Exhibit 10.7
AGREEMENT TO HIRE CHIEF
EXECUTIVE OFFICER FOR
DEVELOPMENT OF LIBERTY
RENEWABLE FUELS, LLC
AGREEMENT MADE this 19
th
day of October, 2006, by
and among the following parties:
A. LIBERTY RENEWABLE FUELS, LLC
(referred to below as “Liberty”);
B. DAVID M. SKJAERLUND (referred to
below as “Skjaerlund”).
I. RECITAL OF FACTS AND
PURPOSES:
1.1 Liberty has been organized to
develop, own and operate an ethanol plant (hereafter “the
Plant”) which is to be constructed in Gratiot County,
Michigan.
1.2 Liberty desires to hire
Skjaerlund as its President/Chief Executive Officer (referred to
hereafter as CEO; the offices of President and CEO are the same
office for purposes of this agreement) to provide the strategic
leadership necessary to the successful development of the
Plant.
1.3 In exchange for the services to
be provided by Skjaerlund, Liberty agrees to provide Skjaerlund
with the compensation described below.
NOW, THEREFORE, IT IS
AGREED:
II. TERMS AND CONDITIONS OF
AGREEMENT:
2.1 Liberty hereby hires Skjaerlund
as its CEO to provide the services set forth in
Section 2.2.
2.2 Skjaerlund is to provide the
general oversight and leadership necessary to the development of
the Plant through the date which is 90 days after the commencement
of ethanol production (the 90 day period will help to ensure a
proper and successful transition to a new CEO if either Skjaerlund
or Liberty desire to discontinue Skjaerlund’s services as
CEO). It is understood that the Board of Liberty and other
individuals and entities will also be providing complementary
services. Skjaerlund’s services shall include the
following:
A. Service as a member of the Board
of Liberty.
B. General supervision and control
of Liberty’s business and affairs
C. Oversight concerning the legal
and financial aspects of the development of the plant to assure
that such matters are being performed correctly and in a timely and
efficient manner.
D. Oversight concerning Plant site
acquisition and preparation, including contact with local
municipalities concerning land use requirements and
restrictions.
E. Oversight concerning the fund
development and financing necessary for the construction of the
Plant.
F. Development of strategies and
business relationships that will better position the Plant to be a
competitive, profitable, and low-cost producer of ethanol. Such
developments would include, but not by way of limitation, grain
acquisition, energy inputs, transportation, ethanol marketing, and
DDG usage, and having such arrangements in place before ethanol
production starts.
G. Providing analysis and
recommendations concerning the hiring of key employees and
contractors (individual and entity contractors) necessary to the
development and operation of the Plant.
H. Presiding at all Managers’
and Member meetings.
Notwithstanding provisions of the
Operating Agreement to the contrary, Skjaerlund’s duties may
not be expanded beyond this agreement without his prior written
consent.
2.3 Compensation and
Reimbursement of Expenses . In consideration of the valuable
services which have been provided and which are to be provided by
Skjaerlund, he is hereby granted Class A membership units in
Liberty according to the following provisions:
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A.
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The total
number of Class A units which are hereby granted to Skjaerlund
is the number of units equal to 3% of the total number of
Class A and B units which will have been issued by Liberty and
any successor entity at the time the Gratiot County ethanol plant
commences production of ethanol. The parties acknowledge that the
total number of units will not be determinable until the
commencement of the production of ethanol.
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B.
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The Capital
accounts of the units hereby granted have a zero value.
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C.
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Certificates
for the Class A units hereby granted shall be issued to
Skjaerlund as soon as reasonably possible following the later of
the following dates (i) the date on which the total
Class A and B units issued by Liberty (and any successor
entity) at the time that the Gratiot County ethanol plant commences
production of ethanol are determinable; or (ii) 90 days
after the commencement of ethanol production.
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D.
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The total
number of Class A units which are hereby granted to Skjaerlund
shall be deemed purchased by Skjaerlund for purposes of section 5.4
of the Operating Agreement, said section being entitled
“Special Right of Appointment of Managers for Certain
Members”. In other words, Skjaerlund may combine the
Class A units which are granted by this section 2.3 with any
other Class A or B units purchased by him, or by an affiliate
or related party, prior to the consummation of ethanol production
at the first of the company’s facilities to begin production,
and if Skjaerlund, his affiliates and related parties hold one
thousand or more units (Class A or Class B), Skjaerlund shall have
the special right to appoint a manager pursuant to section
5.4.
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E.
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A merger,
acquisition, change of ownership or other alteration in
Liberty’s structure shall not abridge the rights and
obligations of the parties under this agreement except to the
extent agreed to in writing.
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F.
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Skjaerlund
shall also be reimbursed reasonable expenses related to his
services, including, but not limited to, travel, lodging and other
business related expenses.
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Skjaerlund shall be entitled to no
other compensation for his services as President/CEO through the
termination of this agreement unless agreed to in writing by the
parties.
2.4 Compensation for the
Continuation of Services as CEO . If Skjaerlund’s
services as CEO are continued beyond the time provided in section
2.2, he shall be paid fair and reasonable compensation for such
services, and the parties agree to negotiate diligently and use
their best good faith efforts to reach an agreement for such
compensation. Their efforts shall include, but shall not be limited
to, considering the compensation paid to CEOs of reasonably similar
companies.
2.5 Purchase of Life Insurance to
Provide Replacement Compensation Upon Skjaerlund’s Death.
As soon as reasonably possible following the execution of this
agreement, Liberty shall pay the premium for a 10-year level term
life insurance pol
