Exhibit 10.11

 

MANAGEMENT SERVICES AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

i.                                     Chief Executive Officer (CEO)

ii.                                  Chief Financial Officer (CFO)

iii.                               Plant Manager

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

v.                                 Human Resources Manager

 

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

 

i.                                          Accounting Controller

 

ii.                                       Financial Accountant.

 

c.                                       Time Commitment.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Office

 

Appointed Person

President

 

Walt Wendland

Vice-President

 

current holder of position

 

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Secretary

 

current holder of position

Treasurer

 

Christy Marchand

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ii.                                       Cause means:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

a.                                       Confidentiality.  With respect to
confidentiality:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9.                                       MISCELLANEOUS.

 

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

 

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

 

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

 

i.                  If to Golden:

 

 

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

 

 

 

ii.               If to Homeland:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

GOLDEN GRAIN ENERGY, LLC

 

 

 

 

 

By:

  /s/ David Sovereign

 

 

Its:

Chairman of the Board of Directors

 

 

 

 

 

HOMELAND ENERGY SOLUTIONS, LLC

 

 

 

 

 

By:

  /s/ Stephen K. Eastman

 

 

Its:

Chairman of the Board of Directors

 

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EXHIBIT 1

 

ORGANIZATIONAL CHART

 

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NULIB:314839.9

 

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