Unassociated Document


     

     

    EXHIBIT
      10.12

    


    INDEPENDENT
      CONTRACTOR AGREEMENT

    


    THIS
      INDEPENDENT CONTRACTOR AGREEMENT ("Agreement")
      is
      made
      and entered into
      on
      November 6, 2007, between EAST COAST ETHANOL, LLC ("Company"),
      a
      Delaware limited
      liability company having principal office at ______________________ and
      THOMPSON, HOFFMAN & COMPANY ("Consultant"),
      a
      Georgia
      corporation with principal
      offices at 4485 Tench Road, Suite 1620, Suwanee, Georgia 30024, Attn: Clint
      Thompson.

     

    Statement
      of Background 

    


    The
      Predecessor Companies (as defined hereafter) have merged with and into Company
      (the
      "Transaction").
      The
      Predecessor Companies were each in the process of developing a corn-based
      ethanol production facility (each of the four facilities, a "Facility"
      and
      collectively, the "Facilities").
      The
      Company, through such merger, is now in the process of developing the
Facilities.

    


    Atlantic
      Ethanol, LLC, a Georgia limited liability company ("AE"), Florida Ethanol,
      LLC,
a
      Florida
      limited liability company ("FE"). Mid-Atlantic Ethanol, LLC, a North Carolina
      limited liability
      company ("MAE"), and Palmetto Agri-Fuels, LLC, a South Carolina limited
      liability company ("PAF") are each referred to as a "Predecessor
      Company" and
      are
      collectively referred to
      as the
"Predecessor
      Companies".

    


    Consultant
      executed an Independent Consulting Agreement with AE dated May, 2006 and
that
      certain First Amendment to Memorandum of Understanding (as amended, the "AE
      Agreement"),
      a Memorandum of Understanding with PAF dated August 31, 2006 and that certain
      First Amendment to Memorandum of Understanding dated December 15, 2006 (as
      amended, the "PAF
      Agreement"), a Memorandum of Understanding with MAE dated May 24, 2007 and
      that
certain
      First Amendment to Memorandum of Understanding dated December 30, 2006 (as
      amended,
      the "MAE Agreement") and a Memorandum of Understanding with FE dated June 29,
      2007
      (the
      "FE Agreement"; together with the AE Agreement, PAF Agreement and MAE
Agreement,
      each a "MOU" and collectively, the "MOUs").

    


    The
      Company has, through merger, succeeded to the Predecessor Companies' rights
      and
      obligations under the MOUs and Consultant and Company desire to terminate the
      MOUs and Company desires to engage Consultant as an independent contractor
      to
      perform certain consulting services
      and assist Company in the construction and operation of the Facilities at
      locations to in Georgia, North Carolina, South Carolina and Florida as more
      particularly to be identified by Company (the "Sites").
      Company
      is willing to engage Consultant and Consultant is willing to undertake the
      engagement with Company subject to the terms and conditions set forth in this
      Agreement.

    


    Statement
      of Agreement


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    NOW,
      THEREFORE, in consideration of the mutual agreements, representations,
warranties
      and covenants set forth herein, and other good and valuable consideration,
      the
      receipt and
      sufficiency of which are hereby acknowledged, Company and Consultant hereby
      agree as follows:

    


    1.    Engagement.

    


    (a)    Services.
      From
      the
      date hereof and until completion of the following or the termination of this
      Agreement (whichever occurs first). Consultant agrees to make commercially
      reasonable
      efforts to perform the following (the "Services"):

    


    (i)    If
      requested by Company, recommend a firm ("Study
      Firm") that
      Company
      may engage to perform one or more feasibility studies as Company may require
      to
determine
      the likelihood of success of the construction and operation a corn-based ethanol
      production
      facility at each of the Sites;

    


    (ii)    If
      requested by Company, assist Company in identifying and engaging
      an accounting firm or consulting firm ("Business
      Planner"), if
      required by the Equity Partner
      (defined below), to prepare a business plan for the Projects (as defined
      hereafter) suitable for
      use
      with the Equity Partner;

    


    (iii)    Assist
      in
      introducing Company to an equity capital consultant ("Equity
      Partner") that Company may, in its sole discretion, engage to conduct local
      equity drives or
      identify other equity investors, and/or lenders (collectively, "Lenders")
      willing
      to supply capital,
      on terms acceptable to Company in its sole discretion, that may be required
      to
      construct and
      initially operate the Facilities;

    


    (iv)    Assist
      in
      locating and introducing to Company an entity or entities to
      be
      engaged by the Company who has/have the ability to construct the Facilities
      (collectively, the
      "Design-Builder");

    


    (v)    Identify
      candidates for Company to hire as general managers or chief
      executive officers ("Managers")
      of
      the
      Facilities, who will be responsible for the operation of
      the
      Facility; and

    


    (vi)    Until
      a
      Manager is hired for a Facility, lead and guide resources hired
      by
      Company through the process of development at each Site (each a "Project").
      Company
      and
      Consultant will cooperate to develop and approve a Project timeline for each
      Project and, until
      the
      Manager is hired, Consultant shall make commercially reasonable efforts to
      keep
      each Project on its timeline.

    


    (b)    Independent
      Contractor. Consultant
      will be an independent contractor and not
      an
      employee of Company. Neither Consultant nor Company shall represent directly
      or
indirectly
      that Consultant is an agent, employee, or legal representative of Company.
      Consultant shall
      not
      have the right, power or authority to incur any liabilities or
      obligations,


    
      
        
        

      

      
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    express
      or implied, or make any representations of any kind in the name of or on behalf
      of Company. Consultant
      and Company agree that Company will treat Consultant as an independent
      contractor for
      purposes of all local, state and federal tax laws and file forms consistent
      with
      that status.

    


    Consultant
      will be solely responsible to pay any and all local, state, and/or federal
      income, Social Security
      and unemployment taxes for Consultant and its personnel. Consultant acknowledges
      and agrees
      that it and its personnel shall not receive any employee benefits of any kind
      from Company as
      a
      result of providing services under this Agreement. Consultant will provide,
      pay,
      or satisfy at its
      own
      expense its own offices, office supplies, telecommunications, and all other
      tangible and intangible
      needs connected with performing this Agreement and all matters related hereto,
      and shall
      not
      be entitled to any reimbursement from Company therefor except that all
      reasonable expenses
      for travel and lodging shall be reimbursed by the Company upon submission of
      receipts confirming
      such expenses. Consultant's compensation expressly provided for in Section
      2
      below is
      Consultant's only compensation for performing this Agreement and for all matters
      related hereto.
      Notwithstanding anything contained to the contrary herein, neither Consultant,
      its shareholders,
      officers, directors, employees nor its 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 Company.

    


    2.    Excluded
      Site Areas. Notwithstanding anything contained to the contrary herein,
Company
      agrees that it shall not locate any Site within any area which is within
      seventy-five (75) miles of the intersection of Highways 15 and 24 in
      Sandersville. Georgia.

    


    3.    Compensation.

    


    (a)    The
      Company agrees to pay Consultant the following amounts and in the following
      manner:

    


    (i)    $100
      per
      hour for Services rendered at Company's request until the earlier
      of the engagement of the Manager or Start-Up (defined below);

    


    (ii)    For
      each
      Facility, $750,000 upon the latter of Company closing a loan, receiving equity
      or otherwise securing funding, necessary to complete construction and
operate
      such Facility through Start-Up. The parties agree and understand that the fees
      set forth in this
      subsection are part of the overall compensation plan of the Consultant and
      shall
      not be characterized
      as brokerage fees, finder's fees, loans from Company to Consultant, or any
      type
      of loan
      commitment fees and they are being paid at the time specified in this Section
      3(a)(ii) as a convenience
      to the Company in that Company should have funds more readily available to
      pay
such
      amounts then-owed. For the absence of confusion, the fees set forth in this
      subsection shall be paid entirely to Consultant without any obligation on behalf
      of Consultant to pay any fees, costs
      or
      expenses of Company, any Facility or any Project.

    


    (iii)    For
      each
      Facility:

    


    (a)    within
      ninety
      (90) days after the second full calendar year


    
      
        
        

      

      
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    after
      Start-Up of such Facility, an amount equal to 2.0% of Net Income (as defined
      hereafter); generated
      by such Facility in such second year;

     

    (b)    within
      ninety (90) days after the third full calendar year after Start-Up
      of such Facility, an amount equal to 2.0% of Net Income generated by such.
      Facility in such
      third year;

    


    (c)    within
      ninety (90) days after the fourth full calendar year after
      Start-Up of such Facility, an amount equal to 2.0% of Net Income generated
      by
      such. 

    Facility
      in
      such
      fourth year;

    


    (d)    within
      ninety (90) days after the fifth full calendar year after Start-Up
      of such Facility, an amount equal to 2.0% of Net Income generated by such
      Facility in such
      fifth year; and

    


    (e)    within
      ninety (90) days after the sixth full calendar year after Start-Up
      of such Facility, an amount equal to 2.0% of Net Income generated by such
      Facility in such
      sixth year;

    


    (f)    within
      ninety (90) days after the seventh full calendar year after
      Start-Up of such Facility, an amount equal to 2.0% of Net Income generated
      by
      such Facility in
      such
      seventh year;

    


    (g)    within
      ninety (90) days after the eighth full calendar year after Start-Up of such
      Facility, an amount equal to 2.0% of Net Income generated by such Facility
      in
      such
      eighth year;

    


    (h)    within
      ninety (90) days after the ninth full calendar year after
      Start-Up of such Facility, an amount equal to 2.0% of Net Income generated
      by
      such Facility in
      such
      ninth year; and

    


    (i)    within
      ninety (90) days after the tenth full calendar year after
      Start-Up of such Facility, an amount equal to 2.0% of Net Income generated
      by
      such Facility
      in such tenth year.

    


    "Net
      Income" as
      used
      herein shall mean gross revenues of the Facility for the period in question
      less
      Costs Per Facility (as defined hereafter) for the period in question less the
      Corporate Overhead
      Factor (as defined hereafter) for the period in question.

    


    "Costs
      Per Facility" shall
      mean the total costs of operating the Facility and generating product incurred
      in accordance with the Christianson and Associate Financial Forecast utilized
      in
      the East Coast Ethanol Business Plan including but not limited to costs for
      corn, chemicals & enzymes, denaturant,
      electricity, natural gas, direct production costs, indirect production costs,
      depreciation and
      amortization, general and administrative expenses of the Facilities and interest
      expense of the Company
      related to such Facility.

    


    "Corporate
      Overhead Factor" shall
      mean the result obtained by dividing: (i)hard overhead costs for services or
      facilities shared by the Facilities including, without limitation, marketing,
      human resource and technology expenses and support staff and management salaries
      and other


    
      
        
        

      

      
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    business
      expenses
      and costs that cannot be allocated to a particular Facility or business venture
      or segment of
      the
      Company but instead represent costs and expenses associated with operating
      all
      of the Company's
      ethanol plants and other Company business ventures or segments (the "Hard
      Costs") by
      (ii)the total number of the Company's ethanol plants plus other Company ventures
      and segments
      that require the use of the hard overhead. The Hard Costs shall only include
      reasonable, ordinary
      course costs and expenses and shall not include any soft costs such as plant
      write-offs or other
      similar costs or expenses that may, for accounting purposes, be allocated at
      the
      Company level
      accounted for at the Company level but are specifically attributable to a
      particular plant, business
      venture or business segment of the Company. Along with each payment made under
      Section
      3(a)(iii), Company shall provide Consultant with an accounting showing the
      detail of the calculation
      of Net Income, Costs Per Facility and Corporate Overhead Factor.

    


    "Start-Up"
      means a
      Facility's being placed into service and actually producing ethanol in any
      commercial
      quantity.

    


    4.    Term
      and Termination.

    


    (a)    Term.
      The
      term of this Agreement shall commence on the effective date hereof
      and shall continue until the earlier of the following (the "Expiration
      Date"): (i)
      thirty (30) years from the effective date hereof; or (ii) the date which is
      (91)
      days after the tenth full calendar year
      after the last Start-Up of a Facility; provided that this Agreement may be
      terminated earlier pursuant
      to the terms of Section 4(b).

    


    (b)    Termination.
      This Agreement may be terminated prior to the Expiration Date
      by
      either party in the event of a material breach of the terms of this Agreement
      by
      the other party
      and
      the failure of the breaching party to cure such material breach within
      seventy-five (75) days
      after receiving written notice identifying the breach and demanding its
      cure.

    


    (c)    Effect
      of
      Termination or Expiration. Notwithstanding the termination or expiration
      of this Agreement: (i) no party shall be released from any obligation that
      accrued prior to
      the
      date of termination or expiration, including without limitation any payment
      obligations under
      Section 3, (ii) if this Agreement is terminated or expires on or after Start-Up
      of a Facility or Facilities,
      the payments set forth in Section 3. including without limitation those set
      forth in Sections
      3(a)(iii) with respect to such Facility or Facilities which have achieved
      Start-Up prior to the
      termination or expiration of this Agreement, shall continue regardless of
      termination or expiration, and (iii) each party shall remain bound by the
      provisions of this Agreement that by their terms impose upon such party
      obligations extending beyond the date of termination or expiration.

    


     5.    Company's
      Obligations. Company
      agrees not to engage another consultant to perform
      the Services during the term of this Agreement. Notwithstanding the foregoing,
      Company
      may engage consultants, independent contractors, or advisors, and/or hire
      employees, to
      perform services that are the same as some or all of and in addition to the
      Services. Unless terminated
      pursuant to Section 4(b), Company agrees to use commercially reasonable efforts
      to cooperate
      with Consultant in the performance of the Services, to


    
      
        
        

      

      
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    undertake
      the Projects and construct
      and operate the Facilities.

    


    (a)    Company
      agrees to indemnify, defend and hold harmless Consultant, its employees,
      shareholders, officers and directors (collectively, "Consultant Indemnitees")
      from and against
      any and all claims, demands and actions, and any liabilities, damages or
      expenses resulting therefrom,
      including court costs and reasonable attorneys' fees and other expenses of
      litigation actually incurred by Consultant Indemnitees at standard hourly rates
      without reference to any statutory reference or percentage, arising out of
      or
      related to: (i) any claims made by MEM Commercial
      Funding, LLC ("MEM") in connection with Consultant's contacts, discussions
      and/or
      negotiations with potential equity, debt or other financing sources for the
      Company (ii) breach
      by
      Company of its obligations hereunder, (iii) any Project; or (iv) the
      construction or operation
      of any Facility, except to the extent that the foregoing claims in subsections
      (ii)-(iv) are caused
      by
      Consultant's gross negligence, willful misconduct, or violation of applicable
      law

    


    (b)    The
      indemnities contained in this Section 5 shall survive termination or
expiration
      of this Agreement.

    


    6.    Consultant's
      Obligations. (a)
      Consultant agrees to indemnify, defend, and hold Company,
      its officers, directors, managers, members and agents, harmless from any and
      all
      claims, liabilities,
      losses, actions, causes of action, damages, legal costs, and expenses, including
      and actual
      reasonable attorneys' fees and other expenses of litigation actually incurred
      by
      Company at standard
      hourly rates without reference to any statutory reference or percentage arising
      out of or resulting
      in any manner in whole or in part to Consultant's gross negligence, willful
      misconduct, or violation of applicable law.

    


    (b)    The
      indemnities contained in Section 6(a) shall survive termination of this
Agreement.

    


    7.    Notices.
      All
      notices under this Agreement shall be in writing and shall be deemed
to
      have
      been sufficiently given or served and effective for all purposes when presented
      personally, or
      when
      transmitted by telex or facsimile telecopier with receipt confirmed on the
      transmitting machine,
      or three (3) days after being deposited in a United States postal receptacle
      for
      registered or
      certified mail addressed, return receipt requested, postage prepaid, or one
      (l)
      business day after delivery to a small package air courier offering service
      to
      the address of the intended recipient
      with shipping prepaid, to any person at the address set forth in the first
      paragraph of this Agreement
      or at such other address as said person shall subsequently designate in a
      writing delivered
      in the form of notice.

    


    8.    Termination
      of MOUs. The
      terms
      of all of the MOUs are hereby terminated and Consultant, the Company and the
      Predecessor Companies shall not owe each other any obligations under their
      respective MOUs. Company does hereby remise, release, acquit and forever
      discharge Consultant of and from all manner of actions, causes of action, suits,
      debts, covenants,
      accounts, trespasses, contracts, agreements, damages, judgments, liabilities,
      losses, costs,
      expenses, obligations, demands, actions, dues, any accrued and unpaid interest,
      claims for relief,
      attorneys fees, demands and claims of any nature whatsoever, in law or equity,
      whether


    
      
        
        

      

      
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    or
      not
      now
      or hereafter known, fixed or contingent, suspected or claimed, (a "Claim")
      which
Company
      or any Predecessor Company ever had, now has, or which it hereafter can, shall
      or may have
      or
      allege against Consultant arising from or in connection with any of the MOUs,
      provided, however,
      such release shall not apply to any acts by Consultant constituting fraud.
      Consultant does
      hereby remise, release, acquit and forever discharge Company of and from any
      and
      all Claims
      which Consultant ever had, now has, or which it hereafter can, shall or may
      have
      or allege against
      Company or a Predecessor Company arising from or in connection with any of
      the
      MOUs, provided,
      however, such release shall not apply to any acts by Company or any Predecessor
      Company
      constituting fraud. The parties hereto further covenant and agree not to bring,
      commence,
      prosecute, maintain or cause or permit to be brought, commenced, prosecuted
      or
maintained
      any suit or action, either at law or in equity, in any court or before any
      other
administrative
      or judicial authority regarding the MOUs. This covenant not to sue may be
pleaded
      as an affirmative defense to any action or other proceeding which may be
      brought, instituted
      or taken by any party or its predecessors, successors or assigns and all past
      and present shareholders,
      directors, officers, employees, agents, affiliates, heirs, and personal
      representatives, in
      breach
      of this covenant.

    


    9.    Miscellaneous.

    


    (a)    This
      Agreement is the sole agreement between the parties relating to the subject
      matter hereof and supersedes all prior understandings, writings, proposals,
      representations or
      communications, oral or written, of either party.

    


    (b)    To
      the
      extent that Company or Consultant is required to approve, accept or
      consent to any matter or thing related to this Agreement or a Project in
      general, such consent shall
      not
      be unreasonably withheld or delayed.

    


    (c)    Neither
      this Agreement nor any provision hereof, may be changed, waived, discharged,
      or terminated orally, but only by an instrument in writing signed by the party
      against whom enforcement of the change, waiver, discharge or termination is
      sought.

    


    (d)    Neither
      party may assign or delegate any of its rights, duties or obligations
under
      this Agreement without the other party's prior written consent.

    


    (e)    This
      Agreement and all obligations of the parties hereunder shall be interpreted,
      construed, and enforced in accordance with the laws of the State of Georgia;
      provided,
      however, that if Georgia's conflict or choice of law rules, statutes or
      constitutional provisions would choose the law of another state, each party
      waives such rules, statutes or constitutional
      provisions and agrees that Georgia substantive, procedural and constitutional
      law shall
      nonetheless govern.

    


    (f)    No
      failure or delay of either party to exercise any right or power given it
herein
      or
      to insist upon strict compliance by the other party of any obligation imposed
      on
      it herein and
      no
      custom or practice of either party hereto at variance with any item hereto
      shall
      constitute a modification
      or a waiver of either party's right to demand strict compliance with the terms
      of this Agreement.


    
      
        
        

      

      
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    (g)    Time
      is
      of the essence.

    


    (h)    This
      Agreement may be executed in any number of counterparts and by different
      parties hereto, and separate counterparts, each of which when so executed and
      delivered shall be deemed to be an original and all of which taken together
      shall constitute but one and the same
      instrument. Further, the signature of any party to any counterpart hereof shall
      be deemed to be
      a
      signature to, or may be appended to, any other counterpart.

    


    (i)    If
      any
      term, covenant, or condition of this Agreement or the application thereof
      to any person or circumstance shall, to any extent, be invalid or unenforceable,
      the remainder
      of this Agreement, or the application of such term, covenant, or condition
      to
      persons or circumstances
      other than those to which it is held invalid or unenforceable, shall not be
      affected thereby,
      and each term, covenant, or condition of this Agreement shall be valid and
      be
      enforced to the
      fullest extent permitted by law.

    


    (j)    The
      headings used herein are for purposes of convenience only and should
not
      be
      used in construing the provisions hereof.

    


    (k)    Should
      any provision of this Agreement require judicial interpretation, it is
agreed
      that the court interpreting or construing the same shall not apply a presumption
      that the terms
      hereof shall be more strictly construed against one party by reason of the
      rule
      of construction that a document is to be construed more strictly against the
      party who itself or through
      its agent prepared same, it being agreed that the agents of all parties have
      participated in the
      preparation hereof.

    


    (l)    All
      of the
      conditions, representations, and obligations imposed hereunder are
      imposed or made solely and exclusively for the benefit of the parties to this
      Agreement. No other
      person shall, under any circumstances, be deemed to be a beneficiary
      hereunder.

    


    (m)    The
      parties hereby agree to execute such other documents, instruments, affidavits,
      or certificates and to perform such other acts as may be necessary or desirable,
      to carry out
      the
      purposes of this Agreement.

    


    (n)    Should
      either party hereto, or any successor or assign of either party hereto,
      resort to litigation to enforce this Agreement, the party or parties prevailing
      in such litigation
      shall be entitled, in addition to such other relief as may be granted, to
      recover its or their reasonable
      attorneys' fees (actually incurred by Company at standard hourly rates without
      reference
      to any statutory reference or percentage) and costs in such litigation from
      the
      party or parties against whom enforcement was sought.

     

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    IN
      WITNESS WHEREOF, the undersigned have executed this Independent Contractor
      Agreement as of the following effective date: November 6, 2007.

    


    


    THE
      COMPANY:

     

    EAST
      COAST ETHANOL, LLC

    A
      Delaware limited liability company

     

    By: 
      /s/
      Randy
      D. Hudson 
      
        

      

    

    Randy
      Hudson, Chairman and Chief Executive
      Officer

     

    CONSULTANT:

     

    THOMPSON,
      HOFFMAN & COMPANY,

    a
      Georgia
      corporation

     

    By: 
      /s/
      Clint
      Thompson 
      
        

      

    

    Clint
      Thompson, President

     

     

     

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