EXHIBIT 10.1
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), dated March 1, 2002, is made
and entered into between Illinois River Energy, LLC ("IRE") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Associates, Inc. ("▇▇▇▇▇▇").
WHEREAS, IRE is a development stage company organized to develop,
finance, construct and operate a proposed 40,000,000 gallon ethanol processing
plant (the "Ethanol Plant") in northern Illinois (the "Ethanol Project");
WHEREAS, ▇▇▇▇▇▇ possesses skills, knowledge, and know-how relevant to
the needs of IRE; and
WHEREAS, IRE wishes to retain ▇▇▇▇▇▇ as a consultant in the role of
Project Coordinator for the Ethanol Project; and
WHEREAS, ▇▇▇▇▇▇ desires to serve as a consultant for IRE in connection
with the Ethanol Project on the terms and conditions set forth herein which
include among other things a covenant not to compete; and
WHEREAS, IRE and ▇▇▇▇▇▇ recognize that, in performing consulting
services to IRE hereunder, ▇▇▇▇▇▇ has had, and will in the future have,
extensive access to IRE's confidential manufacturing, processing, financial,
accounting, human resources and marketing information; and has had, and will
have, opportunities to cultivate valuable business relationships with IRE's
customers, employees, suppliers and advisors; and
WHEREAS, IRE and ▇▇▇▇▇▇ also enter into this Agreement to protect IRE's
trade secrets, confidential information and customer, employee, investor and
other third-party relationships.
NOW THEREFORE, in consideration of the foregoing and mutual obligations
herein, and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties mutually agree as follows:
Section 1. SCOPE OF WORK.
1.1 ▇▇▇▇▇▇ is engaged by IRE to provide services as the Project
Coordinator for IRE's Ethanol Project. In that capacity, ▇▇▇▇▇▇
shall perform all services, acts or things necessary to fulfill
the duties of a Project Coordinator as determined by IRE's Board
of Directors, including without limitation those services listed
on Exhibit A attached hereto and made a part hereof. ▇▇▇▇▇▇ shall
have the full authority and responsibility of a Project
Coordinator as defined by IRE's Board of Directors and consistent
with the policies, procedures and annual and strategic business
plans as adopted by IRE's Board of Directors and ▇▇▇▇▇▇ hereby
agrees to render such services and accept such authority and
responsibility on behalf of IRE.
1.2 ▇▇▇▇▇▇ will devote the time, attention, skill and energy to the
business of IRE as is necessary to perform the services
contemplated by this Agreement, provided that, at a minimum,
▇▇▇▇▇▇ shall devote one person on a full-time basis to perform
the services contemplated by this Agreement and provided further
that ▇▇▇▇▇▇ shall appoint ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as the individual from
▇▇▇▇▇▇ to perform the services contemplated by this Agreement.
1.3 In order for ▇▇▇▇▇▇ to perform the services described in Section
1.1 above, it may be necessary for IRE to provide ▇▇▇▇▇▇ with
Confidential Information (as defined below) regarding IRE's
business and products. IRE will rely heavily upon ▇▇▇▇▇▇'▇
integrity and prudent judgment to use this information only in
the best interests of IRE.
1.4 In rendering services under this Agreement, ▇▇▇▇▇▇ shall conform
to high professional standards of work and business ethics. In no
event shall ▇▇▇▇▇▇ take any action or accept any assistance or
engage in any activity that would result in any governmental
body, or other person, entity or organization acquiring any
rights of any nature in IRE's products or inventions.
1.5 Other than utilizing the services of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ shall
not use the service of any other person, entity or organization
in the performance of its duties under this Agreement without the
prior written consent of an officer of IRE.
1.6 ▇▇▇▇▇▇ shall provide IRE with such written, periodic reports as
IRE may reasonably request and, upon termination of this
Agreement, a final report if requested. These reports shall
become proprietary information of IRE.
Section 2. TERM AND COMPENSATION.
2.1 The term of this Agreement shall be for one year commencing
effective March 1, 2002, unless earlier terminated as provided in
Section 10 hereof.
2.2 During the term of this Agreement, IRE shall pay to ▇▇▇▇▇▇ a
consulting fee of $6,750 per month, to be paid one-half on the
15th and one-half on the last day of each calendar month of
service.
2.3 In the event this Agreement terminates for any reason prior to
the completion of a full month of service by ▇▇▇▇▇▇, IRE shall
pay ▇▇▇▇▇▇ a prorated amount equal to the number of the days in
the month ▇▇▇▇▇▇ actually provided services.
2.4 In the event IRE terminates this Agreement without cause as
further provided in Section 10 hereof, in consideration of the
release of claims and fulfillment of obligations described in
Section 2.5, IRE agrees to pay ▇▇▇▇▇▇ post-termination severance
payments equal to $6,750 per month, to be paid monthly on the
last day
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of each calendar month, for the period from the date of
termination up to and including February 28, 2003.
2.5 IRE's post-termination severance payments provided for in Section
2.4 are expressly conditioned upon (a) IRE's receipt of a release
of claims signed by ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ individually (and
not rescinded as may be allowed by law) in form satisfactory to
IRE which assures, among other things, that neither ▇▇▇▇▇▇ nor
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will commence any type of litigation or bring any
type of claim against IRE or its affiliates as a result of the
termination or any other act or omission of IRE, its officers or
directors, employees or agents, and (b) ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
each honoring and fulfilling their obligations under Sections 5,
6, 7, and 8 of this Agreement. IRE shall have no obligation to
pay any post-termination severance payments unless and until the
foregoing conditions are satisfied and then only for the
remaining term of the post-termination payment period referenced
above.
2.6 IRE agrees to reimburse ▇▇▇▇▇▇ for all actual, reasonable and
necessary expenditures that are directly related to the service
rendered to IRE by ▇▇▇▇▇▇ under this Agreement. ▇▇▇▇▇▇ shall
receive reimbursement upon turning in valid receipts for each
expenditure claimed. In addition, any expenditure that exceeds
$1,000 must be authorized by an officer of IRE in writing prior
to the expenditure. ▇▇▇▇▇▇ shall provide IRE with a monthly
estimate of the expected expenses for the upcoming month at least
10 days' in advance of each month during the term of this
Agreement and a prior month's reconciliation of the estimate to
the actual expenses.
2.7 During the term of this Agreement, ▇▇▇▇▇▇ shall be responsible
for all payroll and other taxes arising from compensation paid to
him under this Agreement.
2.8 During the term of this Agreement, ▇▇▇▇▇▇ shall not participate
in any benefit plan IRE provides to its employees.
2.9 IRE will not obtain any workers' compensation insurance for
▇▇▇▇▇▇ during the term of this Agreement.
Section 3. INDEPENDENT CONTRACTOR.
3.1 ▇▇▇▇▇▇ is an independent contractor and not an employee of IRE,
and this Agreement is not intended to create, and shall not be
construed as creating, between IRE and ▇▇▇▇▇▇ the relationship of
principal and agent, joint or co-venturers, copartners, or any
other similar relationship, the existence of which is hereby
expressly denied. The manner in which ▇▇▇▇▇▇'▇ services are
rendered shall be within its sole control and discretion.
3.2 Unless specifically authorized in writing to do so, neither party
shall have the power or authority to bind the other party by any
representation, promise or
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commitment, and neither party shall make any representation to
the contrary to any third party.
Section 4. [RESERVED.]
Section 5. CONFIDENTIAL INFORMATION.
5.1 In performing services under this Agreement, ▇▇▇▇▇▇ may be
exposed to and be required to use IRE's "Confidential
Information" (as defined below). ▇▇▇▇▇▇ agrees that he will not
use, directly or indirectly, such Confidential Information for
the benefit of any person, entity or organization other than IRE
or disclose such Confidential Information without the express
written authorization of an officer of IRE to do so, either
during or after the term of this Agreement.
5.2 "Confidential Information" means information not generally known
whether presently existing or developed in the future by IRE,
including, but not limited to trade secrets about IRE's Ethanol
Project which includes information relating to product
strategies, financing strategies, organizational strategies, site
location strategies, permitting strategies, design/build and
other contract discussions and strategies, technical know-how,
trade secret information, financial information, plant
specifications, prospective investor lists and strategies,
pricing policies, operational methods, marketing information
including without limitation strategy, sales, finance and
business systems and techniques, business plans, and other
business affairs of IRE relating to the Ethanol Project. All
information of IRE that is disclosed to ▇▇▇▇▇▇ or which ▇▇▇▇▇▇
obtains access, whether originated by ▇▇▇▇▇▇ on behalf of IRE or
by IRE or others, shall be presumed to be Confidential
Information.
5.3 Upon the termination of this Agreement for any reason, ▇▇▇▇▇▇
shall immediately deliver to IRE all Confidential Information,
including, but not limited to, trade secrets, vendor and customer
information, plant and product design information and information
related to the management and operation of IRE's Ethanol Plant,
together with any other material belonging to IRE, whether
Confidential Information or not, that is in ▇▇▇▇▇▇'▇ possession
or control.
Section 6. RIGHTS AND DATA.
6.1 All ideas, concepts, drawings, models, designs, methods,
information, works of authorship, documents and tangible items
prepared by ▇▇▇▇▇▇ for or submitted to IRE by ▇▇▇▇▇▇ in
connection with the services rendered under this Agreement shall
belong exclusively to IRE and shall be deemed to be works made
for hire ("Deliverable Items"). To the extent that any of the
Deliverable Items may not, by operation of law, be works for
hire, ▇▇▇▇▇▇ hereby assigns to IRE the ownership of copyright or
patent in the Deliverable Items, and IRE shall have the right to
obtain and hold in its own name any trademark, patent or
copyright registration, and any other registrations and similar
protection that may be
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available in the Deliverable Items. ▇▇▇▇▇▇ agrees to give IRE or
its designees all assistance reasonably required to perfect such
rights.
6.2 No license or right is granted to ▇▇▇▇▇▇, either expressly or by
implication, estoppel or otherwise, to use, execute, publish,
reproduce, prepare derivative works based upon, distribute
copies, or publicly display the Deliverable Items either during
or after the term of this Agreement.
Section 7. INVENTIONS.
7.1 ▇▇▇▇▇▇ agrees that all "Inventions" (as defined below) that
▇▇▇▇▇▇ may conceive or reduce to practice in the performance of
his services for IRE during the term of this Agreement and all
Inventions that may be conceived or reduced to practice by ▇▇▇▇▇▇
and are based in whole or part upon Confidential Information
▇▇▇▇▇▇ obtained or conceived as a result of his performing
services for IRE shall be the exclusive property of IRE and are
hereby assigned by ▇▇▇▇▇▇ without charge to IRE. ▇▇▇▇▇▇ may
utilize any inventions, if IRE signs a written release to that
effect.
7.2 "Invention" shall mean any invention, discovery, work of
authorship, modification, improvement, concept or idea, whether
patentable or not, including, but not limited to any and all
intellectual property, products, technologies, machines, devices,
instruments, processes, methods, techniques, know-how and
formulae.
Section 8. NON-COMPETITION AND NON-SOLICITATION.
8.1 ▇▇▇▇▇▇ acknowledges that during its engagement with IRE it, at
the expense of IRE, was and will be specially trained in the
business of IRE, it will establish favorable relations with the
investors, customers, clients, and accounts of IRE and it will
have access to certain trade secrets and confidential information
of IRE, all of which have economic significance to IRE.
Therefore, in consideration of this Agreement and the training
and relations incident to ▇▇▇▇▇▇'▇ engagement, and to further
protect the trade secrets and confidential information of IRE,
▇▇▇▇▇▇ agrees that, during the term of this Agreement and for a
period of six (6) months following its termination, for any
reason, (a) ▇▇▇▇▇▇ will not engage in, and will not render
services in any manner or capacity to (e.g., as an employee,
independent contractor, advisor, consultant, principal, agent,
partner, officer, director, stockholder, or otherwise), will not
own an interest in, or otherwise affiliate with the business of
any person or organization that is engaged in or about to become
engaged in, any business in competition with the business of IRE
in the States of Illinois, Indiana, Iowa or Wisconsin; and (b)
▇▇▇▇▇▇ will not call upon, solicit or divert, or attempt to
divert, investors, clients, customers, suppliers or accounts of
the business of the Company, regardless of their location (which
▇▇▇▇▇▇ acknowledges constitute trade secret and confidential
information of the Company).
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8.2 Section 8.1 does not prohibit ▇▇▇▇▇▇ from owning or purchasing
any corporate securities that are regularly traded on a
recognized stock exchange or over-the-counter market, or from
purchasing and holding less than 10% of the securities of a
privately held company for personal passive investment purposes,
or from purchasing and owning any securities of IRE.
8.3 During the term of this Agreement and for a period of one (1)
year following its termination, for any reason, ▇▇▇▇▇▇ shall not
directly or indirectly solicit, hire, recruit, or encourage any
employee or agent of IRE to leave IRE or work for any person or
entity that is engaged in business in the Ethanol Industry.
Section 9. RIGHT TO INJUNCTIVE RELIEF.
9.1 ▇▇▇▇▇▇ acknowledges that a breach of any of the terms of Section
5, 6, 7 or 8 of this Agreement will result in irreparable harm to
IRE and that a remedy at law for such breach is inadequate and
that IRE shall therefore be entitled to any and all equitable
relief, including, but not limited to, injunctive relief and any
other remedy allowed by law. In light of the unique knowledge of
▇▇▇▇▇▇ with respect to the business of IRE, ▇▇▇▇▇▇ acknowledges
and agrees that the restrictive covenants contained herein are
reasonable in duration and scope and not unduly restrictive, and
are necessary to protect the legitimate business interests of
IRE. The parties agrees that if any provision of this Agreement
is held to be unlawful or unenforceable in any respect, such
illegality or unenforceability shall not affect the legality or
enforceability of any other provision of this Agreement. In the
event the terms of these restrictive covenants are determined by
a court of competent jurisdiction to be unreasonable or over
broad, the parties hereby authorize and request the court to
apply the "blue pencil doctrine" to modify the unreasonable or
overly broad covenant to make it valid and enforceable against
▇▇▇▇▇▇.
Section 10. TERMINATION.
10.1 This Agreement shall terminate at the conclusion of its one-year
term, unless earlier terminated in accordance with this Section
10.
10.2 This Agreement shall terminate automatically upon the death or
disability of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇. Either party may terminate this
Agreement at any time, effective immediately upon written notice
to the other party, if the other party shall be in material and
continuing breach of any of its responsibilities or obligations
under this Agreement and shall have failed to cure such breach
within ten (10) days of receiving written notice from the other
party of the existence of such breach. ▇▇▇▇▇▇ may, at its sole
discretion, terminate this Agreement prior to the expiration of
its one-year term on ninety days' prior written notice without
cause. IRE may, at its sole discretion, terminate this Agreement
prior to the expiration of its one-year term on thirty days'
prior written notice without cause, subject however to Sections
2.4 and 2.5 hereof.
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10.3 The provisions of Sections 5, 6, 7 and 8 of this Agreement shall
survive the termination of this Agreement and remain in full
force and effect thereafter.
Section 11. GENERAL PROVISIONS.
11.1 In the event a court of competent jurisdiction holds any
provision of this Agreement unenforceable, such provision shall
be severed and shall not affect the validity or enforceability of
the remaining provisions.
11.2 This Agreement constitutes the complete agreement and set forth
the entire understanding and agreement of the parties as to the
subject matter of this Agreement and supersedes all prior
discussions and understandings in respect to the subject matter
of this Agreement, whether written or oral.
11.3 No modification, termination or attempted waiver of this
Agreement, or any provision thereof shall be valid unless in
writing signed by the party against whom the same is sought to be
enforced.
11.4 The waiver by IRE of a breach of any provision of this Agreement
by ▇▇▇▇▇▇ shall not operate as a waiver of any other or
subsequent breach by Consultant.
11.5 This Agreement may not be assigned by either party without the
prior written consent of the other party.
11.6 This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois.
11.7 Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and sent by facsimile or by
certified/registered mail with return receipt requested to the
addresses set forth below.
If to IRE: If to ▇▇▇▇▇▇:
Illinois River Energy, LLC ▇▇▇▇▇▇ & Associates, Inc.
4000 North Division ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: __________________
11.8 This Agreement may be executed in any number of counterparts and
each fully executed counterpart shall be deemed an original.
11.9 ▇▇▇▇▇▇ and IRE acknowledge that they enter this Agreement of
their own free will and that they have had ample time and
opportunity to review and consider this Agreement.
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IN WITNESS WHEREOF, this Agreement is executed as of the date set forth above.
ILLINOIS RIVER ENERGY, LLC
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Its President
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ASSOCIATES, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Its President
----------------------------------
In consideration for IRE entering into this Agreement, and as owner of
▇▇▇▇▇▇, the undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, agrees to be bound by and adhere to
each of the provisions of Sections 5, 6, 7, and 8 of this Agreement, and further
agrees that all references to "▇▇▇▇▇▇" in those sections shall mean and include
the undersigned ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ individually, and that the covenants, agreements,
obligations, duties and liabilities of ▇▇▇▇▇▇ thereunder also shall be the
covenants, agreements, obligations, duties and liabilities of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
individually, therender.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, individually
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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EXHIBIT A
PROJECT COORDINATOR JOB DESCRIPTION
ILLINOIS RIVER ENERGY, LLC ("IRE")
OBJECTIVE
The Project Coordinator shall be the day-to-day contact between the Board of
Directors of IRE and the various consultants, advisors and consultants
(collectively "the advisors") assisting IRE. The Project Coordinator is
responsible for the completion of construction of the proposed 40-MGY ethanol
plant.
RESPONSIBILITIES
The Project Coordinator shall:
- Serve as the contact between the Board and hired the advisors
- Develop and present policies to the Board for their approval regarding
decision making to enable the advisors to progress in periods when the
Board has not had a meeting
- Be responsible for the day-to-day activities of the advisors
- Be responsible for the completion of the project
- Assist the advisors in all steps necessary to:
- Select a site
- Select a financing plan
- Raise equity
- Work on grant or low interest loan applications
- Work on site development issues
- Negotiate TIF agreements, if any
- Handle public relations for the Board
- Any events necessary to complete the project and remain in good
standing in the community
- Notify board members of material events
- Coordinate board meetings and prepare an agenda for the meetings
- Maintain a timeline and secure that the events necessary to keep with the
timeline are happening as scheduled
MILESTONES TIMELINE OF EXPECTATIONS:
MILESTONE DATE
Business Plan Finalized April 1, 2002
Equity Meetings Organized May 1, 2002
Equity Raised August 1, 2002
Financial Close October 1, 2002
Start-up January 1, 2004
The foregoing timeline is one of several guidelines that will be utilized to
evaluate the performance of the Project Coordinator, and failure to meet this
timeline would constitute a material breach of the obligations of the Project
Coordinator under the Agreement. It is the intention of the Board that the
expectations timeline be adjusted if events occur that are outside the control
of the Project Coordinator, as mutually agreed to by the Board and the Project
Coordinator, including but not limited to:
- Decisions by the Board that change the timing, scope etc.,
- Failure to achieve the necessary equity investments,
- Failure of the hired the advisors to achieve their objective
- Weather related delays
