Exhibit 10.12
BONUS AND PHANTOM UNIT
PLAN
GOLDEN GRAIN ENERGY,
LLC
I.
Purpose . The purposes of this Golden Grain
Energy, LLC Bonus and Phantom Unit Plan are to retain the key
management employees of the Company, to compensate those key
management employees for their contribution to the growth of the
Company and to induce those employees to continue making
contributions to growth of the Company. The Plan is intended
to be an unfunded plan for purposes of the Employee Retirement
Income Security Act of 1974, as amended, and a nonqualified plan
for purposes of Section 401 of the Internal Revenue Code of
1986 (the “Code”), as amended.
II.
Definitions
. As used in the Plan, the
following terms will have the following meanings:
a. “Annual Bonus”
shall have the meaning set forth in
Section III(a) of the Plan.
b. “Annual Net Income”
shall mean the net income of the
Company for any fiscal year as reported in the Company’s
annual report.
c. “Board” shall mean the Board of Directors of the
Company.
d. “Cash Bonus” shall have the meaning set forth in
Section III(b) of the Plan.
e. “Change in Control”
shall mean the occurrence of any of
the following events: (1) a person or group acquires more than
fifty percent (50%) of the voting power or more than fifty percent
(50%) of the fair market value of all the Company’s
outstanding Membership Units; (2) a person or group acquires
thirty-five percent (35%) or more of the Company’s
outstanding Membership Units over a 12-month period; or
(3) over a 12-month period, a person or group acquires Company
assets whose collective fair market value equals or exceeds forty
percent (40%) of the total fair market value of all assets owned by
the Company.
f.
“Committee” shall mean the Executive Compensation Committee
of the Board of Directors.
g. “Company” shall mean Golden Grain Energy, LLC.
h. “ Disability ” shall mean
any of the following: (i) The Participant is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or to last for a continuous period of
at least twelve (12) months; (ii) If the Company
maintains a disability plan, Participant will also be considered
disabled if he receives income replacement benefits under that plan
for a period of at least three (3) months due to a medically
determinable physical or mental impairment that can be expected to
result in death or to last for a continuous period of at least
twelve (12) months. (iii) A Participant who is entitled
to disability benefits payable by the United States Social Security
Administration is deemed to have a Disability for purposes of this
Plan. (iv) A Participant who is determined to be
disabled in accordance with a disability insurance program which
uses a definition of disability that complies with either
(i) or (ii) in this paragraph is deemed to have a
disability for purposes of this Plan.
i.
“Extraordinary Performance
Bonus” shall have
the meaning set forth in Section III(f) of the
Plan.
j.
“Issue
Date” shall mean
the date on which the Committee acknowledges the award of Phantom
Units.
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k. “Management Team”
shall mean the Company’s Chief
Executive Officer, Chief Financial Officer, Plant Manager,
Commodities Manager and Lab Manager.
l.
“Membership
Unit” shall mean a
Class A equity ownership interest in the Company.
m. “Participant”
shall mean an employee who is a
member of the Management Team.
n. “Performance Goal”
shall have the meaning set forth in
Section III(a) of the Plan.
o. “Phantom Award”
shall have the meaning set forth in
Section III(c) of the Plan.
p. “Phantom Dividend”
shall have the meaning set forth in
Section IV(c) of the Plan.
q. “Phantom Unit”
shall mean a phantom unit in the
Company awarded pursuant to the terms of the Plan.
r.
“Plan”
shall mean the Golden Grain Energy,
LLC Bonus and Phantom Unit Plan as set forth in this document and
any amendments hereof.
s.
“Plan
Year” means the
fiscal year of the Plan, a 12 consecutive month period ending every
October 31. The Plan Year is the same as the
Company’s fiscal year.
t.
“Retirement” shall mean separation from service with the
Company on or after attaining age sixty-two (62).
III.
Eligibility
. All Participants shall be
eligible to receive Cash Bonuses, Phantom Units and Extraordinary
Performance Bonuses under the Plan as further provided in this
Section.
a.
Annual Bonus
. The annual bonus to be paid
to the Management Team shall be equal to 1% of the Annual Net
Income of the Company (the “Annual Bonus”). Each
Participant who was employed by the Company throughout the
Company’s fiscal year shall be eligible to participate in the
Annual Bonus. The Annual Bonus shall be allocated between a
Cash Bonus (as defined in Section III(b) below) and a
Phantom Award (as defined in Section III(c) below).
The Annual Bonus shall be paid shortly before or after the end of
each fiscal year or as soon as the relevant financial information
used to calculate the Annual Bonus becomes available. The
Committee may set group performance goals for the Management Team
(the “Performance Goals”). Such Performance Goals
shall be measurable and ascertainable and shall be reasonably
calculated to increase the Company’s efficiency, or
profitability or the market price for the Membership Units.
The Performance Goals shall be set with reference to the
Company’s fiscal year performance, and the Committee shall
determine whether the Management Team has met the Performance Goals
shortly before or after the end of each fiscal year or as soon as
the relevant financial information becomes available. The
Committee shall not be obligated to set Performance Goals for any
of the Company’s fiscal years. Notwithstanding the
foregoing, the Annual Bonus may be reduced or eliminated at the
discretion of the Board as provided in
Section III(g) below.
b.
Cash Bonuses
. A cash bonus shall be paid
equal to 1/3rd of the total amount of the Annual Bonus awarded to
the Management Team (the “Cash Bonus”). The Cash
Bonus shall be evenly divided among and distributed as soon as
administratively practicable to each Participant who was employed
by the Company throughout the Plan Year for which the Annual Bonus
applied.
c.
Phantom Units
. In addition to the Cash
Bonus, the Participants shall be awarded Phantom Units with a value
equal to 2/3rds of the total amount of the Annual
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Bonus (the “Phantom
Award”). The number of Phantom Units awarded to each
Participant shall be calculated based on the relative percentage of
the Participant’s base salary compared to the total base
salaries of the Management Team members entitled to participate in
the Annual Bonus.
d.
Calculation of Phantom
Units . The Company
shall determine the number of Phantom Units to be awarded by
dividing the amount of the Phantom Award by the most recent
weighted average price at which the Membership Units have been
traded through the Company’s bulletin board trading system or
otherwise transferred in a private transaction. If the
Committee believes that there are no private transactions recent
enough to indicate the value of a Membership Unit, the Committee
shall determine the fair market value of a Membership Unit on the
basis of all information then available to it for purposes of
calculating the number of Phantom Units to be awarded. In
converting the Phantom Award into Phantom Units, no discount shall
be applied on account of the restricted status of the Phantom
Units. The Committee shall be entitled to use its discretion
as necessary to determine the value of the Phantom Units in order
to issue an even number of Phantom Units to each
Participant.
e.
No Cash Value
. Each Participant’s
Phantom Awards shall be delivered in
