MANAGEMENT SERVICES
AGREEMENT
This MANAGEMENT SERVICES AGREEMENT
(“Agreement”) is made and entered into to be effective
as of the 15 th 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:
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:
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a.
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Positions Shared by
Golden .
Golden shall provide to Homeland the following management services,
to-wit:
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i.
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Chief Executive Officer
(CEO)
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ii.
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Chief Financial Officer
(CFO)
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iii.
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Plant Manager
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iv.
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OSHA/Safety Manager —
Environmental Protection Agency (EPA) Compliance officer
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v.
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Human Resources Manager
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b.
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Positions Shared by
Homeland . Homeland shall provide to Golden
the following management services, to-wit:
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i.
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Accounting Controller
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ii.
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Financial Accountant.
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i.
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Each Person filling the above
described positions shall devote approximately 50% of their time to
Homeland and 50% of their time to Golden.
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ii.
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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.
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iii.
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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.
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d.
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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:
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i.
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The CEO and CFO shall report
directly to the Homeland Board of Directors.
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ii.
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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.
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iii.
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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:
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Office
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Appointed
Person
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President
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Walt
Wendland
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Vice-President
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current holder
of position
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Secretary
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current holder
of position
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Treasurer
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Christy
Marchand
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iv.
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Homeland and Golden shall adopt a
mutual agreed job description for each position identified at
Section 1(a) and Section 1(b) above.
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v.
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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.
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vi.
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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.
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vii.
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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.
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viii.
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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.
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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:
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a.
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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.
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b.
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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 otherwise provided herein, Golden shall provide CEO
services for at least one year.
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c.
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Termination for
Cause .
Notwithstanding the forgoing, this Agreement may be terminated for
cause, as follows:
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i.
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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.
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ii.
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Cause means:
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A.
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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.
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B.
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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.
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d.
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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.
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e.
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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:
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a.
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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.
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b.
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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.
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c.
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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.
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d.
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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.
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