Document:

EXHIBIT 10.11

 

 

(Top 3 inches reserved for recording data)

 

MORTGAGE

by Business Entity

 

	
MORTGAGE   REGISTRY TAX DUE:  $
    	
 
    	
DATE: May 17, 2013
    

 

o                                    CHECK IF APPLICABLE: NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, ENFORCEMENT OF THIS MORTGAGE IN MINNESOTA IS LIMITED TO A DEBT AMOUNT OF $[...] UNDER CHAPTER 287 OF MINNESOTA STATUTES.

 

THIS MORTGAGE (“Mortgage”) is given by HERON LAKE BIOENERGY, LLC, a Minnesota limited liability company, as mortgagor (“Borrower”), to DAVID J. AND KRISTA R. WOESTEHOFF, SCHMITZ GRAIN, INC., DOUG SCHMITZ, MICHAEL KUNERTH AND DAWN KUNERTH AS TRUSTEES OF THE MICHAEL KUNERTH TRUST UNDER AGREEMENT DATED JULY 18, 2006, DAWN KUNERTH AND MICHAEL KUNERTH AS TRUSTEES OF THE DAWN KUNERTH TRUST UNDER AGREEMENT DATED JULY 18, 2006, ROBERT J. AND JEAN M. FERGUSON, AND PROJECT VIKING, L.L.C. as mortgagee (collectively, “Lender”). In consideration of the receipt of One Million Four Hundred Seven Thousand and no/100 Dollars ($1,407,000) (the “Indebtedness”) from Lender, Borrower hereby mortgages, with power of sale, the real property in Jackson County, Minnesota, legally described as follows:

 

See Exhibit A attached hereto and incorporated herein by reference.

 

Check here if all or part of the described real property is Registered (Torrens) o

 

together with all hereditaments and appurtenances belonging thereto (the “Property”), subject to the following exceptions:

 

(a)                                 Covenants, conditions, restrictions (without effective forfeiture provisions) and declarations of record, if any;

(b)                                 Reservations of minerals or mineral rights by the State of Minnesota, if any;

(c)                                  Utility and drainage easements which do not interfere with present improvements;

(d)                                 Applicable laws, ordinances, and regulations;

(e)                                  The lien of real estate taxes and installments of special assessments not yet due and payable; and

(f)                                   The following liens or encumbrances, if any:  See Exhibit B attached hereto and incorporated herein by reference.

 

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Borrower covenants with Lender as follows:

 

1.  Repayment of Indebtedness.  If Borrower (a) pays the Indebtedness to Lender according to the terms of the 7.25 Subordinated Secured Notes due 2018 or other instrument of even date herewith that evidences the Indebtedness and all renewals, extensions, and modifications thereto (collectively, the “Note”), final payment of which is due on October 1, 2018; (b) pays interest on the Indebtedness as provided in the Note; (c) repays to Lender, at the times and with interest as specified, all sums advanced in protecting the lien of this Mortgage, if any; and (d) keeps and performs all the covenants and agreements contained herein, then Borrower’s obligations under this Mortgage will be satisfied, and Lender will deliver an executed satisfaction of this Mortgage to Borrower. It is Borrower’s responsibility to record any satisfaction of this Mortgage at Borrower’s expense.

 

2.  Statutory Covenants.  Borrower makes and includes in this Mortgage the following covenants and provisions set forth in Minn. Stat. 507.15, and the relevant statutory covenant equivalents contained therein are hereby incorporated by reference:

 

(a)               To warrant the title to the Property;

(b)               To pay the Indebtedness as herein provided;

(c)                To pay all taxes;

(d)               That the Property shall be kept in repair and no waste shall be committed;

(e)                To pay principal and interest on prior mortgages identified in Exhibit B.

 

3.  Additional Covenants and Agreements of Borrower.  Borrower makes the following additional covenants and agreements with Lender:

 

(a)               Borrower shall keep all buildings, improvements, and fixtures now or later located on all or any part of the Property (collectively, the “Improvements”) insured against loss by fire, lightning, and such other perils as are included in a standard all-risk endorsement, and against loss or damage by all other risks and hazards covered by a standard extended coverage insurance policy, including, without limitation, vandalism, malicious mischief, burglary, theft, and if applicable, steam boiler explosion. Such insurance shall be in an amount no less than the full replacement cost of the Improvements, without deduction for physical depreciation. If any of the Improvements are located in a federally designated flood prone area, and if flood insurance is available for that area, Borrower shall procure and maintain flood insurance in amounts reasonably satisfactory to Lender. Borrower shall procure and maintain liability insurance against claims for bodily injury, death, and property damage occurring on or about the Property in amounts reasonably satisfactory to Lender and naming Lender as an additional insured, all for the protection of the Lender.

 

(b)               Each insurance policy required pursuant to Paragraph 3(a) must contain provisions in favor of Lender affording all right and privileges customarily provided under the so-called standard mortgagee clause. Each policy must be issued by an insurance company or companies licensed to do business in Minnesota and acceptable to Lender. Each policy must provide for not less than ten (10) days written notice to Lender before cancellation, non-renewal, termination, or change in coverage. Borrower will deliver to Lender a duplicate original or certificate of such insurance policies and of all renewals and modifications of such policies.

 

(c)                If the Property is damaged by fire or other casualty, Borrower must promptly give notice of such damage to Lender and the insurance company. In such event, the insurance proceeds paid on account of such damage will be applied to payment of the amounts owed by Borrower pursuant to the Note, even if such amounts are not otherwise then due, unless Borrower is permitted to make an election as described in the next paragraph. Such amounts first will be applied to unpaid accrued interest and next to the principal to be paid as provided in the Note in the inverse order of their maturity. Such payment(s) will not postpone the due date of the installments to be paid pursuant to the Note or change the amount of such installments. The balance of insurance proceeds, if any, will be the property of Borrower.

 

(d)               Notwithstanding the provisions of Paragraph 3(c), and unless otherwise agreed by Borrower and Lender in writing, if (i) Borrower is not in default under this Mortgage (or after Borrower has cured any such default); (ii) the mortgagees under any prior mortgages do not require otherwise; and (iii) such damage does not exceed ten percent (10%) of the then assessed market value of the Improvements, then Borrower may elect to have that portion of such

 

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insurance proceeds necessary to repair, replace, or restore the damaged Property (the “Repairs”) deposited in escrow with a bank or title insurance company qualified to do business in Minnesota, or such other party as may be mutually agreeable to Lender and Borrower. The election may only be made by written notice to Lender within sixty (60) days after the damage occurs; and the election will only be permitted if the plans, specifications, and contracts for the Repairs are approved by Lender, which approval shall not be unreasonably withheld, conditioned, or delayed. If such a permitted election is made by Borrower, Lender and Borrower shall jointly deposit the insurance proceeds into escrow when paid. If such insurance proceeds are insufficient for the Repairs, Borrower shall, before the commencement of the Repairs, deposit into such escrow sufficient additional money to insure the full payment for the Repairs. Even if the insurance proceeds are unavailable or are insufficient to pay the cost of the Repairs, Borrower shall at all times be responsible to pay the full cost of the Repairs. All escrowed funds shall be disbursed in accordance with sound, generally accepted, construction disbursement procedures. The costs incurred or to be incurred on account of such escrow shall be deposited by Borrower into such escrow before the commencement of the Repairs. Borrower shall complete the Repairs as soon as reasonably possible and in a good and workmanlike manner, and in any event the Repairs shall be completed by Borrower within one (1) year after the damage occurs. If, following the completion of and payment for the Repairs, there remains any undisbursed escrow funds, such funds shall be applied to payment of the amounts owed by Borrower under the Note in accordance with Paragraph 3(c).

 

(e)                If all or any part of the Property is taken in condemnation proceedings instituted under power of eminent domain or is conveyed in lieu thereof under threat of condemnation, the money paid pursuant to such condemnation or conveyance in lieu thereof must be applied to payment of the amounts due by Borrower to Lender under the Note as set forth in Paragraph 3(c), even if such amounts are not then due to be paid.

 

(f)                 Borrower will diligently complete all Improvements, if any, that may now or hereafter be under construction on the Property.

 

(g)                Borrower will pay all dues, fees, or assessments, if any, which are due and payable by Borrower to any homeowners or similar association as a result of the Property’s inclusion therein.

 

(h)               Borrower will pay any other expenses and attorneys’ fees incurred by Lender pursuant to the Note or as reasonably required for the protection of the lien of this Mortgage.

 

4.  Payment by Lender.  If Borrower fails to pay any amounts to be paid hereunder to Lender or any third parties, or to insure the Improvements, and deliver the policies as required herein, Lender may make such payments or secure such insurance. The sums so paid shall be additional Indebtedness, bear interest from the date of such payment at the same rate set forth in the Note, be an additional lien upon the Property, and be immediately due and payable upon written demand. This Mortgage secures the repayment of such advances.

 

5.  Default.  In case of default (i) in the payment of sums to be paid under the Note or this Mortgage, when the same becomes due, (ii) in any of the covenants set forth in this Mortgage, (iii) under the terms of the Note, or (iv) under any addendum attached to this Mortgage, Lender may declare the unpaid balance of the Note and the interest accrued thereon, together with all sums advanced hereunder, immediately due and payable without notice, and Borrower hereby authorizes and empowers Lender to foreclose this Mortgage by judicial proceedings or to sell the Property at public auction and convey the same in fee simple in accordance with Minn. Stat. Ch. 580, and out of the monies arising from such sale, to retain all sums secured hereby, with interest and all legal costs and charges of such foreclosure and the maximum attorneys’ fees permitted by law, which costs, charges, and fees Borrower agrees to pay.

 

6.  Governing Law; Severability.  This Mortgage shall be governed by the laws of Minnesota. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect without the conflicting provision.

 

7.  Additional Terms.  None.

 

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Note:  Remainder of page left blank, signature page follows.

 

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Borrower
    
	
 
    	
 
    
	
 
    	
HERON   LAKE BIOENERGY, LLC, a Minnesota limited liability company
    
	
 
    	
By:
    	
/s/   Robert J. Ferguson
    
	
 
    	
Print   Name:  Robert J. Ferguson
    
	
 
    	
Its:  General Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Print Name:
    
	
 
    	
Its:
    
				

 

State of Minnesota, County of Jackson

 

This instrument was acknowledged before me on May 17th , 2013 by Robert J. Ferguson as General Manager and by                                                          as                                                    of HERON LAKE BIOENERGY, LLC, a Minnesota limited liability company.

 

	
(Stamp)
    	
Jean Marie Ferguson
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(signature of notarial officer)
    
	
 
    	
 
    	
 
    
	
 
    	
Title   (and Rank): 
    	
Notary   Public
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
My   commission expires: 
    	
01-31-2014
    
	
 
    	
 
    	
(month/day/year)
    
					

 

THIS INSTRUMENT WAS DRAFTED BY:

Lindquist & Vennum, LLP (AMO)

4200 IDS Center

80 South 8th Street

Minneapolis, MN 55402

612-371-3211

 

Note:  Failure to record or file this mortgage may give other parties priority over this mortgage.

 

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EXHIBIT A

LEGAL DESCRIPTION

 

Parcel A

 

Part of the SW1⁄4 of Sec. 16, T104N, R37W, Jackson County, Minnesota, lying Southerly of the Southerly right of way line of the Union Pacific Railroad, described as follows:

 

Beginning at an existing iron monument at the SE corner of the SW1⁄4 of said Sec. 16; thence South 89°57’49” West, along the South line of said SW1⁄4, a distance of 1031.09 feet; thence North 00°37’05” East, parallel with the West line of said SW1⁄4, a distance of 275.02 feet; thence South 89°57’49” West, parallel with the South line of said SW1⁄4, a distance of 1600.10 feet, to a point on the West line of said SW1⁄4; thence North 00°37’05” East, along the West line of said SW1⁄4, a distance of 593.98 feet; thence South 89°22’55” East a distance of 412.00 feet; thence North 00°37’05” East, parallel with the West line of said SW1⁄4, a distance of 400.00 feet; thence North 89°22’55” West a distance of 412.00 feet, to a point on the West line of said SW1⁄4; thence North 00°37’05” East, along the West line of said SW1⁄4, a distance of 103.50 feet, to a point on the Southerly right of way line of the Union Pacific Railroad; thence North 76°38’53” East, along the Southerly right of way line of said Union Pacific Railroad, a distance of 2706.70 feet, to a point on the East line of said SW1⁄4; thence South 00°29’31” West, along the East line of said SW1⁄4, a distance of 1995.89 feet, to the point of beginning,

 

AND ALSO that part of the S1⁄2 of the SW1⁄4 of Sec. 16, T104N, R37W of the Fifth Principal Meridian, Jackson County, Minnesota, described as follows: Commencing at an existing iron monument at the Southeast corner of the SW1⁄4 of said Section 16; thence South 89 degrees 57 minutes 49 seconds West, bearing based on Jackson County Coordinate System, along the South line of the SW1⁄4 a distance of 1031.09 feet to the POINT OF BEGINNING; thence North 00 degrees 37 minutes 05 seconds East, parallel with the West line of said SW1⁄4 , a distance of 275.02 feet; thence South 89 degrees 57 minutes 49 seconds West, parallel with the South line of said SW1⁄4 , a distance of 1600.10 feet to a point on the West line of said SW1⁄4; thence South 00 degrees 37 minutes 05 seconds West, along the West line of said SW1⁄4, a distance of 275.02 feet to the Southwest corner of said SW1⁄4; thence North 89 degrees 57 minutes 49 seconds East, along the South line of said SW1⁄4, to the point of beginning.

 

EXCEPTING a part of the S1⁄2 SW1⁄4 of Sec. 16, T104N, R37W, Jackson County, Minnesota, described as follows:  Commencing at an existing iron monument at the SE corner of the SW1⁄4 of said Sec. 16; thence South 89°57’49” West, bearing based on Jackson County Coordinate System, along the South line of said SW1⁄4 of said Sec. 16, a distance of 1048.26 feet, to the point of beginning; thence continuing South 89°57’49” West, along said South line, a distance of 503.33 feet; thence North 00°02’11” West a distance of 275.00 feet; thence North 89°57’49” East, parallel with the South line of said SW1⁄4, a distance of 246.59 feet; thence North 00°02’11” West a distance of 74.71 feet; thence North 89°57’49” East, parallel with the South line of said SW1⁄4, a distance of 256.74 feet; thence South 00°02’11” East a distance of 349.71 feet, to the point of beginning.

 

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Parcel B

 

Part of the SE1⁄4 of Sec. 16, T104N, R37W, Jackson County, Minnesota, described as follows:

 

Beginning at an existing iron monument at the SW corner of the SE1⁄4 of said Sec. 16; thence North 00°29’31” East, bearing based on Jackson County Coordinate System, along the West line of the SE1⁄4 of said Sec. 16, a distance of 1995.89 feet, to a point on the Southerly right of way line of the Union Pacific Railroad; thence North 76°38’53” East, along the Southerly right of way line of said Union Pacific Railroad, a distance of 2701.22 feet, to a point on the East line of the SE1⁄4; thence South 00°18’29” West, along the East line of said SE1⁄4 a distance of 1799.88 feet; thence South 89°57’40” West, parallel with the South line of said SE1⁄4, a distance of 593.49 feet; thence South 61°26’20” West a distance of 545.54 feet; thence South 01°19’30” East, a distance of 557.71 feet, to a point on the South line of said SE1⁄4; thence South 89°57’40” West, along the South line of said SE1⁄4, a distance of 1575.92 feet, to the point of beginning.

 

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EXHIBIT B

 

PERMITTED ENCUMBRANCES

 

1.                                      Jackson County Ordinances, Codes, and Resolutions of record.

 

2.                                      Transmission Line Easement in favor of Interstate Power Company, dated 02/17/50, filed 03/03/50, in Book 160, page 72, as Doc. #126735.  Runs over and across the S1⁄2 SW1⁄4, Sec. 16-104-37, with other land.  Exact location of easement is not clear.  PARCEL A.

 

3.                                      Transmission Line Easement in favor of Interstate Power Company, dated 05/10/51, filed 05/17/51, in Book 160, Page 178 as Doc. #128876.  Grants 34 foot wide strip, located approximately 50 feet East of and parallel to the West line of PARCEL A.

 

Partial Easement Assignment dated 12/20/07, filed 01/03/08 as Doc #A251649, by Interstate Power and Light Company, to ITC Midwest, LLC.

 

Easement Assignment dated 12/20/07, filed 1/3/08 as Doc #A251650, by Interstate Power and Light Company, to ITC Midwest, LLC.

 

First Mortgage and Deed of Trust dated 1/14/08, filed 1/17/08 as Doc #A251774, to The Bank of New York Trust Company, N.A.

 

First Supplemental Indenture to First Mortgage and Deed of Trust dated 1/14/08, filed 1/17/08 as Doc #A251775, to The  Bank of New York Trust Company, N.A.

 

Second Supplemental Indenture to First Mortgage and Deed of Trust dated 12/15/08, filed 12/17/08 as Doc #A254516, to The Bank of New York Mellon Trust Company, N.A., as successor to The Bank of New York Trust Company, N.A.

 

Third Supplemental Indenture to First Mortgage and Deed of Trust dated 12/15/08, filed 12/17/08 as Doc #A254517, to The Bank of New York Mellon Trust Company, N.A., as successor to The Bank of New York Trust Company, N.A.

 

Fourth Supplemental Indenture to First Mortgage and Deed of Trust dated 12/10/09, filed 12/15/09 as Doc #A257698, to The Bank of New York Mellon Trust Company, N.A., as successor to The Bank of New York Trust Company, N.A.

 

Consent of Easement Holders given by ITC Midwest LLC to Power Partners Midwest, LLC filed 4/29/11 as  Doc #A261738.

 

Fifth Supplemental Indenture to First Mortgage and Deed of Trust dated 7/15/11, filed 7/20/11 as Doc #A262368, to The Bank of New York Mellon  Trust Company, N.A., as successor to The Bank of New York Trust Company, N.A.

 

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Sixth Supplemental Indenture to First Mortgage and Deed of Trust dated 11/29/11, filed 12/16/11 as Doc #A263601, to The Bank of New York Mellon Trust Company, N.A., as successor to The Bank of New York Trust Company, N.A.

 

Seventh Supplemental Indenture to First Mortgage and Deed of Trust dated              , filed 3/27/13 as Doc #A267760, to The Bank of New York Mellon Trust Company, N.A., as successor to The Bank of New York Mellon Trust Company, N.A.

 

4.                                      Weimer Township Resolution filed 3/25/86 as Doc #190214.  Establishes township roads.

 

5.                                      Easement Deed No. 86589 given to US Sprint Communications Company Limited Partnership dated 3/6/91, filed 3/13/91 as Doc #201551.  Grants a 10 foot wide strip over and across the SW1⁄4 of Sec. 16-104-37.  Exact location of easement is not clear.  PARCEL A.

 

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6.                                      Transmission Line Easement in favor of Interstate Power Company, dated 10/30/46, filed 11/13/46, in Book 158, Page 502, as Doc #N/A.  Runs over and across the SE1⁄4 of Sec. 16-104-37, said line to be constructed 1 foot North of the highway  along the South side of said property.  PARCEL B.

 

7.                                      Mortgage dated 12/28/07, filed 01/09/08 as Doc #A251707, given by Heron Lake BioEnergy, LLC, to Federated Rural Electric Association, securing the principal sum of $600,000.00. Secured by a .62 acre parcel located in a portion of Parcel A of TRACT A.

 

8.                                      Mortgage dated 9/29/05, filed for record on 9/30/05 as Doc #244879, given by Heron Lake BioEnergy, LLC, a Minnesota limited liability company, in favor of AgStar Financial Services, PCA, securing the amount of $61,883,000.00.  TRACT A

 

AND

 

Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases, by and between Heron Lake BioEnergy, LLC, a Minnesota limited liability company, and AgStar Financial Services, PCA, dated 11/20/06, filed for record on 12/6/06, as Doc #248498, amending the original principal amount to $65,583,000.00, among other items.

 

AND

 

Second Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases, by and between Heron Lake BioEnergy, LLC, a Minnesota limited liability company, and AgStar Financial Services, PCA, dated 12/27/06, filed for record on 12/27/06, as Doc #248658, amending the original principal amount to $70,283,000.00, and amending the legal description of the original mortgage to exclude an additional parcel, among other items.

 

AND

 

Third Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases, by and between Heron Lake BioEnergy, LLC, a Minnesota limited liability company, and AgStar Financial Services, PCA, dated 05/08/07, filed for record on 06/04/07, as Doc #A250019, amending the original principal amount to $72,083,000.00, among other items.

 

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AND

 

Fourth Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases, by and between Heron Lake BioEnergy, LLC, a Minnesota limited liability company, and AgStar Financial Services, PCA, dated 09/01/11, filed for record on 09/08/11, as Doc #A262710, amending the original principal amount to $72,083,000.00, among other items.

 

AND

 

Fifth Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases, by and between Heron Lake BioEnergy, LLC, a Minnesota limited liability company, and AgStar Financial Services, PCA, dated 9/20/11, filed for record 11/1/11, as Document Number A263140, securing the principal sum of $

 

AND

 

Sixth Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases, by and between Heron Lake BioEnergy, LLC, a Minnesota limited liability company, and AgStar Financial Services, PCA, dated May         , 2013, filed for record May         , 2013, as Document Number                                       , securing the principal sum of $37,904,344.28, amending the legal description, among other items.

 

11Exhibit 10.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement ("Agreement") is made and entered into this June 26, 2013, between General Employment Enterprises, Inc., an Illinois Corporation (the "Company") and Brad A. Imhoff ("Executive").

WITNESSETH:

WHEREAS, pursuant to that certain Asset Purchase Agreement dated August 31, 2011, by and between Executive, Ashley Ellis LLC, an Illinois limited liability company ("Ashley Ellis") and Company (the "Asset Purchase Agreement"), Company purchased substantially all of the assets owned by Seller used or useable in conjunction with the operation of the "Business" (hereinafter defined);

WHEREAS, Executive was an officer, director, shareholder and employee of Ashley Ellis, familiar with the management and operation of Ashley Ellis’ business of recruitment and placement of technical personnel (the "Business");

WHEREAS, the Asset Purchase Agreement and the transactions consummated pursuant thereto were freely entered into by the parties, each party being represented by counsel of its or his own selection; and

WHEREAS, as a condition precedent to, and in order to induce Company's execution and delivery of, the Asset Purchase Agreement, Executive agreed to accept employment by the Company pursuant to the terms and conditions contained in that certain Employment Agreement dated August 31, 2011, by and between the parties hereto (the “Original Agreement”).  This Agreement amends and restates the Original Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

		1.	Employment and Duties. During the "Term" (hereinafter defined), Executive shall be employed by the Company to perform the covenants, duties and obligations set forth in this Agreement, and such additional duties and responsibilities as may be agreed upon by the parties (sometimes collectively the "Employment Duties") subject to the reasonable overall direction and authority the Chief Financial Officer of the Company, or his designee.

 

		(a)	Executive shall devote all of Executive's full time, attention, energies and best efforts to fully and timely performing the Employment Duties and to further the business, operations and best interests of Company in an honest and ethical manner in compliance with this Agreement, all applicable laws,  ordinances, permits, licenses, governmental rules, regulations, authorizations and requirements, the Company’s Employee Handbook,  rules and regulations as may be promulgated by Company, from time to time.

		(b)	Executive shall be employed with the title " Chief Operating Officer and President of the Professional Staffing Division" of the Company located at One Tower Lane, Suite 2200, Oakbrook Terrace, IL 60181, or such other title and location as mutually agreed upon by Company and Executive, but in no event, during the Term, shall Executive be required to relocate more than fifty (50) miles outside the Chicago metropolitan area unless mutually agreed upon by Company and Executive in writing.

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		(c)	The Company’s Professional Staffing Division is defined as follows:

 

		(i)	the three Ashley Ellis branch offices that are being acquired pursuant to the certain Asset Purchase Agreement dated August 31, 2011, which subsists of the Naperville, Atlanta, and Houston branch offices of Ashley Ellis.

 

		(ii)	the Company’s  branch offices which provide staffing services substantially in the IT, Accounting, Engineering and Clerical area on a contract and direct hire basis.

 

		(iii)	future branch offices that the Company opens, which provide staffing services substantially in the IT, Accounting, Engineering and Clerical area on a contract and direct hire basis.

 

		(iv)	any Company acquisition which provides staffing services substantially in the IT, Accounting, Engineering, and Clerical area on a contract and direct hire basis.

 

		(v)	the Company’s Professional Staffing Division will not include branches, affiliates or subsidiaries where a substantial portion of the business is staffing in the Light Industrial or Agricultural area.

 

		2.	Term of Employment. The period of Company's employment of Executive commenced as of September 1, 2011 and, unless earlier terminated for cause as provided for herein, will continue until July 15, 2013 (the "Term").

 

		(a)	The Term shall immediately terminate upon notice to Executive if (each shall be deemed a "breach"):

 

		(i)	Executive dies or if Executive is unable to carry out the Employment Duties under this Agreement due to illness or injury for a period of ninety (90) days in any 365 day period. Any days of disability separated by thirty (30) days or less shall be considered continuous.

 

		(ii)	Executive uses intoxicants, alcohol, drugs or other stimulants or depressants while performing the Employment Duties and such that the reputation of the Company is adversely affected, as reasonably determined by the Company.

 

		(iii)	Executive fails or refuses to satisfactorily perform the Employment Duties or any assignment reasonably given to Executive by the officers of Company or Executive's supervisor.

 

		(iv)	Executive otherwise breaches the terms or conditions of this Agreement or any other policy, rule or regulation of Company's generally in effect from time to time.

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		(v)	Executive is convicted of or pleads guilty or nolo contendere to any felony charge or commits a fraudulent, dishonest, immoral or unethical act with regard to Company, Company's customers, Company's prospective customers, suppliers, employees, agents or independent contractors.

		(vi)	Executive commits an act of moral turpitude.

		(vii)	Executive has been found by a court in a civil action or by the SEC to have violated any federal or state securities law.

		(b)	In the event of termination with cause, Company shall only be obligated to pay Executive compensation and benefits, if any, up to and including the effective date of such termination or expiration.

		(c)	Executive’s employment with the Company will terminate upon the expiration of the Term, without any further action on the part of the Company or the Executive, unless the Company and the Executive expressly agree in writing to an extension of the Term.

		3.	Compensation.

 

	
 

 

	(a)	During the Term of this Agreement, the Company shall pay the Executive as compensation for his services a base salary at the annualized rate of One Hundred Eighty Thousand Dollars ($180,000), less all customary employee withholdings and all other applicable federal, state and local deductions as required by law.

 

		(b)	Should this Agreement expire at the end of its Term (as opposed to being terminated prior to the end of the Term), the Company shall continue to pay the Executive’s compensation and benefits hereunder until September 15, 2013, and will make a one-time payment of Twelve Thousand Five Hundred Dollars ($12,500) to Executive on October 15, 2013, subject to Executive performing his ongoing duties under Section 3(c) below.

		(c)	Should this Agreement expire at the end of its Term (as opposed to being terminated prior to the end of the Term), the Executive agrees that he will make himself reasonably available to perform the Employment Duties and other transitional services to the Company for up to 5 hours per week until January 15, 2014.  In consideration therefore, the Company will pay the Executive $100 per hour for each hour of service so rendered.  During said period, the Executive will be an independent contractor of the Company, not an employee of the Company.

		(d)	The Company shall reimburse Executive for all normal, reasonable and necessary out-of-pocket expenses incident to the performance of his Employment Duties in accordance with policies adopted by the Company from time to time, upon submission by Executive of an itemized account of such expenses containing such detail and accompanied by such supporting documentation as may be generally required by the Company.

		4.	Benefits and Vacation. Vacation time and all other benefits entitled to the Executive will be governed by the Company’s Employee Handbook.  Notwithstanding any to the contrary in the Company’s Employee Handbook regarding the years of service required to earn vacation time, Executive shall receive 4 weeks of paid time off as vacation yearly.

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		5.	Confidential Information. Executive acknowledges and agrees that Executive will have access to and receive certain proprietary and confidential information and trade secrets of Company, including, without limitation, customer lists, the terms of any oral or written agreement or understanding between Company and any customer, sales and business records, price lists and methods, financial and cost information, marketing plans, methods of doing business, methods and processes and business strategy documentation, as well as such other information as Company may designate as confidential from time to time (collectively "Confidential Information"). Executive further acknowledges and agrees that the Confidential Information is the exclusive property of Company, not generally known to the trade or industry and, but for Company's engagement of Executive in accordance with the terms of this Agreement, Executive would not have had any access to the Confidential Information. Therefore, Executive agrees that he shall not disclose to any unauthorized person or use for his own purposes any Confidential Information without the prior written consent of the Company.

 

		(a)	During the Term and for the "Restricted Period" (hereinafter defined) following the effective date of the termination or expiration of the Term, for any or no reason whatsoever, Executive will not, directly or indirectly, for his own benefit or for the benefit of any person or entity, other than Company pursuant to this Agreement, use, divulge, disseminate, disclose or communicate to any person or entity any of the Confidential Information in any manner whatsoever, unless Company otherwise consents to such use or disclosure of any item of the Confidential Information in writing prior to the use or disclosure thereof, in each instance and then only with respect to those items of Confidential Information specifically described, and only to the extent specifically authorized, in such written consent.

		(b)	With respect to each item of Confidential Information, the "Restricted Period" shall mean: (i) five (5) years, if such item of Confidential Information does not constitute or ceases to be a trade secret; or (ii) indefinitely, if such item of Confidential Information constitutes a trade secret; provided, however, if an item of Confidential Information ceases to be a trade secret, such item of Confidential Information shall remain confidential and proprietary to Company for a period of not less than five (5) years.

		(c)	Notwithstanding the foregoing, Confidential Information does not include information: (i) in the public domain; or (ii) that later becomes public, unless such information is made public by: (x) Executive as a result of the breach o this Agreement; or (y) any other person or entity, directly or indirectly, under an obligation of confidentiality to Company.

		(d)	Executive acknowledges and agrees that, under all circumstances, the restrictions upon him and his covenants, duties and obligations unto the Company set forth in this Paragraph 5 are necessary to protect the Company's legitimate business interests, are given as a material inducement to the Company's employment of Executive, are reasonable in scope and duration and will not prevent Executive from pursuing other business ventures and employment opportunities or otherwise cause Executive a financial hardship.

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		(e)	In the event that Executive reasonably believes, after consultation with counsel, that he is required by law to disclose any Confidential Information, Executive will: (i) provide the Company with prompt notice before such disclosure in order that the Company may attempt to obtain a protective order or other assurance that confidential treatment will be accorded such Confidential Information, and (ii) cooperate with the Company in attempting to obtain such order or assurance.

		(f)	All Confidential Information, files, records, documents and similar items relating to the business of the Company, and any copies, reproductions or recordings thereof in the Executive's possession or control, whether prepared by Executive or otherwise, shall be and remain the exclusive property of the Company and Executive shall deliver to the Company at the termination or expiration of the Term, or at any other time that the Company may request: (i) all Confidential Information including all copies and reproductions thereof, and all writings and recordings incorporating or referring 'to the Confidential Information (ii) all other property of Company and (iii) certify in writing to Company that Executive has satisfied all of his covenants, duties and obligations pursuant to this Paragraph 5(g).

		6.	Enforcement.  If the duration of Executive's covenants, duties and obligations set forth in Paragraph 5 is held to be excessive, unreasonable, invalid or unenforceable by a court of competent jurisdiction, such duration will be modified so as to be reasonable, valid and enforceable to the maximum extent permitted by law as determined by such court of competent jurisdiction. Because Executive's services are unique and because Executive has access to Confidential Information, the parties hereto agree that money damages would not be an adequate remedy for any breach of this Agreement.  Therefore, in the event a breach or threatened breach of this Agreement, the Company or its successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations of, the provisions hereof, without the requirement of posting a bond or security thereof.  Executive hereby waives any claim or defense that Company has an adequate remedy at law or is not being irreparably injured and will not raise or suggest any such claim or defense in any action or proceeding initiated by or on behalf of Company. Company's rights and remedies hereunder are cumulative in nature, and no such right or remedy shall be, or be considered to be, Company's sole and exclusive right or remedy.

		7.	Executive's Representations.  Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive does not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) other than as contained in that certain Non-Disclosure and Non-Competition Agreement dated August 31, 2011, by and among Company, Ashley Ellis and Executive, Executive is not a party to or bound by any employment agreement, non-compete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

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		8.	Compliance with IRC Code Section 409. This Agreement is intended to comply with IRC Code Section 409A and the interpretative guidance thereunder, including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions, and shall be administered accordingly.  This Agreement shall be construed and interpreted with such intent. If a payment under this Agreement does not qualify as a short-term deferral under IRC Code Section 409A and Treas. Reg. Section 1.409A-1(b)(4) (or any similar or successor provisions), and the Executive is a Specified Employee (as defined below) as of his  termination, distributions to the Executive may not be made before the date that is six months after the date of his termination or, if earlier, the date of the Executive’s death (the "Six-Month Delay Rule").  Payments to which the Executive would otherwise be entitled during the first six months following the termination (the "Six-Month Delay") will be accumulated and paid on the first day of the seventh month following the termination.  Notwithstanding the Six-Month Delay Rule set forth in this Section:

 

To the maximum extent permitted under IRC Code Section 409A and Treas. Reg. Section 1.409A-1(b)(9)(iii) (or any similar or successor provisions), during each month of the Six-Month Delay, the Company will pay the Executive an amount equal to the lesser of (i) the total monthly severance provided under this Agreement, or (ii) one-sixth (1/6) of the lesser of (1) the maximum amount that may be taken into account under a qualified plan pursuant to IRC Code Section 401(a)(17) for the year in which the  Executive termination occurs, and (2) the sum of the Executive’s annualized compensation based upon the annual rate of pay for services provided to the Company for the taxable year of the Executive’s preceding the taxable year of the Executive in which his termination occurs (adjusted for any increase during that year that was expected to continue indefinitely if the Executive had not had a termination); provided that amounts paid under this sentence will count toward, and will not be in addition to, the total payment amount required to be made to the Executive by the Company under this Agreement; and

To the maximum extent permitted under IRC Code Section 409A and Treas. Reg. Section 1.409A-1(b)(9)(v)(D) (or any similar or successor provisions), within ten (10) days of the termination, the Company will pay the Executive an amount equal to the applicable dollar amount under IRC Code Section 402(g)(1)(B) for the year of the Executive’s  termination; provided that the amount paid under this sentence will count toward, and will not be in addition to, the total payment amount required to be made to the Executive by the Company under this Agreement.

For purposes of this Agreement, "Specified Employee" has the meaning given that term in IRC Code Section 409A and Treas. Reg. 1.409A-1(c)(i) (or any similar or successor provisions).  The Company's "specified employee identification date" (as described in Treas. Reg. 1.409A-1(c)(i)(3)) will be December 31 of each year, and the Company's 'specified employee effective date' (as described in Treas. Reg. 1.409A- 1(c)(i)(4) or any similar or successor provisions) will be February 1 of each succeeding year."

Each payment under this Agreement or any Company benefit plan is intended to be treated as one of a series of separate payments for purposes of IRC Code Section 409A and Treasury Regulation Section 1.409A-2(b)(2)(iii) (or any similar or successor provisions).

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		9.	Survival. Paragraphs 5, 6, 7, 8, 9, 10, 11,14 and15 shall survive and continue in full force in accordance with its terms, notwithstanding the expiration or termination of the Term for any or no 'reason whatsoever.

 

		10.	Notices. Any and all notices, demands, requests, consents, designations and other communications required or desired to be given pursuant to this Agreement will be given in writing and will be deemed duly given upon personal delivery, or on the third day after mailing if sent by certified mail, postage prepaid, return receipt requested, or on the day after deposit with a nationally recognized overnight delivery service which maintains records of the time, place and receipt of delivery, or upon receipt of a confirmed facsimile transmission, and in each case to the person and address set forth below, or to such other person or address which Company or Executive may respectively designate in like manner from time to time.

	
If to Executive:

	
 

	
If to Company, then to:

	
 

	
 

	
 

	
Brad A. Imhoff

	
 

	
Andrew Norstrud

	
c/o: General Employment Enterprises, Inc.

	
 

	
Chief Financial Officer

	
One Tower Lane, Suite 2200

	
 

	
General Employment Enterprises, Inc.

	
Oakbrook Terrace, Il 60181

	
 

	
One Tower Lane, Suite 2200

	
Fax:  (630) 954-0595

	
 

	
Oakbrook Terrace, IL 60181

	
 

	
 

	
 

	
 

	
 

	
With a copy to (which copy alone shall not constitute notice under shall not constitute notice under this Agreement):

	
 

	
 

	
 

	
 

	
 

	
Clint J. Gage, Esq.

	
 

	
 

	
Roetzel & Andress

	
 

	
 

	
350 East Las Olas Boulevard, Ste. 1150

	
 

	
 

	
Fort Lauderdale, FL 33301

	
 

	
 

	
Fax:  954-462-4260

 

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		11.	Severability. If any provision contained herein is held to be invalid or unenforceable by a court of competent jurisdiction, such provision will be severed herefrom and such invalidity or unenforceability will not affect any other provision of this Agreement, the balance of which will remain in and have its intended full force and effect; provided, however, if such invalid or unenforceable provision may be modified so as to be valid and enforceable as a matter of law, such provision will be deemed to have been modified so as to be valid and enforceable to the maximum extent permitted by law.

 

		12.	Entire Agreement. This Agreement and those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

		13.	Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. Additionally, signatures transmitted via facsimile of electronically with electronic receipted delivery shall be deemed originals..

 

		14.	Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors and assigns. Executive shall not assign his rights or delegate his duties or obligations hereunder.

 

		15.	Governing Law; Jurisdiction. This Agreement will be construed and enforced in accordance with the laws of the State of Illinois without regard to its choice of law rules.  Any action, suite or legal proceeding that is commenced to resolve any matter arising under or related to any provision of this Agreement shall be submitted to the exclusive jurisdiction of any state or federal court in DuPage County Illinois.

 

		16.	Exhibits. The Exhibits referred to in this Agreement are attached to, made a part of and incorporated in this Agreement by this reference.

 

		17.	Waivers and Consents. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by the written agreement of the party entitled to the benefits of such terms or provisions intended to be waived. Each such waiver or consent will be effective only in the specific instance and for the specific purpose for which it was given, and will not constitute a continuing waiver or consent.

 

		18.	Assignment. Executive acknowledges that the services to be rendered by him pursuant to this Agreement are unique and personal and that he may not assign any of his rights or benefits or delegate any of his covenants, duties, agreements or obligations under this Agreement (including the right to payment hereunder). Any attempted assignment, transfer, pledge or hypothecation or other disposition of this Agreement, or of such rights, covenants, or obligations by Executive, will be null and void and of no force or effect whatsoever. The Company may assign this Agreement and any or all of its rights, covenants, duties and obligations under this Agreement upon written notice to Executive.

 

		19.	Amendments. No modifications or amendments of this Agreement will be effective unless made in writing and signed by Company and Executive.

 

		20.	Recitals. The recitals set forth at the beginning of this Agreement are hereby incorporated into and made a part of this Agreement as if fully set forth herein.

 

		21.	Headings. The headings and captions of the various Paragraphs and Subparagraphs of this Agreement are for convenience of reference only and will in no way modify or affect the meaning or construction of any of the terms or provisions hereof.

 

		22.	Knowledge and Understanding. Executive acknowledges that he has been given the time and opportunity to consult with counsel of Executive's choice prior to executing and delivering this Agreement and that Executive has freely and voluntarily executed and delivered this Agreement with full knowledge and understanding of its content, meaning and intent.

		23.	Change in Control.  The parties hereto expressly acknowledge and agree that the Change of Control Agreement entered into by said parties concurrently with the Original Agreement is hereby null and void and of no further effect.

 

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IN WITNESS WHEREOF, the Company and Executive have each duly executed this Agreement as of the date first written above.

	
GENERAL EMPLOYMENT ENTERPRISES, INC.

	
 

	
EXECUTIVE

	
 

	
 

	
 

	
By:

	
/s/ Andrew Norstrud

	
 

	
By:

	
/s/ Brad Imhoff

	
 

	
Andrew Norstrud

	
 

	
 

	
Brad A. Imhoff

	
 

	
Chief Financial Officer

	
 

	
 

	
Executive

 

 

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