Exhibit 10.2
MANAGEMENT AGREEMENT
RED TRAIL ENERGY, LLC / GREENWAY CONSULTING LLC
This Agreement made and entered into this 17th day of December, 2003, by and
between Red Trail Energy, LLC, a North Dakota Limited Liability Company of
Richardton, North Dakota (Owner) and Greenway Consulting, LLC, a Minnesota LLC
(Greenway);
RECITALS
A. Owner is in the process of designing and constructing an ethanol plant
in Stark County, State of North Dakota, and is in need of management
services to operate the ethanol plant;
B. Greenway is an ethanol consulting company providing, among other
things, management services for the operation of ethanol plants.
C. Owner is desirous of utilizing the management services of Greenway,
and Greenway is desirous of providing such services to Owner.
NOW THEREFORE, in consideration of the following terms and conditions,
Owner and Greenway hereby agree as follows:
SECTION I. SCOPE OF SERVICES
Greenway shall provide the following services:
A. Management of day to day plant operations, maintenance and repair,
including management of installation of additional necessary capital
equipment;
B. Set up, monitor and oversee policies and procedures for programs for
input acquisitions including, among other things, corn supply
C. Sole operational control including hiring and termination of the
General Manager, Controller/CFO and Plant Manager. Greenway will also
have ultimate direction of all plant employees primarily through
control of management. All employees will be on owner's payroll with
the exception of the General Manager and Plant Manager whose
compensation will be paid by Greenway. Compensation for all employees
will be set by Greenway with the exception that General Manager,
Controller/CFO and Plant Manager's salaries require Owner approval.
D. Greenway will report directly to the Board of Directors regarding all
plant management concerns on at least a monthly basis or more
frequently as necessary.
SECTION II. TERM
This Agreement shall begin thirty (30) days after successful commissioning
of the plant and shall run for five (5) consecutive years. Successful
commissioning is defined as reasonable compliance with the engineer's
performance standards.
SECTION III. COMPENSATION
Owner shall pay Greenway compensation for services rendered under the terms
of this Agreement as follows:
A. Two Hundred Thousand Dollars ($200,000) per year payable in equal
monthly installments of Sixteen Thousand Six Hundred Sixty-Six and
67/100 Dollars ($16,666.67) on the first day of each month.
B. Reimbursement to Greenway for the salary and benefit package for the
General Manager and the Plant Manager payable each month, along with
the monthly payment in "A." above.
C. Expenses are in addition to the above compensation and shall be billed
monthly as incurred. Expenses shall include all out-of-pocket
expenditures paid or accrued by Greenway in carrying out the terms of
this Management Agreement. If expenses exceeding $5,000 per month are
required, Greenway shall seek pre-approval by Owner, which approval
shall not be unreasonably withheld.
D. Four percent (4%) of the pre-tax net income, which income shall
include all revenues including, but not limited to, governmental
payments. This sum shall be payable within thirty (30) days after
conclusion of each quarter, beginning with the first full quarter
after the Contract commences and shall terminate after payment for the
twentieth (20th) consecutive quarter.
SECTION IV. STANDARD OF PERFORMANCE
All services provided by Greenway will be provided on a best effort basis
with no warranties of performance due to limitations of the equipment.
SECTION V. TERMINATION
This Agreement may not be terminated by either party except for good cause
shown. 'Good Cause' shall be defined as (i) Insolvency or Bankruptcy of either
party (ii) Dishonest or fraudulent
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acts of either party. (iii) Gross misconduct of either party. If either party
desires to terminate this agreement, that party shall provide written notice to
the other party setting forth, with particularity, the claimed basis for
termination. The party receiving such notice shall have thirty (30) days to
dispute this notice or to correct the claimed defect. In the event the party
receiving notice disputes the claim it shall submit the claim to Arbitration
pursuant to Section IX herein.
Failure to dispute this notice or to arbitrate or to correct the claimed
defect within the given time frame shall result in termination of this Agreement
at the option of the non-defaulting party. In the event of termination all sums
accrued under this Agreement shall then become immediately due in full and any
unpaid balance shall carry an interest rate of eight percent (8%) per annum.
SECTION VI. INDEMNIFICATION
RED TRAIL ENERGY, LLC will indemnify and hold Greenway harmless from and
against all claims, liabilities, losses, damages, expenses, attorney fees and
disbursements related to or arising out of Greenway's performance under this
Agreement, except in the event of gross misconduct on the part of Greenway, its
employees or agents.
SECTION VII. INSURANCE
During the term of this Agreement, each party shall provide Workers'
Compensation Insurance within the statutory requirements for all of its
employees. Owner shall provide comprehensive general liability insurance and
automobile liability insurance to cover claims for personal injury, death or
property damage which may arise out of the performance of this Agreement. Owner
agrees that Greenway shall be named as an additional named insured under its
general liability and automobile liability insurance policies.
Comprehensive general liability limits shall be at least Two Million
Dollars ($2,000,000) for bodily injury or death for any one occurrence and Five
Million dollars ($5,000,000) for property damage. Automobile liability limits
shall be at least One Million Dollars ($1,000,000) for any one person with an
aggregate of Two Million Dollars ($2,000,000) for any occurrence of bodily
injury or property damage.
Upon request, Owner agrees to furnish Greenway with a certificate of
insurance naming Greenway as an additional insured as described above.
SECTION VIII. GOVERNING LAW
This Agreement shall be governed by the laws of the State of North Dakota
with respect to interpretation and performance.
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SECTION IX. ARBITRATION
If any dispute arises out of the interpretation or performance of this
Agreement, the matter shall be referred to Arbitration pursuant to the
commercial rules of the American Arbitration Association. The Arbitration shall
be conducted in Fargo, North Dakota. Each party to the Arbitration shall bear
one half, each, of the expenses of the Arbitrator(s), including their fees and
costs, but each party shall bear their own expenses, including attorney fees.
SECTION X. NOTICES
Any written notice or communication required or permitted by this
Agreement, or by law, to be served upon, given to, or delivered to either party,
by the other party, shall be in writing, and shall be deemed duly served, given,
or delivered when personally delivered to the party to whom it is addressed, or
in lieu of such personal services, when deposited in the United States mail,
first class postage prepaid, addressed to Owner at:
RED TRAIL ENERGY, LLC
P.O. BOX 11/11 SOUTH AVE WEST
RICHARDTON, NORTH DAKOTA 58652
ATTN: FRANK KIRCHENHEITER
Or to:
GREENWAY CONSULTING, LLC
74 SOUTH COUNTY ROAD 22
MORRIS, MINNESOTA 56267
ATTN: GERALD BACHMEIER
SECTION XI. INDEPENDENT CONTRACTOR
Greenway is an independent Consultant and nothing in this Agreement shall
constitute or designate Greenway or any of its employees or agents as employees
of Owner.
SECTION XII. CONFIDENTIALITY
Neither party shall disclose confidential information of the other party to
a third party. (See previously executed Non-Disclosure Agreement which shall
remain in effect; Exhibit A.) Each party shall designate to the other party
information it considers to be confidential and not part of the public domain. A
violation of this provision shall be resolved through Section IX. Arbitration,
herein.
SECTION XIII. MODIFICATION
This Agreement constitutes the entire agreement between the parties. Any
prior agreements, promises, negotiations or representations not expressly set
forth in this Agreement are of no force
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or effect. This Agreement may only be modified upon the written agreement of the
parties executed as an amendment to this Agreement.
SECTION XIV. ASSIGNMENT
This Agreement shall be binding upon the parties and their respective
assigns, representatives and agents including upon any third party buyer of all
or a part of Owner's interest herein.
IN WITTNESS WHEREOF, the Parties have executed this Agreement in the day
and year first above written. By signature of its representative(s) below, each
Party affirms that it has taken all necessary action to authorize said
representative(s) to execute this Agreement.
EACH PARTY AGREES IT HAS READ AND UNDERSTANDS ALL THE TERMS OF THIS
AGREEMENT.
OWNER: RED TRAIL ENERGY, LLC
By: /s/ Frank Ambrose Hoff
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Frank Ambrose Hoff
Its: President
CONSULTANT: GREENWAY CONSULTING LLC
By: /s/ Gerald Bachmeier
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Gerald Bachmeier
Its Chief Manager
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