**Exhibit10.21**

 

**POLYOILCONSULTING SERVICES AGREEMENT**

 

This Polyoil ConsultingServices Agreement (“Agreement”) is made this 1 day of January, 2000, by andbetween South Dakota Soybean Processors, a South Dakota cooperative (“SDSP”)and Larry Mahlum (“Employee”).

 

RECITALS

 

A.            SDSPis a South Dakota cooperative engaged in the buying, selling, manufacturing,processing, and marketing of polyurethane, plastics and resins from oil seedproducts (the “Polyoil Products”).

 

B.            SDSPis also engaged in the buying, selling, manufacturing, processing, andmarketing of oil seeds and oil seed products, including but limited to soybeansand soybean products (collectively with the Polyoil Products, the “Products”).

 

C.            Anintegral part of Employee’s employment is the development of the PolyoilProducts for and on behalf of SDSP.

 

D.            SDSPdesires to continue to employ Employee and Employee desires to continue hisemployment with SDSP subject to the terms and conditions set forth in thisAgreement.

 

NOW, THEREFORE, the parties agree as follows:

 

1.             Duties.Employee shall be employed by SDSP and shall faithfully and to the best of hisability perform such duties and render such services as may be directed bySDSP, including but not limited to, the development of the Polyoil Products.During the term of his employment by SDSP, Employee shall devote all of hisworking time to SDSP.

 

2.             Compensation.Employee shall continue to be compensated for his services at the rate and inthe manner as may be determined by SDSP from time to time. In addition, forproviding services for the development of the Polyoil Products, Employee shallreceive for a period of ten (10) years from the date of the Agreement or untilhis death, whichever is the latest to occur, on an annual basis an amount equalto two percent (2%) of the first $1,000,000.00 and one percent (1%) thereafterof the “Net Proceeds” from the sale of Polyoil Products. “Net Proceeds” shallbe determined in accordance with the following described computations. Allproceeds of the sales of Polyoil Products shall be deemed to be “TotalProceeds.” SDSP shall deduct from the “Total Proceeds” the following items withrespect to the buying, selling, manufacturing, processing and marketing of thePolyoil Products, to arrive at the determination of “Net Proceeds”:

 

A.            All operatingexpenses and costs, including but not limited to, research, development andstart-up expenses and costs, and also including an allocation of administrativeand operations overhead;

 

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B.            The cost ofsupplies, commodities, equipment and other property procured or sold forpatrons;

 

C.            The cost of servicesperformed for patrons;

 

D.            All taxes and otherexpenses;

 

E.             Reasonable andnecessary reserves for depreciation, depletion and obsolescence of physicalproperty, doubtful accounts and other valuation reserves.

 

In the event that thedetermination of the “Net Proceeds” is a negative amount for any given year,the shortfall shall be carried over to future years to enable SDSP to firstrecover all of its expenses before paying the additional compensation toEmployee. The determination of “Net Proceeds” shall be completed by SDSP’saccountants in accordance with the accounting standards employed by saidaccounts in preparing the audited financial statements of SDSP. “Net Proceeds”shall be determined on an annual basis using SDSP’s fiscal year. Payment ofEmployee’s compensation, based upon a determination of the “Net Proceeds” asprovided herein, shall be completed within One Hundred Twenty (120) daysfollowing the end of SDSP’s fiscal year.

 

3.             Inventions. “Inventions” means discoveries,concepts, and ideas, whether patentable or not, relating to any present orprospective activities of SDSP, including, but not limited to, devices,processes, methods, formulae, techniques, and any improvements to theforegoing. With respect to all Inventions made or conceived by Employee,whether or not during the hours of Employee’s employment, or with the use ofSDSP’s facilities, materials, or personnel, either solely or jointly with others,during the term of Employee’s employment by SDSP commencing with the originaldate of Employee’s employment and for a period of one year after anytermination of such employment, Employee hereby assigns and agrees to assign,without compensation, to SDSP all of Employee’s rights to such Inventions andto all proprietary rights therein, based thereon or related thereto, including,but not limited to, applications for United States and foreign letters patentand resulting letters patent. At SDSP’s request and expense, Employee shallexecute such documents and provide such assistance as may be deemed necessaryby SDSP to apply for, defend or enforce any United States and foreign letterspatent based on or related to such Inventions.

 

4.             Employee Non-Competition and ConfidentialityAgreement. Employee shall simultaneously with the execution of thisAgreement sign and deliver to Employer an Employee Non-Competition andConfidentiality Agreement, the terms and conditions of which are incorporatedherein by reference, except that Employee shall be entitled to royaltycompensation notwithstanding the disclaimer of such compensation contained inthe Employee Non-Competition and Confidentiality Agreement.

 

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The parties have executedthis Agreement on the date and year first above written.

 
|   | SOUTH DAKOTA SOYBEAN  PROCESSORS |
|--------|----------------------------------|
|   |                             |
|   |                             |
|   | By                               |     /s/  Rodney Christianson |   |
|   | Its                              |  CEO |   |
|   |                             |
|   |                             |
|   |  /s/ Larry Mahlum           |   |
|   | Employee – Larry Mahlum     |
|        |                                  |  |  |  |  |  |

 

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