Document:

Exhibit 10.11

 

MANAGEMENT SERVICES AGREEMENT

 

                                                This MANAGEMENT SERVICES AGREEMENT (“Agreement”)
is made and entered into to be effective as of the 15th day of December, 2008, by and between Golden
Grain Energy, LLC, an Iowa Limited Liability Company (“Golden”) and Homeland
Energy Solutions, LLC, an Iowa Limited Liability Company (“Homeland”) and is as
follows:

 

RECITALS

 

1.                                       WHEREAS, Golden currently owns and operates
an ethanol facility; and Homeland is currently constructing an ethanol facility
which Homeland will own and operate;

 

2.                                       WHEREAS, the highly competitive nature of the
ethanol industry requires that both Golden and Homeland take advantage of all
possible costs savings measures — with one such cost saving measure being the
reduction of administrative overhead through sharing of management services;

 

3.                                       WHEREAS, Golden and Homeland wish to share
management services so as to reduce overhead but still have available a full
management team for carrying out ethanol production;

 

4.                                       WHEREAS, Golden and Homeland, in connection
with accomplishing the sharing of management services, each requires other
terms and conditions as necessary to protect each company’s
confidential/proprietary/trade secret information; and such terms and
conditions as will cause all shared management employees to respect the
separate interests and objectives of each company; and

 

5.                                       WHEREAS, the parties have had discussions
regarding such shared management services, have reached agreement as to the
same, and which to put their understandings and agreements in writing.

 

NOW,
THEREFORE, for good and valuable consideration, the parties agree as follows:

 

1.                                       SHARED MANAGEMENT SERVICES.  Each
of Golden and Homeland shall provide shared management services to the other
with respect to the following job descriptions and titles:

 

a.                                       Positions Shared by Golden. 
Golden shall provide to Homeland the following management services,
to-wit:

 

i.                                     Chief Executive Officer (CEO)

ii.                                  Chief Financial Officer (CFO)

iii.                               Plant Manager

iv.                              OSHA/Safety Manager — Environmental
Protection Agency (EPA) Compliance officer

v.                                 Human Resources Manager

 

 

b.                                   Positions Shared by Homeland. 
Homeland shall provide to Golden the following management services,
to-wit:

 

i.                                          Accounting Controller

 

ii.                                       Financial Accountant.

 

c.                                       Time Commitment.

 

i.                                         Each Person filling the above described
positions shall devote approximately 50% of their time to Homeland and 50% of
their time to Golden.

 

ii.                                    Each person shall use their best efforts when
performing work irrespective of whether that work is for Homeland or
Golden.  Those best efforts may, from
time to time, require that time reasonably necessary to perform work for
Homeland or for Golden will result in a departure from the time sharing goals as
stated above.

 

iii.                                 Approximate hours worked per week by each
shared position for each party shall be disclosed at monthly management/CEO
meetings; and reported to the Homeland Board and to the Golden Board no less
than quarterly.

 

d.                                      Reporting and Organization.  Each
person filling one of the above described positions shall report in accordance
with the ongoing organizational chart attached hereto as Exhibit 1 and
made a part hereof.  In connection
therewith:

 

i.                                       The CEO and CFO shall report directly to the
Homeland Board of Directors.

 

ii.                                     Each Board of Directors reserves the right to
require, from time to time, any of the above named persons to do such work or
make such reports directly to or for the Board.

 

iii.                                  Pursuant to the Operating Agreement of
Homeland, the persons holding the following positions shall serve, until a
successor is duly appointed and qualified by Homeland, as the Officers required
pursuant to Section 5.19 of the Operating Agreement of Homeland, to-wit:

 

	
  Office

  	
   

  	
  Appointed Person

  
	
  President

  	
   

  	
  Walt
  Wendland

  
	
  Vice-President

  	
   

  	
  current
  holder of position

  

 

2

 

	
  Secretary

  	
   

  	
  current
  holder of position

  
	
  Treasurer

  	
   

  	
  Christy
  Marchand

  

 

iv.                                  Homeland and Golden shall adopt a mutual
agreed job description for each position identified at Section 1(a) and
Section 1(b) above.

 

v.                                     Homeland and Golden shall use their best
efforts to create and adopt substantially similar personnel policies and
procedures so as to enhance the ability to coordinate the work required
hereunder.

 

vi.                                  Subject to the policies and procedures of
each Company, the CEO shall be primarily responsible for hiring and firing of
persons providing shared management services as described herein.

 

vii.                               Nothing herein is intended to create an
employment contract, or guaranty of employment, or a guaranty of employment for
any length of time to any person.  Each
person providing management services hereunder shall, at all times, remain the
employee of the Company designated to share services as provided above.

 

viii.                            To the extent that the CEO and/or CFO provide
certifications or reports to the SEC on behalf of Homeland, Homeland shall
provide reasonable cooperation with respect to securing, if necessary, back up
certifications with respect to accuracy of information provided by Homeland
employees for use in preparing such reports and which information is not
otherwise available to the CEO/CFO.

 

2.                                     TERM AND TERMINATION.  The
initial term of this Agreement, subject to the remaining terms and conditions
hereof, shall be for three years from the effective date as stated in the
preamble hereof.  With respect to the
term and termination hereof:

 

a.                                       Evergreen.  At
the expiration of the initial term, this Agreement shall continue from year to
year under its then existing conditions unless and until a party hereto gives
the other no less than 90 days written notice of termination prior to
expiration of the initial term or of the one year extension then in effect.

 

b.                                      Termination of CEO Services Only. 
Notwithstanding the foregoing, Homeland may terminate its obligation to
use the CEO services provided by Golden by giving to Golden no less than 90
days written notice of termination of use of such services on or before the
first anniversary date of this Agreement; or 90 days on or before any extension
then in effect.  Upon appointment by
Homeland of a separate CEO, all persons providing management services to
Homeland as provided for herein, shall report to the appointed by Homeland CEO.  The parties agree that, except as

 

3

 

 otherwise provided herein,
Golden shall provide CEO services for at least one year.

 

c.                                       Termination for Cause. 
Notwithstanding the forgoing, this Agreement may be terminated for
cause, as follows:

 

i.                                          If a party seeks to terminate this Agreement
for cause, it shall deliver to the other party written notice of termination;
which notice shall describe the basis for determining cause exists; and which
notice shall provide 30 days notice and opportunity to cure.  In the event that basis for determining cause
has not been cured to the reasonable satisfaction of the party giving notice
within 30 days, then the party may deliver notice that this Agreement has been
terminated.

 

ii.                                       Cause means:

 

A.                                   A material breach of this Agreement.  Material breach shall be: a failure of a
party (to include failure of the person being provided by a party) to comply
with applicable laws or regulations; a willful breach by a party (to include a
person being provided by a party) of a term of this Agreement; or acts or
conduct by a party (to include a person being provided by a party) which
demonstrates intentional misconduct, reckless misconduct or grossly negligent
misconduct.

 

B.                                     A deadlock in the management of Golden and/or
Homeland.  Deadlock shall be the occurrence
of disagreements between the Board of Homeland and the Board of Golden which,
in the opinion of one or both Boards, has impaired the ability of the
management team to carry out the policies and/or procedures as directed by one
or both Boards of Directors.

 

d.                                     Return of Confidential
Information.  Upon termination each party shall return to
the other all of the other’s Confidential Information that may be in possession
of the returning party.

 

e.                                      Surviving Obligations. 
Payment of any reimbursement obligations which have accrued and are
unpaid as of the date of termination, together with the obligations of the
parties as set forth at Sections 4 — 7 hereof, shall survive termination.  In all other respects the obligations of the
parties to each other shall cease upon termination hereof.

 

4

 

3.                                       REIMBURSEMENT.  The
parties intend and agree that compensation by each party to the other party
shall occur as follows:

 

a.                                       Compensation.  Each
party shall be responsible for and shall directly pay salary, wages, and/or
benefits to their respective employees, who are providing management services
hereunder.

 

b.                                      Reimbursement of Compensation.  Each
party shall be reimbursed by the other for wages, salaries and/or benefits of
persons providing management services hereunder at the rate of 50% of such
wages, salaries, and/or benefits.

 

c.                                       Reimbursement of Costs.  With
respect to costs, reimbursement shall also include 50% of all costs associated
with employment of such persons, to include, social security taxes, health
insurance, workers’ compensation and mileage.

 

d.                                      Income in Compensation. 
Compensation for any person providing management services shall be as
agreed by Golden and Homeland at the time of execution hereof; or at the time
such position is subsequently filled. 
Thereafter, compensation for such persons shall be reviewed annually;
but the party with the obligation to reimburse shall not be required to provide
reimbursement of compensation in excess of cost of living adjustment announced
by the U.S. Department of Labor absent its advance consent.  In no event shall any bonus program or bonus
payment be included in reimbursement obligations of either party.

 

e.                                       Bonuses.  In
the exercise of their respective sole discretion, Golden may pay bonuses to
employees of Homeland and Homeland may pay bonuses to employees of Golden;
provided that any such bonuses will be to reward performance for shared
services as provided for herein.  The
party proposing a bonus to a person holding a shared position as provided for
herein shall report to the other the bonus proposal in advance of awarding the
same to the subject employee.

 

f.                                         Payment. 
Payment by each party to the other for shall occur on the 10th day of each month.

 

4.                                     SEPARATE RIGHTS AND
RESPONSIBILITIES OF GOLDEN AND HOMELAND.  The parties agree that to the
following reservation of their separate rights and statement of their separate
responsibilities, to-wit:

 

a.                                       Separate Authority. 
Nothing herein shall be construed as a grant of authority by Golden as
to Homeland, or by Homeland as to Golden, to make any management or other
business decision for the other; or to exercise or seek to exercise a
controlling influence over any management policies of the other.

 

5

 

b.                                      Preserve Competition. 
Golden and Homeland acknowledge that they are competing business
entities with different ownership.  This
Agreement has been entered into for purposes of enhancing the ability of each
Company to compete by enabling each Company to have a complete management
team.  However, the CEO and CFO shall be
advised by Golden to observe all laws related to price and/or competition in
carrying out this Agreement; and to implement such processes to ensure ongoing
compliance with such laws by all employees providing management services
hereunder.

 

c.                                       Sharing of Intellectual Property. 
Golden and Homeland agree that during the term hereof any and all
inventions, discoveries, formulas, processes, other intellectual property or
improvements to the same if already in existence, regarding production of
ethanol or business activities related thereto shall be owned fifty percent
(50%) by Golden and fifty percent (50%) by Homeland.  In the event that one party seeks to exploit
jointly owned intellectual property and the other does not; or in the event
that the parties dispute the ownership of intellectual property on termination
of this Agreement, then unless the parties can mutually agree as to ownership,
the matter will be resolved pursuant to the dispute resolution process set
forth at Section 7 hereof.  Dispute
resolution shall seek to achieve a result, which to the greatest extent
possible, matches risk of intellectual property development with the reward for
such development — and to the greatest extent possible such risk/reward shall be
divided equally.

 

d.                                      Insurance. 
During the term hereof each party shall maintain Workers’ Compensation
Insurance at statutory limits; as well as comprehensive liability insurance for
all injuries or property damage which may occur on account of services
performed hereunder — with such insurance having mutually acceptable terms and
limits; with each party being named as an additional insured of the other
(except regarding the Worker’s Compensation policy whereby each party shall add
the Alternate Employer endorsement to the respective Workers’ Compensation
policy naming the other party as the Alternate Employer); with such policies
having an endorsement of no cancellation without notice to both parties hereto;
and said policies having a Waiver of Subrogation on all policies, including the
property, where allowed by law.

 

5                                        CONFIDENTIALITY AND COMPETITION COVENANTS.  With respect to confidentiality and
competition covenants, the parties agree:

 

a.                                       Confidentiality.  With respect to confidentiality:

 

6

 

i.              Each person providing management services hereunder
shall protect from unauthorized disclosure – either to third parties (with
respect to shared management services), or to Golden or Homeland as the case
may be (with respect to information that is beyond the scope of shared
management service) – information which Golden and/or Homeland consider
non-public, confidential, or proprietary in nature.  Such non-public, confidential, and/or
proprietary information (collectively “Confidential Information”) may include,
without limitation, customer lists, contracts, planning and financial
information, business plans and strategies, marketing plans, development plans,
technical and business information, customer information, pricing information,
sales information, any formulas/devices/methods/techniques, or other
information which has independent economic value because of not being generally
known, and which Golden or Homeland, as the case may be, has protected through
reasonable efforts regarding maintenance of secrecy.

 

ii.             The parties agree that Confidential
Information shall not include: information that, at the time of disclosure
hereunder, is in the public domain; information that, after
disclosure hereunder, enters the public domain other than by breach of this
Agreement or the obligation of confidentiality stated herein; information that,
prior to disclosure hereunder, was already in a party’s possession, either
without limitation on disclosure to others or subsequently becoming free of
such limitation; information obtained by either party from a third party having
an independent right to disclose the information; information that is available
through discovery by independent research without use of or access to the
confidential information acquired from the other party; information disclosed
upon the order of a court or other authorized governmental entity, or pursuant
to other legal requirements – provided that prior to such disclosure, the
disclosing party shall first timely inform the other party of such disclosure
request so that the other party may seek a protective or equivalent order for
non-disclosure – and provided that the disclosing party shall limit any such
disclosure to the greatest extent permitted by law.

 

iii.            The persons performing services pursuant to
this Agreement shall sign Confidentiality Agreements binding each such person
to the confidentiality obligations set forth above.

 

b.                                      No Solicitation. 
Golden hereby warrants to Homeland and Homeland hereby warrants to
Golden that each shall not, directly or indirectly, either for itself or for
any other person, firm or corporation solicit for employment, retain or employ
any past or present employee of the other

 

7

 

party, or request, induce or
advise any employee to leave the employ of or cease affiliation with the other
party.

 

c.                                       The provisions as set forth in this Section 5
shall survive termination of this Agreement for a period of three (3) years.

 

6.                                       INDEMNIFICATION.  From
and after the date hereof, and except as otherwise provided for herein:

 

a.                                       Golden Indemnification of
Homeland.  Golden
shall indemnify, defend and hold harmless Homeland against:  (i) all
losses, claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement of or in connection with any claim, action, suit,
proceeding or investigation to the extent the same is caused in whole or in
part by Golden, (ii) or, on
account of a breach of Golden’s
obligations hereunder.

 

b.                                      Homeland Indemnification of
Golden.  Homeland
shall indemnify, defend and hold harmless Golden against:  (i) all
losses, claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement of or in connection with any claim, action, suit,
proceeding or investigation to the extent the same is caused in whole or in
part by Homeland, (ii) or,
on account of a breach of Homeland’s
obligations hereunder.

 

c.                                       Limitations on Indemnification
Obligation.  Neither Homeland nor Golden shall be required
to indemnify the other for any direct claim by the other that it has suffered
consequential damages or lost profits; nor shall the requirement to indemnify
extend to consequential damages or lost profits claimed by a third party and
which – but for this Section 6(c) – would be included in the
indemnification obligations listed at Sections 6(a) and 6(b) above.

 

d.                                      Survival
of Obligations.  The
provisions of this Section 6 shall survive the termination of this
Agreement.

 

7.                                       DISPUTE RESOLUTION.  Any
controversy, claim or dispute arising out of or relating to this Agreement or
the breach hereof, including a dispute arising out of the negotiation,
formation and execution of this Agreement, and the interpretation of this
Agreement, shall be resolved as follows:

 

a.                                       Meet and Confer.  The
Dispute Resolution Team (“DRT”) of Golden shall meet and confer – in person –
with the DRT of Homeland to discuss the controversy, claim or dispute in an
attempt to resolve differences and reach agreement.  Each party may elect to be represented by
counsel or other professional advisors at such meeting.  The meeting shall occur as soon as reasonably
possible, but no later than ten (10) days from a written

 

8

 

notice
by a party to the other the dispute, and the request for a meeting of the
Boards.

 

b.                                      Mediation.  If
the controversy, claim or dispute is not resolved by a face-to-face meeting of
the respective DRTs, then the DRTs shall meet with a neutral mediator in an
attempt to reach a mediated settlement. 
The mediator shall be jointly agreed to by the parties and if they
cannot agree, the court for Blackhawk County, Iowa, shall be petitioned and
shall appoint the mediator.  Such
mediation shall occur within twenty-one (21) business days of when the mediator
is selected.

 

c.                                       Arbitration.  If
the controversy is not resolved by mediation, then the controversy shall be
resolved by resort to binding arbitration conducted pursuant to Iowa Code
Chapter 679A and subject to the following additional requirements:

 

i.              Arbitration and proceeds related thereto
shall be venued in Black Hawk county, Iowa. 
The District Court in and for Black Hawk County shall have jurisdiction
to direct the arbitration process; and to preserve the status quo of the
parties during the pondery of arbitration.

 

ii.             The arbitration shall proceed as a private
arbitration, without involvement of the American Arbitration Association, but
otherwise pursuant to the then existing Rules of the American Arbitration
Association applicable to commercial disputes.

 

iii.            Each DRT shall select an arbitrator and the
two arbitrators shall select a neutral third arbitrator.

 

iv.            The
arbitration shall occur within sixty (60) days of the appointment of the final
arbitrator.

 

v.             The determination of the arbitrators shall be
final and binding and each party waives the right to appeal any such decision.
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.  The
arbitrators shall decide who shall pay the costs, expenses, and /or attorneys
fees associated with arbitration.  Each
party shall pay their own attorneys’ fees related to the arbitration.

 

d.                                      Conflict.  The
parties agree that any person who is a Director of both Homeland and Golden, or
an employee of one and a Director of the other, shall excuse themselves from
and not be a party to any dispute resolution process.

 

9

 

e.                                       Role of DRT.  The
Dispute Resolution Team of each party shall consist of that party’s then
existing Committee of Disinterested Persons together with that party’s
Executive Committee.   Each party’s DRT
shall represent it during the dispute resolution proceedings; and the DRT shall
make recommendations for final decisions regarding dispute resolution to its
Board.  The final decision on such
recommendation shall, however, be reserved to and made by the respective Boards
of the parties.

 

8.                                       FORCE MAJEURE.  The
performance of a party may be excused upon the occurrence a Force Majeure event.  A Force Majeure event shall be fire, flood,
storm, act of God, governmental action or intervention, or other circumstance
which is beyond the reasonable control of the party claiming the event and
which renders the performance of this Agreement by a party hereto
impossible.  A party affected by a Force
Majeure event shall not be relieved of performance unless such party has used
reasonable efforts to remedy the conditions giving rise to such event; and
unless and until such party has given written notice of the occurrence of such
event.  Either party may terminate this
Agreement upon not less than thirty (30) days prior written notice if the Force
Majeure event has been continuously in existence for a period of ninety (90)
days.

 

9.                                       MISCELLANEOUS.

 

a.                                       Independent Contractors.  At
all times during this Agreement, Golden and its employees on the one hand, and
Homeland and its employees on the other, shall be deemed independent
contractors of the other.  Nothing herein
shall be construed to create a partnership, joint venture, agency, or any other
form of business relationship between Golden and Homeland.  Golden and Homeland acknowledge that their
Agreement is strictly contractual in nature.

 

b.                                      Further Assurance.  Each
party agrees to execute and deliver all further instruments, legal opinions and
documents, and take all further action not inconsistent with the provisions of
this Agreement that may be reasonably necessary to complete performance of a
party’s obligations hereunder and to effectuate the purposes and intent of this
Agreement.

 

c.                                       Notice.  Any
and all notices provided for herein shall be given in writing by registered or
certified mail, postage prepaid, which shall be addressed by either party and
delivered to the other at its then existing registered office – with the
initial address for notice being as follows:

 

	
  i.                  If to Golden:

   

  	
   

  	
  Golden
  Grain Energy, LLC

  Attn: Chairman of the Board of
  Directors
 Address: 1822 43rd St. SW
 Mason City, IA 50401

  
	
   

  	
   

  	
   

  
	
  ii.               If to Homeland:

  	
   

  	
  Homeland
  Energy Solutions, LLC

  Attn: Chairman of the Board of
  Directors
 Address: 2727 Iowa Hwy 24
 Lawler, IA 52154

  

 

10

 

d.                                      Binding Effect.  This
Agreement shall be binding upon the successors, legal representatives and
assigns of the parties hereto, all of whom, regardless of the number of
intervening transfers, shall be bound in the same manner as the parties hereto.

 

e.                                       No Assignment.  This
Agreement shall not be assigned by either party except upon the written consent
of the other party.  Nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies under or by reason of this Agreement.

 

f.                                         Integration and Amendment.  This
Agreement supersedes and takes precedence over any previous agreement entered
into between the parties hereto, whether written or oral, regarding the matters
covered herein.  This Agreement sets
forth the entire understanding of the parties and may not be amended, altered or
modified except by written agreement between the parties.

 

g.                                      Severability.  Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement, or affecting the validity
or enforceability of any of the other terms of this Agreement in any other
jurisdiction.  In the event a term or provision
is invalid or unenforceable, a Court or Arbitrators (as the case may be) are
granted the authority to construe, interpret, or modify this Agreement in a
manner which is intended to remedy such invalidity or unenforceability while
giving effect, to the greatest extent possible, to all remaining terms and
provisions hereof.

 

h.                                      No Waiver. Any waiver of any of terms and/or
conditions of this Agreement by a party shall not be construed to be a general
waiver of such terms and/or conditions; and no waiver shall be effective absent
the written agreement of the parties.

 

i.                                          Counter Parts.  This
Agreement may be executed in one or more counterparts, all of which, taken
together, shall be deemed one and the same Agreement.

 

j.                                          Captions.  The
captions herein are inserted for the convenience of reference only and shall be
ignored in the construction or interpretation hereof.

 

11

 

k.                                       Governing Law.  This
Agreement shall be construed, interpreted and enforced in accordance with the
laws of the State of Iowa.

 

IN
WITNESS WHEREOF, each party hereto has executed this Agreement effective as of
the date first above written.

 

	
   

  	
  GOLDEN
  GRAIN ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ David Sovereign

  
	
   

  	
   

  	
  Its:

  	
  Chairman
  of the Board of Directors

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOMELAND
  ENERGY SOLUTIONS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Stephen K. Eastman

  
	
   

  	
   

  	
  Its:

  	
  Chairman
  of the Board of Directors

  

 

12

 

EXHIBIT 1

 

ORGANIZATIONAL CHART

 

 

NULIB:314839.9Exhibit 10.12

 

BONUS
AND PHANTOM UNIT PLAN

GOLDEN
GRAIN ENERGY, LLC

 

I.              Purpose.  The purposes of this Golden Grain Energy, LLC
Bonus and Phantom Unit Plan are to retain the key management employees of the
Company, to compensate those key management employees for their contribution to
the growth of the Company and to induce those employees to continue making
contributions to growth of the Company. 
The Plan is intended to be an unfunded plan for purposes of the Employee
Retirement Income Security Act of 1974, as amended, and a nonqualified plan for
purposes of Section 401 of the Internal Revenue Code of 1986 (the “Code”),
as amended.

 

II.            Definitions.  As used in the Plan, the following terms will
have the following meanings:

 

a.    “Annual Bonus” shall have the
meaning set forth in Section III(a) of the Plan.

 

b.    “Annual Net Income” shall mean the
net income of the Company for any fiscal year as reported in the Company’s
annual report.

 

c.    “Board” shall mean the
Board of Directors of the Company.

 

d.    “Cash Bonus” shall have the
meaning set forth in Section III(b) of the Plan.

 

e.    “Change in Control” shall mean the
occurrence of any of the following events: (1) a person or group acquires
more than fifty percent (50%) of the voting power or more than fifty percent
(50%) of the fair market value of all the Company’s outstanding Membership
Units; (2) a person or group acquires thirty-five percent (35%) or more of
the Company’s outstanding Membership Units over a 12-month period; or (3) over
a 12-month period, a person or group acquires Company assets whose collective
fair market value equals or exceeds forty percent (40%) of the total fair
market value of all assets owned by the Company.

 

f.     “Committee” shall mean the
Executive Compensation Committee of the Board of Directors.

 

g.    “Company” shall mean
Golden Grain Energy, LLC.

 

h.    “Disability”
shall mean any of the following:  (i) 
The Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or to last for a continuous period of at least
twelve (12) months;  (ii)  If the
Company maintains a disability plan, Participant will also be considered
disabled if he receives income replacement benefits under that plan for a
period of at least three (3) months due to a medically determinable
physical or mental impairment that can be expected to result in death or to
last for a continuous period of at least twelve (12) months.  (iii)  A Participant who is entitled to
disability benefits payable by the United States Social Security Administration
is deemed to have a Disability for purposes of this Plan.  (iv) A Participant who is determined to
be disabled in accordance with a disability insurance program which uses a
definition of disability that complies with either (i) or (ii) in
this paragraph is deemed to have a disability for purposes of this Plan.

 

i.     “Extraordinary Performance Bonus” shall have the
meaning set forth in Section III(f) of the Plan.

 

j.     “Issue Date” shall mean the
date on which the Committee acknowledges the award of Phantom Units.

 

1

 

k.    “Management Team” shall mean the
Company’s Chief Executive Officer, Chief Financial Officer, Plant Manager, Commodities
Manager and Lab Manager.

 

l.     “Membership Unit” shall mean a Class A
equity ownership interest in the Company.

 

m.   “Participant” shall mean an
employee who is a member of the Management Team.

 

n.    “Performance Goal” shall have the
meaning set forth in Section III(a) of the Plan.

 

o.    “Phantom Award” shall have the
meaning set forth in Section III(c) of the Plan.

 

p.    “Phantom Dividend” shall have the
meaning set forth in Section IV(c) of the Plan.

 

q.    “Phantom Unit” shall mean a
phantom unit in the Company awarded pursuant to the terms of the Plan.

 

r.     “Plan” shall mean the
Golden Grain Energy, LLC Bonus and Phantom Unit Plan as set forth in this
document and any amendments hereof.

 

s.     “Plan Year” means the
fiscal year of the Plan, a 12 consecutive month period ending every October 31.  The Plan Year is the same as the Company’s
fiscal year.

 

t.     “Retirement” shall mean  separation from service with the Company on or after
attaining age sixty-two (62).

 

III.           Eligibility.  All Participants shall be eligible to receive
Cash Bonuses, Phantom Units and Extraordinary Performance Bonuses under the
Plan as further provided in this Section.

 

a.               Annual Bonus.  The annual bonus to be paid to the Management
Team shall be equal to 1% of the Annual Net Income of the Company (the “Annual
Bonus”).  Each Participant who was
employed by the Company throughout the Company’s fiscal year shall be eligible
to participate in the Annual Bonus.  The
Annual Bonus shall be allocated between a Cash Bonus (as defined in Section III(b) below)
and a Phantom Award (as defined in Section III(c) below).  The Annual Bonus shall be paid shortly before
or after the end of each fiscal year or as soon as the relevant financial
information used to calculate the Annual Bonus becomes available.  The Committee may set group performance goals
for the Management Team (the “Performance Goals”).  Such Performance Goals shall be measurable
and ascertainable and shall be reasonably calculated to increase the Company’s
efficiency, or profitability or the market price for the Membership Units.  The Performance Goals shall be set with
reference to the Company’s fiscal year performance, and the Committee shall
determine whether the Management Team has met the Performance Goals shortly
before or after the end of each fiscal year or as soon as the relevant
financial information becomes available. 
The Committee shall not be obligated to set Performance Goals for any of
the Company’s fiscal years. 
Notwithstanding the foregoing, the Annual Bonus may be reduced or eliminated
at the discretion of the Board as provided in Section III(g) below.

 

b.              Cash Bonuses.  A cash bonus shall be paid equal to 1/3rd of
the total amount of the Annual Bonus awarded to the Management Team (the “Cash
Bonus”).  The Cash Bonus shall be evenly
divided among and distributed as soon as administratively practicable to each
Participant who was employed by the Company throughout the Plan Year for which
the Annual Bonus applied.

 

c.               Phantom Units.  In addition to the Cash Bonus, the
Participants shall be awarded Phantom Units with a value equal to 2/3rds of the
total amount of the Annual 

 

2

 

Bonus (the “Phantom Award”).  The
number of Phantom Units awarded to each Participant shall be calculated based
on the relative percentage of the Participant’s base salary compared to the
total base salaries of the Management Team members entitled to participate in
the Annual Bonus.

 

d.              Calculation of Phantom Units.  The Company shall determine the number of
Phantom Units to be awarded by dividing the amount of the Phantom Award by the
most recent weighted average price at which the Membership Units have been
traded through the Company’s bulletin board trading system or otherwise
transferred in a private transaction.  If
the Committee believes that there are no private transactions recent enough to
indicate the value of a Membership Unit, the Committee shall determine the fair
market value of a Membership Unit on the basis of all information then
available to it for purposes of calculating the number of Phantom Units to be
awarded.  In converting the Phantom Award
into Phantom Units, no discount shall be applied on account of the restricted
status of the Phantom Units.  The
Committee shall be entitled to use its discretion as necessary to determine the
value of the Phantom Units in order to issue an even number of Phantom Units to
each Participant.

 

e.               No Cash Value.  Each Participant’s Phantom Awards shall be
delivered in Phantom Units.  No
Participant shall be entitled to demand the cash value of the Phantom Units
awarded to him or her.  Participants
shall not be required to make any payment for their Phantom Units, but each
Participant shall be responsible for any income and employment tax liability
incurred with respect to his or her Phantom Units.

 

f.                 Extraordinary Performance
Bonus.  In addition to the Annual
Bonus described in Section III(a) above, from time to time, the
Committee may award any one or more of the Participants cash bonuses for
extraordinary performance (the “Extraordinary Performance Bonus”).  The awarding of an Extraordinary Performance
Bonus shall be within the sole discretion of the Committee or its
delegate.  Extraordinary Performance
Bonuses shall be given sparingly.

 

g.              Reduction of Annual Bonus.  At the discretion of the Board, the Annual
Bonus may be reduced or eliminated should any of the following events occur
during the Company’s fiscal year to which the Annual Bonus relates: (i) the
amount of the Annual Bonus for any fiscal year may be reduced by up to fifty
percent (50%) should the Company experience a lost time or worse injury during
the period of time between November 1st and April 30th of that fiscal year; (ii) the amount of
the Annual Bonus for any fiscal year may be reduced by up to fifty percent
(50%) should the Company experience a lost time or worse injury during the
period of time between May 1st and October 31st of that fiscal year; and (iii) the amount
of the Annual Bonus may be reduced as provided by the Committee should the Management
Team fail to meet the Performance Goals set by the Committee in any fiscal
year.

 

IV.           Special Provisions for
Phantom units.

 

a.               Ledger of Phantom Units.  The Company shall create and maintain an
appropriate record (hereinafter called the “Special Ledger”) and establish
therein an account for each Participant that shows the number of Phantom Units
that have been awarded to each Participant and establishes the dates on which
such Phantom Units shall vest.  In the
event of any recapitalization of the Company which affects its Membership
Units, including but not limited to a stock dividend, stock 

 

3

 

split, or reverse stock split, appropriate adjustment to the Special
Ledger shall be made by the Company.

 

b.              Recapitalization Events.  If, at any time, the Company approves a
Membership Unit split or a reverse Membership Unit split, the number of
outstanding Phantom Units shall be accordingly reduced or increased in the same
proportion as the Company’s Membership Units. 
If the Participant should be entitled to new, additional or different
Phantom Units by virtue of his or her ownership of the Phantom Units, then
additional certificates for such new, additional or different Phantom Units
shall be issued to the Participant in the same manner and subject to the same
restrictions, as the certificates issued pursuant to Section IV(a) above.  The vesting schedule applicable to such new,
additional or different Phantom Units shall be the same as the vesting schedule
applying to the underlying Phantom Units issued to the Participant as provided
in Section IV(e) below, and the new, additional or different Phantom
Units shall vest contemporaneously with the vesting of the underlying Phantom
Units.

 

c.               Dividends.  If dividends or other distributions are
declared by the Company for its Membership Units, the holder of each Phantom
Unit shall be granted a dividend equal to sixty percent (60%) of the dividend
per Membership Unit declared by the Company for its Membership Units (the “Phantom
Dividend”).  The Phantom Dividend shall
accrue without regard to vesting and will be paid by the Company at the time
the underlying Phantom Units are Cashed Out pursuant to the provisions of Section V.  The Phantom Dividend shall be forfeited for
each of the underlying Phantom Units that are forfeited.

 

d.              Vesting.  Phantom Units awarded pursuant to the Plan
shall vest according to the following vesting schedule:

 

i.     On the third anniversary of
the Issue Date, fifty percent (50%) of the Phantom Units awarded on that Issue
Date shall vest.  On the vesting date,
the escrow holder shall deliver such vested Phantom Units to the Participant.

 

ii.    On the fourth anniversary of
the Issue Date, twenty-five percent (25%) of the Phantom Units awarded on the
Issue Date shall vest.  On the vesting
date, the escrow holder shall deliver such vested Phantom Units to the
Participant.  Following the fourth
anniversary of the Issue Date, a total of seventy-five percent (75%) of the
Phantom Units awarded on the Issue Date shall be vested.

 

iii.   On the fifth anniversary of
the Issue Date, one hundred percent (100%) of the Phantom Units awarded on the
Issue Date shall vest.  The remaining
twenty-five percent (25%) of the Phantom Units held by the escrow holder shall
be delivered to the Participant.

 

iv.   Notwithstanding any
provision under Sections IV(e)(i) through (iii) to the contrary, upon
any Change in Control of the Company or on the seventh anniversary of the date
when the Participant commenced continuous employment with the Company, each of
the Phantom Units awarded to the Participant, regardless of the Issue Date
shall immediately vest.

 

v.    Notwithstanding any
provision under Sections IV(e)(i) through (iii) to the contrary, one
hundred percent (100%) of the Phantom Units awarded to a Participant shall vest
upon the Participant’s death, Disability or Retirement.

 

4

 

V.            Cash Out.  Participants shall exchange any vested
Phantom Units awarded under the Plan for cash according to the same valuation
procedure established in Section III(d) above (the “Cash Out”).  Participants shall Cash Out on the date the
Phantom Units become vested, except for Phantom Units that vest pursuant to Section IV(d)(iv) above.  For Phantom Units that vest pursuant to
Sections IV(d)(i) through (iii) and (v), Cash Out payments will be
made by the Company to the Participant in a lump sum distribution payable
during the 2.5 month period commencing on the date the Phantom Units become
vested.  The Participant does not have
the right to designate the taxable year of the payment.  In the event of Participant’s death, the Cash
Out will be made to the Participant’s Beneficiary during the 2.5 month period
commencing on the date of death.  The
Beneficiary does not have the right to designate the taxable year of the
payment.  Notwithstanding the foregoing,
Phantom Units that vest pursuant to Section IV(d)(iv) above, shall
receive Cash Out payments as follows: (i) fifty percent (50%) of the
Phantom Units shall Cash Out on the third anniversary of the Issue Date; (ii) twenty-five
percent (25%) of the Phantom Units shall Cash Out on the fourth anniversary of
the Issue Date; and (iii) the remaining twenty-five percent (25%) of the
Phantom Units shall Cash Out on the fifth anniversary of the Issue Date.  Cash Out payments will be made by the Company
to the Participant in a lump sum distribution payable during the 2.5 month
period commencing on the date the Phantom Units Cash Out.

 

VI.           Payment of Beneficiaries.  Each person upon becoming a Participant shall
file with the Company a notice in writing designating one or more Beneficiaries
to whom payments otherwise due the Participant shall be made in the event of
his or her death.  The Participant shall
have the right to change the Beneficiary or Beneficiaries from time to time;
provided, however, that any change shall not become effective until received in
writing by the Company.  If a Participant
fails to name a Beneficiary in accordance with provisions of this paragraph, or
if the Beneficiary so named by a Participant predeceases the Participant, then
benefits shall be paid in the event of the Participant’s death in the following
order of priority:

 

a.               the Participant’s surviving
spouse;

b.              the Participant’s surviving
children, in equal shares;

c.               the Participant’s surviving
parents, in equal shares; or

d.              the Participant’s estate.

 

VII.         Finality of Determination.  The Committee will administer this Plan and
construe its provisions.  Any
determination by the Committee in carrying out, administering or construing
this Plan will be final and binding for all purposes and upon all interested
persons and their heirs, successors, and personal representatives.  No member of the Committee shall be liable to
any person for any action taken or omitted in connection with the
interpretation and administration of the Plan unless attributable to his own
willful misconduct or lack of good faith.

 

VIII.        Limitations.

 

a.               No Right to Allocation.  No person will at any time have any right to
receive a Cash Bonus, Phantom Units or an Extraordinary Performance Bonus
hereunder and no person other than the Committee or its delegate will have
authority to make any representation or warranty with respect thereto.

 

b.              Rights of Participants.  Participants shall have no rights other than
those set forth in this Plan.  Such
rights may not be assigned or transferred except as expressly provided by the
Plan.  The Phantom Units do not
constitute legal ownership in the 

 

5

 

Company and thus may not be sold, exchanged, transferred, pledged,
hypothecated, or otherwise disposed of.

 

c.               No Right to Continued
Employment.  Neither the
Company’s action in establishing the Plan, nor any action taken by it or by the
Board or the Committee under the Plan, nor any provision of the Plan, will be
construed as giving to any person the right to be retained for employment by
the Company.

 

d.              Taxes and Withholding.  The Participant will be liable for all
employee taxes attributable to any Cash Bonus, Phantom Units, Phantom
Dividends, or Extraordinary Performance Bonus and for all income tax due with
respect to such awards.  The employment
tax and withholding liability will be satisfied out of the funds constituting
the award and the value of the bonus will be reported as taxable income, all in
accordance with the Company’s usual payroll practices.

 

IX.           Amendment, Suspension or
Termination of Plan.  The Board
may amend, suspend or terminate the Plan in whole or in part at any time;
provided that such amendment or termination will not adversely affect the
rights or obligations with respect to Phantom Units previously awarded.

 

X.            Governing Law.  The Plan will be governed by the laws of the
State of Iowa, except where superseded by Federal law, without regard for its
choice of law principles.

 

XI.           Expenses of Administration.  All costs and expenses incurred in the
operation and administration of the Plan will be borne by the Company.

 

XII.         Claims Procedure.  A Participant is not required to file a formal claim in order
to receive benefits under the Plan.  When
an event occurs which entitles a Participant to a distribution under the Plan,
the Committee will automatically will notify the Participant.  If the Committee determines it should deny
benefits to a Participant or beneficiary, the Committee will give adequate
notice in writing setting forth specific reasons for the denial and referring
the Participant or beneficiary to the pertinent provisions of the Plan
supporting the Committee’s decision.  If
the Participant or beneficiary disagrees with the Committee, the Participant or
beneficiary, or a duly authorized representative must appeal the adverse
determination in writing to the Committee within 75 days after the receipt of
the notice of denial of benefits, except that if the claim involves a
disability determination, the appeal must be filed within 180 days (rather than
75 days) after the receipt of the notice of denial of benefits.  If the Participant or beneficiary fails to
appeal a denial within the 75-day period (180-day period in case of a
disability claim), the Committee’s determination will be final and binding.

 

This
Plan was adopted by the Board of Directors of Golden Grain Energy, LLC on December 19,
2008

 

 

	
  /s/
  Dave Sovereign

  	
   

  
	
  Chairman
  of the Board

  	
   

  

 

 

	
  /s/
  Leslie Hansen

  	
   

  
	
  Chairperson
  of the Committee

  	
   

  

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}]]