omni10k123109x106_332010.htm


    
 Exhibit 10.6

    EXECUTIVE
EMPLOYMENT AGREEMENT

     

    


     

    This
Executive Employment Agreement (the “Employment
Agreement”) is made as of February 15th, 2010 (the “Effective
Date”) by and between Dennis
Harstad (“Executive”)
and KL ENERGY
CORPORATION,
a Nevada corporation (hereinafter, along with its parent, subsidiaries and
affiliates, referred to as the “Company”),
and amends and restates all previous Employment Agreements by and between
Executive and the Company (the “Original
Agreement”).

     

    Recitals

     

    Whereas,
Executive is a key executive employee of the Company and has become and will
continue to be intimately familiar with the Company’s plans, trade secrets,
proprietary information, business activities and operations;

     

    Whereas,
Executive’s past experience and skills make him singularly qualified to render
special, unique, unusual and extraordinary services to the Company;

     

    Whereas,
the Company desires to employ Executive to provide executive-level employment
services and to provide Executive with certain compensation and benefits in
return for such services;

     

    Whereas,
Executive wishes to be employed by the Company and provide employment services
in return for certain compensation and benefits;

     

    Now,
Therefore, in consideration of the mutual promises and covenants
contained herein, the Company and Executive agree to the below
terms.

     

    Agreement

     

    1.           Term; Employment; Position and
Responsibilities.

     

    1.1           Term.  The
term of this Employment Agreement shall be three (3) years from the Effective
Date (the “Initial Term”). The Term may be extended only upon written agreement
of the Company and Executive prior to the end of the Initial Term (such extended
period, together with the Interim Term, to be referred to as the
“Term”).

     

    1.2           Role. Executive agrees to
serve as the Company’s Vice President of Plant Operations
and to perform all duties and responsibilities associated with that
position consistent with the Company’s Bylaws, as may be amended from time to
time (the “Bylaws”)
and as directed by Executive’s supervisor. Executive shall report to President and Chief Executive
Officer in this role.  Executive agrees to devote all of his
professional time, attention, skill and best efforts to the performance of his
duties hereunder, except for permitted vacation periods and reasonable periods
of illness or other incapacity.  Executive shall perform his duties,
responsibilities and functions to the Company hereunder to the best of his
abilities in a diligent, trustworthy, professional and efficient manner and
shall comply with the Company’s policies and procedures in all material
respects.  While an employee of the Company, Executive shall not serve
as an officer or director of, or otherwise perform services for compensation
for, any other

     

    


    
      
        
           


        

        
          Exhibit
10.6 Page 1

          
            

          

        

        
           


        

      

    

    


    entity
without the prior written consent of Executive’s supervisor (which may be given
or withheld in his/her sole discretion); provided, that Executive may, with the
prior written approval of Executive’s supervisor, serve as an officer or
director of, or otherwise participate in, purely educational, welfare, social,
religious and civic organizations, in each case so long as such activities do
not interfere with Executive's employment.  Executive acknowledges and
agrees that he may become an employee of a direct or indirect parent, subsidiary
or other affiliate of KL Energy Corp., and that the terms and conditions of this
Agreement shall apply to Executive as an employee of any such other entity, and
that all such entities are included in the term “Company,” as used
herein..

     

    1.3           Employment Policies.
Executive’s employment shall also be governed by the general employment
policies and practices of the Company in effect from time to time, except that
when the terms of this Employment Agreement differ from or are in conflict with
such general employment policies or practices, this Employment Agreement shall
control.

     

    1.4           Other Agreements. Executive represents and
warrants that he has disclosed to the Company the existence of any and all
non-solicitation, confidentiality, and/or non-competition agreements to which
Executive is a party and that Executive is not under an obligation to any other
person or entity that would interfere or conflict with his employment with the
Company or the performance of his duties hereunder.

    


    2.           Compensation.

     

    2.1           Base Salary.  As
compensation for his services hereunder, the Company shall pay Executive a base
salary of $130,500 per year (“Base Salary”). The Executive’s salary will be
reinstated to $145,000 per year (“110% Base Salary”) which was the salary level
prior to the Company-wide 10% pay adjustment in November 2008 on the event of
the company signing a service contract with for the pending bagasse testing with
a Brazilian company. Executive’s performance may be reviewed by Executive’s
supervisor each calendar year.  The supervisor may adjust the
Executive’s Base Salary concurrent with the administration of the performance
review, or at any other time (to reflect cost of living changes or otherwise),
in its sole discretion, subject to the severance provisions set forth in Section
4 below.

     

    2.2           Bonus.

     

    (a)           Annual
Bonus.   During each calendar year during the Term, Executive
shall be eligible to earn a cash performance bonus of up to 100% of Base Salary
(the “Bonus”),
which Bonus shall be earned and paid in the sole discretion of the Company’s
Board of Directors.

     

    (b)           Equity Incentive
Scheme.  Executive may also be eligible to participate in any
equity incentive plan or arrangement that may be adopted from time to time by
the Board of Directors of the Company’s.  To the extent Executive is
eligible and the Board if Directors determines that Executive is to be granted
any type of equity incentive, the Company and Executive will enter into a
separate agreement setting forth the terms and conditions of such
participation.

    


    
      
        
           


        

        
          Exhibit
10.6 Page 2

          
            

          

        

        
           


        

      

    

     

    


    2.3           Tax
Treatment.  Executive’s Base Salary and Bonus (if earned) and
any other compensation (including severance benefits) payable to Executive in
consideration for his employment services shall be paid by the Company subject
to applicable payroll withholdings and deductions, reportable on a Form W-2
annually.  Executive’s Base Salary shall be paid on the Company’s
customary payroll payment schedule, as may be modified from time to
time.

     

    3.           Benefits.

     

    3.1           Business
Expenses.  The Company shall reimburse Executive for all
reasonable, documented business expenses incurred in connection with his
services hereunder, in accordance with the Company’s business expense
reimbursement policies and procedures in effect from time to time.

     

    3.2           Paid Leave
Benefits.  Beginning on January 1, 2010, Executive shall accrue
twenty (20) days of paid vacation each calendar year, to be taken at such times
as mutually agreed with Executive’s supervisor.  Executive shall also
be entitled to paid holiday leave in accordance with the Company’s governing
holiday schedule.  All vacation (i) shall be accrued on a monthly
basis, in accordance with the Company’s vacation policies and procedures, as may
be amended from time to time, and (ii) must be taken during the calendar year
accrued, or it will be forfeited.

     

    3.3           Standard
Benefits.  Executive shall be entitled to participate in all
benefits plans and programs the Company makes available to its salaried
employees generally, on the same terms and conditions governing those plans as
in effect from time to time.

     

    3.4           Other
Benefits. To the extent not paid by the Company under Section 3.3, Executive
also shall be entitled to receive full reimbursement for the premium costs of
coverage for Executive (but not Executive’s family and dependents), under the
Company’s medical and dental plans.

     

    3.5           D&O
Insurance.    To the extent that the Company has any
Director and Officer Liability Insurance coverage, Executive will be covered
under such policy as it exists from time to time.  If Executive serves
as a director of the Company, or as a director or officer of any subsidiary,
parent or other affiliate of the Company, he will serve in such capacity without
additional compensation from the Company.

     

    3.6           Changes to
Benefits    The Company reserves the right to supplement,
discontinue or change its benefit and bonus plans and programs from time to
time, in its sole discretion.

     

    4.           At Will Employment; Severance
Benefits.

     

    4.1           At Will Status. Executive’s
employment with the Company shall be on an “at will”
basis.  Accordingly, both Executive and the Company retain the right
to terminate the

     

    


    
      
        
           


        

        
          Exhibit
10.6 Page 3

          
            

          

        

        
           


        

      

    

    


    employment
relationship at any time, with or without Good Reason or Cause, and with or
without advance notice, subject to the terms set forth herein.  The
Company, however, requests that Executive provide ninety (90) days advance
notice of his intention to resign to allow for an orderly
transition.

     

    4.2           Final Pay. Upon termination of
Executive’s employment for any reason, the Company shall pay Executive all
earned but unpaid salary, and all accrued but unused vacation earned by
Executive through and including the date his employment terminates (the “Termination
Date”), subject to applicable payroll deductions, in accordance with
governing law.  Executive shall not be entitled to any severance
benefits or other compensation from the Company after the Termination Date,
except as expressly provided herein or as may be required by law.

     

    4.3           Severance Benefits.


     

    (a)           Termination Not for Cause or for Good
Reason.  If, during the Term, Executive resigns for Good Reason
or is terminated by the Company without Cause (each a “Covered
Termination”), Executive will be eligible to receive, as
severance:

     

    (i)           
four (4) months of Executive’s Base Salary, less applicable withholdings and
deductions; and

     

    (ii)           at
the sole discretion of the Board of Directors (as to both amount of and payment
date for), a Bonus for the calendar year in which the Termination Date occurs,
pro-rated to reflect the portion of the calendar year for which the Executive
was employed by the Company;

     

    “Good Reason” for Executive to
resign his employment shall exist if any of the following occurs without
Executive’s consent: (1) Executive’s Base Salary is reduced below the Base
Salary rate in effect as of the Effective Date but excluding any reduction made
by the Company in good faith as a result of a material decline in the Company’s
financial performance as compared to its financial performance for the prior
fiscal year; (2) Executive’s position, authority and responsibilities, taken as
a whole, are materially diminished; (3) Executive is required to relocate
Executive’s principal office to a location 50 miles or more from his current
location; or (4) any material breach by the Company of the terms of this
Employment Agreement.  To resign for Good Reason, Executive must
notify the Company in writing of the specific act(s) or event(s) which give rise
to Good Reason within thirty (30) days of Executive’s knowledge of the
occurrence of such act(s) or event(s) and give the Company thirty (30) days to
cure.

    


    (b)           Termination upon Death or
Disability.  If, during the term, Executive dies or Executive’s
employment is terminated because Executive has become Disabled, Executive will
be eligible to receive (1) six (6) months of severance and (2), at the sole
discretion of the Board of Directors (as to both amount of and payment date
for), a Bonus for the calendar year in which the Termination Date occurs,
pro-rated to reflect the portion of the calendar year for which the Executive
was employed by the Company.

     

    


    
      
        
           


        

        
          Exhibit
10.6 Page 4

          
            

          

        

        
           


        

      

    

    


    (c)           Amounts
payable to Executive under Section 4.3(a) or (b) (the “Severance
Pay”) shall be paid in equal installments on the Company’s customary
payroll pay dates or at the Company’s discretion, in one or more lump sum
payments. As a precondition to receiving any Severance Pay, Executive agrees
that Executive must provide the Company with a signed, effective Release of
Claims in substantially the form attached hereto as Exhibit A (the “Release”).
Severance Pay shall commence on the first payroll pay date after the Company
receives the fully executed release from the Executive and the Release becomes
effective by its terms.

     

    (d)           Termination for Cause. If,
during the Term, Executive is terminated for Cause, he shall have no right to
any severance benefits of any kind or nature.  Additionally,
notwithstanding the terms and conditions of any equity incentive plan or
arrangement under which Executive may receive an equity incentive award, right
or option, effective immediately upon the Terminate Date, such award, right or
option shall immediately, with no further action by the Company, terminate and
no longer be exercisable by Executive. “Cause” to
terminate Executive’s employment shall exist if, in the reasonable determination
of the Company, any one of the following has occurred: (1) Executive’s
misappropriation of a material business opportunity of the Company, including
securing any personal profit in connection with any transaction entered into on
behalf of the Company; (2) Executive’s participation in any act of fraud or
dishonesty against the Company or any of its affiliated entities; (3)
Executive’s willful neglect and/or unreasonable refusal to perform his duties as
set forth in this Employment Agreement; (4) Executive’s material breach of the
terms of this Employment Agreement or any other agreement between Executive and
the Company; (5) Executive’s conviction of, or an entry of a pleading of guilty
or no contest to a felony or any crime involving moral turpitude, fraud, theft,
embezzlement or dishonesty; (6) misconduct by Executive that demonstrates gross
unfitness to serve; and/or (7) Executive’s breach of the duties of care or
loyalty to the Company; provided that the Company shall give Executive thirty
(30) days’ written notice and opportunity to cure prior to any termination for
Cause based on the grounds specified in subsections (3) and (7),
above..

     

    5.           Proprietary
Information.  As a condition of employment, Executive must sign
and abide by the terms of the Employee Proprietary Information and Inventions
Assignment Agreement attached hereto as Exhibit B (“Proprietary
Information Agreement”).  To the extent any of the obligations
set forth in the Proprietary Information Agreement conflict with those set forth
in this Employment Agreement, the terms and conditions of the Proprietary
Information Agreement shall control.

     

    6.           NonCompetition
Obligations.  Executive’s obligations under this Employment
Agreement are in addition to Executive’s obligations pursuant to that certain
Noncompetition and Non-Solicitation Agreement attached hereto as Exhibit C (the Noncompetition
Agreement”).  Nothing in this Employment Agreement shall be
construed as limiting or superseding Executive’s obligations under the
Noncompetition Agreement.  Executive’s obligations under the
Noncompetition Agreement shall survive termination of Executive’s employment
with the Company, and shall not be modified, altered, or otherwise effected by
such termination or the reasons for such termination.  To the extent
that any of the obligations set forth in the Noncompetition Agreement conflict
with those set forth in this Employment Agreement, the terms and conditions of
the Noncompetition Agreement shall control.

     

    


    
      
        
           


        

        
          Exhibit
10.6 Page 5

          
            

          

        

        
           


        

      

    

     

     

    7.           Notice.  Any notices provided
hereunder must be in writing and shall be deemed effective upon the earlier of
personal delivery (including, personal delivery by facsimile transmission),
delivery by express delivery service (e.g. Federal Express or UPS), or the third
day after mailing by first class mail, to the Company at its primary office
location and to Executive at his address as listed on the Company payroll (which
address may be changed by written notice).

     

    8.           Arbitration.  Except as
provided in Section 9 of this Employment Agreement, Executive and the Company
agree that any and all disputes, claims, or causes of action, in law or equity,
arising from or relating to the enforcement, breach, performance, execution or
interpretation of (i) this Employment Agreement, Release attached here to as
Exhibit A, the
Employee Proprietary Information and Inventions Agreement attached hereto as
Exhibit B, and
the Noncompetition Agreement attached hereto as Exhibit C (the “Operative
Documents”), (ii) Executive’s employment with the Company, and/or (iii)
the termination of that employment (collectively, “Claims”),
shall be resolved, to the fullest extent permitted by law, by final, binding and
(to the extent permitted by law) confidential arbitration in Rapid City, South
Dakota before a single arbitrator with American Arbitration Association (“AAA”) or
its successor, conducted pursuant to the AAA Employment Arbitration Rules and
Mediation Procedures then in effect.  Claims subject to this
arbitration provision shall (a) include, but not be limited to, Claims pursuant
to any federal, state or local law or statute, including (without limitation)
the Age Discrimination in Employment Act, as amended; Title VII of the Civil
Rights Act of 1964, as amended; the Americans With Disabilities Act of 1990; the
federal Fair Labor Standards Act; the applicable state anti-discrimination
statutes and Claims pursuant to any common law, tort law or contract law,
including (without limitation) breach of contract or other promise,
discrimination, harassment, retaliation, wrongful discharge, fraud,
misrepresentation, defamation, and emotional distress, and (b) exclude Claims
that by law are not subject to arbitration.  The arbitrator
shall:  (1) have the authority to compel adequate discovery for the
resolution of all Claims and to award such relief as would otherwise be
permitted by law; and (2) issue a written arbitration decision including the
arbitrator’s essential findings and conclusions and a statement of the
award.  The arbitral panel shall have the power to assign the
responsibility for legal fees of any party to any other party as provided by
law; provided, however, the administrative costs associated with any arbitration
under this Section 8 shall be shared equally by the Executive and by the
Company.  The award of the arbitral panel maybe entered and enforced
as a judgment in any court of competent jurisdiction. Executive and the Company acknowledge
that, by agreeing to this arbitration procedure, both Executive and the Company
waive the right to resolve any Claims through a trial by jury or judge or by
administrative proceeding.

     

    9.           Injunctive
Relief.  In the event of a breach or threatened breach by the
Executive of the provisions of the Employee Proprietary Information and
Inventions Agreement attached hereto as Exhibit B, and the
Noncompetition Agreement attached hereto as Exhibit C, the
Executive and/or the Company irrevocably and unconditionally consent to submit
to the jurisdiction of the state or federal courts located in Rapid City, South
Dakota, for any action to obtain a temporary restraining order or preliminary
injunction, and waive any objection to venue or jurisdiction of those courts;
provided, however, that the merits of such action, and a final

     

    


    
      
        
           


        

        
          Exhibit
10.6 Page 6

          
            

          

        

        
           


        

      

    

    


    judgment
on the action, shall be submitted to arbitration as provided in Section 8 above.
Executive further acknowledges and agrees that any breach or threatened breach
of the Employee Proprietary Information and Inventions Agreement attached hereto
as Exhibit B,
and/or the Noncompetition Agreement attached hereto as Exhibit C may cause
irreparable injury to the Company for which an adequate remedy may not available
at law and that Company may elect to pursue injunctive relief to prohibit such
breach.  Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies available to the Company for such breach or
threatened breach at law or in equity, including the recovery of monetary
damages from the Executive.  The Executive acknowledges that the
possible restrictions on his activities which occur as a result of the
performance of his obligations under the Employee Proprietary Information and
Inventions Agreement attached hereto as Exhibit B, and/or the
Noncompetition Agreement attached hereto as Exhibit C are
reasonably required for the protection of the Company’s interests.  In
the event the Company obtains a temporary restraining order in accordance with
this Section 9 for the Executive’s alleged violations of the Employee
Proprietary Information and Inventions Agreement attached hereto as Exhibit B, and/or the
Noncompetition Agreement attached hereto as Exhibit C, the
Company’s obligations to pay any Severance Pay to Executive pursuant to Section
4 of this Agreement shall be suspended until a final determination on the merits
of the Company’s claim is made in arbitration under the procedures set forth in
Section 8.  If the Company obtains in arbitration a judgment, order,
or other similar determination against the Executive, the Company’s obligations
with respect to the Severance Pay shall terminate effective as of the date of
the temporary restraining order.  If the Company does not obtain such
a judgment, order or other similar determination against the Executive for
violating the Employee Proprietary Information and Inventions Agreement attached
hereto as Exhibit
B, and/or the Noncompetition Agreement attached hereto as Exhibit C, then the
Company’s obligations with respect to the Severance Pay which were suspended
shall become immediately due and payable to the Executive in lump sum, along
with an award of interest at eight percent (8%) per annum for all sums
wrongfully withheld, and all remaining Severance Pay shall continue thereafter
in accordance with this Agreement.  In such circumstances, the
arbitral panel shall also award the Executive his attorneys’ fees and costs
incurred in defending the temporary restraining order and the
arbitration.

     

    10.           Miscellaneous.

     

    10.1           Entire
Agreement.  This Employment Agreement, together with the
exhibits hereto, constitutes the entire agreement and understanding between the
parties with regard to the subject matter hereof.  This Employment
Agreement supersedes and replaces all prior agreements and understandings,
whether written or oral, with respect to the subject matter hereof, including
but not limited to the Original Agreement.  The parties are entering
into this Employment Agreement only on the representations contained herein, and
not on any representations, agreements or understandings not expressly included
herein.  This Employment Agreement shall be construed under and
governed by the substantive laws of the State of South Dakota, without regard to
conflict of interest principles.  This Employment Agreement shall
inure to the benefit of and shall be binding upon the parties and their
respective heirs, legal representatives, successors, and assigns; provided,
however, that Executive’s obligations hereunder are personal and
non-assignable.

     

    


    
      
        
           


        

        
          Exhibit
10.6 Page 7

          
            

          

        

        
           


        

      

    

    


    10.2           Severability.  The
provisions of this Employment Agreement are severable, and the invalidity of any
provision does not affect the validity of any other provision.  In the
event that any arbitrator or court of competent jurisdiction determines that any
provision of this Employment Agreement is invalid or unenforceable in whole or
in part, such invalidity or unenforceability shall attach only to such provision
and all other provisions hereof shall continue in full force and effect. The
court or arbitrator will, to the fullest extent possible, reform any provision
deemed unenforceable in whole or in part, so that it is enforceable to the
fullest extent possible.

     

    10.3           Waiver/Modification.  No
waiver of any provision of this Employment Agreement shall be effective unless
such waiver is confirmed in a writing signed by the waiving
party.  Except for modifications expressly reserved to the Company’s
discretion hereunder, no modification of this Employment Agreement shall be
effective unless memorialized in a writing signed by both parties.

     

    10.4           Counterparts.  This
Employment Agreement may be executed in counterparts, each of which need not
contain signatures of more than one party, but all of which taken together will
constitute one and the same agreement.  Facsimile signatures and/or
PDF signatures shall be deemed as effective as original
signatures.  Each party has carefully read this Employment Agreement,
has been afforded the opportunity to be advised of its meaning and consequences
by his or its respective attorneys, and signed the same of his or its own free
will.

     

    10.5           Personal
Guarantees.  To the extent that the Executive has personally
guaranteed any credit card or other debt of the Company (including obligations
relating to Midwest Renewable Energy LLC), the Company will use its commercially
reasonable efforts to extinguish these guarantees either through the full
payment of the obligation and/or the negotiation of payment terms that will
eliminate the Executive’s guarantee of such indebtedness.

     

    10.6           Exhibits.

     

    Exhibit A – Form of
Release

    Exhibit B – Employee
Proprietary Information And Inventions Agreement

    Exhibit C –
Noncompetition Agreement

    


    


    [Signature
Page to Follow]

    


    
      
        
           


        

        
          Exhibit
10.6 Page 8

          
            

          

        

        
           


        

      

    

    


    IN
WITNESS WHEREOF the parties have executed the Executive Employment Agreement as
of the date and year noted above.

     

    KL
ENERGY CORPORATION

    


     

    /s/
Steve Corcoran

     

    Name: 
Steve Corcoran

    Title: 
President

    


     

    DENNIS
HARSTAD

     

    /s/ DENNIS HARSTAD

     

    


    


    
      
        
           


        

        
          Exhibit
10.6 Page 9

          
            

          

        

        
           


        

      

    

    


    EXHIBIT
A

    


    RELEASE
OF CLAIMS

    


    1.           Employment Agreement. On 15
February, 2010, I entered into that certain Executive Employment Agreement (the
“Employment
Agreement”) with KL Energy Corporation, which along with its parent,
subsidiaries and affiliates, is referred to as the “Company”.  My
employment with the Company ended on ____________ (the “Termination
Date”).  I confirm that I have been paid all compensation owed
for all hours worked by me for the Company, I have received all the leave and
leave benefits and protections for which I was eligible in connection with my
employment with the Company, pursuant to the Family and Medical Leave Act or
otherwise, and I have not suffered any on-the-job injury for which I have not
already filed a claim.

     

    2.           General Release.  In
exchange for certain severance and other post-employment benefits to be provided
to me under the Agreement, I hereby waive and release the Company, its parents,
subsidiaries, predecessors, successors and affiliates, and each of such
entities’ officers, directors, employees, shareholders, managers, members,
employees, agents, representatives and assigns (collectively, the “Released
Parties”) from any and all claims, liabilities, demands, causes of
action, attorneys’ fees, damages, or obligations of every kind and nature,
whether known or unknown, arising at any time prior to and including the date I
sign this Release of Claims (the “Release”).  This
general release includes, but is not limited to: (a) all claims directly or
indirectly arising out of or in any way connected with my employment with the
Company or the termination of that employment relationship; (b) all claims or
demands related to salary, bonuses, fees, retirement contributions,
profit-sharing rights, profit distributions, commissions, stock, stock options,
or any other ownership or equity interests in the Company or any of its
affiliated entities, vacation pay, fringe benefits, expense reimbursements or
any other form of compensation or benefit; (c) all claims pursuant to any
federal, state or local law, statute or cause of action in any jurisdiction,
including, but not limited to, the federal Civil Rights Act of 1964, the federal
Americans with Disabilities Act of 1990, the Family and Medical Leave Act, the
Employee Retirement Income Security Act, the federal Age Discrimination in
Employment Act of 1967, the Equal Pay Act of 1963, the Fair Labor Standard Act,
South Dakota Codified Laws § 20-13-10 (1984), each as amended to date, tort law,
contract law, wrongful discharge, discrimination, harassment, fraud, defamation,
emotional distress, or claims for breach of fiduciary
duty.  Notwithstanding the foregoing, nothing in paragraph shall
release: (i) any rights I have under the Agreement; (ii) any rights to
indemnification I have pursuant to any written indemnification agreement to
which I am a party or third party beneficiary, the certificate of incorporation
or Bylaws of the Company, or under applicable law; or (iii) any rights which
cannot be waived as a matter of law.  In addition, I understand that
nothing in this release prevents me from filing, cooperating with, or
participating in any proceeding before the Equal Employment Opportunity
Commission, the Department of Labor, or any analogous state or federal agency,
except that I acknowledge and agree that I shall not recover any monetary
benefits in connection with any such claim, charge or proceeding with regard to
any claim released herein.

     

     

    /s/
D.H.

    /s/
S.C.

    


    
      
        
           


        

        
          Exhibit
10.6 Page 10

          
            

          

        

        
           


        

      

    

    


    3.           ADEA Waiver and
Release.  If I am 40 years of age or older as of the
Termination Date, I acknowledge that I am knowingly and voluntarily waiving and
releasing any rights I may have under the federal Age Discrimination in
Employment Act of 1967 (as amended) (the “ADEA”).  I
acknowledge that the consideration given for this waiver and release is in
addition to anything of value to which I was already entitled.  I
further acknowledge that I have been advised by this writing, as required by the
ADEA, that:  (a) this Release does not apply to any rights or claims
that arise after the date I sign it; (b) I should consult with an attorney
before signing this Release; (c) I have twenty-one (21) days to consider this
Release (although I may choose to voluntarily sign it sooner); (d) I have seven
(7) days after the date I sign this Release to revoke my acceptance of it (by
sending written notice of such revocation to the Company); and (e) this Release
will not be effective until the date upon which this revocation period has
expired unexercised, which will be the eighth (8th) day
after I sign this Release (assuming I do not earlier revoke my acceptance of
it).

     

    4.           Entire Agreement. This
Release, together with the Employment Agreement (including any exhibits
thereto), constitutes the complete, final and exclusive embodiment of the entire
agreement between me and the Company with regard to their subject matter, and I
am not relying on any promise, warranty or representation that is not expressly
stated therein.

     

    Understood,
Accepted and Agreed:

     

    
      	
              DENNIS
      HARSTAD

               

              /s/ DENNIS
      HARSTAD

               

              Date:
      February 24,
      2010

               

            


    

    


     

    
       

      /s/
D.H.

      /s/
S.C.


    

    
      
        
           


        

        
          Exhibit
10.6 Page 11

          
            

          

        

        
           


        

      

    

    


    EXHIBIT
B

     

    EMPLOYEE
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

     

    
    

     

    
      	In
      consideration of my employment with KL Energy Corporation (hereinafter,
      along with its parent, subsidiaries and affiliates, referred to as the
      “Company”), and
      the compensation paid to me now and during my employment with the Company
      I, DENNIS HARSTAD
      , agree to the terms of this Agreement as follows: 

               

              1.           Confidential
      Information Protections.

               

              1.1           Nondisclosure; Recognition of
      Company’s Rights.  At all times during and after my
      employment, I will hold in confidence and will not disclose, use or
      publish any of the Company’s Confidential Information (defined below),
      except as may be required in connection with my work for the Company, or
      as expressly authorized by the Board of Directors of the Company (the
      “Board”). I
      hereby assign to the Company any rights I may have or acquire in any and
      all Company Confidential Information and recognize that all Company
      Confidential Information shall be the sole and exclusive property of
      Company and its assigns.

               

              1.2           Confidential
      Information.  The term “Confidential
      Information” shall mean any and all confidential knowledge, data or
      information related to the Company’s business or its actual or
      demonstrably anticipated business or development, including without
      limitation (a) information regarding products, services, marketing and
      business plans, market studies and forecasts, competitive analyses,
      budgets, financial statements, contracts, prices, and profit margins; (b)
      the names, addresses, phone numbers, preferences, buying and/or selling
      histories and other information concerning suppliers, vendors, customers
      and prospective customers of the Company; (c) proprietary technology,
      trade secrets, patented processes, research and development data,
      know-how, databases and data collections, diagrams or designs, models,
      formulae, inventions (whether or not patentable), patent applications,
      registered and unregistered marks and all goodwill associated with such
      marks, methods, processes, procedures, software and software code (in any
      form, including source code and executable code), techniques, user
      interfaces, domain names, URLs, web sites, registered and unregistered
      copyrights, works of authorship and other forms of technology or
      technical  

            	 	information
      regarding the skills and compensation of Company’s employees, contractors,
      and any other service providers of Company; (e) the existence of any
      business discussions, negotiations, or agreements between Company and
      other information (whether or not embodied in any tangible form and
      including all tangible embodiments of the foregoing, such as instruction
      manuals, prototypes, samples, studies and summaries) and any reissues,
      extensions or renewals thereof; (d) employee lists, employment agreements,
      personnel policies, and  and any third party; and (f) any of the
      above materials, data or information as it relates; to the Company’s
      parent, subsidiaries, and affiliated entities provided, however,
      Confidential Information shall not include any information that is
      generally known in the industry or otherwise becomes available in the
      public domain, in each case other than pursuant to a breach of this
      Agreement. 

               

              1.3           Third Party
      Information.  I understand that the Company has received
      and in the future will receive from third parties confidential or
      proprietary information (“Third Party
      Information”) subject to a duty on the Company’s part to maintain
      the confidentiality of such Third Party Information and to use it only for
      certain limited purposes.  During and after the term of my
      employment, I will hold Third Party Information in strict confidence and
      will not disclose to anyone (other than Company personnel who need to know
      such information in connection with their work for Company), nor will I
      use Third Party Information except in connection with my work for the
      Company or unless expressly authorized by an officer of the Company in
      writing.

               

              1.4           No Improper Use of Information
      of Prior Employers and Others.  I represent that my
      employment by the Company does not and will not breach any agreement with
      any former employer, including any non-compete agreement or any agreement
      to keep in confidence or refrain from using information acquired by me
      prior to my employment by the Company.  I further represent that
      I have not entered into, and will not enter into, any agreement, either
      written or oral, in conflict with my obligations under this
      Agreement.  During my employment by the Company, I will not
      improperly make use of, or disclose, any confidential information or trade
      secrets

            


    

     

    
       

      /s/
D.H.

      /s/
S.C.

    

     

    
      
        
           


        

        
          Exhibit
10.6 Page 12

          
            

          

        

        
           


        

      

    

    
       

      
        	
                 

                of
      any former employer or other third party, nor will I bring onto the
      premises
      of the Company or use any unpublished documents or any property belonging
      to any former employer or other third party, in violation of any lawful
      agreements with that former employer or third party.  I will use
      in the performance of my duties only information that is generally known
      and used by persons with training and experience comparable to my own, is
      common knowledge in the industry or otherwise legally in the public
      domain, or is otherwise provided or developed by the Company.

                 

                
                  2.           Inventions.

                   

                  2.1           Inventions and Intellectual
      Property Rights.  As used in this Agreement, the term
      “Invention” means
      any proprietary or trade-secret ideas, concepts, Confidential Information,
      materials, processes, data, programs, know-how, improvements, discoveries,
      developments, designs, artwork, formulae, other copyrightable works, and
      techniques and all Intellectual Property Rights in any of the items listed
      above as such relate to the business of the Company.  The term
      “Intellectual Property
      Rights”  means all past, present, and future rights of
      the following types, which may exist or be created under the laws of any
      jurisdiction in the world: (A) rights associated with works of authorship,
      including exclusive exploitation rights, copyrights, moral rights and mask
      works; (B) trademark and trade name rights and similar rights; (C) trade
      secret rights; (D) patent and industrial property rights; (E) other
      proprietary rights in Intellectual Property; and (F) rights in or relating
      to registrations, renewals, extensions, combinations, divisions, and
      reissues of, and applications for, any of the rights referred to in
      clauses (A) through (E) above.

                   

                  2.2           Ownership of Company
      Inventions. I irrevocably assign to the Company all right, title
      and interest in any work product that I create or to which I contribute
      pursuant to this Agreement related to the business of the Company (the
      “Work Product”),
      including all Intellectual Property Rights contained therein.

                   

                  2.3           Enforcement of Intellectual
      Property Rights and Assistance. During and after the period of my
      employment, I will, at the Company’s sole expense, reasonably assist the
      Company in every proper way, to obtain and enforce United States and
      foreign Intellectual Property Rights relating to Company Inventions in all
      countries, including securing my signature on any document needed in
      connection with such purposes.

                

              	 	
                3.           Records.  I
      agree to keep and maintain adequate and current records (in the form of
      notes, sketches, drawings and in any other form that is required by the
      Company) of all Inventions made by me during the period of my employment
      by the Company, which records shall be available to, and remain the sole
      property of, the Company at all times.

                 

                4.           Return
      Of Company Property. Upon termination of my employment or upon the
      Company’s request at any other time, I will deliver to the Company all of
      the Company’s property, equipment, and documents, together with all copies
      thereof, and any other material containing or disclosing any Inventions,
      Third Party Information or Confidential Information and certify in writing
      that I have fully complied with the foregoing obligation.  Upon
      termination of my employment, I agree that I will not copy, delete, or
      alter any information contained upon my Company computer or Company
      equipment before I return it to Company.  In addition, if I have
      used any personal computer, server, or e-mail system to receive, store,
      review, prepare or transmit any Company information, including but not
      limited to, Confidential Information, I agree to provide the Company with
      a computer-useable copy of all such Confidential Information and then
      permanently delete and expunge such Confidential Information from those
      systems; and I agree to allow an independent computer forensics consultant
      access to my system as reasonably requested by the Company to verify that
      the necessary copying and/or deletion is completed.  I further
      agree that any property situated on Company premises and owned by the
      Company is subject to inspection by Company personnel at any time with or
      without notice.  Prior to the termination of my employment or
      promptly after termination of my employment, I will cooperate with the
      Company in attending an exit interview and certify in writing that I have
      complied with the requirements of this section.

                 

                5.           Notification
      Of New Employer.  If I leave
      the employ of the Company, I consent to the notification of my new
      employer of my rights and obligations under this Agreement, by the Company
      providing a copy of this Agreement or otherwise.

                 

                6.           General
      Provisions.

                 

                6.1           Governing Law and
      Venue.  This

              


      

       

    

    
       

      /s/
D.H.

      /s/
S.C.

    

    


    
      
        
           


        

        
          Exhibit
10.6 Page 13

          
            

          

        

        
           


        

      

    

    


    
       

      
        	
                
                   

                  Agreement
      and any action related thereto will be governed and interpreted by and
      under the laws of the State of South Dakota, without giving effect to any
      conflicts of laws principles that require the application of the law of a
      different state.  I expressly consent to personal jurisdiction
      and venue in the state of South Dakota for any lawsuit or arbitration
      filed against me by the Company arising from or related to this Agreement
      and I consent to the application of the provisions of Sections 8 and 9 of
      the Employment Agreement with respect to the resolution of any dispute
      raised by the parties hereto.

                   

                  6.2           Severability.  If
      any provision of this Agreement is, for any reason, held to be invalid or
      unenforceable, the other provisions of this Agreement will remain
      enforceable.  If the final judgment of a court of competent
      jurisdiction or arbitral panel declares that any term or provision hereof
      is invalid or unenforceable, the parties hereto agree that the court or
      arbitral making such determination shall have the power
      to  limit the term or provision, to delete specific words or
      phrases, or to replace any invalid or unenforceable term or provision with
      a term or provision that is valid and enforceable and that comes closest
      to expressing the intention of the invalid or unenforceable term or
      provision, and this Agreement shall be enforceable as so
      modified.  In the event such court or arbitral panel does not
      exercise the power granted to it in the prior sentence, the parties hereto
      agree to replace such invalid or unenforceable term or provision that will
      achieve, to the extent possible, the economic, business and other purposes
      of such invalid or unenforceable term.

                   

                  6.3           Survival.  This
      Agreement shall survive the termination of my employment and the
      assignment of this Agreement by Company to any successor or other assignee
      and be binding upon my heirs and legal representatives.

                   

                  6.4           Employment.  I
      agree and understand that nothing in this Agreement shall give me any
      right to continued employment by Company, and it will not interfere in any
      way with my right or the Company’s right to terminate my employment at any
      time, with or without cause.

                   

                  6.5           Notices.  Each
      party must deliver all notices or other communications required or
      permitted under this Agreement in writing to the other party at the
      address listed on the signature page, by courier, by certified or
      registered mail (postage 

                

              	 	
                
                  prepaid
      and return receipt requested), or by a nationally-recognized express mail
      service.  Notice will be effective upon receipt, or refusal by
      party of delivery.  If delivered by certified or registered
      mail, notice will be considered to have been given five (5) business days
      after it was mailed, as evidenced by the postmark.  If delivered
      by courier or express mail service, notice will be considered to have been
      given on the delivery date reflected by the courier or express mail
      service receipt. Each party may change its address for receipt of notice
      by giving notice of the change to the other party.

                   

                  6.6           Injunctive Relief. I
      acknowledge that, because my services are personal and unique and because
      I will have access to the Confidential Information of the Company, any
      breach of this Agreement by me would cause irreparable injury to Company
      for which monetary damages would not be an adequate remedy and, therefore,
      will entitle Company to injunctive relief (including specific performance)
      in accordance with the provisions of Sections 8 and 9 of my Employment
      Agreement with the Company.

                   

                   6.7           Waiver. Any waiver or
      failure to enforce any provision of this Agreement on one occasion will
      not be deemed a waiver of that provision or any other provision on any
      other occasion.

                   

                  6.8           Entire
      Agreement.  If no other agreement governs nondisclosure
      and assignment of inventions during any period in which I was previously
      employed or am in the future employed by the Company or retained as an
      independent contractor, the obligations pursuant to sections of this
      Agreement titled “Confidential Information Protections” and “Inventions”
      shall apply.  This Agreement is the final, complete and
      exclusive agreement of the parties with respect to the subject matter
      hereof and supersedes and merges all prior communications between us with
      respect to such matters; provided, however, to
      the extent that any of the obligations set forth in this Proprietary
      Information Agreement conflict with those set forth in the Employment
      Agreement, the terms and conditions of this Proprietary Information
      Agreement shall control.. If no other agreement governs nondisclosure and
      assignment of inventions during any period in which I was previously
      employed or am in the future employed by the Company as an independent
      contractor, the obligations pursuant to sections of this Agreement titled
      “Confidential Information Protections” and “Inventions” shall
      apply.  No

                

              


      

       

    

    
       

      /s/
D.H.

      /s/
S.C.

    

    


    
      
        
           


        

        
          Exhibit
10.6 Page 14

          
            

          

        

        
           


        

      

    

     

    
      
        	
                modification
      of or amendment to this Agreement, or any waiver of any rights under this
      Agreement, will be effective unless in writing and 

              	 	signed by me and the Board.  Any subsequent change
      or changes in my duties, salary or compensation will not affect the
      validity or scope of this Agreement.


      

       

    

    


    This
Agreement shall be effective as of the first day of my employment with the
Company.

     

     

     

    
      	
              DENNIS
      HARSTAD :

               

              I have read, understand,
      and accept this agreement and have been given the opportunity to Review it
      with independent legal counsel.

               

               

               

               

            	 	
              KL
      ENERGY CORPORATION:

               

              Accepted
      and agreed:

               

               

               

               

               

            
	
              /s/ DENNIS
      HARSTAD

            	 	/s/ Steve Corcoran
	  (Signature)	 	                            (Signature)
	 	 	 
	 	 	 
	 	 	 By: /s/ Steve Corcoran
	 Print Name:DENNIS
      HARSTAD	 	 Title:
      President
	 	 	 
	 Date: 
      February 24,
    2010	 	 Date:
      24FEB10
	 	 	 
	
               Address:    3019
      Heidiway Lane

                           Rapid City, SD 57702

            	 	
               Address:    306
      East St. Joseph St

                           Suite 200

                           Rapid City, SD
  57701

            


    

     

    
      /s/
D.H.

      /s/
S.C.


    

    
      
        
           


        

        
          Exhibit
10.6 Page 15

          
            

          

        

        
           


        

      

    

    


    


    EXHIBIT
C

    


    NONCOMPETITION
AGREEMENT

     

    This
Noncompetition Agreement (the “Agreement”) is being executed and
delivered as of February 15, 2010 (the “Effective
Date”) by DENNIS HARSTAD
(“Executive”)
in favor of, and for the benefit of KL ENERGY
CORPORATION,
a Nevada corporation (hereinafter, along with its parent, subsidiaries
and Affiliates, referred to as the “Company”) and
the other “Indemnitees”
(as hereinafter defined).  Certain capitalized terms used in this
Noncompetition Agreement are defined in Section 21.

     

    Recitals

     

    Whereas,
the Company and Executive are executing an Employment Agreement (the “Employment
Agreement”) contemporaneously with the execution and delivery of this
Agreement, pursuant to which Executive will provide key executive-level
employment services to the Company; and

     

    Whereas,
as a result of Executive’s employment by the Company, he will be intimately
familiar with the Company’s plans, trade secrets, proprietary information,
business activities and operations;

     

    Now,
Therefore, in order to induce the Company to enter into the Employment
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Executive agrees to the terms set
forth.

     

    Agreement

     

    
      	
              1.

            	
              Restriction
      on Competition.

            


    

     

    1.1           Executive
agrees that, during the Noncompetition Period, he shall not, and shall not
permit any of his Affiliates to:  (a) engage directly or
indirectly in Competition in any Restricted Territory; (b) directly or indirectly be
or become an officer, director, shareholder, owner, co-owner, Affiliate,
partner, promoter, employee, agent, representative, designer, consultant,
advisor, manager, investor, licensor, sublicensor, licensee or sublicensee of,
for or to, or otherwise be or become associated with or acquire or hold (of
record, beneficially or otherwise) any direct or indirect interest in, any
Person or entity that engages directly or indirectly in Competition in any
Restricted Territory; provided, however, that
Executive may, without violating this Section 1, own, as a passive investment,
shares of capital stock of a publicly-held corporation that engages in
Competition if the following three conditions are satisfied: (i) the securities
held are actively traded on an established national securities market in the
United States, (ii) the number of shares of such entity’s equity securities
collectively owned beneficially (directly or indirectly) by Executive and his
Affiliates collectively represent less than one-half of one percent (.5%) of the
total number of equity securities of such entity outstanding, and (iii) neither
Executive nor his Affiliates are otherwise associated directly or indirectly
with such entity or with any Affiliate of such entity.

    
      /s/
D.H.

      /s/
S.C.


    

    


    
      
        
           


        

        
          Exhibit
10.6 Page 16

          
            

          

        

        
           


        

      

    

    


    2.           No Hiring or
Solicitation.  Executive agrees that, during the Noncompetition
Period, he shall not, and shall not permit any of his Affiliates to: (a) hire a
Specified Worker; or (b) directly or indirectly, personally or through others,
encourage, induce, attempt to induce, solicit or attempt to solicit (on their
own behalf or on behalf of any other Person) any Specified Worker to terminate
his/her/its employment or consulting relationship with the
Company.  For purposes of this Section 2, a “Specified
Worker” shall mean any individual who is an employee or contractor of the
Company or has been an employee or contractor of the Company within the
preceding six (6) month period.

     

    3.           Restriction
on Interference with Business.  Executive
agrees that, during Executive’s employment with the Company and after the
termination of that employment for any reason, he will not: (a) discourage,
dissuade, induce or attempt to induce any supplier or customer of the Company
not to enter into a business relationship with the Company or any supplier or
customer of the Company to terminate any of its material relationships with the
Company; or (b) make any public statements or public comments of a defamatory or
disparaging nature regarding the Company or any of its officers, directors,
personnel, products, services, or Affiliates, in any manner likely to be harmful
to it or their business, business reputation or personal
reputation.  Nothing in this Section shall prevent Executive from
responding accurately and fully to any request for information when a response
is required by legal process.

     

    4.           Confidentiality.  Executive
agrees that he shall hold all Confidential Information in strict confidence and
shall fully comply with all terms and conditions of that certain Employee Proprietary Information And
Inventions Agreement between the Company and Executive of even date
herewith..

     

    5.           Representations and
Warranties.  Executive represents and warrants, to and for the
benefit of the Indemnitees, that: (a) he has full power and capacity to execute
and deliver, and to perform all of his obligations under this Noncompetition
Agreement; and (b) neither the execution and delivery of this Noncompetition
Agreement nor the performance of this Noncompetition Agreement will result
directly or indirectly in a violation or breach of: (i) any agreement or
obligation by which Executive or any of his Affiliates is or may be bound; or
(ii) any law, rule or regulation.  The representations and
warranties provided by Executive shall survive the expiration of the
Noncompetition Period for an unlimited period of time.

     

    6.           Specific
Performance.  Executive agrees that, in the event of any breach
or threatened breach by him of any covenant or obligation contained in this
Noncompetition Agreement, the Company and each of the other Indemnitees shall be
entitled (in addition to any other remedy that may be available to it, including
monetary damages) to seek and obtain relief pursuant to the provisions of
Sections 8 and 9 of the Employment Agreement.  Executive further
agrees that no Indemnitee shall be required to obtain, furnish or post any bond
or similar instrument in connection with or as a condition to obtaining any
remedy referred to in this Section 6, and Executive hereby irrevocably waives
any right he may have to require any Indemnitee to obtain, furnish or post any
such bond or similarly instrument.

     

    7.           Indemnification.  Without
in any way limiting any of the rights or remedies otherwise available to any of
the Indemnitees, Executive agrees to indemnify and hold harmless

     

    
      /s/
D.H.

      /s/
S.C.



    

    
      
        
           


        

        
          Exhibit
10.6 Page 17

          
            

          

        

        
           


        

      

    

    


    each
Indemnitee against and from any loss, damage, injury, harm, detriment, lost
opportunity, liability, exposure, claim, demand, settlement, judgment, award,
fine, penalty, tax, fee (including attorneys’ fees), charge or expense (whether
or not relating to any third-party claim) that is directly or indirectly
suffered or incurred at any time (whether during or after the Noncompetition
Period) by such Indemnitee, or to which such Indemnitee otherwise becomes
subject at any time (whether during or after the Noncompetition Period), and
that arises directly or indirectly out of or by virtue of, or relates directly
or indirectly to, any inaccuracy in or breach of any representation or warranty
made by them in this Noncompetition Agreement, or any failure on his part to
observe, perform or abide by, or any other breach of, any restriction, covenant,
obligation or other provision contained in this Noncompetition
Agreement.

     

    8.           Non-Exclusivity.  The
rights and remedies of the Company and the other Indemnitees under this
Noncompetition Agreement are not exclusive of or limited by any other rights or
remedies which they may have, whether at law, in equity, by contract or
otherwise, all of which shall be cumulative (and not
alternative).  Without limiting the generality of the foregoing, the
rights and remedies of the Company and the other Indemnitees under this
Noncompetition Agreement, and the obligations and liabilities of Executive under
this Noncompetition Agreement, are in addition to his rights, remedies,
obligations and liabilities under the law of unfair competition, under laws
relating to misappropriation of trade secrets, under other laws and common law
requirements and under all applicable rules and regulations.  Nothing
in this Noncompetition Agreement shall limit any of Executive’s obligations, or
the rights or remedies of the Company or any of the other Indemnitees, under the
Employment Agreement; and nothing in the Employment Agreement shall limit any of
Executive’s obligations, or any of the rights or remedies of the Company or any
of the other Indemnitees, under this Noncompetition Agreement.  No
breach on the part of the Company or any other party of any covenant or
obligation contained in the Employment Agreement or any other agreement shall
limit or otherwise affect any right or remedy of the Company or any of the other
Indemnitees under this Noncompetition Agreement.

     

    9.           Severability.  Any
term or provision of this Noncompetition Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.  If the final judgment of a court of
competent jurisdiction or any arbitral panel declares that any term or provision
hereof is invalid or unenforceable, the parties hereto agree that the court or
arbitral panel making such determination shall have the power
to  limit the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this
Noncompetition Agreement shall be enforceable as so modified.  In the
event such court or arbitral panel does not exercise the power granted to it in
the prior sentence, the parties hereto agree to replace such invalid or
unenforceable term or provision with a valid and enforceable term or provision
that will achieve, to the extent possible, the economic, business and other
purposes of such invalid or unenforceable term.

     

    
      /s/
D.H.

      /s/
S.C.



    

    
      
        
           


        

        
          Exhibit
10.6 Page 18

          
            

          

        

        
           


        

      

    

    


    10.           Specific
Acknowledgements.  Executive specifically acknowledges and
agrees that: (a) the promises and restrictive covenants Executive is providing
in this Agreement are reasonable and necessary to the protection of the
Company’s business and to the Company’s legitimate interests in the protection
and preservation of the goodwill and other assets of the Company; and that, if
Executive were to violate the terms of this Agreement, such conduct would
materially and adversely affect the value of the Company and cause the Company
to suffer substantial irreparable harm.

     

    11.           Governing
Law; Venue.

     

    11.1           This
Noncompetition Agreement shall be construed in accordance with, and governed in
all respects by, the laws of the State of South Dakota (without
giving effect to principles of conflicts of laws).

     

    11.2           The
provisions of Sections 8 and 9 of the Employment Agreement shall apply to this
Noncompetition Agreement.

     

    11.3           EXECUTIVE
IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LEGAL
PROCEEDING RELATING TO THIS NONCOMPETITION AGREEMENT OR THE ENFORCEMENT OF ANY
PROVISION OF THIS NONCOMPETITION AGREEMENT.

     

    12.           Waiver.  No failure
on the part of the Company or any other Indemnitee to exercise any power, right,
privilege or remedy under this Noncompetition Agreement, and no delay on the
part of the Company, or any other Indemnitee in exercising any power, right,
privilege or remedy under this Noncompetition Agreement, shall operate as a
waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
or further exercise thereof or of any other power, right, privilege or
remedy.  No Indemnitee shall be deemed to have waived any claim of
such Indemnitee arising out of this Noncompetition Agreement, or any power,
right, privilege or remedy of such Indemnitee under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Indemnitee; and any such waiver shall not be applicable or have
any effect except in the specific instance in which it is given.

     

    13.           Successors and
Assigns.  The Company and/or the other Indemnitees may freely
assign any or all of its rights under this Noncompetition Agreement, at any
time, in whole or in part, to any Person without obtaining the consent or
approval of Executive or of any other Person.  This Noncompetition
Agreement shall be binding upon Executive and each of his heirs, executors,
estate, personal representatives, successors and assigns, and shall inure to the
benefit of the Company and the other Indemnitees.

     

    14.           Further
Assurances.  Executive shall (at his sole expense) execute
and/or cause to be delivered to each Indemnitee such instruments and other
documents, and shall (at the their sole expense) take such other actions, as
such Indemnitee may reasonably request at any time (whether during or after the
Noncompetition Period) for the purpose of carrying out or evidencing any of the
provisions of this Noncompetition Agreement.

     

    
      /s/
D.H.

      /s/
S.C.



    

    
      
        
           


        

        
          Exhibit
10.6 Page 19

          
            

          

        

        
           


        

      

    

     

    15.           Attorneys’ Fees.  If
any legal action or other legal proceeding relating to this Noncompetition
Agreement or the enforcement of any provision of this Noncompetition Agreement
is brought against Executive, the prevailing party shall be entitled to recover
reasonable attorneys’ fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).

     

    16.           Captions.  The
captions contained in this Noncompetition Agreement are for convenience of
reference only, shall not be deemed to be a part of this Noncompetition
Agreement and shall not be referred to in connection with the construction or
interpretation of this Noncompetition Agreement.

     

    17.           Construction.  Whenever
required by the context, the singular number shall include the plural, and vice
versa; the masculine gender shall include the feminine and neuter genders; and
the neuter gender shall include the masculine and feminine
genders.  Any rule of construction to the effect that ambiguities are
to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Noncompetition
Agreement.  Neither the drafting history nor the negotiating history
of this Noncompetition Agreement shall be used or referred to in connection with
the construction or interpretation of this Noncompetition
Agreement.  As used in this Noncompetition Agreement, the words
“include” and “including,” and variations thereof, shall not be deemed to be
terms of limitation, and shall be deemed to be followed by the words “without
limitation.” Except as otherwise indicated in this Noncompetition Agreement, all
references in this Noncompetition Agreement to “Sections” are intended to refer
to Sections of this Noncompetition Agreement.

     

    18.           Survival of
Obligations.  Except as specifically provided herein, the
obligations of Executive under this Noncompetition Agreement (including his
obligations under Sections 7 and 14) shall survive the expiration of the
Noncompetition Period.  The expiration of the Noncompetition Period
shall not operate to relieve Executive of any obligation or liability arising
from any prior
breach of any provision of this Noncompetition Agreement.

     

    19.           Obligations
Absolute.  Executive’s obligations under this Noncompetition
Agreement are absolute and shall not be terminated or otherwise limited by
virtue of any breach (on the part of the Company any other Indemnitee or any
other Person) of any provision of the Employment Agreement or any other
agreement, or by virtue of any failure to perform or other breach of any
obligation of the Company, Executive, any other Indemnitee or any other
Person.

     

    20.           Amendment.  This
Noncompetition Agreement may not be amended, modified, altered or supplemented
other than by means of a written instrument duly executed and delivered on
behalf of Executive and the Company (or any successor to the
Company).

     

    21.           Defined Terms.  For
purposes of this Noncompetition Agreement:

     

    
      /s/
D.H.

      /s/
S.C.



    

    
      
        
           


        

        
          Exhibit
10.6 Page 20

          
            

          

        

        
           


        

      

    

    


    21.1           “Affiliate” means, with
respect to any specified Person, any other Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under
common control with such specified Person.

     

    21.2           “Competing Business” means (a)
the design, development, sale, distribution, marketing or promotion of process
technologies designed to facilitate the conversion of cellulose derived from
biomass into Cellulosic Based Ethanol (CBE) and those CBE derived products or
services offered by the Company as of the date of this Agreement, and any other
CBE derived product or service designed, developed, distributed, promoted,
marketed, or sold or any CBE derived product or service under development by the
Company, at any time during Executive’s employment with the Company, and (b) if
employed by or acting as an officer, director or manager of an Affiliate of the
Company, the CBE derived products or services designed, developed, distributed,
promoted, marketed, or sold or any CBE derived product or service under
development by such Affiliate(s), at any time during Executive’s employment with
such Affiliate.

     

    21.3           A
Person shall be deemed to be engaged in “Competition” if such Person,
or any of such Person’s subsidiaries or Affiliates is engaged in a Competing
Business.

     

    21.4           “Confidential Information”
means any and all Confidential Information as defined in that Employee
Proprietary Information And Inventions Agreement executed by Executive in
connection with his employment with the Company.

     

    21.5           “Indemnitees” shall include:
(i) the Company; (ii) each Person who is or becomes an Affiliate of the Company;
and (iii) the successors and assigns of each of the Persons referred to in
clauses “(i)” and “(ii)” of this sentence.

     

    21.6           “Noncompetition Period” shall
mean the period commencing on the Effective Date and ending on the date which is
twelve (12) months from the date Executive’s employment with the Company, or any
subsidiary or Affiliate thereof or their respective successors or assigns is
terminated for any reason; provided however, that in the
event of any breach on the part of the Executive of any provision of this
Noncompetition Agreement, in addition to all other rights and remedies available
to the Indemnitees in law, equity or by agreement, the Noncompetition Period
shall be automatically extended by a number of days equal to the total number of
days in the period from the date on which such breach shall have first occurred
through the date as of which such breach shall have been fully
cured.

     

    21.7           “Person” means any: (i)
individual; (ii) corporation, general partnership, limited partnership, limited
liability partnership, trust, company (including any limited liability company
or joint stock company) or other organization or entity; or (iii) governmental
body or authority.

     

    21.8           “Restricted Territory” means
each country within North America, as well as any other country in which the
Company conducts, has conducted, or demonstrably intends to conduct Business,
during the period of Executive’s Employment Agreement and as of the Termination
Date

     

    
      /s/
D.H.

      /s/
S.C.


    

    
      
        
        

      

      
        Exhibit
10.6 Page 21

        
          

        

      

      
        
        

      

    

     

     

     

    22.           Counterparts/Facsimiles.  This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.  Facsimile or PDF signatures shall be deemed as
enforceable as originals.

     

    [signature
page follows]

     

    
      /s/
D.H.

      /s/
S.C.



    

    
      
        
           


        

        
          Exhibit
10.6 Page 22

          
            

          

        

        
           


        

      

    

    


    In Witness
Whereof, Executive duly executes and delivers this Noncompetition
Agreement as of the date first above written.

    
 

    
      	 
      	DENNIS
      HARSTAD
	 
      	 	 
      
	 
      	 	/s/
       Dennis Harstad
	 	 	 
	 
      	 Address:  	
              3019 Heidiway
      Lane 

                Rapid
      City, SD 57702
                  

            
	 
      	 	 
      
	 
      	 Telephone
      No.: 	
               ( 605 ) 430-1496

            
	 
      	 Facsimile: 	
               ( 605 )
      718-1372

            
	 
      	 	 
      
	 
      	 	 
      
	 
      	kl
      energy corporation
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	 
      	
              By:

            	
              /s/
      Steve M. Corcoran

            
	 
      	 	 
      
	 
      	Its:	
              President

            


    

     

    
      /s/
D.H.

      /s/
S.C.

       

      Exhibit 10.6 Page
23