Exhibit 10.2
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made effective as of the
1st day of July 2002, (the "Effective Date") by and between VALUE ADD VENTURES,
LLC of Volga, South Dakota, a South Dakota limited liability company ("VAV") and
EAST KANSAS AGRI-ENERGY, LLC, of Garnett, Kansas, a Kansas limited liability
company ("Client").
WHEREAS, Client intends to develop, finance and construct an ethanol
plant in or near Garnett, Kansas (the "Project"); and
WHEREAS, VAV has a background in value-added agriculture 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 hereby engages VAV, and VAV hereby accepts engagement,
upon the terms and conditions hereinafter set forth.
1. TERM. The VAV engagement with Client shall commence as of the
Effective Date and may be terminated at any time by either party upon fourteen
(14) days prior written notice of its intent to terminate this Agreement. Upon
termination, neither Client nor VAV shall have any further rights or obligations
under the terms of this Agreement other than delivery of payments for services
to which VAV may be entitled through the date of termination.
2. SERVICES. VAV shall serve as the Client's Project Consultant and
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,
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 VAV, its members, 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, VAV shall determine the manner in which the
services are to be performed and the specific hours to be worked by VAV. Client
will rely on VAV to work as many hours as may be reasonably necessary to fulfill
VAV's commitments under this Agreement. Client acknowledges that, although VAV
will perform the majority of its services under this Agreement in the State of
Kansas, a lesser amount of services may be provided elsewhere if the locale of
performance is immaterial to the quality of the performance.
3. EMPLOYEES, MEMBERS, AGENTS. VAV's employees, members, or agents, if
any, who perform services for Client under this Agreement shall also be bound by
the terms of this Agreement
4. PAYMENT. VAV shall receive payment for services in the amount of
$750.00 per week, until a date (the determination of which is to be mutually
agreed upon by the parties) expected to be approximately thirty (30) days prior
to the date on which the Client is to become legally authorized to sell its
equity, at which time the payment shall become $1,500.00 per week. VAV shall
also receive $150.00 per day, for each day
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prior to the Effective Date, during which VAV provided services to Client
consistent with this Agreement. Payments shall be payable twice monthly, no
later than the 15th day and last day of each month during which the services
were performed. Upon termination of this Agreement, payments hereunder shall
cease; provided, however, that VAV shall be entitled to payments for periods or
partial periods that occurred prior to the date of termination for which VAV has
not been paid.
Additionally, Client will pay a one-time bonus based upon the following
guidelines:
a. If, after the Client has raised the amount of equity required
by a prospective lender to secure a loan adequate to finance the Client's
business plan, and within 120 days of the date upon which the Client is
legally authorized to sell its equity, the Client receives a binding
commitment from such prospective lender to provide such loan or loans as
a result of the efforts of VAV pursuant to section 2(c) of this
Agreement, and the loan transaction described in such commitment
thereafter actually closes and is funded, the one-time bonus shall be
$75,000; or
b. If, after the Client has raised the amount of equity required
by a prospective lender to secure a loan adequate to finance the Client's
business plan, and within 150 days of the date upon which the Client is
legally authorized to sell its equity, the Client receives a binding
commitment from such prospective lender to provide such loan or loans as
a result of the efforts of VAV pursuant to section 2(c) of this
Agreement, and the loan transaction described in such commitment
thereafter actually closes and is funded, the one-time bonus shall be
$65,000; or
c. If, after the Client has raised the amount of equity required
by a prospective lender to secure a loan adequate to finance the Client's
business plan, and within 180 days of the date upon which the Client is
legally authorized to sell its equity, the Client receives a binding
commitment from such prospective lender to provide such loan or loans as
a result of the efforts of VAV pursuant to section 2(c) of this
Agreement, and the loan transaction described in such commitment
thereafter actually closes and is funded, the one-time bonus shall be
$55,000.
Notwithstanding the foregoing:
d. The Client shall have sole discretion in determining whether
to accept a commitment or close a loan, and the Client shall not become
liable to pay the one-time bonus related to either sections 4(a), 4(b),
or 4(c) above if it elects to not accept a loan commitment or close a
loan; and
e. The time periods discussed in sections 4(a), 4(b), and 4(c)
above shall be tolled between September 14, 2002 and November 16, 2002.
5. EXPENSES. Client shall reimburse VAV for all reasonable, ordinary
and necessary expenses incurred by VAV in performance of its duties hereunder,
including without limitation, reimbursement for automobile mileage at a rate of
30 cents per mile or such other rate to which the parties hereto may later
agree. However, in no case shall any such expense reimbursements exceed $750 in
any single week.
6. SUPPORT SERVICES. Client will provide the following support services
for the benefit of VAV as approved by Client: office space, secretarial support,
and office supplies.
7. SUCCESSORS AND ASSIGNS BOUND. This Agreement shall be binding upon
the Client and VAV, their respective heirs, executors, administrators,
successors in interest or assigns, including without limitation, any
partnership, corporation or other entity into which the 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 VAV 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 void.
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8. RELATIONSHIP OF THE PARTIES. The parties understand that VAV 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 VAV.
9. INJURIES. VAV acknowledges VAV's obligation to obtain appropriate
insurance coverage for the benefit of VAV and its members, employees, and
agents. VAV waives any rights to recover from Client for any injuries that VAV,
or its members, employees, or agents, may sustain while performing services
under this Agreement resulting from the negligence of VAV, or its members,
employees, or agents.
10. RETURN OF RECORDS. Upon termination of this Agreement, VAV shall
deliver all records, notes, data, memoranda, models, and equipment of any nature
that are in VAV's possession or under VAV's control an that are Client's
property or relate to Client's business.
11. WAIVER. The waiver by the Client of its rights under this Agreement
or the failure of the Client promptly to 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.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties hereto with regard to the subject matter hereof, and there
are no agreements, understanding 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 be enforced.
13. 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:
To VAV: Value Add Ventures, LLC
Attention: Xxxxxxx X. Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxx, Xxxxx Xxxxxx 00000
To Client: East Kansas Agri-Energy, LLC
Attention: Xxxxxxx X. Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxx 00000
14. GOVERNING LAW. This Agreement is entered into pursuant to and shall
be governed by and in accordance with the laws of the State of Kansas.
15. PRIMARY SERVICE PROVIDER. Client acknowledges that VAV will assign
Xxxxxxx X. Xxxxxxxx to provide the majority of the service under this Agreement,
to be assisted from time to time by Xxxx Xxxxxx, at the discretion of VAV.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
VALUE ADD VENTURES, LLC EAST KANSAS AGRI-ENERGY, LLC
By:
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Xxxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx, President
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