Exhibit 10.4


 


EMPLOYMENT
AGREEMENT


PLANT
MANAGER


 


This Employment Agreement (“Agreement”)
is made and effective the 30th day of May, 2006, by and between Otter Tail Ag
Enterprises, LLC, a Minnesota limited liability company (“Company”), and B.
Gunner Greene, a Kentucky resident (“Greene”).


 


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, Greene is experienced in
operation and plant management of ethanol enterprises and seeks to be employed
by Company as Plant Manager, and Company seeks to hire Greene as Plant Manager;
and


 


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


 


NOW, THEREFORE, the parties
hereto agree as follows:


 


1.     EMPLOYMENT.


 


Company agrees to employ Greene
as its Plant Manager, commencing on January 1, 2007, or such earlier or
later date as agreed to by the parties (the “Start Date”). Greene 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, as a
condition of employment, Greene 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 September 1, 2006, Greene and Company will enter into a
consulting services agreement under which Greene will provide consulting
services to the Company on an independent contractor basis at the rate of $6,667.00
per month, through December 31, 2006. In addition, Contractor will be
reimbursed for his COBRA costs for his individual 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
Greene prior to September 1, 2006, will be voluntary services. The parties
will enter into the independent contractor services agreement on or before July 1,
2006.


 

















 


The Company will provide a one
time relocation assistance payment to Greene. The amount of the relocation
payment will be as agreed to by the parties, it being contemplated that the
payment will not exceed $3,500.00 and is intended to assist Green with the
expense and out-of-pocket costs incurred by Green in relocating to Fergus
Falls, Minnesota area.


 


2.     DUTIES
OF GREENE.


 


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


 


Greene’s primary work location
will be at the Company’s Fergus Falls Ethanol Plant, but training and other
time maybe spent at other locations, and travel may be required to fulfill the
responsibilities of the Plant Manager position. Greene’s employment is
conditioned upon Greene relocating to the Fergus Falls, Minnesota area and
having his residence within a 20-minute drive to the Company’s plant. Greene
will report to the Company’s Chief Executive Officer.


 


Greene 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. Greene 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. Greene 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.


 


Greene’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. Greene’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: $80,000.00


January l,
2008 - December 31, 2008: $83,000.00


 


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, Greene’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 Greene’s performance as evaluated by the Board and the
Company’s CEO.


 


2

















 


After the Company’s ethanol plant
is operational and meets performance guarantees, in addition to the Base
Salary, Greene shall have the opportunity to earn annual incentive compensation
awards, which shall first be considered in November, 2008. The maximum
incentive compensation payable for any one period shall not exceed 40 percent
(40%) of Greene’s Base Salary for the 2008 period in which the incentive
compensation is being considered. The incentive compensation plan will be developed
by mutual agreement of Greene 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.


 


It is contemplated that the
incentive compensation plan will establish goals in various areas of Greene’s
individual performance. There will be an annual performance review of Greene to
determine the award, conducted by the CEO and the Board of Governors, which
will consider among the specific incentive plan goals such things as employee
satisfaction, customer satisfaction, vendor relations, public relations,
positive working relationship with the Board of Governors and CEO, 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 occurs. It is contemplated that the incentive compensation plan
will set forth goals to measure the Company’s plant performance, in addition to
Greene’s individual performance, based upon criteria to be mutually agreed upon
by Greene and the Company to be set forth on a Schedule A to this Agreement, to
include concepts such as:


 


Operations and efficiency


Plant safety (no loss time
accidents)


Days of production*


Process guarantees and Gallons
beyond performance guarantees


BTU/gal


KW/Gal


Yield*


Compliance with regulations,
permits, etc


SOPs (standard operating
procedures)


Retention/cross training of
employees


Maintenance/parts inventory


Plant cleanliness


Identification of new technology
and implementation


 


*Annual goals divided or measured by monthly
results


 


The incentive compensation review
will be conducted on or before November 30 for each eligibility period. In
connection with each incentive compensation review, Greene will be responsible
to submit to the Board and the CEO a summary of achievements on goals for
consideration by the Board and the CEO. The Board and the CEO 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 Greene to purchase member
units of the Company at a per-unit cost of $2.00 for up to 5,000 units.  The levels of eligibility for such member
unit purchase options granted to Greene are


 


3

















 


generally described on the attached Schedule “A.”
Greene’s member unit purchase option agreement will be included within the
written incentive compensation plan for Greene. It is contemplated that Greene’s
option to purchase is conditioned upon the option being exercised within thirty
(30) days of the option period, and Greene must be employed with the Company to
exercise his options. The member unit purchase option plan will provide that
Greene’s first option to purchase will be December 1, 2008. It is
contemplated that Greene’s member unit purchase option plan will include an
option by the Company and right of first refusal to repurchase Greene’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 Greene separates from
employment.


 


Provided Greene meets the
standard requirements of qualifying to be a member of the Company, as a
one-time signing bonus, Greene will receive a profit’s interest on 5,000 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 – 1,000
Units Vest


January 1, 2008 – 1,000
Units Vest


January 1, 2009 – 1,000
Units Vest


January 1, 2010 – 1,000
Units Vest


January 1, 2011 – 1,000
Units Vest


 


Vesting is contingent upon Greene
being employed with the Company on any of the Vesting Dates. Until the Vesting
Date, Greene shall be allocated all profits or losses associated with the 5,000
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 Greene’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, Greene will be entitled to
certain additional benefits afforded to the Plant Manager position. Benefits
afforded are generally subject to being altered, modified, discontinued,
amended, or otherwise changed by the Company.


 


A.     Vacation/Sick
Leave. Greene will be entitled to paid time off and extended illness bank
benefits or vacation/sick leave benefits as will be set forth in the Handbook.
It is contemplated that Greene will be entitled to two weeks of vacation per
365 day employment period, and up to six days of sick leave per 365 day
employment period, or their equivalent in PTO/EIB.


 


B.     Health
and Hospitalisation Insurance. Greene 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 Greene’s
Individual coverage. Depending on the health and hospitalization plan selected
by Company, family and


 


4

















 


dependent coverage might be available for
Greene, with premium payments for family coverage to be determined at a later
date depending on plan selected.


 


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


 


D.     401K.
Greene 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.


 


E.     Expense
Reimbursement. Greene shall be entitled to reimbursement for all reasonable
expenses, including travel and entertainment, incurred by Greene in the
performance of Greene’s duties pursuant to policies adopted by the Board.
Greene will maintain records and written receipt as required by the Company
policy and reasonably requested by the Board of Governors to substantiate such
expenses.


 


F.     Miscellaneous.
Company will provide Greene with a cellular phone and service plan, personal
computer, PDA, and such other equipment and tools as are reasonably necessary for
Greene to perform Greene’s duties. Company shall reimburse Greene or pay dues
or fees incurred by Greene in ethanol industry related programs, organizations,
and education programs as the Company may, from time to time, authorize Greene
to participate in.


 


5.     TERM AND
TERMINATION.


 


A.     Term.
The term of Greene’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, 2008 (the “Termination Date”), unless earlier terminated
as provided in this Agreement. On the Termination Date, this Agreement and
Greene’s employment with the Company shall terminate without any further
action, but may be renewed or extended upon the mutual written agreement of
Greene and Company. In the ninety- (90-) day period preceding the Termination
Date, or earlier as agreed to by the parties, Company and Greene will engage in
discussions regarding extension of this Agreement and Greene’s employment with
the Company.


 


B.     Termination
By Company Without Cause. Notwithstanding any provision of this Agreement
or applicable law to the contrary, Greene’s employment with the Company and
this Agreement may be terminated by the Company, acting by and through the
Board, at any time 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 Greene or such later date as determined by
the Board. In the event of such termination after January 31, 2007, the
Company shall pay to Greene $20,000.00 (the “Severance Payment”). By agreement
of the parties, in the event of such termination without Cause (as that term is
defined herein), in 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 Greene, and Greene hereby waives and releases the Company from any
further or other claims by Greene against the Company. Greene 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, Greene will execute and deliver to Company a release of all
claims against Company, its officers, governors,


 


5

















 


employees, affiliates, or other agents or
representatives from any and all legal and equitable claims, of any nature
whatsoever.


 


C.     Termination
By Employee. Greene’s employment with the Company and this Agreement may be
terminated by Greene at any time prior to the Termination Date, effective upon
one hundred eighty (180) days’ prior written notice to the Company. This
Agreement and Greene’s employment with the Company will be deemed terminated by
Employee upon the occurrence of any of the following events: (i) the death
of Greene; or (ii) Greene’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 three (3) months within any one (1) year period. In
the event of termination pursuant to this section, no Severance Payment will be
payable and Company’s sole obligation will be to pay Greene’s salary at the
pro-rated Base Salary to the termination date included in Greene’s original termination
notice or the date of death or disability.


 


D.     Termination
by Company for Cause. In the event that Greene 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 Greene’s employment with the
Company upon five (5) days’ written notice to Greene.


 


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


 


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


 


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


 


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


 


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


 


v.      Greene engages in conduct unbecoming a Plant
Manager which materially impairs the Company’s operations or Greene’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), Greene’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 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.


 


6

















 


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


 


6.     BOARD
MEETING ATTENDANCE.


 


Greene shall attend meetings of
the Board, in a non-voting capacity, as requested by the Board.


 


7.     SUCCESSOR
TRANSITION.


 


Greene shall assist Company in
transitioning to Greene’s successor to the Plant Manager 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 Greene, Greene will
execute and deliver a confidential information and intellectual property
agreement under which Greene 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 Greene 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 Greene under
this section shall survive termination of this Agreement.


 


9.     NON-COMPETITION;
NON-SOLICIT.


 


As a condition of Greene’s
employment by the Company, Greene 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 Greene’s employment with the Company, whichever date is later, i)
Greene 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 Greene 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.


 


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


 


7

















 


10.    MISCELLANEOUS.


 


A.     Notices.
Any notice required try 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
  Greene:

  	
   

  	
  B. Gunner
  Greene

  	
   

  
	
   

  	
   

  	
  432 Levi
  North Rd.

  	
   

  
	
   

  	
   

  	
  Crofton, Ky
  42217

  	
   

  



 


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. This Agreement, and any companion agreement are freely assignable
by the Company. Neither this Agreement nor any or interest in this Agreement
may be assigned by Greene without the prior express written approval of
Company, which may be withheld by Company at Company’s absolute discretion.


 


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.


 


8

















 


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 Greene, 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 Greene’s employment with
the Company, or the termination of this Agreement or Greene’s employment with
the Company, and specifically includes, without limitation, any claim that a
termination of employment by Company was not for cause, that Greene 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,
Greene 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, Greene and the Company
enter into this Agreement dated effective the 30th day of May, 2006.


 


	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
  Its Board President

  
	
   

  	
  Date:

  	
  5-30-06

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
   

  
	
  B. Gunner Greene

  	
   

  
	
  Date:

  	
  6-3-06

  	
   

  	
   

  	
   

  
							



 


10