Document:

EXHIBIT 10.1

 

EMPLOYMENT, NON-COMPETITION, AND
SEVERANCE AGREEMENT

BETWEEN

GOLDEN OVAL EGGS, LLC

AND

DANA PERSSON

 

This Employment,
Non-Competition, and Severance Agreement (this “Agreement”), effective September 1,
2004 is entered into by and between Golden Oval Eggs, LLC a Delaware limited
liability company (“Company”) and Dana Persson, (“CEO”) and supersedes and
replaces the prior “Employment and Non-Competition Agreement” entered into by
Midwest Investors of Renville, Inc. d/b/a Golden Oval Eggs and Dana
Persson (predecessor to the Company and CEO) (“Prior Employment Agreement”).  The Company and CEO agree that the Prior
Employment Agreement terminates by mutual agreement on the effective date of
this Agreement.  Employment on and after
the effective date of this Agreement is governed by and subject to this
Agreement.

 

BACKGROUND

 

A.                                   The Company was
incorporated as a Minnesota Chapter 308A cooperative, Midwest Investors of
Renville, Inc., on March 16, 1994 and converted into a Delaware
limited liability company on August 31, 2004.

 

B.                                     The Company desires to continue to employ CEO to manage the
day-to-day operations of the Company. 
Company and CEO are entering into this Agreement to set forth the terms
under which CEO will be employed as Chief Executive Officer of the Company.

 

STATEMENT OF AGREEMENT

 

Company and CEO (the “Parties”
or either, the “Party”), each in consideration of the promises of the other
contained in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, hereby agree as
follows:

 

1.                                      Employment Term.

 

(a)                                  Initial Term.  Upon the terms
and conditions set forth in this Agreement and in Exhibit A attached to
and a part of this Agreement, Company offers to employ CEO, and CEO hereby
accepts employment on those terms and conditions with Company. The term of
employment under this Agreement shall be for the “Employment Term” stated in Exhibit A,
unless terminated earlier under Section 8.

 

(b)                                 Renewal. 
The Employment Term, under this Agreement,
shall automatically renew for successive one year periods unless either Party
notifies the other Party in writing, not less than 60 days before the end of
the then current Employment Term, that this Agreement shall not be renewed at
the end of the then current Employment Term.

 

 

2.                                      Duties.

 

Generally. 
CEO shall be employed as the Chief Executive Officer of the Company to
provide such services and to have such duties and responsibilities as are
normally associated with that position, together with any other duties and
responsibilities as may be designated by the Board of Directors from time to
time. The CEO shall devote his full time, attention and energy to the business
affairs of the Company and the performance of CEO’s duties under this Agreement.
The CEO shall discharge the duties in a diligent and proper manner and shall
conduct himself at all times so as to advance the best interests of the
Company.  The CEO shall report to the
Company’s Board of Directors.

 

(a)                                  Specific duties of the CEO include:

 

(1)                                  Preparation and submission of monthly and fiscal year financial and
operations reports for the Board of Directors;

 

(2)                                  Preparation and revision of the Company’s operating plan and
strategic plan for submission to the Board of Directors;

 

(3)                                  Reports to the Board of Directors as soon as practicable all hiring
and firing of management personnel;

 

(4)                                  Reports to the Board of Directors annually on product sale
allocations and on changes in product allocations that have a material impact
on the Company’s operations or finances as often as practicable; and

 

(5)                                  Preparation and submission of an annual budget to the Board of
Directors at least thirty (30) days prior to the start of the fiscal year.

 

(b)                                 Operating Control; Expenditures.  The CEO shall have full
day-to-day operating control of the Company and may expend Company funds under
the annual budget as approved by the Board of Directors and within identified
spending categories as identified in the budget.

 

3.                                      Compensation.

 

(a)                                  Base Salary.  During the
Employment Term and in consideration of his services provided hereunder, the
Company shall pay CEO an annual “Base Salary” stated in Exhibit A and a
bonus as provided in Section 4 and Exhibit A.

 

(b)                                 Base Salary Payments.  The Base Salary
shall be paid in equal biweekly installments each month of the Employment Term,
and prorated on a daily basis for any partial period for which services are
rendered at the end of the Employment Term.

 

2

 

(c)                                  Deductions from Compensation.  Company shall withhold from
CEO’s compensation payments (Base Salary and Bonus) state, federal and local
income taxes, FICA, social security and other amounts that are customarily
withheld from a CEO’s compensation.

 

4.                                      Bonus.

 

(a)                                  Payment of Bonus.  The Company shall pay to
CEO all bonuses for which the CEO is eligible as provided in Exhibit A.  Except for the Equity Capital Markets
Transaction Bonus, which shall be paid as provided in Exhibit A, all
bonuses will be paid by 50% in units of the Company, which are subject to
forfeit back to the Company as provided in paragraph (b), and 50% in cash.  The Company shall pay the cash portion of the
bonus no later than 30 days after the audited financial statements are approved
by the Company’s Board of Directors unless deferred by the CEO to the next tax
year.  The ROE Bonus shall be annualized
and prorated to the nearest month end for any partial year for which services
are rendered at the beginning and end of the Employment Term.

 

(b)                                 Unit Bonus.  The unit portion of any bonus (“Bonus Units”)
shall be issued to the CEO effective as of the beginning of the fiscal year,
subject to forfeiture to the Company. 
Certain Bonus Units will forfeit upon: 
(1) termination of employment for cause (Section 8(a)(4)); or (2) termination
at CEO’s election (Section 8(a)(6)) (“Forfeiture Event”).  Within one year after the effective issuance
of the Bonus Units, all of the Bonus Units are nontransferable, and shall
forfeit back to the Company with no rights relating to the Bonus Units
remaining with the CEO if a Forfeiture Event occurs.  One (1) year after the effective
issuance of the Bonus Units, the forfeiture and nontransferability restrictions
on one-third (1/3) of the Bonus Units terminate.  After one (1) year and until two (2) years
after the effective issuance of the Bonus Units, two-thirds (2/3) of the Bonus
Units are nontransferable, and shall forfeit back to the Company with no
additional rights relating to the forfeited Bonus Units remaining with the CEO
if a Forfeiture Event occurs.  Two years
after the effective issuance of the Bonus Units the forfeiture and
nontransferability restrictions on an additional one-third (1/3) (two-thirds
(2/3) of the Bonus Units in total) terminate. 
After two (2) years and until three (3) years after the
effective issuance of Bonus Units, one-third (1/3) of the Bonus Units are
nontransferable, and shall forfeit back to the Company with no rights relating
to the forfeited Bonus Units remaining with the CEO if a Forfeiture Event
occurs.  The forfeiture and
nontransferability restrictions remaining Bonus Units held by the CEO are
terminated:  (1) at the end of three
years after the effective issuance of Bonus Units to the CEO; (2) notwithstanding
the restrictions above at any time a change of control of the Company resulting
in a different group of owners obtaining governance rights to elect a majority
of the Board of Directors occurs; or (3) notwithstanding the restrictions
above, at any time, if the retirement of the CEO occurs at age 59 1⁄2 years of
age or older.

 

Except for the Equity Capital
Markets Transaction Bonus which shall be paid as provided in Exhibit A and
the 2004 Unit Bonus below, the amount of units to be awarded as part of the
bonus shall be based on the higher of book or market value of the units at the
time the bonus is awarded.  Book value
shall be determined by the most recent year-end audited financial
statements.  Market value shall be
determined by the average price of units that have traded in the secondary
market during the preceding fiscal year.

 

3

 

The Unit Bonus for 2004,
consisting of 96,084 units, shall be subject to this Section 4(b) and
96,084 units shall be issued with 64,056 units subject to forfeiture to the
Company upon execution of this Agreement with the issuance effective as of September 1,
2004.

 

If the Employment Term is
terminated prior to the end of a fiscal year, bonuses shall be calculated based
on the financial statements of the most recent fiscal quarters prior to the
termination.

 

5.                                       CEO Benefits, Expenses.  CEO shall have, and the
Company shall pay for, the following benefits and expenses during the
Employment Term:

 

(a)                                Group Benefits. CEO shall be entitled to participate in group life insurance,
long-term disability, group health and hospitalization, vision and dental,
401(k) retirement program and other group benefits as are presently or may
hereafter be provided to other employees of Company, which benefits may be in
varying amounts and scope relative to the age, years of employment,
compensation and pay status of the employees.

 

(b)                               Business Expenses. Upon CEO’s periodic presentation to Company of an itemized
account, the Company shall pay or reimburse CEO for reasonable expenses
incurred by CEO on behalf of Company directly in connection with, and
reasonably necessary for the rendering of, his services to Company under this
Agreement.

 

(c)                                  Automobile.  Through
August 31, 2005, the Company shall provide CEO with a vehicle owned by the
Company for CEO’s use during CEO’s employment with the Company as approved in
the annual budget.  The Company will
either continue to provide a vehicle to CEO as provided in this paragraph or
will pay the CEO a vehicle allowance.

 

(d)                                 Vacation. CEO
shall be entitled to five weeks paid vacation for each 12-month period of the
Employment Term.

 

6.                                      CEO Beneficiary.  If CEO has deceased:  (1) during the Employment Term, or (2) after
this Agreement expires or is terminated, the payments due or payable to CEO
shall be paid or payable to the CEO’s beneficiary (referred to as the “Designated
Beneficiary”).   If the CEO has deceased,
the Designated Beneficiary shall have the authority of the CEO under this
Agreement on a post-termination basis (for example, to hold or transfer units,
to receive payments, etc.).

 

The Designated Beneficiary is                                 ,
if           is then living,
(Primary Beneficiary); or if                                                
is not then living, the trustee, serving as trustee of the estate of Dana
Persson,                                 (Second
Beneficiary).  The trustee as the Second
Beneficiary shall be entitled to receive the payments due or payable to CEO and
the trustee shall have the authority of the CEO under this Agreement on a
post-termination basis, provided the Company has been notified in writing of
the trustee and there is demonstration that the trustee is duly authorized to
act as such.  Upon request, the Chair

 

4

 

of the Board of Directors will acknowledge
the trustee as Second Beneficiary upon receipt of proper notification.

 

CEO may change the Designated
Beneficiary by submitting a written change of beneficiary form to the Chair of
the Board of Directors to be included in the minutes of the meetings of the
Board of Directors.  If the Board of
Directors is unable to determine or locate the Designated Beneficiary in the
two functions of:  (1) to whom or
what entity should payments due or payable to CEO be paid; and (2) who
shall have the authority of the CEO under this Agreement on a post-termination
basis, then the Designated Beneficiary shall be deemed to be the estate of the
CEO as to the entity to which the payments should be made, and the administrator
of CEO’s estate shall have the authority of the CEO to make any elections as to
how to receive payments or units, to transfer units or to negotiate a
resolution of compensation issues of payments or units in place of the CEO
under this Agreement on a post-termination basis.

 

7.                                      Life Insurance.  Company may at any time, in
its discretion, apply for and procure, as owner and for its own benefit,
insurance on the life of CEO in such amounts and in such form or forms as
Company may choose. CEO shall have no interest in any such policy or policies,
but CEO shall, at the request of Company, submit to such medical examinations,
supply such information and execute such applications, instruments and other
documents as may be required by the insurance company or companies to whom
Company has applied for such insurance.

 

8.                                      Termination of Agreement.

 

(a)                                  Termination Events.  The Employment Term shall
terminate upon the first to occur of any of the following:

 

(1)                                  Last
Day of Term.  The last day of the
then-current Employment Term if either Party has notified the other, in
accordance with Section 1, that the Employment Term will not be renewed;

 

(2)                                  Date Set By Company.  A date within
the Employment Term specified by the Company by written notice to the CEO to terminate
the CEO’s employment;

 

(3)                                  Death or Permanent Disability.  The death or
permanent disability of CEO which, for purposes of this Agreement, the “permanent
disability” of CEO shall be deemed to occur on the earlier of: (1) the
date on which CEO is determined to be permanently disabled for the purposes of
any disability benefits provided to CEO by Company; or (2) the date as of
which CEO has been incapable of performing CEO’s duties under this Agreement
for a continuous period of 60 days or for periods aggregating 60 days within a
period of 365 days; or (3) the date of certification to Company by a
physician approved by Company that CEO is so mentally or physically disabled or
impaired as to be incapable of engaging in and performing the duties of the employment
position with Company which CEO occupied prior to the commencement of the
disorder that led to the disability and upon the certification by the physician
that the disability is likely to be permanent;

 

5

 

(4)                                  For Cause.  A date specified
by Company by written notice to CEO of Company’s intention to terminate the
Employment Term for Cause which, for purposes of this clause (4), “Cause” shall
mean:  (i) repeated disobedience or
insubordination after written notice of same by the Board to CEO identifying
this paragraph of this Agreement and if the disobedience or insubordination is
not cured by CEO within ten (10) days after receiving notice from Company,
(ii) any other breach by CEO of any of his agreements contained in this
Agreement if the breach is not cured by CEO within ten (10) days after
receiving notice of the breach from Company, (iii) willfully making
derogatory statements regarding Company, (iv) misappropriation of any of
Company’s funds, (v) fraud, or (vi) any criminal conviction of an act
of moral turpitude by CEO;

 

(5)                                  Mutual Agreement.  The mutual
agreement of Company and CEO; or

 

(6)                                  CEO Termination.  A date specified
by CEO by written notice to Company of CEO’s intention to terminate the Employment
Term.

 

(b)                                 Notice Requirements.  Any notice of
termination by either Party under this Section 8 shall clearly state that
the terminating Party elects to terminate the Employment Term and shall specify
the subsection of this Section 8 upon which the Party is relying as
the basis for the termination.

 

(c)                                  Effect of Termination.  Except as
specifically provided in Section 10 with respect to any applicable
continuing covenants or agreements of CEO, subject to the provisions for
severance benefits contained in Section 9, subject to the assignment
provisions under Section 13, and subject to indemnification for actions
during the employment under Section 12, if the Employment Term is
terminated for any reason whatsoever pursuant to this Section 8:

 

(1)                                  this Agreement shall be terminated and of no further force or
effect;

 

(2)                                  CEO shall have no obligation or duty to further serve Company in
any capacity; and

 

(3)                                  Company shall not be under any obligation or duty to employ CEO or
provide the benefits specified in Section 5 other than through the
Employment Term or as required by law or make any of the payments provided in Section 4,
except to the extent the obligations of payments which have accrued prior to
the effective date of the termination and remain unpaid as of the date of the
termination; provided, however, that Company may offset against, and deduct
from, any amounts due to CEO under this Agreement the amount of any losses,
costs or other damages incurred by Company, as the case may be, in connection
with any actions constituting “Cause” for termination of CEO pursuant to Subsection (a),
clause (4)(iv) or (v) above.

 

6

 

9.                                       Severance Benefits.  In the event that the
Employment Term is terminated, other than by death or permanent disability
under Section 8(a)(3), then the Company shall pay CEO an amount equal to
the Base Salary that would otherwise be payable to CEO under this Agreement for
a period of twenty-four (24) months following termination (the “Severance
Period”) or as long as the noncompetition restriction in Section 10(a) is
effective and all of Section 10 is complied with by CEO.  The amount shall be payable at normal salary
payment intervals in effect for Company’s executive personnel.  In addition, the Company shall provide to CEO
the group benefits referred to in Subsection 5(a) for the Severance
Period. In the event any applicable law or any benefit plan referred to in Subsection 5(a) prohibits
or otherwise precludes the provision of benefits to an individual whose
employment with Company has terminated, then the Company shall pay to CEO as
expeditiously as is practicable after the effective date of termination the
cash equivalent of any prohibited or precluded benefits.

 

10.                               Certain CEO Covenants. CEO expressly covenants and agrees to and with Company as set
forth in this Section:

 

(a)                                  Non-competition.  CEO recognizes
and acknowledges that he has been trained by and has knowledge of know how
acquired during his employment with the Company. During the Employment Term and
for a period of twenty-four (24) months after the termination of the Employment
Term, CEO shall not, without the written consent of Company, within the United
States of America, participate through management or control or be employed by
any business or enterprise which is engaged in any business activity similar to
that of the Company that competes with the Company for the Company’s egg
product markets or sources of egg supplies.

 

(b)                                 Confidential Information. CEO recognizes the interests of Company in maintaining the
confidential nature of its respective proprietary and other business and
commercial information.  CEO shall not,
at any time after the Employment Term, or in any manner that does not promote
the interests of the Company during the Employment Term, directly or
indirectly, publish, disclose or use, or authorize anyone else to publish,
disclose or use, any secret, confidential or proprietary information of
Company, or any of its respective affiliates, except for such information as is
in the public domain through no fault of CEO, which is acquired by CEO in
connection with CEO’s employment with Company or work with the Company prior to
the date hereof or thereafter and relates to any aspect of the operations,
activities, research, investigations or obligations of Company, or any of its
respective affiliates, including, without limitation:  (1) the information described in Subsection (c) below;
(2) information pertaining to Company, the business of the Company, or the
business of any of Company’s respective affiliates; and (3) other
confidential material or information relating to the business, customers,
suppliers, trade or industrial practices, trade secrets, technology, know-how
or intellectual property of Company or any of Company’s affiliates
(collectively, the “Confidential Information”). All records, files, data,
documents and the like relating to suppliers, customers, costs, prices,
systems, methods, personnel, equipment and other materials relating to Company,
or Company’s affiliates (including, but not limited to, the Confidential
Information), shall be and remain the sole property of Company or the Company’s
affiliate, as the case may be.  Any
disclosure of Confidential Information by the CEO shall include appropriate
protection for the type of information to protect the Company’s interests in
the Confidential Information.  Upon

 

7

 

termination of CEO’s employment under this
Agreement, CEO shall not remove from Company’s premises, or retain, any of the
Confidential Information materials described in this Section.

 

(c)                                  Development of Information and
Intellectual Property.  During the Employment Term, CEO shall keep Company informed of any
and all customer lists, supplier lists, manuals, handbooks, inventions,
discoveries, improvements, trade secrets, secret processes, technology,
know-how or intellectual property made or developed by CEO, in whole or in
part, or conceived of by CEO, alone or with others, which results from CEO’s
employment with Company or any work CEO may do for, or at the request of,
Company or which relates to the operations, activities, research,
investigations or obligations of Company (collectively, the “Information”).

 

CEO shall assign, transfer and set
over, and hereby assigns, transfers and sets over to Company, all of CEO’s
right, title and interest in and to any and all information, and any patents,
patent applications, copyrights, trademarks, trade names or other intellectual
property rights relating thereto, provided or conceived by CEO and related to
the information during the Employment Term.

 

(d)                                 Return of Information.  Upon termination of CEO’s
employment for whatever reason, CEO shall return to or leave with Company,
without making or retaining copies thereof, all documents, records, notebooks
and other repositories containing Confidential Information.

 

(e)                                  Breach of Covenants.  If CEO breaches
any of the covenants and agreements contained in this Section 10, then, in
addition to any other rights or remedies of Company hereunder, Company shall
have at its option the following specific rights and remedies: (1) CEO’s
right to any payments pursuant to Sections 3, 4, 5 and 9 may be terminated by
Company; (2) Company shall have the right to enforce any legal or
equitable remedy (including injunctive relief) that may be available to
Company; and (3) Company shall be entitled to an accounting and repayment
of all profits, compensation, commissions, remuneration, or other benefits that
CEO has directly or indirectly realized or may realize as a result of any such
breach and CEO acknowledges that any breach of the covenants and agreements
under this Section 10 will cause irreparable harm and injury to Company.

 

Except to the extent otherwise
expressly limited to a restricted period in Subsection (a) of this
Section, all covenants and provisions contained in this Section 10 shall
survive any termination of CEO’s employment with Company.

 

11.                                 Notices.  Any notice or other communication required or
desired to be given under this Agreement shall be in writing and shall be
deemed duly given to a Party when personally delivered or when mailed by first
class mail, registered or certified, return receipt requested and postage
prepaid, addressed to the Party at the address set forth below or at such other
address as may be specified by the Party by a notice to the other Party:

 

8

 

If to Company:

 

Golden Oval
Eggs, LLC

1800 Park
Avenue East, P.O. Box 615

Renville,
MN  56284

 

Attention:
Chair, the Board of Directors

 

If to CEO:

 

Mr. Dana
Persson

8833 45th
Avenue N.W.

Pennock,
MN  56279

 

12.                               Waiver: Remedies Cumulative.  No waiver of any right or
option hereunder by either Party shall operate as a waiver of any other right
or option, or the same right or option as respects any subsequent occasion for
its exercise, or of any legal remedy. No waiver by any Party of any breach of
this Agreement or of any agreement or covenant contained in this Agreement
shall be held to constitute a waiver of any other breach or a continuation of
the same. All remedies provided by this Agreement are in addition to all other
remedies provided by it or applicable law.

 

13.                                Assignment.  This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of Company and shall survive
any change of control or change of ownership of Company. Neither this Agreement
nor any rights under this Agreement shall be assignable by CEO and any
purported assignment by CEO shall be void and of no force or effect.

 

14.                                Applicable Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
Minnesota.

 

15.                               Enforceability; Understanding; Amendment.  The invalidity or
unenforceability of any term or provision of this Agreement shall not impair or
affect the other provisions of this Agreement, which shall remain in full force
and effect. This Agreement shall constitute the entire understanding between
Company and CEO concerning CEO’s employment and shall supersede any and all
previous agreements, whether written or oral, between the Parties concerning
such employment. This Agreement cannot be amended or modified in any respect
unless such amendment or modification is evidenced by a written instrument
executed by Company and CEO. The captions of the various sections of this
Agreement are not a part of the context hereof, but are inserted merely for
convenience in locating the different provisions hereof and shall be ignored in
construing this Agreement.

 

16.                               Indemnification.  Company agrees to indemnify
and hold harmless CEO for any matter relating to his performance of his
obligations under this Agreement, other than acts taken by CEO with the
intention to harm Company and except to the extent that CEO may incur criminal
liability for his acts. The obligation to indemnify and hold harmless includes,
but is not limited to, all pending litigation and claims against Company, its
officers, employees and

 

9

 

directors. The expenses against which CEO is
indemnified include, but are not limited to, all reasonable attorney fees and
other costs associated with legal representation.

 

17.                                 Opportunity for Independent Legal Counsel.  This Agreement
has been prepared by legal counsel acting as representative solely to
Company.  CEO confirms that he has been
afforded the opportunity to review this Agreement with his independent legal
counsel.

 

IN WITNESS WHEREOF, the Parties
have executed multiple counterparts of this Agreement, each of which is deemed
to be an original, this            
day of October, 2005.

 

 

	
  COMPANY:

  	
  CEO:

  
	
  GOLDEN OVAL EGGS,
  LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   Chairman of Board of Directors

  	
  Dana Persson

  
					

 

10

 

EXHIBIT A

 

EMPLOYMENT,
NON –COMPETITION, AND SEVERANCE AGREEMENT

BETWEEN

GOLDEN
OVAL EGGS, LLC

AND

DANA
PERSSON

 

TERMS
AND CONDITIONS

 

	
  1.

  	
   

  	
  Effective Date:

  	
   

  	
  September 1, 2004

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Employment Term:

  	
   

  	
  From September 1, 2004 until August 31,
  2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Base Salary:

  	
   

  	
  The annual base salary shall be
  $260,000.  The Company shall make a
  single payment to CEO for the difference between the base salary that CEO has
  been paid since September 1, 2004 and August 31, 2005.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  ROE Bonus:

  	
   

  	
  Company shall pay CEO a bonus based upon
  the Company’s return on equity (“ROE”) calculated from the Company’s audited
  financial statements for each fiscal year during the Employment Term  (“ROE Bonus”).  The table below shall be used to determine
  the ROE Bonus as a percent of Base Salary through interpolation between the
  numbers stated.  For Example, if
  Company’s ROE is 16%, the ROE bonus shall be 87.5% of the Base Salary.

  

 

	
  %
  ROE

  	
   

  	
  <  4.0

  	
   

  	
  4.0

  	
   

  	
  9.0

  	
   

  	
  14.0

  	
   

  	
  18.0

  	
   

  	
  22.0

  	
   

  	
  27.0

  	
   

  	
  33.0

  	
   

  	
  40.0

  	
   

  	
  >  40

  	
   

  
	
  % of  Base

  	
   

  	
  0

  	
  %

  	
  25

  	
  %

  	
  50

  	
  %

  	
  75

  	
  %

  	
  100

  	
  %

  	
  125

  	
  %

  	
  150

  	
  %

  	
  175

  	
  %

  	
  200

  	
  %

  	
  200

  	
  %

  

 

	
   

  	
   

  	
   

  	
   

  	
  The Company’s ROE shall be calculated by
  dividing Company’s Fiscal Year Net Income by Company’s Previous Fiscal Year
  End Equity.  Fiscal Year Net Income
  means the net income reported in the audited consolidated statement of
  operations for the fiscal year with the following adjustments as relevant: (a) add
  back any bonuses to management that have been deducted in calculating the
  consolidated statement of operations and (b) any adjustments for any
  non-recurring income or expense or other exogenous event as determined by the
  Board of Directors in its sole discretion. 
  No ROE Bonus will be paid

  

 

A-1

 

	
   

  	
   

  	
   

  	
   

  	
  below a 4.0% ROE. The maximum percentage is
  200%, which cap may be lifted in the discretion of the Board of Directors.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Discretionary
  Individual

  	
   

  	
   

  
	
   

  	
   

  	
  Performance Bonus:

  	
   

  	
  CEO will be eligible for an individual
  performance bonus of up to 50% of CEO’s base salary (up to $130,000 maximum)
  based on individual performance. The Board and CEO will establish specific
  goals by the beginning of each year, which may be adjusted due to changed
  circumstances or new information as agreed by CEO and Board.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  The CEO will develop specific goals for
  management personnel of COO, CFO, and Vice President, all of which must be
  approved by the Board. The CEO will promptly report to the Board any
  individual performance bonuses to be paid to management personnel.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Equity Capital

  	
   

  	
   

  
	
   

  	
   

  	
  Markets Transaction

  	
   

  	
   

  
	
   

  	
   

  	
  Bonus:

  	
   

  	
  Concurrent with the completion of one or
  more transactions in which equity interests in the Company or a subsidiary
  are offered through the equity capital markets to investors (“Equity Capital
  Markets Transaction” or the “Transaction”), the CEO shall be paid an amount
  equivalent to 1.5% of the members gain on ownership whether in cash or equity
  interests in the Company (“Member’s Gain on Equity”). Member’s Gain on Equity
  shall be measured by using Total Transaction value to determine the new
  equity value of the Company less the book value immediately prior to the
  Transaction and less any costs directly related to the Transaction. This
  bonus shall be paid to the CEO in the same form (or forms) of payment as
  received by the other unitholders of the Company as a result of the
  Transaction.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Similarly, if more than 20% of the fixed or
  operating assets of the Company are sold which would represent a proportional
  gain on Member’s Gain on Equity allocated to those assets on a pro rata
  basis, or has a change in control resulting in a gain on Member’s Gain on
  Equity, then CEO shall be paid a “Liquidation Bonus” equivalent to 1.5% of
  the actual or proportional Gain on Member’s Equity. The date for
  determination of such percentage amount shall be

  

 

A-2

 

	
   

  	
   

  	
   

  	
   

  	
  as of the effective date of the sale,
  merger, consolidation, or change in control and the liquidation bonus shall
  be paid upon closing of the transaction. This bonus shall be paid to the CEO
  in the same form (or forms) of payment as received by the other unitholders
  of the Company as a result of the Transaction.

  

 

A-3EXHIBIT 10.7

 

EMPLOYMENT, NON-COMPETITION, AND
SEVERANCE AGREEMENT

BETWEEN

GOLDEN OVAL EGGS, LLC

AND

DOUG LEIFERMANN

 

This Employment,
Non-Competition, and Severance Agreement (this “Agreement”), effective for
employment as of September 1, 2004 is entered into by and between Golden
Oval Eggs, LLC, a Delaware limited liability company (“Company”) and Doug
Leifermann, (“CFO”) and supersedes and replaces any prior oral or written
agreement for employment between Midwest Investors of Renville, Inc. d/b/a
Golden Oval Eggs (predecessor to the Company for Golden Oval Eggs, LLC) and
Doug Leifermann (CFO).  The Company and
CFO agree that any prior employment agreement terminates by mutual agreement on
the effective date of this Agreement. 
Employment on and after the effective date of this Agreement is governed
by and subject to this Agreement.

 

BACKGROUND

 

The Company desires to continue
to employ Chief Financial Officer (CFO) to provide managerial leadership for
the accounting, financial, data processing and budgeting functions of the
Company.  Company and CFO are entering
into this Agreement to set forth the terms under which CFO will be employed as
Chief Financial Officer of the Company.

 

STATEMENT OF AGREEMENT

 

Company and CFO (the “Parties”
or either, the “Party”), each in consideration of the promises of the other
contained in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, hereby agree as
follows:

 

1.                                      Employment Term.

 

(a)                                  Initial Term.  Upon the terms
and conditions set forth in this Agreement and in Exhibit A attached to
and a part of this Agreement, Company offers to employ CFO, and CFO hereby
accepts employment on those terms and conditions with Company.  The term of employment under this Agreement
shall be for the “Employment Term” stated in Exhibit A, unless terminated
earlier under Section 8.

 

(b)                                 Renewal.  The Employment Term, under this
Agreement, shall automatically renew for successive one year periods unless
either Party notifies the other Party in writing, not less than 60 days before
the end of the then current Employment Term, that this Agreement shall not be
renewed at the end of the then current Employment Term.

 

2.                                      Duties.

 

Generally. 
CFO shall be employed as the Chief Financial Officer of the Company to
provide such services and to have such duties and responsibilities as are
normally associated with

 

 

that position, together with any other duties and responsibilities as
may be designated by the CEO from time to time. The CFO shall devote his full
time, attention and energy to the business affairs of the Company and the
performance of CFO’s duties under this Agreement.  The CFO shall discharge the duties in a
diligent and proper manner and shall conduct himself at all times so as to
advance the best interests of the Company. 
The CFO shall report to the Company’s CEO.

 

(a)                                  Specific duties of the CFO include:

 

(1)                                  Design and implement financial controls along with providing timely
information that accurately portrays the financial status of the Company;

 

(2)                                  Provide managerial leadership for the accounting, financial, data
processing and budgeting functions for the Company; and

 

(3)                                  Prepares financial reports on a timely basis and reports to the CEO
and Board of Directors on all financial matters of the Company.

 

3.                                      Compensation.

 

(a)                                  Base Salary.  During the
Employment Term and in consideration of his services provided hereunder, the
Company shall pay CFO an annual “Base Salary” stated in Exhibit A and a
bonus as provided in Section 4 and Exhibit A.

 

(b)                                 Base Salary Payments.  The Base Salary
shall be paid in equal biweekly installments each month of the Employment Term,
and prorated on a daily basis for any partial period for which services are
rendered at the end of the Employment Term.

 

(c)                                  Deductions from Compensation.  Company shall withhold from
CFO’s compensation payments (Base Salary and Bonus) state, federal and local
income taxes, FICA, social security and other amounts that are customarily
withheld from a CFO’s compensation.

 

4.                                      Bonus.

 

(a)                                  Payment of Bonus.  The Company
shall pay to CFO all bonuses for which the CFO is eligible as provided in Exhibit A.  Except for the Equity Capital Markets
Transaction Bonus, which shall be paid as provided in Exhibit A, all
bonuses will be paid by 50% in units of the Company, which are subject to
forfeit back to the Company as provided in paragraph (b), and 50% in cash.  The Company shall pay the cash portion of the
bonus no later than 30 days after the audited financial statements are approved
by the Company’s Board of Directors unless deferred by the CFO to the next tax
year.  The ROE Bonus shall be annualized
and prorated to the nearest month end 
for any partial year for which services are rendered at the beginning
and end of the Employment Term.

 

(b)                                 Unit Bonus.  The unit portion of any bonus (“Bonus Units”)
shall be issued to the CFO effective as of the beginning of the fiscal year,
subject to forfeiture to the Company. 
Certain Bonus Units will forfeit upon: 
(1) termination of employment for cause

 

2

 

(Section 8(a)(4)); or (2) termination
at CFO’s election (Section 8(a)(6)) (“Forfeiture Event”).  Within one year after the effective issuance
of the Bonus Units, all of the Bonus Units are nontransferable, and shall
forfeit back to the Company with no rights relating to the Bonus Units
remaining with the CFO if a Forfeiture Event occurs.  One (1) year after the effective
issuance of the Bonus Units, the forfeiture and nontransferability restrictions
on one-third (1/3) of the Bonus Units terminate.  After one (1) year and until two (2) years
after the effective issuance of the Bonus Units, two-thirds (2/3) of the Bonus
Units are nontransferable, and shall forfeit back to the Company with no
additional rights relating to the forfeited Bonus Units remaining with the CFO
if a Forfeiture Event occurs.  Two years
after the effective issuance of the Bonus Units the forfeiture and
nontransferability restrictions on an additional one-third (1/3) (two-thirds
(2/3) of the Bonus Units in total) terminate. 
After two (2) years and until three (3) years after the
effective issuance of Bonus Units, one-third (1/3) of the Bonus Units are
nontransferable, and shall forfeit back to the Company with no rights relating
to the forfeited Bonus Units remaining with the CFO if a Forfeiture Event
occurs.  The forfeiture and
nontransferability restrictions remaining Bonus Units held by the CFO are
terminated:  (1) at the end of three
years after the effective issuance of Bonus Units to the CFO; (2) notwithstanding
the restrictions above at any time a change of control of the Company resulting
in a different group of owners obtaining governance rights to elect a majority
of the Board of Directors occurs; or (3) notwithstanding the restrictions
above, at any time, if the retirement of the CFO occurs at age 59 1⁄2 years of
age or older.

 

Except for the Equity Capital
Markets Transaction Bonus, which shall be paid as provided in Exhibit A,
the amount of units to be awarded as part of the bonus shall be based on the
higher of book or market value of the units at the time the bonus is
awarded.  Book value shall be determined
by the most recent year-end audited financial statements.  Market value shall be determined by the
average price of units that have traded in the secondary market during the
preceding fiscal year.

 

If the Employment Term is
terminated prior to the end of a fiscal year, bonuses shall be calculated based
on the financial statements of the most recent fiscal quarters prior to the
termination.

 

5.                                      CFO Benefits, Expenses.  CFO shall have, and the
Company shall pay for, the following benefits and expenses during the
Employment Term:

 

(a)                                Group Benefits. CFO shall be entitled to participate in group life insurance,
long-term disability, group health and hospitalization, vision and dental,
401(k) retirement program and other group benefits as are presently or may
hereafter be provided to other employees of Company, which benefits may be in
varying amounts and scope relative to the age, years of employment,
compensation and pay status of the employees.

 

(b)                               Business Expenses. Upon CFO’s periodic presentation to Company of an itemized
account, the Company shall pay or reimburse CFO for reasonable expenses
incurred by CFO on behalf of Company directly in connection with, and
reasonably necessary for the rendering of, his services to Company under this
Agreement.

 

3

 

(c)                                  Vacation. CFO
shall be entitled to four weeks paid vacation for each 12-month period of the
Employment Term.

 

6.                                      CFO Beneficiary.  If CFO has deceased:  (1) during the Employment Term, or (2) after
this Agreement expires or is terminated, the payments due or payable to CFO
shall be paid or payable to the CFO’s beneficiary (referred to as the “Designated
Beneficiary”).   If the CFO has deceased,
the Designated Beneficiary shall have the authority of the CFO under this
Agreement on a post-termination basis (for example, to hold or transfer units,
to receive payments, etc.).

 

The Designated Beneficiary is                                 ,
if           is then living,
(Primary Beneficiary); or if                                
is not then living, the trustee, serving as trustee of the estate of Doug
Leifermann,                                                (Second
Beneficiary).  The trustee as the Second
Beneficiary shall be entitled to receive the payments due or payable to CFO and
the trustee shall have the authority of the CFO under this Agreement on a post-termination
basis, provided the Company has been notified in writing of the trustee and
there is demonstration that the trustee is duly authorized to act as such.  Upon request, the CEO will acknowledge the
trustee as Second Beneficiary upon receipt of proper notification.

 

CFO may change the Designated
Beneficiary by submitting a written change of beneficiary form to the CEO.  If the Company is unable to determine or
locate the Designated Beneficiary in the two functions of:  (1) to whom or what entity should
payments due or payable to CFO be paid; and (2) who shall have the
authority of the CFO under this Agreement on a post-termination basis, then the
Designated Beneficiary shall be deemed to be the estate of the CFO as to the
entity to which the payments should be made, and the administrator of CFO’s
estate shall have the authority of the CFO to make any elections as to how to
receive payments or units, to transfer units or to negotiate a resolution of
compensation issues of payments or units in place of the CFO under this
Agreement on a post-termination basis.

 

7.                                      Life Insurance.  Company may at any time, in
its discretion, apply for and procure, as owner and for its own benefit,
insurance on the life of CFO in such amounts and in such form or forms as Company
may choose. CFO shall have no interest in any such policy or policies, but CFO
shall, at the request of Company, submit to such medical examinations, supply
such information and execute such applications, instruments and other documents
as may be required by the insurance company or companies to whom Company has
applied for such insurance.

 

8.                                      Termination of Agreement.

 

(a)                                  Termination Events.  The Employment Term shall
terminate upon the first to occur of any of the following:

 

(1)                                  Last
Day of Term.  The last day of the
then-current Employment Term if either Party has notified the other, in
accordance with Section 1, that the Employment Term will not be renewed;

 

4

 

(2)                                  Date Set By Company.  A date within
the Employment Term specified by the Company by written notice to the CFO to
terminate CFO’s employment;

 

(3)                                  Death or Permanent Disability.  The death or
permanent disability of CFO which, for purposes of this Agreement, the “permanent
disability” of CFO shall be deemed to occur on the earlier of: (1) the
date on which CFO is determined to be permanently disabled for the purposes of
any disability benefits provided to CFO by Company; or (2) the date as of
which CFO has been incapable of performing CFO’s duties under this Agreement
for a continuous period of 60 days or for periods aggregating 60 days within a
period of 365 days; or (3) the date of certification to Company by a
physician approved by Company that CFO is so mentally or physically disabled or
impaired as to be incapable of engaging in and performing the duties of the
employment position with Company which CFO occupied prior to the commencement
of the disorder that led to the disability and upon the certification by the
physician that the disability is likely to be permanent;

 

(4)                                  For Cause.  A date specified
by Company by written notice to CFO of Company’s intention to terminate the
Employment Term for Cause which, for purposes of this clause (4), “Cause” shall
mean:  (i) repeated disobedience or
insubordination after written notice of same by the CEO to CFO identifying this
paragraph of this Agreement and if the disobedience or insubordination is not
cured by CFO within ten (10) days after receiving notice from Company, (ii) any
other breach by CFO of any of his agreements contained in this Agreement if the
breach is not cured by CFO within ten (10) days after receiving notice of
the breach from Company, (iii) willfully making derogatory statements
regarding Company, (iv) misappropriation of any of Company’s funds, (v) fraud,
or (vi) any criminal conviction of an act of moral turpitude by CFO;

 

(5)                                  Mutual Agreement.  The mutual
agreement of Company and CFO; or

 

(6)                                  CFO Termination.  A date specified
by CFO by written notice to Company of CFO’s intention to terminate the
Employment Term.

 

(b)                                 Notice Requirements.  Any notice of
termination by either Party under this Section 8 shall clearly state that
the terminating Party elects to terminate the Employment Term and shall specify
the subsection of this Section 8 upon which the Party is relying as
the basis for the termination.

 

(c)                                  Effect of Termination.  Except as
specifically provided in Section 10 with respect to any applicable
continuing covenants or agreements of CFO, subject to the provisions for
severance benefits contained in Section 9, subject to the assignment
provisions under Section 13, and subject to indemnification for actions
during the employment under Section 12, if the Employment Term is
terminated for any reason whatsoever pursuant to this Section 8:

 

(1)                                  this Agreement shall be terminated and of no further force or
effect;

 

5

 

(2)                                  CFO shall have no obligation or duty to further serve Company in
any capacity; and

 

(3)                                  Company shall not be under any obligation or duty to employ CFO or
provide the benefits specified in Section 5 other than through the
Employment Term or as required by law or make any of the payments provided in Section 4,
except to the extent the obligations of payments which have accrued prior to
the effective date of the termination and remain unpaid as of the date of the
termination; provided, however, that Company may offset against, and deduct
from, any amounts due to CFO under this Agreement the amount of any losses,
costs or other damages incurred by Company, as the case may be, in connection
with any actions constituting “Cause” for termination of CFO pursuant to Subsection (a),
clause (4)(iv) or (v) above.

 

9.                                       Severance Benefits.  In the event that the
Employment Term is terminated other than by death or permanent disability under
Section 8(a)(3), then the Company shall pay CFO an amount equal to the
Base Salary that would otherwise be payable to CFO under this Agreement for a
period of twelve (12) months following termination (the “Severance Period”) or
as long as the noncompetition restriction in Section 10(a) is
effective and all of Section 10 is complied with by CFO.  The amount shall be payable at normal salary
payment intervals in effect for Company’s executive personnel.  In addition, the Company shall provide to CFO
the group benefits referred to in Subsection 5(a) for the Severance
Period. In the event any applicable law or any benefit plan referred to in Subsection 5(a) prohibits
or otherwise precludes the provision of benefits to an individual whose
employment with Company has terminated, then the Company shall pay to CFO as
expeditiously as is practicable after the effective date of termination the
cash equivalent of any prohibited or precluded benefits.

 

10.                               Certain CFO Covenants.  CFO expressly covenants and
agrees to and with Company as set forth in this Section:

 

(a)                                  Non-competition.  CFO recognizes
and acknowledges that he has been trained by and has knowledge of know how
acquired during his employment with the Company. During the Employment Term and
for a period of twelve (12) months after the termination of the Employment
Term, CFO shall not, without the written consent of Company, within the United
States of America, participate through management or control or be employed by
any business or enterprise which is engaged in any business activity similar to
that of the Company that competes with the Company for the Company’s egg
product markets or sources of egg supplies.

 

(b)                                 Confidential Information. CFO recognizes the interests of Company in maintaining the
confidential nature of its respective proprietary and other business and
commercial information.  CFO shall not,
at any time after the Employment Term, or in any manner that does not promote
the interests of the Company during the Employment Term, directly or
indirectly, publish, disclose or use, or authorize anyone else to publish,
disclose or use, any secret, confidential or proprietary information of
Company, or any of its respective affiliates, except for such information as is
in the public domain through no fault of CFO, which is acquired by CFO in
connection with CFO’s employment with Company or work with the Company prior to
the date hereof or thereafter and relates to any aspect of the operations,
activities, research, investigations or obligations of Company, or any of its
respective affiliates,

 

6

 

including, without limitation:  (1) the information described in Subsection (c) below;
(2) information pertaining to Company, the business of the Company, or the
business of any of Company’s respective affiliates; and (3) other
confidential material or information relating to the business, customers,
suppliers, trade or industrial practices, trade secrets, technology, know-how
or intellectual property of Company or any of Company’s affiliates
(collectively, the “Confidential Information”). All records, files, data,
documents and the like relating to suppliers, customers, costs, prices,
systems, methods, personnel, equipment and other materials relating to Company,
or the Company’s affiliates (including, but not limited to, the Confidential
Information), shall be and remain the sole property of Company or Company’s
affiliate, as the case may be.  Any disclosure
of Confidential Information by the CFO shall include appropriate protection for
the type of information to protect the Company’s interests in the Confidential
Information.  Upon termination of CFO’s
employment under this Agreement, CFO shall not remove from Company’s premises,
or retain, any of the Confidential Information materials described in this
Section.

 

(c)                                  Development of Information and
Intellectual Property.  During the Employment Term, CFO shall keep Company informed of any
and all customer lists, supplier lists, manuals, handbooks, inventions,
discoveries, improvements, trade secrets, secret processes, technology,
know-how or intellectual property made or developed by CFO, in whole or in
part, or conceived of by CFO, alone or with others, which results from CFO’s
employment with Company or any work CFO may do for, or at the request of,
Company or which relates to the operations, activities, research,
investigations or obligations of Company (collectively, the “Information”).

 

CFO shall assign, transfer and
set over, and hereby assigns, transfers and sets over to Company, all of CFO’s
right, title and interest in and to any and all information, and any patents,
patent applications, copyrights, trademarks, trade names or other intellectual
property rights relating thereto, provided or conceived by CFO and related to
the information during the Employment Term.

 

(d)                                 Return of Information.  Upon termination of CFO’s
employment for whatever reason, CFO shall return to or leave with Company,
without making or retaining copies thereof, all documents, records, notebooks
and other repositories containing Confidential Information.

 

(e)                                  Breach of Covenants.  If CFO breaches
any of the covenants and agreements contained in this Section 10, then, in
addition to any other rights or remedies of Company hereunder, Company shall
have at its option the following specific rights and remedies: (1) CFO’s
right to any payments pursuant to Sections 3, 4, 5 and 9 may be terminated by
Company; (2) Company shall have the right to enforce any legal or
equitable remedy (including injunctive relief) that may be available to
Company; and (3) Company shall be entitled to an accounting and repayment
of all profits, compensation, commissions, remuneration, or other benefits that
CFO has directly or indirectly realized or may realize as a result of any such
breach and CFO acknowledges that any breach of the covenants and agreements
under this Section 10 will cause irreparable harm and injury to Company.

 

7

 

Except to the extent otherwise
expressly limited to a restricted period in Subsection (a) of this
Section, all covenants and provisions contained in this Section 10 shall
survive any termination of CFO’s employment with Company.

 

11.                                 Notices.  Any notice or other communication required or
desired to be given under this Agreement shall be in writing and shall be
deemed duly given to a Party when personally delivered or when mailed by first
class mail, registered or certified, return receipt requested and postage
prepaid, addressed to the Party at the address set forth below or at such other
address as may be specified by the Party by a notice to the other Party:

 

If to Company:

 

Golden Oval
Eggs, LLC

1800 Park
Avenue East, P.O. Box 615

Renville,
MN  56284

Attention:
President & CEO

 

If to CFO:

 

Mr. Doug
Leifermann

204 Fairway
Circle

Glencoe,
MN  55336

 

12.                               Waiver: Remedies Cumulative.  No waiver of any right or
option hereunder by either Party shall operate as a waiver of any other right
or option, or the same right or option as respects any subsequent occasion for
its exercise, or of any legal remedy. No waiver by any Party of any breach of
this Agreement or of any agreement or covenant contained in this Agreement
shall be held to constitute a waiver of any other breach or a continuation of
the same. All remedies; provided by this Agreement are in addition to all other
remedies provided by it or applicable law.

 

13.                                Assignment.  This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of Company and shall survive
any change of control or change of ownership of Company.  Neither this Agreement nor any rights under
this Agreement shall be assignable by CFO and any purported assignment by CFO
shall be void and of no force or effect.

 

14.                                Applicable Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
Minnesota.

 

15.                               Enforceability; Understanding; Amendment.  The invalidity or
unenforceability of any term or provision of this Agreement shall not impair or
affect the other provisions of this Agreement, which shall remain in full force
and effect. This Agreement shall constitute the entire understanding between
Company and CFO concerning CFO’s employment and shall supersede any and all
previous agreements, whether written or oral, between the Parties concerning
such employment. This Agreement cannot be amended or modified in any respect
unless such amendment or modification is evidenced by a written instrument executed
by Company and CFO.  The captions of the
various sections of this Agreement are not a part of the

 

8

 

context hereof, but are inserted merely for
convenience in locating the different provisions hereof and shall be ignored in
construing this Agreement.

 

16.                               Indemnification.  Company agrees to indemnify
and hold harmless CFO for any matter relating to his performance of his
obligations under this Agreement, other than acts taken by CFO with the
intention to harm Company and except to the extent that CFO may incur criminal
liability for his acts. The obligation to indemnify and hold harmless includes,
but is not limited to, all pending litigation and claims against Company, its
officers, employees and directors. The expenses against which CFO is
indemnified include, but are not limited to, all reasonable attorney fees and
other costs associated with legal representation.

 

17.                                 Opportunity for Independent Legal Counsel.  This Agreement
has been prepared by legal counsel acting as representative solely to
Company.  CFO confirms that he has been
afforded the opportunity to review this Agreement with his independent legal
counsel.

 

IN WITNESS WHEREOF, the Parties
have executed multiple counterparts of this Agreement, each of which is deemed
to be an original, this          
day of October, 2005.

 

 

	
  COMPANY:

  	
  CFO:

  
	
  GOLDEN OVAL EGGS,
  LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  President & CEO

  	
  Doug Leifermann

  
					

 

9

 

EXHIBIT A

 

EMPLOYMENT,
NON-COMPETITION, AND SEVERANCE AGREEMENT

BETWEEN

GOLDEN
OVAL EGGS, LLC

AND

DOUG
LEIFERMANN

 

TERMS
AND CONDITIONS

 

	
  1.

  	
  Effective Date:

  	
  September 1, 2004

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Employment Term:

  	
  From September 1, 2004 until August 31,
  2007

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Base Salary:

  	
  The annual base salary shall be
  $160,000.  The Company shall make a
  single payment to CFO for the difference between the base salary that CFO has
  been paid since September 1, 2004 and August 31, 2005.

  
	
   

  	
   

  	
   

  
	
  4.

  	
  ROE Bonus:

  	
  Company shall pay CFO a bonus based upon
  the Company’s return on equity (“ROE”) calculated from the Company’s audited
  financial statements for each fiscal year during the Employment Term  (“ROE Bonus”).  The table below shall be used to determine
  the ROE Bonus as a percent of Base Salary through interpolation between the
  numbers stated.  For Example, if
  Company’s ROE is 16%, the ROE bonus shall be 65.625% of the Base Salary.

  

 

	
  ROE

  	
   

  	
  <  4.0

  	
   

  	
  4.0

  	
   

  	
  9.0

  	
   

  	
  14.0

  	
   

  	
  18.0

  	
   

  	
  22.0

  	
   

  	
  27.0

  	
   

  	
  33.0

  	
   

  	
  40.0

  	
   

  	
  >  40

  	
   

  
	
   

  	
   

  	
  0

  	
  %

  	
  18.75

  	
  %

  	
  37.5

  	
  %

  	
  56.25

  	
  %

  	
  75

  	
  %

  	
  93.75

  	
  %

  	
  112.5

  	
  %

  	
  131.25

  	
  %

  	
  150

  	
  %

  	
  150

  	
  %

  

 

	
   

  	
   

  	
  The Company’s ROE shall be calculated by
  dividing Company’s Fiscal Year Net Income by Company’s Previous Fiscal Year
  End Equity.  Fiscal Year Net Income
  means the net income reported in the audited consolidated statement of
  operations for the fiscal year with the following adjustments as
  relevant:  (a) add back any
  bonuses to management that have been deducted in calculating the consolidated
  statement of operations and (b) any adjustments for any non-recurring
  income or expense or other exogenous event as determined by the Board of
  Directors in its sole discretion.  No
  ROE Bonus will be paid below a 4.0% ROE. 
  The maximum percentage is 150%, which cap may be lifted in the
  discretion of the Board of Directors.

  

 

A-1

 

	
  5.

  	
  Discretionary Individual

  	
   

  
	
   

  	
  Performance Bonus:

  	
  CFO will
  be eligible for an individual performance bonus of up to 50% of CFO’s base
  salary (up to $80,000 maximum) based on individual performance.  The CEO and CFO will establish specific
  goals by the beginning of each year, which may be adjusted due to changed
  circumstances or new information as agreed by CFO and CEO.

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Equity Capital Markets

  	
   

  
	
   

  	
  Transaction Bonus:

  	
  Concurrent
  with the completion of one or more transactions in which equity interests in
  the Company or a subsidiary are offered through the equity capital markets to
  investors “Equity Capital Markets Transaction” or the (“Transaction”), the
  CFO shall be paid an amount equivalent to .5% of the members gain on
  ownership whether in cash or equity interests in the Company (“Member’s Gain
  on Equity”).  Member’s Gain on Equity
  shall be measured by using Total Transaction value to determine the new
  equity value of the Company less the book value immediately prior to the
  Transaction and less any costs directly related to the Transaction.  This bonus shall be paid to the CFO in the
  same form (or forms) of payment as received by the other unitholders of the
  Company as a result of the Transaction.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Similarly, if more than 20% of the fixed or
  operating assets of the Company are sold which would represent a proportional
  gain on Member’s Gain on Equity allocated to those assets on a pro rata
  basis, or has a change in control resulting in a gain on Member’s Gain on
  Equity, then CFO shall be paid a “Liquidation Bonus” equivalent to .5% of the
  actual or proportional Gain on Member’s Equity.  The date for determination of such
  percentage amount shall be as of the effective date of the sale, merger,
  consolidation, or change in control and the liquidation bonus shall be paid
  upon closing of the transaction.  This
  bonus shall be paid to the CFO in the same form (or forms) of payment as
  received by the other unitholders of the Company as a result of the
  Transaction.

  

 

A-2

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