Exhibit 10.2


 


EMPLOYMENT AGREEMENT


CHIEF EXECUTIVE OFFICER/GENERAL
MANAGER


 


This Employment Agreement (“Agreement”) is made and
effective the 12th day of May, 2006, by and between Otter Tail Ag Enterprises,
LLC, a Minnesota limited liability company (“Company”), and Kelly Longtin, a
Minnesota resident (“Executive”).


 


RECITALS


 


WHEREAS, Company is a limited liability company
organized for the purpose, among other things, of developing, constructing, and
operating an ethanol plant and associated operations, with its principal place
of business near Fergus Falls, Minnesota; and


 


WHEREAS, Executive is experienced in management and
administration of agri-business enterprises and seeks to be employed by Company
as Chief Executive Officer/General Manager, and Company seeks to hire Executive
as Chief Executive Officer/General Manager; and


 


WHEREAS, the Company and Executive believe it is in
their mutual best interests to enter into an agreement regarding their mutual
obligations relative to Executive’s employment with the Company.


 


NOW,
THEREFORE, the parties hereto agree as follows:


 


1.                                        EMPLOYMENT.


 


Company agrees to employ Executive as its Chief
Executive Officer, also known as General Manager, commencing on January 1,
2007, or such earlier or later date as agreed to by the parties (the “Start
Date”). Executive hereby accepts such employment commencing on the Start Date,
and agrees to be employed with the Company in accordance with the terms and
conditions of this Agreement and the terms of employment applicable to regular
employees of Company, including the terms and conditions to be set forth in the
Company’s Human Resources Policy Manual to be developed by the Company (the “Handbook”).
In the event of any conflict or ambiguity between the terms of this Agreement
and terms of employment applicable to regular employees, the terms of this
Agreement shall control.


 


Prior to the Start Date, Executive shall complete
such pre-employment applications, screening and background checks as required
by Company, with results satisfactory to Company.


 


Prior to the Start Date, commencing August 1,
2006, Executive and Company will enter into a consulting services agreement
under which Executive will provide consulting services to the Company on an
independent contractor basis at the rate of $11,000.00 per month, through December 31,
2006. In addition, Contractor will be reimbursed for his COBRA costs for health
and hospitalization insurance and for the cost of Worker’s Compensation
equivalent coverage, during the term of the independent contractor services
agreement. Any activity by Executive prior to August 1, 2006, will be
voluntary services. The parties will enter into the independent contractor
services agreement on or before June 1, 2006.


 

















 


2.                                           DUTIES
OF EXECUTIVE.


 


The duties of Executive shall include the
performance of all of the duties typical of the office held by Chief Executive
Officer of an ethanol plant as described in the organizational documents of the
Company, to be described in the job description of Chief Executive Officer, and
such other duties and obligations as may be assigned or directed by the Company’s
Board of Governors (the “Board”). Executive shall perform all his duties in a
professional, ethical and businesslike manner.


 


Executive agrees to serve the Company faithfully and to the best of his
abilities, and to devote his full time, attention, and efforts to the business
and affairs of the Company during the term of his employment with the Company.
Executive will not, during the term of this Agreement or his employment with
the Company, directly or indirectly engage in any other part time or full time
employment or business, either as an employee, employer, consultant, principal,
officer, director, advisor, or in any other capacity, either with or without
compensation, without the prior written consent of the Board. Executive
represents to the Company that he is under no contractual commitments that are
inconsistent with his obligations set forth in this Agreement or that would
preclude his employment with the Company.


 


3.                                           COMPENSATION.


 


Executive’s salary during the term of his employment with the Company
under this Agreement will be payable in installments according to the Company’s
regular payroll schedule. Executive’s base salary for the following periods during
the term of this Agreement shall be as follows (for any period, the “Base
Salary”):


 


Start Date – December 31,
2007: $132,000.00


January 1, 2008 -
December 31, 2008: $137,000.00


January 1, 2009 –
December 31, 2009: $142,000.00


 


If the Start Date does not fall on January 1, 2007, then the Base
Salary for the first annual period of this Agreement shall be pro rated based
upon actual calendar days during the first employment period. Base Salary shall
accrue and be payable on a pro rata basis for days of service during each Base
Salary period. On any renewal of this Agreement, Executive’s Base Salary shall
be evaluated and adjusted as appropriate based upon a survey of comparable
positions at comparable companies, comparably qualified and experienced persons
in the applicable job market, as well as upon Executive’s performance as
evaluated by the Board.


 


After the Company’s ethanol plant is operational and
meets performance guarantees, in addition to the Base Salary, Executive shall
have the opportunity to earn annual incentive compensation awards, which shall
first be considered in December, 2008, and thereafter in December, 2009. The
maximum incentive compensation payable for any one period shall not exceed
fifty percent (50%) of the Executive’s Base Salary for the period in which the
incentive compensation is being considered. The incentive compensation plan
will be developed by mutual agreement of the Executive and the Search Committee
of the Company’s Board, to be approved by the full Board. The incentive compensation
plan will be developed, agreed upon and set forth in a separate document in
order to be put in place and effective as of the Start Date.


 


2

















 


It
is contemplated that the incentive compensation plan will establish goals in
various areas of the Executive’s individual performance. In addition there will
an annual performance review of employee satisfaction, customer satisfaction,
vendor relations, public relations, positive working relationship with the
Board of Governors, attitude, creativity, achievement of short-term goals, and
other contributions beyond normal expectations. The incentive compensation plan
will include a required level of financial performance to be attained by the
Company before payment eligibility on any of the goals occurs. Goals and
thresholds for incentive compensation will be developed by the Executive and
the Search Committee of the Company’s Board. It is further contemplated that
the incentive compensation plan will set forth goals to measure the Company’s
performance based upon return on investment performance to the Company’s
members and upon net cost per gallon benchmark reporting by Christianson &
Associates. Attached as Schedule “A” is a summary description of goals for
return on investment performance and attendant bonus eligibility. Attached as
Schedule “B” is a summary description of the Christianson &
Associates, PLLP benchmark measured goals for net cost per gallon performance.
Goals within the Christianson & Associates benchmark measured
incentive compensation plan will include a category for “cost of goods sold”
(to include feed stock, ingredients, water costs, electricity costs, natural
gas, and production labor) and “operations” (to include, administrative expenses,
plant supplies, repairs and maintenance, insurance costs, real estate taxes,
taxes-other, depreciation/amortization, interest expense). The incentive
compensation plan will provide that one-half of the incentive compensation will
be determined by goals and standards relating to return on investment, and
one-half will be determined based on standards and goals related to the
Christianson net cost per gallon benchmark reporting.


 


The incentive compensation review will be conducted on or before December 31
for each eligibility period, and will be based upon the Christianson &
Associates, PLLP benchmark reporting for the quarter ended September 30,
and will be based upon the Company’s financial statements for the year ended September 30.
In connection with each incentive compensation review, the Executive will be
responsible to submit to the Board a summary of achievements on goals for
consideration by the Board. The Board will be charged with reviewing,
determining, and awarding an appropriate incentive compensation payment.


 


It
is contemplated that the incentive compensation plan will include an
opportunity for Executive to purchase member units of the Company at a per-unit
cost of $2.00. The levels of eligibility for such member unit purchase options
granted to Executive are generally described on the attached Schedule “A.” The
Executive’s member unit purchase option agreement will be included within the
written incentive compensation plan for Executive. It is contemplated that
Executive’s option to purchase is conditioned upon the option being exercised
within one-hundred eighty (180) days of the option period, and Executive must
be employed with the Company to exercise his options. The member unit purchase
option plan will provide that Executive’s first option to purchase will be January 1,
2009. It is contemplated that the Executive’s member unit purchase option plan
will include an option by the Company and right of first refusal to repurchase
Executive’s units at fair market value as determined by comparable sales of the
Company’s units at the time of the exercise of option, in the event Executive
separates from employment.


 


3

















 


Provided
Executive meets the standard requirements of qualifying to be a member of the
Company, as a one-time signing bonus, Executive will receive a profit’s
interest on 12,500 Class A member units of the Company at a zero basis,
with ownership of said units to vest at 20% per year as follows (the “Vesting
Dates”):


 


January 1,
2007 – 2,500 Units Vest


January 1,
2008 – 2,500 Units Vest


January 1,
2009 – 2,500 Units Vest


January 1,
2010 – 2,500 Units Vest


January 1,
2011 – 2,500 Units Vest


 


Vesting is contingent upon Executive being employed with the Company on
any of the Vesting Dates. Until the Vesting Date, Executive shall be allocated
all profits or losses associated with the 12,500 Class A member units of
the Company. The arrangements relative to the signing bonus units shall be set
forth in a separate agreement between the parties.


 


A precondition of any Compensation to be paid under this Agreement is
Executive’s performance of his duties, compliance with this Agreement, and
compliance with the regulations governing plant operations.


 


4.                              BENEFITS.


 


In addition to the compensation described in Section 3 of this
Agreement, Executive will be entitled to certain additional benefits afforded
to the Chief Executive Officer position, as well as those benefits generally
available to employees of the Company. Benefits afforded are generally subject
to being altered, modified, discontinued, amended, or otherwise changed by the
Company.


 


A.                           Vacation/Sick Leave. Executive will be entitled
to paid time off and extended illness bank benefits or vacation/sick leave
benefits as set forth in the Handbook. It is contemplated that Executive will
accrue up to three weeks of vacation per period, and accrue up to six days of
sick leave per period, or their equivalent in PTO/EIB.


 


B.                             Health and Hospitalization Insurance. - Executive shall be
afforded health and hospitalization insurance coverage pursuant to the Company’s
plans afforded other employees, with the Company paying health and
hospitalization insurance premiums for Executive’s individual coverage.
Depending on the health and hospitalization plan selected by Company, family
and dependent coverage might be available for Executive, with premium payments
to be at Executive’s cost for family coverage.


 


C.                             Other Benefits. Executive shall also be
afforded the right to participate in any other benefit plans now or later
available to other Company employees.


 


D.                            401K. Executive shall be entitled to participate in
Company’s 401K savings plan, to be developed, on the basis of the same
availability to other Company employees.


 


4

















 


E.                             Automobile. Company shall lease a motor vehicle for
Executive’s use during the term of this Agreement. The motor vehicle will be
insured by the Company. The vehicle will be used for administrative purposes
primarily, but may be used by Executive for personal use. A mileage log shall
be kept by Executive noting all business use and personal use miles, and this
log shall be utilized to do a personal value calculation to be reflected on
Executive’s W-2 form each year.


 


F.                                Expense Reimbursement. Executive shall be entitled
to reimbursement for all reasonable expenses, including travel and
entertainment, incurred by Executive in the performance of Executive’s duties
pursuant to policies adopted by the Board. Executive will maintain records and
written receipt as required by the Company policy and reasonably requested by
the board of directors to substantiate such expenses. The Company will pay or reimburse
Executive for service club dues or fees of those service club organizations or associations
in which Executive participates, and the Company hereby encourages Executive to
be involved in service, civic, and other local clubs, organizations, and
affiliations. Such involvement shall be considered part of Executive’s duties
as Chief Executive Officer.


 


G.                               Miscellaneous. Company will provide
Executive with a cellular phone and service plan, personal computer, PDA, and
such other equipment and tools as are reasonably necessary for Executive to
perform Executive’s duties. Company shall reimburse Executive or pay dues or fees
incurred by Executive in ethanol industry related programs, organizations, and
education programs as the Company may, from time to time, authorize Executive
to participate in. Executive is authorized and directed to involve himself in
and participate in the activities of such organizations related to the ethanol
industry as Executive, in his reasonable discretion, and such other
organizations related to the ethanol industry as Executive, in his reasonable
discretion, deems appropriate and necessary, and such activities shall be
regarded as part of Executive’s duties as Chief Executive Officer.


 


5.                              TERM
AND TERMINATION.


 


A.                            Term. The term of Executive’s employment with the
Company pursuant to this Agreement shall commence on the Start Date, and it
shall continue in effect for a period terminating on December 31, 2009
(the “Termination Date”), unless earlier terminated as provided in this
Agreement. On the Termination Date, this Agreement and Executive’s employment
with the Company shall terminate without any further action, but may be renewed
or extended upon the mutual written agreement of Executive and Company. In the
ninety- (90-) day period preceding the Termination Date, or earlier as agreed
to by the parties, Company and Executive will engage in discussions regarding
extension of this Agreement and Executive’s employment with the Company.


 


B.                              Termination By Company Without Cause. Notwithstanding any
provision of this Agreement or applicable law to the contrary, Executive’s
employment with the Company and this Agreement may be terminated by the
Company, acting by and through the Board, at anytime prior to the Termination
Date without Cause (as that term is defined herein), in its sole discretion and
at its election, effective immediately upon written notice to Executive or such
later date as determined by the Board. In the event of such termination after January 31,
2007, the Company shall pay to Executive $60,000.00 (the “Severance Payment”).
By agreement of the parties, in the event of such termination without Cause (as
that term is defined herein), in


 


5

















 


addition to any
pro-rated portion of the Base Salary then earned, the Severance Payment shall
be the sole and exclusive liability of Company to Executive, and Executive
hereby waives and releases the Company from any further or other claims by
Executive against the Company. Executive shall not be entitled to any further
or other payments from the Company, including, without limitation, any
incentive compensation payment. As a condition to receiving the Severance
Payment, Executive will execute and deliver to Company a release of all claims
against Company, its officers, governors, employees, affiliates, or other
agents or representatives from any and all legal and equitable claims, of any
nature whatsoever.


 


C.                             Termination By Employee. Executive’s employment with
the Company and this Agreement may be terminated by Executive at any time prior
to the Termination Date, effective upon one hundred eighty (180) days’ prior
written notice to the Company. This Agreement and Executive’s employment with
the Company will be deemed terminated by Employee upon the occurrence of any of
the following events: (i) the death of Executive; or (ii) Executive’s
inability to carry on the essential functions of his usual and customary
duties, because of illness or sickness, for a period of an aggregate six (6) months.
In the event of termination pursuant to this section, no Severance Payment will
be payable and Company’s sole obligation will be to pay Executive’s salary at
the pro-rated Base Salary to the termination date included in Executive’s original
termination notice or the date of death or disability.


 


D.                            Termination by Company for Cause. In the event that Executive
is in breach of any obligation owed Company in this Agreement, or engages in
any of the following conduct which shall constitute “Cause,” then Company shall
have the right, at its discretion, to terminate this Agreement and Executive’s
employment with the Company upon five (5) days’ written notice to
Executive.


 


Grounds for termination of this Agreement and Executive’s employment with
the Company, for Cause, includes:


 


i.                                   Executive habitually and willfully neglects the duties to be performed by
him;


 


ii.                                Executive engages in any conduct which is dishonest, or disloyal to
Company, or materially damages the reputation or standing of the Company;


 


iii.                             Executive is convicted of any crime involving theft or dishonesty, or
comprising a felony level offense;


 


iv.                             Executive violates material Company rules, regulations, directives, or
policies;


 


v.                                Executive engages in conduct unbecoming a chief executive officer which
materially impairs the Company’s operations or Executive’s effectiveness in his
work;


 


vi.                            Other good and sufficient grounds constituting similar serious misconduct.


 


Except for termination on the basis of Subdivisions
D(ii), D(iii), or D(iv), Executive’s employment shall not be terminated upon
any of the above specified grounds constituting Cause, unless he shall have
failed to correct a deficiency to the satisfaction of Company, at its
discretion, after having been given written notice of the specified items of
nonperformance and a


 


6

















 


reasonable amount of
time, not to exceed thirty (30) days within which to correct the claimed
failure to perform. Any recurrence of conduct for which notice was previously
given shall constitute grounds for immediate termination.


 


In event of termination of this Agreement pursuant to this section,
Company’s sole obligation will be to pay Executive’s then earned salary at the
pro-rated Base Salary to the termination date, and no Severance Payment will be
due or owing to Executive.


 


6.                              BOARD
MEETING ATTENDANCE.


 


Executive shall be notified of and attend all
annual, regular, and special meetings of the Board, but in a non-voting
capacity.


 


7.                              SUCCESSOR
TRANSITION.


 


Executive shall assist Company in transitioning to
Executive’s successor to the Chief Executive Officer position as reasonably
requested by the Company.


 


8.                              CONFIDENTIAL
INFORMATION; INTELLECTUAL PROPERTY.


 


In connection with this Agreement, and as a condition to Company agreeing
to employ Executive, Executive will execute and deliver a confidential
information and intellectual property agreement under which Executive will
agree (i) during the term of his employment with the Company and
thereafter, to not use any Company information, except for the purposes of
performing his duties and services for the Company, and never in competition
with the Company; and (ii) that all developments, know-how, research,
processes, or other concepts developed by Executive during the course and scope
of his employment with Company, shall be the exclusive property of the Company.


 


A breach of said companion agreement will be a breach of this Agreement.
The obligations of Executive under this section shall survive termination of
this Agreement.


 


9.                              NON-COMPETITION;
NON-SOLICIT.


 


As a condition of Executive’s employment by the
Company, Executive agrees to execute and deliver to the Company
contemporaneously with execution and delivery of this Agreement, a
non-competition and non-solicit agreement under which Employee agrees that
during the term of this Agreement, and for so long as he is employed with the
Company, and for a period of two (2) years after the termination of this
Agreement or Executive’s employment with the Company, whichever date is later,
i) Executive will not consult for, be employed with, or otherwise perform
services for, any person or entity in the ethanol business within a geographic
area as follows: Minnesota, the northern one-half of the State of Iowa, the
eastern one-half of the State of North Dakota, and the eastern one-half of the
State of South Dakota; and ii) that Executive will not, directly or indirectly,
solicit any customer, supplier, employee, or other representative of the
Company to withdraw, curtail, or cancel its business with the Company, or leave
the employ of the Company, as the case may be. The companion agreement will
provide that employment in


 


7

















 


for
an elevator not owned or controlled by an ethanol plant or an affiliate of an
ethanol plant will not be a breach of the non-compete, provided that no grain
procurement for ethanol plants will be permitted within a one-hundred fifty
(150) mile radius of the Company’s ethanol plant.


 


A breach of said companion agreement will be a breach of this Agreement.
The obligations of Executive under this section shall survive termination of
this Agreement.


 


10.                       MISCELLANEOUS.


 


A.                           Notices. Any notice required by this Agreement or
given in connection with it, shall be in writing and shall be given to the
appropriate party by personal delivery, or by certified mail, postage prepaid,
and return receipt requested, or by recognized, national overnight delivery services;


 


	
  If to Company:

  	
  Otter Tail Ag Enterprises, LLC

  
	
   

  	
  1220 North Tower Road, Suite 201

  
	
   

  	
  Fergus Falls, MN 56537

  
	
   

  	
   

  
	
  If
  to Executive:

  	
  Kelly Longtin

  
	
   

  	
  11274 Morningside Drive

  
	
   

  	
  Dalton, MN 56324

  



 


Notice given by certified mail shall be deemed given
five (5) days after the notice is deposited in the mail. All other forms
of notice shall be deemed given on the date of personal delivery or the date of
the overnight delivery. If either party desires to change their address for
notice purposes, prior notice of such address change shall be given to the
other party as set forth in this section.


 


B.                             Final Agreement. This Agreement and any other
agreements referred to herein are the entire agreement of the parties relating
to the subject matter hereof, and supersede all prior understandings or agreements
on the subject matter hereof. This Agreement may be modified, waived, amended,
or altered only by a further writing that is duly executed by both parties.


 


C.                             Governing Law And Jurisdiction. This Agreement shall
be construed and enforced in accordance with the laws of the state of
Minnesota, without regard to choice of law or conflict of law provisions. Each
party consents to the state courts of Minnesota, Otter Tail County, as
exclusive jurisdiction and venue to determine any disputes and hear any
proceedings related to or arising from this Agreement or the parties’
employer/employee relationship. The parties waive any argument or objection to
such jurisdiction and venue and agree that it is mutually convenient.


 


D.                            Headings. Headings used in this Agreement are provided
for convenience only and shall not be used to construe meaning or intent.


 


E.                              No Assignment. Neither this Agreement nor
any or interest in this Agreement may be assigned by Executive without the
prior express written approval of Company, which may be withheld by Company at
Company’s absolute discretion.


 


8

















 


F.                                          Severability. If any term of this
Agreement is held by a court of competent jurisdiction to be invalid or
unenforceable, then this Agreement, including all of the remaining terms, will
remain in full force and effect as if such invalid or unenforceable term had never
been included.


 


G.                                        Dispute Resolution. For purposes of this
provision, the term “dispute” means any and all disputes between Company,
including its officers, governors, employees, on the one hand; and Executive,
on the other hand, arising out of or relating to the making, performance, interpretation,
or application of this Agreement, or in any way relating to, concerning, or
arising from Executive’s employment with the Company, or the termination of
this Agreement or Executive’s employment with the Company, and specifically
includes, without limitation, any claim that a termination of employment by
Company was not for cause, that Executive was constructively discharged or
terminated, or otherwise.


 


If a dispute arises, the parties agree first to try
in good faith for a period of sixty (60) days to settle the dispute by
mediation under the Commercial Mediation Rules of the American Arbitration
Association, before resorting to arbitration. Thereafter, any remaining
unresolved dispute, controversy or claim shall be submitted to binding
arbitration pursuant to the Commercial Arbitration Rules of the American
Arbitration Association as modified by this Section; PROVIDED, that this Section shall
not require use of the American Arbitration Association (only that such Rules as
modified by this Section shall be followed). The arbitration shall be
conducted in the State of Minnesota. Any award rendered shall be final and
conclusive upon the parties and a judgment thereon may be entered in any court
having competent jurisdiction. The parties shall (i) agree upon and
appoint as the arbitrator a retired former trial Judge in Minnesota; (ii) direct
the arbitrator to follow substantive rules of law and the Federal Rules of
Evidence; (iii) allow for the parties to conduct discovery pursuant to the
rules then in effect under the Federal Rules of Civil Procedure for a
period not to exceed 60 days; (iv) require the testimony to be
transcribed; and (v) require the award to be accompanied by findings of
fact and a statement of reasons for the decision. The cost and expense of the
arbitrator and location costs shall be borne equally by the parties to the
dispute. All other costs and expenses, including reasonable attorney’s fees and
expert’s fees, of all parties incurred in any dispute which is determined
and/or settled by arbitration pursuant to this Section shall be borne by
the party incurring such cost and expense. Except where clearly prevented by
the area in dispute, the parties agree to continue performing their respective obligations
under this Agreement while the dispute is being resolved.


 


H.                                       Surrender of Records and Property. Upon termination of
employment with the Company, Executive must deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company or which relate in any way to the business, products,
practices or techniques of the Company, and all other property of the Company
such as keys, computers, cell phones and other tools of the trade, trade
secrets and confidential information of the Company, including, but not limited
to, all documents which in whole or in part contain any trade secrets or
confidential information of the Company, which in any of these cases are in his
possession or under his control.


 


9

















 


IN
WITNESS WHEREOF, the Executive and the Company enter into this Agreement dated
effective the 12th day of May, 2006.


 


	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Its Board President

  
	
   

  	
  Date:

  	
                   5-12-06

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly Longtin

  	
   

  
	
  Kelly Longtin

  
	
  Dale:

  	
  5-12-06

  	
   

  
								



 


10

















 


Schedule “A”


to CEO Employment Agreement


 


	
  ROI

  	
   

  	
  15%

  	
   

  	
  2.5%  of Bonus or $3,425

  	
   

  	
  1,000 Units at $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ROI

  	
   

  	
  16%

  	
   

  	
  5.0% of Bonus or $6,850

  	
   

  	
  2,000 Units at $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ROI

  	
   

  	
  17%

  	
   

  	
  7.5% of Bonus or $10,275

  	
   

  	
  3,000 Units at $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ROI

  	
   

  	
  18%

  	
   

  	
  10.0% of Bonus or $13,700

  	
   

  	
  4,000 Units at $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ROI

  	
   

  	
  19%

  	
   

  	
  12.5% of Bonus or $17,125

  	
   

  	
  5,000 Units at $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ROI

  	
   

  	
  20%

  	
   

  	
  15.0% of Bonus or $20,550

  	
   

  	
  6,000 Units at $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ROI

  	
   

  	
  21%

  	
   

  	
  17.5% of Bonus or $23,975

  	
   

  	
  7,000 Units at $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ROI

  	
   

  	
  22%

  	
   

  	
  20.0% of Bonus or $27,400

  	
   

  	
  8,000 Units at $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ROI

  	
   

  	
  23%

  	
   

  	
  22.5% of Bonus or $30,825

  	
   

  	
  9,000 Units at $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ROI

  	
   

  	
  24%

  	
   

  	
  25.0% of Bonus or $34,250

  	
   

  	
  10,000 Units at
  $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total(s)

  	
   

  	
   

  	
   

  	
  25% Bonus
         or $34,500

  	
   

  	
  10,000 Units at
  $2.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  Initials 

  	
  [ILLEGIBLE]

  	
  (Company) 

  
	
   

  	
   

  	
   

  
	
  Initials

  	
  K.L.

  	
  (Executive)

  
				



 

















 


Schedule “B”


 


Christianson & Associates Benchmarking Model


 


NET COST PER GALLON (NC/G) Schedule


 


	
  Position in Group

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Top 10% of Group

  	
   

  	
  $

  	
  8,562.50

  	
   

  	
  $

  	
  11,833.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Top 20% of Group

  	
   

  	
  $

  	
  8,562.50

  	
   

  	
  $

  	
  11,833.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Top 30% of Group

  	
   

  	
  $

  	
  8,562.50

  	
   

  	
  $

  	
  11,833.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Top 40% of Group

  	
   

  	
  $

  	
  8,562.50

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total(s)

  	
   

  	
  $

  	
  34,250.00

  	
   

  	
  $

  	
  35,500.00

  	
   

  



 


The NC/G calculation
will be determined by taking the Christianson &  Associates, PLLP benchmarking reports to
include the following elements of Costs of Goods Sold and Operations:


 


	
  Cost of Goods Sold

  	
   

  	
  Operations

  
	
   

  	
   

  	
   

  
	
  Feed Stock

  	
   

  	
   

  
	
  Ingredients

  	
   

  	
  Administrative Expense

  
	
  Water Cost

  	
   

  	
  Plant Supplies

  
	
  Natural Gas

  	
   

  	
  Repairs and Maintenance

  
	
  Production Labor

  	
   

  	
  Insurance Costs

  
	
  Electricity Cost

  	
   

  	
  Real Estate Taxes

  
	
   

  	
   

  	
  Taxes – Other

  
	
   

  	
   

  	
  Depreciation/Amortization

  
	
   

  	
   

  	
  Interest Expense

  



 


 


	
  Initials 

  	
  [ILLEGIBLE]

  	
  (Company) 

  
	
  Initials

  	
  K.L.

  	
  (Executive)