gold Energy, LLC, a Minnesota limited liability company, with an address
of 0000 0xx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxx Xxxxxx 00000 (“Client”).
R E C I T A L S:
A. Client intends to develop, finance and construct an ethanol plant in North Dakota or
Minnesota with an expected capacity to produce 50 million gallons of ethanol per year (the
“Project”).
B. BioEnergy has a background in the development of value-added agriculture projects and is
willing to provide services to Client based on this background.
NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein,
Client engages BioEnergy, and BioEnergy accepts engagement, upon the terms and conditions
hereinafter set forth.
1. Term. BioEnergy’s engagement with Client shall commence as of the Effective Date
and shall continue at least through the first day after the Loan Closing Date (as defined in
section 3), unless properly terminated as provided herein. BioEnergy may terminate its services
upon fourteen (14) days prior written notice to Client. Client may only terminate BioEnergy’s
services for “Cause”. For purposes of this Agreement, “Cause” means BioEnergy’s gross negligence
or intentional misconduct in the performance of its duties under this Agreement, a known violation
of the law, or a material breach of this Agreement by BioEnergy.
Upon termination, neither Client nor BioEnergy shall have any further rights or obligations
under the terms of this Agreement other than delivery of payments for services and/or bonus
payments to which BioEnergy may be entitled through the date of termination.
2. Services. BioEnergy shall serve as Client’s Project consultant. BioEnergy’s
service providers (described in section 7 of this Agreement) shall perform the following duties
incident to that service subject to Client’s approval:
a. Assist negotiations of contracts with various service and product providers;
b. Assist the planning of the Client’s equity marketing effort, including, without
limitation, preparation of written and visual equity marketing materials (including, but not
limited to, a power point presentation), and training Client’s officers and directors to
conduct Client’s equity marketing effort;
c. Assist the securing of debt financing for and commencement of construction of the
Project;
d. Assist the education of local lenders including, without limitation, the preparation of a
“banker’s book” tailored to the Project; and
e. Perform such other reasonably necessary duties as Client may request for the timely and
successful securing of debt financing and commencement of construction of the Project,
including without limitation, cooperating with the Client’s personnel similarly engaged.
Notwithstanding the forgoing, neither BioEnergy, its members, managers, officers, employees,
nor 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 Client.
Subject to Client’s approval, BioEnergy shall determine the manner in which the services are
to be performed and the specific hours to be worked by BioEnergy. Client shall rely on BioEnergy
to work as many hours as may be reasonably necessary to fulfill BioEnergy’s commitments under this
Agreement.
3. Payment.
a. Client shall transfer to BioEnergy a one time commitment fee of Fifty Thousand
Dollars ($50,000) on the Effective Date.
b. Client shall pay a one-time conditional bonus of One Hundred Seventy-Five Thousand
Dollars ($175,000) (the Bonus”) on the date that client closes a loan transaction sufficient
to finance the construction of the Project (the “Loan Closing Date”). Client shall have
sole discretion in determining whether to accept a loan commitment or close a loan, and
Client shall not become liable to pay the Bonus, or any portion thereof if it elects in good
faith to refuse to accept a loan commitment or close a loan.
c. In the event of an early termination of this Agreement, the following shall apply
with respect to the bonus
(i) If Client terminates this Agreement for Cause prior to the Equity Drive
Closing Date, Client shall pay to BioEnergy a percentage of the Bonus equal to the
percentage of the equity goal that has been subscribed to as of the date of
termination. Such partial Bonus shall be payable on the Loan Closing Date.
(ii) If Client terminates this Agreement for Cause after the Equity Drive
Closing Date, but prior to the Loan Closing Date, Client shall pay to BioEnergy 100%
of the Bonus on the Loan Closing Date.
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(iii) If BioEnergy terminates this Agreement prior to the Equity Drive Closing
Date, Client shall not owe BioEnergy any portion of the Bonus.
(iv) If, at any time, Client terminates this Agreement in bad faith or without
Cause, Client shall immediately pay BioEnergy 100% of the Bonus.
4. Expenses. Client shall reimburse BioEnergy for all reasonable, ordinary and
necessary expenses incurred by BioEnergy in performance of its duties hereunder, including without
limitation, reimbursement for automobile mileage. The frequency and rate of reimbursement shall be
the same as that made to Client’s own officers and directors.
5. Support Services. Client shall provide the following support services for the
benefit of BioEnergy, as approved by Client: office space, secretarial support, and office
supplies.
6. Relationship of the Parties. The parties understand that BioEnergy is an
independent contractor with respect to Client, and not an employee of Client. Client will not
provide fringe benefits, including health insurance benefits, paid vacation, or any other employee
benefits for the benefit of BioEnergy.
7. Service Providers. Xxxx Xxxxxx and Xxxx X. Xxxxxx shall provide the majority of
BioEnergy’s services under this Agreement. Xxxx X. Xxxxxx’x duties shall include assisting in the
development of the Project and the organization of investor meetings. Xxxx Xxxxxx’x duties shall
include assisting in the organization of investor meetings. Notwithstanding the foregoing,
BioEnergy may substitute its other personnel to provide BioEnergy’s services under this Agreement
on a limited basis as needed, with Client’s consent. BioEnergy’s employees, members, or agents who
perform services for Client under this Agreement shall be bound by the terms of this Agreement.
8. Insurance. BioEnergy and Client shall each obtain, maintain and keep in full force
and effect during the term of this Agreement the following insurance coverages:
a. Commercial general liability insurance with policy limits that have a combined
single limit of One Million Dollars ($1,000,000.00); and
b. Business automobile liability insurance, covering owned, non-owned and hired
vehicles with a combined single limit of One Million Dollars ($1,000,000.00).
All insurance provided for in this section 8 shall be effective under valid and enforceable
policies issued by insurers of recognized responsibility, licensed to do business in states where
the respective parties currently conduct business. Each party shall name the other as an
additional insured with respect to each policy. Each party shall furnish the other with proof of
the payment of all premiums due on said policies of insurance and that the policies of insurance
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are in full force and effect. Each policy or certificate of insurance shall contain an agreement
by the insurer that coverages shall not be cancelled for any reason without at least 30 days prior
written notice to the other party.
9. Indemnification. Client shall indemnify and defend BioEnergy and its employees,
members, managers, officers, and agents against expenses actually and reasonably incurred in
connection with the defense of any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative (a “Proceeding”), in which
BioEnergy and/or its employees, members, managers, officers or agents are made a party by reason of
performing services for Client or acting in any manner pursuant to this Agreement, except that
Client shall have no obligation to indemnify and defend BioEnergy and/or its employees, members or
agents for its and/or their act or omission that involve gross negligence, intentional misconduct
or a known violation of the law. BioEnergy shall indemnify and defend Client and its employees,
members, directors, officers and agents against expenses actually and reasonably incurred in
connection with the defense of any Proceeding in which Client and/or its employees, members,
directors, officers or agents are made a party by reason of BioEnergy and/or its employees,
members, managers, officers or agents commit an act or omission that involves gross negligence,
intentional misconduct or a known violation of the law.
10. Taxes. Client shall be solely responsible for payment of all taxes and charges,
now or hereafter imposed (whether by federal, state, municipal or other public authority), by
reason of this Agreement or its performance, including but not limited to, sales or use taxes, but
excluding any income tax imposed upon the net profits of BioEnergy.
11. Copyright License. BioEnergy will author written and visual equity marketing
materials, Power Point presentations, advertisements, a “banker’s book”, training materials and
other literary works and audio visual works (the “Proprietary Information”) in fulfillment of its
duties hereunder. BioEnergy hereby grants Client a non-exclusive right and license to use the
Proprietary Information for its business and operations only. Client shall not have or acquire any
proprietary or other right whatsoever in the Proprietary Information, except as provided herein,
all of which rights belong exclusively to BioEnergy. Client shall not sell, assign, gift,
sublicense or otherwise transfer to any third party any rights in the Proprietary Information
without the prior written consent of BioEnergy, with the granting of said consent to be in
BioEnergy’s sole discretion.
12. Successors and Assigns. This Agreement shall be binding upon Client and
BioEnergy, their respective heirs, executors, administrators, successors in interest or assigns,
including without limitation, any partnership, corporation or other entity into which Client may be
merged or by which it may be acquired (whether directly, indirectly or by operation of law), or to
which it may assign its rights under this Agreement. Notwithstanding the foregoing, any assignment
by BioEnergy of this Agreement or of any interest herein, or of any money due to or to become due
by reason of the terms hereof without the prior written consent of Client shall be
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void, unless such assignment is made to Xxxx Xxxxxx or Xxxx X. Xxxxxx, or any entity in which
either Xxxx Xxxxxx, Xxxx X. Xxxxxx or BioEnergy own a majority ownership interest.
13. Waiver. The waiver by either party of its rights under this Agreement or the
failure of a party to promptly enforce any provision hereof shall not be construed as a waiver of
any subsequent breach of the same or any other covenant, term or provision.
14. Notices. Any notice required to be given hereunder shall be in writing and shall
be deemed to be sufficiently served by either party on the other party if such notice is delivered
personally or is sent by certified or first class mail addressed as follows, or such substitute
street addresses as the parties may provide in writing:
| To BioEnergy: | BioEnergy Capital Consultants, LLC | |||
| Attn: Xxxx Xxxxxx | ||||
| 00000 000xx Xxxxxx | ||||
| Xxxx Xxxxxxx, XX 00000 | ||||
| To Client: | Gold Energy, LLC | |||
| 0000 0xx Xxxxxx Xxxxx | ||||
| Xxxxxxxx, Xxxxx Xxxxxx 00000 |
15. Applicable Law. This Agreement and all obligations created hereunder or required
to be created hereby shall be governed by and construed and enforced in accordance with the laws of
the State of Minnesota, and the parties hereby consent that the District Court situated in Clay
County, Minnesota, shall be the exclusive jurisdiction and venue of any disputes relating to this
Agreement.
16. Defaults. In the event of the failure of either of the parties to comply with any
of the terms and provisions of this Agreement, or in the event either party has violated any of the
warranties and representations made herein by that party, then such party shall be deemed to be in
default hereunder and the other party shall be given written notice of such noncompliance and shall
give the defaulting party seven (7) days from the date of such notice within which to correct such
noncompliance. If such default has not been corrected, or an arrangement satisfactory to the
complaining party has not been made by the end of the notice period, then the complaining party may
take whatever action is necessary, and exercise all remedies available in order to protect the
complaining party’s rights under the terms and conditions of this Agreement. The parties agree
that the remedies set forth in this section 16 shall not be exclusive, but they shall be cumulative
with all other rights and remedies available, at law or in equity, to the parties. In the event of
any dispute between the parties resulting from this Agreement or any provisions hereunder, the
prevailing party in any such dispute shall be entitled to recover reasonable attorneys’ fees and
such other costs incurred therewith.
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17. Severability. In the event that any term, condition, or provision of this
Agreement is held to be invalid by any court of competent jurisdiction, such holding or holdings
shall not invalidate or make unenforceable any other term, condition or provision of this
Agreement. The remaining terms, conditions and provisions shall be fully severable, and shall be
construed and enforced as if such invalid term, condition or provision had never been inserted in
this Agreement initially.
18. Entire Agreement. This Agreement constitutes the entire Agreement between the
parties hereto with regard to the subject matter hereof, and there are no agreements,
understandings, specific restrictions, warranties or representations relating to said subject
matter between the parties other than those set forth herein or herein provided for. No amendment
or modification of this Agreement shall be valid or binding unless in writing and signed by the
party against whom such amendment or modification is to enforced.
19. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be considered an original document, but all of which shall be considered one and the
same agreement and shall become binding when one or more counterparts have been signed by each of
the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the Effective Date.
| BIOENERGY CAPITAL | GOLD ENERGY, LLC | |||||||||||
| CONSULTANTS, LLC | ||||||||||||
| By | /s/ Xxxx Xxxxxx | By | ||||||||||
| Xxxx Xxxxxx, Member | ||||||||||||
| and | ||||||||||||
| By | /s/ Xxxx X. Xxxxxx | |||||||||||
| Xxxx X. Xxxxxx, Member | ||||||||||||
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