Document:

exhibit_4-5.htm

Exhibit 4.5

 

Causata Inc

 

2010 Stock Plan

 

Adopted on October 19, 2010

 

  

  

  

 

TABLE OF CONTENTS

 

	  	  	  	  	
Page

	  	  	  	  	  
	
SECTION 1.

	 	
ESTABLISHMENT AND PURPOSE

	  	
1

	  	  	  	  	  
	
SECTION 2.

	 	
ADMINISTRATION

	  	
1

	
          (a)

	  	
Committees of the Board of Directors

	  	
1

	
          (b)

	  	
Authority of the Board of Directors

	  	
1

	  	  	  	  	  
	
SECTION 3.

	 	
ELIGIBILITY

	  	
1

	
          (a)

	  	
General Rule

	  	
1

	
          (b)

	  	
Ten-Percent Stockholders

	  	
1

	  	  	  	  	  
	
SECTION 4.

	 	
STOCK SUBJECT TO PLAN

	  	
2

	
          (a)

	  	
Basic Limitation

	  	
2

	
          (b)

	  	
Additional Shares

	  	
2

	  	  	  	  	  
	
SECTION 5.

	 	
TERMS AND CONDITIONS OF AWARDS OR SALES

	  	
2

	
          (a)

	  	
Stock Grant or Purchase Agreement

	  	
2

	
          (b)

	  	
Duration of Offers and Nontransferability of Rights

	  	
2

	
          (c)

	  	
Purchase Price

	  	
2

	
          (d)

	  	
Withholding Taxes

	  	
2

	
          (e)

	  	
Transfer Restrictions and Forfeiture Conditions

	  	
3

	  	  	  	  	  
	
SECTION 6.

	 	
TERMS AND CONDITIONS OF OPTIONS

	  	
3

	
          (a)

	  	
Stock Option Agreement

	  	
3

	
          (b)

	  	
Number of Shares

	  	
3

	
          (c)

	  	
Exercise Price

	  	
3

	
          (d)

	  	
Exercisability

	  	
3

	
          (e)

	  	
Basic Term

	  	
3

	
          (f)

	  	
Termination of Service (Except by Death)

	  	
3

	
          (g)

	  	
Leaves of Absence

	  	
4

	
          (h)

	  	
Death of Optionee

	  	
4

	
          (i)

	  	
Post-Exercise Restrictions on Transfer of Shares

	  	
5

	
          (j)

	  	
Pre-Exercise Restrictions on Transfer of Options or Shares

	  	
5

	
          (k)

	  	
Withholding Taxes

	  	
5

	
          (l)

	  	
No Rights as a Stockholder

	  	
5

	
          (m)

	  	
Modification, Extension and Assumption of Options

	  	
5

	
          (n)

	  	
Company’s Right to Cancel Certain Options

	  	
6

	  	  	  	  	  
	
SECTION 7.

	 	
PAYMENT FOR SHARES

	  	
6

	
          (a)

	  	
General Rule

	  	
6

	
          (b)

	  	
Services Rendered

	  	
6

	
          (c)

	  	
Promissory Note

	  	
6

	
          (d)

	  	
Surrender of Stock

	  	
6

	
          (e)

	  	
Exercise/Sale

	  	
6

	
          (f)

	  	
Other Forms of Payment

	  	
7

 

  

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SECTION 8.

	 	
ADJUSTMENT OF SHARES

	  	
7

	
          (a)

	  	
General

	  	
7

	
          (b)

	  	
Corporate Transactions

	  	
7

	
          (c)

	  	
Reservation of Rights

	  	
8

	  	  	  	  	  
	
SECTION 9.

	 	
PRE-EXERCISE INFORMATION REQUIREMENT

	  	
8

	
          (a)

	  	
Application of Requirement

	  	
8

	
          (b)

	  	
Scope of Requirement

	  	
9

	  	  	  	  	  
	
SECTION 10.

	 	
MISCELLANEOUS PROVISIONS

	  	
9

	
          (a)

	  	
Securities Law Requirements

	  	
9

	
          (b)

	  	
No Retention Rights

	  	
9

	
          (c)

	  	
Treatment as Compensation

	  	
9

	
          (d)

	  	
Governing Law

	  	
9

	  	  	  	  	  
	
SECTION 11.

	 	
DURATION AND AMENDMENTS

	  	
9

	
          (a)

	  	
Term of the Plan

	  	
9

	
          (b)

	  	
Right to Amend or Terminate the Plan

	  	
10

	
          (c)

	  	
Effect of Amendment or Termination

	  	
10

	  	  	  	  	  
	
SECTION 12.

	 	
DEFINITIONS

	  	
10

 

  

ii

  

 

Causata Inc 2010 Stock Plan

 

SECTION 1. ESTABLISHMENT AND PURPOSE.

 

          The purpose of the Plan is to offer selected persons an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, by acquiring Shares of the Company’s Stock. The Plan provides both for the direct award or sale of Shares and for the grant of Options to purchase Shares. Options granted under the Plan may include Nonstatutory Options as well as ISOs intended to qualify under Section 422 of the Code.

 

          Capitalized terms are defined in Section 12.

 

SECTION 2. ADMINISTRATION.

 

          (a)     Committees of the Board of Directors. The Plan may be administered by one or more Committees. Each Committee shall consist of one or more members of the Board of Directors who have been appointed by the Board of Directors. Each Committee shall have such authority and be responsible for such functions as the Board of Directors has assigned to it. If no Committee has been appointed, the entire Board of Directors shall administer the Plan. Any reference to the Board of Directors in the Plan shall be construed as a reference to the Committee (if any) to whom the Board of Directors has assigned a particular function.

 

          (b)     Authority of the Board of Directors. Subject to the provisions of the Plan, the Board of Directors shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan. All decisions, interpretations and other actions of the Board of Directors shall be final and binding on all Purchasers, all Optionees and all persons deriving their rights from a Purchaser or Optionee.

 

SECTION 3. ELIGIBILITY.

 

          (a)     General Rule. Only Employees, Outside Directors and Consultants shall be eligible for the grant of Nonstatutory Options or the direct award or sale of Shares. Only Employees shall be eligible for the grant of ISOs.

 

          (b)     Ten-Percent Stockholders. A person who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries shall not be eligible for the grant of an ISO unless (i) the Exercise Price is at least 110% of the Fair Market Value of a Share on the Date of Grant and (ii) such ISO by its terms is not exercisable after the expiration of five years from the Date of Grant. For purposes of this Subsection (b), in determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied.

 

  

  

  

 

SECTION 4. STOCK SUBJECT TO PLAN.

 

          (a)     Basic Limitation. Not more than _________ Shares may be issued under the Plan, subject to Subsection (b) below and Section 8(a).1 All of these Shares may be issued upon the exercise of ISOs. The number of Shares that are subject to Options or other rights outstanding at any time under the Plan shall not exceed the number of Shares that then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. Shares offered under the Plan may be authorized but unissued Shares or treasury Shares.

 

          (b)     Additional Shares. In the event that Shares previously issued under the Plan are reacquired by the Company, such Shares shall be added to the number of Shares then available for issuance under the Plan. In the event that Shares that otherwise would have been issuable under the Plan are withheld by the Company in payment of the Purchase Price, Exercise Price or withholding taxes, such Shares shall remain available for issuance under the Plan. In the event that an outstanding Option or other right for any reason expires or is canceled, the Shares allocable to the unexercised portion of such Option or other right shall be added to the number of Shares then available for issuance under the Plan.

 

SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.

 

          (a)     Stock Grant or Purchase Agreement. Each award of Shares under the Plan shall be evidenced by a Stock Grant Agreement between the Grantee and the Company. Each sale of Shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Grant Agreement or Stock Purchase Agreement. The provisions of the various Stock Grant Agreements and Stock Purchase Agreements entered into under the Plan need not be identical.

 

          (b)     Duration of Offers and Nontransferability of Rights. Any right to purchase Shares under the Plan (other than an Option) shall automatically expire if not exercised by the Purchaser within 30 days after the grant of such right was communicated to the Purchaser by the Company. Such right shall not be transferable and shall be exercisable only by the Purchaser to whom such right was granted.

 

          (c)     Purchase Price. The Board of Directors shall determine the Purchase Price of Shares to be offered under the Plan at its sole discretion. The Purchase Price shall be payable in a form described in Section 7.

 

          (d)     Withholding Taxes. As a condition to the award, purchase, vesting or transfer of Shares, the Grantee or Purchaser shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such event.

 

 

1 Please refer to Exhibit A for a schedule of the initial share reserve and any subsequent increases in the reserve.

 

  

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          (e)     Transfer Restrictions and Forfeiture Conditions. Any Shares awarded or sold under the Plan shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may determine. Such restrictions shall be set forth in the applicable Stock Grant Agreement or Stock Purchase Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

 

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

 

          (a)     Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. The Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

 

          (b)     Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 8. The Stock Option Agreement shall also specify whether the Option is an ISO or a Nonstatutory Option.

 

          (c)     Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an Option shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant, and in the case of an ISO a higher percentage may be required by Section 3(b). Subject to the preceding sentence, the Exercise Price shall be determined by the Board of Directors at its sole discretion. The Exercise Price shall be payable in a form described in Section 7. This Subsection (c) shall not apply to an Option granted pursuant to an assumption of, or substitution for, another option in a manner that complies with Section 424(a) of the Code (whether or not the Option is an ISO).

 

          (d)     Exercisability. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. No Option shall be exercisable unless the Optionee (i) has delivered an executed copy of the Stock Option Agreement to the Company or (ii) otherwise agrees to be bound by the terms of the Stock Option Agreement. The Board of Directors shall determine the exercisability provisions of the Stock Option Agreement at its sole discretion. All of an Optionee’s Options shall become exercisable in full if Section 8(b)(iv) applies.

 

          (e)     Basic Term. The Stock Option Agreement shall specify the term of the Option. The term shall not exceed 10 years from the Date of Grant, and in the case of an ISO a shorter term may be required by Section 3(b). Subject to the preceding sentence, the Board of Directors at its sole discretion shall determine when an Option is to expire.

 

          (f)     Termination of Service (Except by Death). If an Optionee’s Service terminates for any reason other than the Optionee’s death, then the Optionee’s Options shall expire on the earliest of the following dates:

 

  

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             (i)     The expiration date determined pursuant to Subsection (e) above;

	  
	  	  	  
	  	
             (ii)    The date three months after the termination of the Optionee’s Service for any reason other than Disability, or such earlier or later date as the Board of Directors may determine (but in no event earlier than 30 days after the termination of the Optionee’s Service); or

	  
	  	  	  
	  	
             (iii)   The date six months after the termination of the Optionee’s Service by reason of Disability, or such later date as the Board of Directors may determine.

	  

 

The Optionee may exercise all or part of the Optionee’s Options at any time before the expiration of such Options under the preceding sentence, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination). The balance of such Options shall lapse when the Optionee’s Service terminates. In the event that the Optionee dies after the termination of the Optionee’s Service but before the expiration of the Optionee’s Options, all or part of such Options may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination).

 

          (g)     Leaves of Absence. For purposes of Subsection (f) above, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in writing and if continued crediting of Service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).

 

          (h)     Death of Optionee. If an Optionee dies while the Optionee is in Service, then the Optionee’s Options shall expire on the earlier of the following dates:

 

	  	
             (i)     The expiration date determined pursuant to Subsection (e) above; or

	  
	  	  	  
	  	
             (ii)    The date 12 months after the Optionee’s death, or such earlier or later date as the Board of Directors may determine (but in no event earlier than six months after the Optionee’s death).

	  

 

All or part of the Optionee’s Options may be exercised at any time before the expiration of such Options under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s death (or became exercisable as a result of the death) and the underlying Shares had vested before the Optionee’s death (or vested as a result of the Optionee’s death). The balance of such Options shall lapse when the Optionee dies.

 

  

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          (i)      Post-Exercise Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

 

          (j)      Pre-Exercise Restrictions on Transfer of Options or Shares. An Option shall be transferable by the Optionee only by (i) a beneficiary designation, (ii) a will or (iii) the laws of descent and distribution, except as provided in the next sentence. If the applicable Stock Option Agreement so provides, a Nonstatutory Option shall also be transferable by gift or domestic relations order to a Family Member of the Optionee. An ISO may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian or legal representative. In addition, an Option shall comply with all conditions of Rule 12h-1(f)(1) under the Exchange Act until the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. Such conditions include, without limitation, the transferability restrictions set forth in Rule 12h-1(f)(1)(iv) and (v) under the Exchange Act, which shall apply to an Option and, prior to exercise, to the Shares to be issued upon exercise of such Option during the period commencing on the Date of Grant and ending on the earlier of (i) the date when the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or (ii) the date when the Company makes a determination that it will cease to rely on the exemption afforded by Rule 12h-1(f)(1) under the Exchange Act. During such period, an Option and, prior to exercise, the Shares to be issued upon exercise of such Option shall be restricted as to any pledge, hypothecation or other transfer by the Optionee, including any short position, any “put equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act) or any “call equivalent position” (as defined in Rule 16a-1(b) under the Exchange Act).

 

          (k)     Withholding Taxes. As a condition to the grant or exercise of an Option, the Optionee shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such grant or exercise. The Optionee shall also make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the vesting or transfer of Shares acquired by exercising an Option or any similar event.

 

          (l)      No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by the Optionee’s Option until such person becomes entitled to receive such Shares by filing a notice of exercise and paying the Exercise Price pursuant to the terms of such Option.

 

          (m)    Modification, Extension and Assumption of Options. Within the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s obligations under such Option.

 

  

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          (n)     Company’s Right to Cancel Certain Options. Any other provision of the Plan or a Stock Option Agreement notwithstanding, the Company shall have the right at any time to cancel an Option that was not granted in compliance with Rule 701 under the Securities Act. Prior to canceling such Option, the Company shall give the Optionee not less than 30 days’ notice in writing. If the Company elects to cancel such Option, it shall deliver to the Optionee consideration with an aggregate Fair Market Value equal to the excess of (i) the Fair Market Value of the Shares subject to such Option as of the time of the cancellation over (ii) the Exercise Price of such Option. The consideration may be delivered in the form of cash or cash equivalents, in the form of Shares, or a combination of both. If the consideration would be a negative amount, such Option may be cancelled without the delivery of any consideration.

 

SECTION 7. PAYMENT FOR SHARES.

 

          (a)     General Rule. The entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable in cash or cash equivalents at the time when such Shares are purchased, except as otherwise provided in this Section 7.

 

          (b)    Services Rendered. At the discretion of the Board of Directors, Shares may be awarded under the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to the award.

 

          (c)     Promissory Note. At the discretion of the Board of Directors, all or a portion of the Purchase Price or Exercise Price (as the case may be) of Shares issued under the Plan may be paid with a full-recourse promissory note. The Shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon. The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Board of Directors (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note.

 

          (d)     Surrender of Stock. At the discretion of the Board of Directors, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when the Option is exercised.

 

          (e)     Exercise/Sale. To the extent that a Stock Option Agreement so provides, and if Stock is publicly traded, all or part of the Exercise Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company.

 

  

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          (f)      Other Forms of Payment. To the extent that a Stock Purchase Agreement or Stock Option Agreement so provides, the Purchase Price or Exercise Price of Shares issued under the Plan may be paid in any other form permitted by the Delaware General Corporation Law, as amended.

 

SECTION 8. ADJUSTMENT OF SHARES.

 

          (a)     General. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a combination or consolidation of the outstanding Stock into a lesser number of Shares, a reclassification, or any other increase or decrease in the number of issued shares of Stock effected without receipt of consideration by the Company, proportionate adjustments shall automatically be made in each of (i) the number of Shares available for future grants under Section 4, (ii) the number of Shares covered by each outstanding Option and (iii) the Exercise Price under each outstanding Option. In the event of a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of the Stock, a recapitalization, a spin-off, or a similar occurrence, the Board of Directors at its sole discretion may make appropriate adjustments in one or more of (i) the number of Shares available for future grants under Section 4, (ii) the number of Shares covered by each outstanding Option or (iii) the Exercise Price under each outstanding Option; provided, however, that the Board of Directors shall in any event make such adjustments as may be required by Section 25102(o) of the California Corporations Code.

 

          (b)     Corporate Transactions In the event that the Company is a party to a merger or consolidation or in the event of a sale of all or substantially all of the Company’s stock or assets, all Shares acquired under the Plan and all Options shall be subject to the definitive transaction agreement. Such agreement need not treat all Options in an identical manner, and it shall provide for one or more of the following with respect to each Option:

	  	  	  
	  	
             (i)     The continuation of such outstanding Options by the Company (if the Company is the surviving corporation).

	  
	  	  	  
	  	
             (ii)    The assumption of such outstanding Options by the surviving corporation or its parent in a manner that complies with Section 424(a) of the Code (whether or not such Options are ISOs).

	  
	  	  	  
	  	
             (iii)   The substitution by the surviving corporation or its parent of new options for such outstanding Options in a manner that complies with Section 424(a) of the Code (whether or not such Options are ISOs).

	  
	  	  	  
	  	
             (iv)   Full exercisability of such outstanding Options and full vesting of the Shares subject to such Options, followed by the cancellation of such Options. The full exercisability of such Options and full vesting of the Shares subject to such Options may be contingent on the closing of such transaction. The Optionees shall be able to exercise such Options during a period of not less than five full business days preceding the effective date of such transaction, unless (A) a shorter period is required to permit a timely closing of such transaction and (B) such shorter period still offers the Optionees a reasonable opportunity to exercise such Options. Any exercise of such Options during such period may be contingent on the closing of such transaction.

	  

 

  

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             (v)     The cancellation of such outstanding Options and a payment to the Optionees equal to the excess of (A) the Fair Market Value of the Shares subject to such Options as of the effective date of such transaction over (B) their Exercise Price. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Subject to the requirements of Section 409A of the Code, such payment may be made in installments and may be deferred until the date or dates when such Options would have become exercisable or such Shares would have vested. The amount of such payment initially shall be calculated without regard to whether or not such Options are then exercisable or such Shares are then vested. However, such payment may be subject to vesting based on the Optionee’s continuing Service, provided that the vesting schedule shall not be less favorable to the Optionees than the schedule under which such Options would have become exercisable or such Shares would have vested. In addition, any escrow, holdback, earnout or similar provisions in the transaction agreement may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Shares. If the Exercise Price of the Shares subject to such Options exceeds the Fair Market Value of such Shares, then such Options may be cancelled without making a payment to the Optionees. For purposes of this Paragraph (v), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

	  

 

          (c)     Reservation of Rights. Except as provided in this Section 8, a Grantee, Purchaser or Optionee shall have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class, (ii) the payment of any dividend or (iii) any other increase or decrease in the number of shares of stock of any class. Any issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

 

SECTION 9. PRE-EXERCISE INFORMATION REQUIREMENT.

 

          (a)     Application of Requirement. This Section 9 shall apply only during a period that (i) commences when the Company begins to rely on the exemption described in Rule 12h-1(f)(1) under the Exchange Act, as determined by the Company in its sole discretion, and (ii) ends on the earlier of (A) the date when the Company ceases to rely on such exemption, as determined by the Company in its sole discretion, or (B) the date when the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. In addition, this Section 9 shall in no event apply to an Optionee after he or she has fully exercised all of his or her Options.

  

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          (b)     Scope of Requirement. The Company shall provide to each Optionee the information described in Rule 701(e)(3), (4) and (5) under the Securities Act. Such information shall be provided at six-month intervals, and the financial statements included in such information shall not be more than 180 days old. The foregoing notwithstanding, the Company shall not be required to provide such information unless the Optionee has agreed in writing, on a form prescribed by the Company, to keep such information confidential.

 

SECTION 10. MISCELLANEOUS PROVISIONS.

 

          (a)     Securities Law Requirements. Shares shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded. The Company shall not be liable for a failure to issue Shares that is attributable to such requirements.

 

          (b)     No Retention Rights. Nothing in the Plan or in any right or Option granted under the Plan shall confer upon the Grantee, Purchaser or Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Grantee, Purchaser or Optionee) or of the Grantee, Purchaser or Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

 

          (c)     Treatment as Compensation. Any compensation that an individual earns or is deemed to earn under this Plan shall not be considered a part of his or her compensation for purposes of calculating contributions, accruals or benefits under any other plan or program that is maintained or funded by the Company, a Parent or a Subsidiary.

 

          (d)     Governing Law. The Plan and all awards, sales and grants under the Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

 

SECTION 11. DURATION AND AMENDMENTS.

 

          (a)     Term of the Plan. The Plan, as set forth herein, shall become effective on the date of its adoption by the Board of Directors, subject to the approval of the Company’s stockholders. If the stockholders fail to approve the Plan within 12 months after its adoption by the Board of Directors, then any grants, exercises or sales that have already occurred under the Plan shall be rescinded and no additional grants, exercises or sales shall thereafter be made under the Plan. The Plan shall terminate automatically 10 years after the later of (i) the date when the Board of Directors adopted the Plan or (ii) the date when the Board of Directors approved the most recent increase in the number of Shares reserved under Section 4 that was also approved by the Company’s stockholders. The Plan may be terminated on any earlier date pursuant to Subsection (b) below.

  

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          (b)     Right to Amend or Terminate the Plan. The Board of Directors may amend, suspend or terminate the Plan at any time and for any reason; provided, however, that any amendment of the Plan shall be subject to the approval of the Company’s stockholders if it (i) increases the number of Shares available for issuance under the Plan (except as provided in Section 8) or (ii) materially changes the class of persons who are eligible for the grant of ISOs. Stockholder approval shall not be required for any other amendment of the Plan. If the stockholders fail to approve an increase in the number of Shares reserved under Section 4 within 12 months after its adoption by the Board of Directors, then any grants, exercises or sales that have already occurred in reliance on such increase shall be rescinded and no additional grants, exercises or sales shall thereafter be made in reliance on such increase.

 

          (c)     Effect of Amendment or Termination. No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option (or any other right to purchase Shares) granted under the Plan prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option previously granted under the Plan.

 

SECTION 12. DEFINITIONS.

 

          (a)     “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.

 

          (b)     “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

          (c)     “Committee” shall mean a committee of the Board of Directors, as described in Section 2(a).

 

          (d)     “Company” shall mean Causata Inc, a Delaware corporation.

 

          (e)     “Consultant” shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

 

          (f)      “Date of Grant” shall mean the date of grant specified in the applicable Stock Option Agreement, which date shall be the later of (i) the date on which the Board of Directors resolved to grant the Option or (ii) the first day of the Optionee’s Service.

 

          (g)     “Disability” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

 

          (h)     “Employee” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

  

10

  

          (i)      “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

          (j)      “Exercise Price” shall mean the amount for which one Share may be purchased upon exercise of an Option, as specified by the Board of Directors in the applicable Stock Option Agreement.

 

          (k)     “Fair Market Value” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

 

          (l)      “Family Member” shall mean (i) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, (ii) any person sharing the Optionee’s household (other than a tenant or employee),(iii) a trust in which persons described in Clause (i) or (ii) have more than 50% of the beneficial interest, (iv) a foundation in which persons described in Clause (i) or (ii) or the Optionee control the management of assets and (v) any other entity in which persons described in Clause (i) or (ii) or the Optionee own more than 50% of the voting interests.

 

          (m)    “Grantee” shall mean a person to whom the Board of Directors has awarded Shares under the Plan.

 

          (n)     “ISO” shall mean an employee incentive stock option described in Section 422(b) of the Code.

 

          (o)     “Nonstatutory Option” shall mean a stock option not described in Sections 422(b) or 423(b) of the Code.

 

          (p)     “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

 

          (q)     “Optionee” shall mean a person who holds an Option.

 

          (r)      “Outside Director” shall mean a member of the Board of Directors who is not an Employee.

 

          (s)     “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

 

          (t)      “Plan” shall mean this Causata Inc 2010 Stock Plan.

  

11

  

          (u)     “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Board of Directors.

 

          (v)     “Purchaser” shall mean a person to whom the Board of Directors has offered the right to purchase Shares under the Plan (other than upon exercise of an Option).

 

          (w)    “Securities Act” shall mean the Securities Act of 1933, as amended.

 

          (x)     “Service” shall mean service as an Employee, Outside Director or Consultant.

 

          (y)     “Share” shall mean one share of Stock, as adjusted in accordance with Section 8 (if applicable).

 

          (z)      “Stock” shall mean the Class A Common Stock of the Company.

 

          (aa)   “Stock Grant Agreement” shall mean the agreement between the Company and a Grantee who is awarded Shares under the Plan that contains the terms, conditions and restrictions pertaining to the award of such Shares.

 

          (bb)   “Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to the Optionee’s Option.

 

          (cc)   “Stock Purchase Agreement” shall mean the agreement between the Company and a Purchaser who purchases Shares under the Plan that contains the terms, conditions and restrictions pertaining to the purchase of such Shares.

 

          (dd)   “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

  

12

  

 

 

CAUSATA INC

2010 STOCK PLAN (the "PLAN")

 

APPENDIX 1

 

APPENDIX FOR THE GRANT OF RESTRICTED STOCK UNITS

 

	
  

	
1.1

	
TERMS

 

	
1.1.1

	
This appendix (the "RSU Appendix") to the Plan governs the grant of RSUs (as defined below) under the Plan and has been adopted in accordance with Section 11 of the Plan. All other terms and conditions of the Plan applicable to Options (including but not limited to Section 8 of the Plan), shall apply to RSUs, mutatis mutandis, except as modified in accordance with the provisions of the RSU Appendix.

 

	
1.1.2

	
Capitalized terms not otherwise defined in this RSU Appendix have the same meaning as defined in the Plan.

 

	
  

	
1.2

	
GRANT OF RESTRICTED STOCK UNITS:

 

	
1.2.1

	
Subject to the sole and absolute discretion and determination of the Board of Directors, the Board of Directors, may decide to grant under the Plan, Restricted Stock Unit(s) (“RSU(s)”). A RSU is a right to receive a Share (or Shares) of the Company, under certain terms and conditions, for a consideration of no more than the underlying Share’s nominal value (the "Consideration"). Upon the lapse of the vesting schedule of a RSU, such RSU shall automatically vest into a Share (subject to adjustments under Section 8 of the Plan) and the Grantee shall pay to the Company the Consideration.

 

	
  

	
1.3

	
RSU AGREEMENT

 

	
1.3.1

	
Each grant of RSUs shall be evidenced by an agreement that shall specify any vesting conditions, performance objectives, the number of RSUs granted, the Consideration payable therefor, and such other terms and conditions as the Board of Directors, in its sole discretion, shall determine (the "RSU Agreement").

 

	
  

	
1.4

	
VESTING, PERFORMANCE OBJECTIVES AND SETTLEMENT

 

	
1.4.1

	
The Board of Directors, in its discretion, shall set vesting criteria or performance objectives which, depending on the extent to which they are met, will determine the number of RSUs that will vest, all as specified in the applicable RSU Agreement.

 

	
1.4.2

	
After the grant of a RSU, the Board of Directors, in its sole discretion, may reduce or waive any vesting condition that must be met for vesting of such RSU and may accelerate the time at which any restrictions will lapse or be removed.

 

	
1.4.3

	
Settlement of vested RSUs may be made in the form of (i) cash, (ii) Shares or (iii) any combination of both, as determined by the Board of Directors at the time of grant of the RSUs, in its sole discretion. Methods of converting RSUs into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. Vested RSUs may be settled in a lump sum or in installments, provided, however, that any settlement of vested RSUs in installments shall be exempt from or otherwise comply with the provisions regarding deferred compensation set forth in Section 409A of the Code.  The distribution may occur or commence when the vesting conditions applicable to the RSUs have been satisfied or have lapsed, in accordance with applicable law, to any later date.  Until an award of RSUs is settled, the number of such RSUs shall be subject to adjustment pursuant to Section 8 of the Plan.

 

  

  

  

 

	
  

	
1.5

	
TAX WITHHOLDING

 

	
1.5.1

	
Withholding Requirements. Prior to the delivery of any Shares pursuant to an RSU, or at such earlier time as tax is due, the Company shall have the power and the right to deduct or withhold, or require a recipient to remit to the Company, an amount sufficient to satisfy all tax and social insurance liability obligations ("Tax(es)").

 

	
1.5.2

	
Withholding Arrangements. The Board of Directors, in its sole discretion and pursuant to such procedures as it may specify from time to time, may designate the method or methods by which a holder of RSUs may satisfy such Tax obligations. As determined by the Board of Directors in its discretion from time to time, these methods may include one or more of the following: (a) paying cash, (b) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the amount required to be withheld, (c) selling a sufficient number of otherwise deliverable Shares through such means as the Board of Directors may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld, or (d) any other means which the Board of Directors, in its sole discretion, determines to both comply with applicable laws, and to be consistent with the purposes of the Plan. The amount of Tax will be deemed to include any amount that the Board of Directors agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income Tax rates applicable to the recipient or the Company, as applicable, with respect to the RSU on the date that the amount of Tax to be withheld or remitted is to be determined. The Fair Market Value of the Shares to be withheld or delivered shall be determined as of the date that the Tax is required to be withheld.

 

	
  

	
1.6

	
MISCELLANEOUS

 

	
1.6.1

	
The holders of RSUs shall have no voting rights.

 

	
1.6.2

	
A holder of RSUs shall have no rights other than those of a general creditor of the Company.  RSUs represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable RSU Agreement.

 

  

- 2 -

  

 

	
1.6.2

	
Within the limitations of the Plan, the Board of Directors may modify or assume outstanding RSUs or may accept the cancellation of outstanding RSUs (including stock units granted by another issuer) in return for the grant of new RSUs for the same or a different number of Shares and with the same or different vesting provisions. Notwithstanding the preceding sentence or anything to the contrary herein, no modification of an RSU shall, without the consent of the holder thereof, impair his or her rights or obligations under such RSU Agreement.

 

	
1.6.3

	
Except as otherwise provided in the applicable RSU Agreement and then only to the extent permitted by applicable law, RSUs shall not be  anticipated, assigned, attached garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily, involuntarily or by operation of law. Any act in violation of this Subsection shall be void. However, this Subsection shall not preclude the holder of an RSU from designating a beneficiary who will receive any outstanding vested RSUs in the event of such holder’s death, nor shall it preclude a transfer of vested RSUs by will or by the laws of descent and distribution.

 

- 3 -Exhibit10.1-MembershipInterestPurchaseAgreement

EXHIBIT 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

This MEMBERSHIP INTEREST PURCHASE AGREEMENT (the “Agreement”) is made effective this 31st day of July, 2013, by and between GRANITE FALLS ENERGY, LLC, a Minnesota limited liability company (the “Buyer”) and ROLAND J. FAGEN and DIANE K. FAGEN (the “Sellers”).  

The Sellers collectively own 100% of the membership interests of Project Viking, L.L.C., a Minnesota limited liability company (the “Company”).

The Buyer and the Sellers desire that the Buyer purchase 100% of the membership interests of the Company under the terms and conditions of this Agreement.

Therefore, in consideration of the mutual agreements contained herein, the parties hereby agree as follows:

SECTION 1
THE MEMBERSHIP INTEREST PURCHASE

1.1    Purchase and Sale of Membership Interest.  Pursuant to the terms and conditions of this Agreement, the Sellers agree to sell to the Buyer and the Buyer agrees to purchase from the Sellers, 100% of the membership interests of the Company (the “Membership Interests”) for an aggregate purchase price of Seventeen Million Twenty-Four Thousand Five Hundred Dollars ($17,024,500) (the “Purchase Price”).  At the Closing, Buyer shall pay the Purchase Price as follows: 
(a)     Buyer shall pay $8,000,000 of the Purchase Price by wire transfer of immediately available funds to an account specified in writing by the Sellers;

(b)    Buyer shall issue to the Sellers a secured promissory note in the form attached hereto as Exhibit A (the “Note”) in the original principal amount of $4,024,500; and

(c)     Buyer shall assume all of the Sellers’ and the Company’s obligations under that certain Promissory Note in the principal amount of $5,000,000 having Loan Number 28407, dated July 23, 2013, in favor of Granite Falls Bank  (the “GF Note”) as of the Effective Date.  Buyer shall execute and deliver an Assumption Agreement, in the form attached hereto as Exhibit B (the “Assumption”), evidencing such assumption and the consent of Granite Falls Bank to such assumption. 

1.2    Closing.  The closing of the sale and purchase of the Membership Interests (the “Closing”) will take place simultaneously with the execution of this Agreement at the offices of Leonard Street and Deinard Professional Association, located at 150 South Fifth Street, Suite 2300, Minneapolis, Minnesota at 10:00 a.m. local time, or by such other method or at such other place or different time as may be mutually acceptable to the Buyer and the Sellers. 

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1.3    Closing Deliveries.  At the Closing, in addition to delivering a duly executed copy of this Agreement:
(a)    the Buyer will pay the Purchase Price and deliver a duly executed Note, a duly executed Assumption, and a duly executed Assignment in Blank (defined below) to the Sellers in accordance with Section 1.1 above; and
(b)    the Sellers will deliver duly executed assignments for the uncertificated Membership Interests to the Buyer.

SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

In order to induce Buyer to purchase the Membership Interests from Sellers, the Sellers hereby represent and warrant to the Buyer, as of the date hereof, as follows:

2.1    Organization; Good Standing; Assets.  The Company is a limited liability company duly organized, validly existing and in good standing under the laws of Minnesota and has all requisite corporate power and authority to conduct its business as currently conducted. 

2.2    Capitalization of the Company.  The Membership Interests constitute 100% of the issued and outstanding equity interests of the Company.  There are no outstanding options, warrants, convertible or exchangeable securities or other rights, agreements, arrangements or commitments obligating the Sellers or the Company, directly or indirectly, to issue, sell (other than the transactions contemplated by this Agreement), purchase, acquire or otherwise transfer or deliver any equity interest in the Company, or any agreement, document, instrument or obligation convertible or exchangeable therefor.  

2.3    Title to Membership Interests.  The Sellers own of record and beneficially the Membership Interests, which are, subject to any provisions contained in the GF Note, free and clear of any obligation, lien, claim, pledge, security interest, liability, charge, contingency or other encumbrance or claim of any nature whatsoever (a “Lien”).  Upon sale of the Membership Interests to the Buyer hereunder, the Buyer will acquire the entire legal and beneficial interest in the Membership Interests, free and clear of any Lien except such Liens that may be imposed by the Note and/or the GF Note.

SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER

In order to induce the Sellers to sell the Membership Interests to the Buyer, the Buyer hereby represents and warrants to the Sellers as of the date hereof, as follows:

3.1    Organization, Standing of Buyer. The Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Minnesota. The 

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Buyer has full power and authority under applicable law to own, lease and operate its properties and to carry on the business in which it is engaged.

3.2    Due Authorization.  The Buyer has all requisite power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transaction contemplated hereby.  The execution and delivery by the Buyer of this Agreement, the performance by the Buyer of its obligations hereunder, and the consummation by the Buyer of the transaction contemplated hereby have been duly authorized by all requisite limited liability company action on the part of the Buyer.  This Agreement has been duly executed and delivered by the Buyer and (assuming due execution and delivery by the Sellers) this Agreement constitutes a legal, valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms. 

3.3    No Violation.  The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby does not and will not violate or conflict with the constituting documents of Buyer or any subsidiary, or violate any legal requirement or order applicable to the Buyer or any subsidiary.  The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by the Buyer does not and will not require any third-party action, or conflict with or constitute a default under, or result in the acceleration or right of acceleration, of any obligations, or any termination or right of termination under any contract.  No consent of any third party is required as a result of, or in connection with, the execution, delivery and performance of this Agreement or the consummation of the transaction contemplated hereby.
3.4    Financing.  The Buyer has or shall have sufficient cash on hand or other sources of immediately available funds to enable it to make payment in full of all obligations under the Note and the GF Note on or prior to August 30, 2013. 

SECTION 4
OTHER COVENANTS

4.1    Publicity.  No party hereto will issue or make, or allow to have issued or made, any press release or public announcement concerning the transactions contemplated by this Agreement without the prior written consent of all other parties.  
4.2    Resignations.  Effective as of the Closing, the Sellers hereby resign from all officer, manager, director, and other roles and positions he or she holds with the Company. 
4.3    SEC Filings.  The Buyer shall promptly cause to be made on behalf of the Company all filings with the Securities and Exchange Commission required as a result of the transactions contemplated by this Agreement or the subscription by the Company to purchase additional equity of Heron Lake BioEnergy, LLC.
4.4    Grant of Security Interest.  The Buyer hereby pledges and grants to the Sellers, and hereby creates a continuing first priority lien and security interest in favor of the Sellers in and to all of its right, title and interest in and to the Membership Interest (the “Collateral”).  The 

3

Collateral secures the due and prompt payment and performance of: (a) the obligations of the Buyer from time to time arising under the Note and this Agreement with respect to the due and prompt payment of (i) the principal of and interest on the Note (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, or otherwise and (ii) all other monetary obligations, including fees, costs, attorneys’ fees and disbursements, reimbursement obligations, contract causes of action, expenses and indemnities, whether primary, secondary, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Buyer under or in respect of the Note and this Agreement.   The Buyer shall, from time to time, as may be required by the Sellers with respect to all Collateral, immediately take all actions as may be requested by the Sellers to perfect the security interest of the Sellers in the Collateral.  In connection with the granting of the security interest in the Collateral, the Buyer shall execute and deliver to the Sellers an assignment in blank in the form attached hereto as Exhibit C (the “Assignment in Blank”).  The Buyer hereby irrevocably authorizes the Sellers at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by the Buyer hereunder, without the signature of the Buyer where permitted by law, including the filing of a financing statement describing the Collateral as all Membership Interest in Project Viking, L.L.C. now owned or hereafter acquired by the Buyer, or words of similar effect. The Buyer agrees to provide all information required by the Sellers pursuant to this Section 4.4 promptly to the Sellers upon request.  The Buyer shall not issue any additional equity in the Company to any third party, grant any Lien on the Collateral that has a priority over the Sellers’ security interest in the Collateral, or take any other action which may harm the Sellers’ interest and rights in the Collateral, at any time prior to payment in full of all amounts owed to the Sellers and Granite Falls Bank pursuant to the terms of this Agreement.  If the Buyer shall fail to pay the Note when due or otherwise be in default under the Note, and such default is continuing, the Sellers, without any other notice to or demand upon the Buyer, may assert all rights and remedies of a secured party under the UCC or other applicable law, including, without limitation, the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral.  

SECTION 5
MISCELLANEOUS

5.1    Survival; Indemnification. The parties agree that the representations and warranties of each party shall survive and remain in full force and effect after the execution of this Agreement and after payment for the delivery of the Membership Interests.  Each party agrees to indemnify and hold harmless the other party from and against any and all loss, damage or liability due to or arising out of, a breach of any agreement or representation or warranty in this Agreement by such party.  Notwithstanding anything in this Agreement to the contrary, the 

4

maximum amount that the Sellers shall be entitled to recover from the Buyer pursuant to the indemnity obligation of this Agreement shall in no event exceed the Purchase Price and the maximum amount that the Buyer shall be entitled to recover from the Sellers pursuant to this Agreement shall in no event exceed the Purchase Price.  

5.2    Expenses. Whether or not the transaction contemplated by this Agreement is consummated, the Seller and the Buyer shall each pay their own fees and expenses incident to the negotiation, preparation, execution, delivery and performance hereof, including, without limitation, the fees and expenses of their respective counsel, accountants and other experts.

5.3    Complete Agreement; Waiver and Modification; No Third Party Beneficiaries. This Agreement, together with the Note, constitutes the entire agreement between the parties pertaining to the subject- matter hereof and supersedes all prior agreements and understandings of the parties with the respect to the subject-matter hereof.  There are no representations or warranties by any party except those expressly stated for herein, any implied warranties being hereby expressly disclaimed by both parties. There are no covenants or conditions except those expressly stated herein. No amendment, supplement or termination of or to this Agreement, and no waiver of any of the provisions hereof, shall be binding on a party unless made in a writing signed by such party. This Agreement may be modified by mutual agreement of the parties. Nothing in this Agreement shall be construed to give any person other than the express parties hereto any rights or remedies.  

5.4    Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be given by delivery (by mail or otherwise) or transmitted to the address or facsimile number listed below, and will be effective (in all cases) upon receipt. Without limiting the generality of the foregoing, a mail, express, messenger or other receipt signed by any person at such address shall conclusively evidence delivery to and receipt at such address, and any printout showing successful facsimile transmission of the correct total pages to the correct facsimile number shall conclusively evidence transmission to and receipt at such facsimile number.

(a)    If to the Buyer: 

Granite Falls Energy, LLC
15045 Hw. 23 SE, P.O. Box 216
Granite Falls, MN  56241-0216    
Attention:    Paul Enstad        
Facsimile:    (320) 564-3190    

with copy to:

STONEBERG, GILES & STROUP, P.A.
300 South O’Connell Street, Marshall, MN  56258-2638

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Attention:    Kevin K. Stroup    
Facsimile:    (507) 532-3498    

(b)    If to the Sellers:

Roland and Diane Fagen
P.O. Box 159
501 West Highway 212
Granite Falls, MN 56242
Facsimile:  (320) 564-3278

with copy to:
    
Leonard, Street and Deinard Professional Association
The Army and Navy Club Building
1627 Eye Street NW, Suite 610
Washington, DC 20006
Attn:  Jonathan W. Gottlieb, Esq.
Facsimile:  (202) 974-6101

5.5    Law Governing. This Agreement shall be interpreted in accordance with and governed by the laws of the State of Minnesota.

5.6    Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators and successors of the parties hereto, but no right or liability or obligation arising hereunder may be assigned by any party hereto.

5.7    Counterparts, Separate Signature Pages. This Agreement may be executed in any number of counterparts, or using separate signature pages.  Each such executed counterpart and each counterpart to which such signature pages are attached shall be deemed to be an original instrument, but all such counterparts together shall constitute one and the same instrument.  A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

5.8    Severability. In the event any of the provisions of this Agreement shall be declared by a court or arbitrator to be void or unenforceable, then such provision shall be severed from this Agreement without affecting the validity and enforceability of any of the other provisions hereof, and the parties shall negotiate in good faith to replace such unenforceable or void provisions with a similar clause to achieve, to the extent permitted under law, the purpose and intent of the provisions declared void and unenforceable. 

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5.9    Brokers.  The parties represent they have not used a broker in connection with this Agreement, and therefore neither party will incur, directly or indirectly, any liability for brokerage or agent commissions or any other similar charges.

[Signatures follow on next page.]

7

IN WITNESS WHEREOF, the parties have executed this Membership Interest Purchase Agreement.
 

BUYER

GRANITE FALLS ENERGY, LLC

By:/s/ Paul Enstad        

Its: Chairman        

SELLERS

/s/ Roland J. Fagen    
Roland J. Fagen

/s/ Diane K. Fagen    
Diane K. Fagen

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