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                     URETHANE SOY SYSTEMS COMPANY, INC. AND
                      SOUTH DAKOTA SOYBEAN PROCESSORS, INC.
                         VEGETABLE OIL SUPPLY AGREEMENT

      This VEGETABLE OIL SUPPLY AGREEMENT ("Agreement") is effective the 2nd day
of August, 1999 by and between Urethane Soy Systems Company, Inc. ("USS"), an
Illinois corporation and South Dakota Soybean Processors, Inc. ("SDSP"), a South
Dakota corporation.

      USS is a newly formed corporation established in 1998 for the development
and delivery of vegetable oil based products to the urethane and plastics
industry. SDSP is in the process of planning, designing, constructing, and
developing market strategies and agreements for a Soy Oyl Production Facility
(hereinafter referred to as "Facility(s)") to serve as USS's exclusive supplier
of vegetable oils. USS is developing a new and emerging market. USS and SDSP
will endeavor to manage growth in this industry while providing a delicate
balance between growth in USS's demand for their products and SDSP's growth in
production capacity and marketing.

USS AND SDSP AGREE AS FOLLOWS:

1.    APPOINTMENT OF SDSP AS EXCLUSIVE SUPPLIER OF USS'S VEGETABLE OIL

      1.1.  USS hereby appoints SDSP as USS's exclusive supplier of vegetable
            oil during the term of this Agreement. SDSP accepts such appointment
            and agrees to supply USS's vegetable oil needs in accordance with
            the terms of this Agreement.

      1.2.  SDSP, under this Agreement, will supply vegetable oil for use in the
            plastics and urethane industry for products under patent (pending)
            by USS solely to USS.

2.    CONTRACTING VOLUME, DELIVERY, PRICE

      2.1.  SDSP's oil sales to USS will be governed by the terms and conditions
            of SDSP's Sales Contract as found in Addendum "A" of this Agreement.

      2.2.  USS will submit requests to SDSP for USS's volume requirements (in
            pounds) and required shipment dates.

      2.3.  Pricing options are Basis Fixed contract, Basis Fixed contract with
            Maximum Guaranteed Price, Basis Fixed contract with Maximum/Minimum
            Guaranteed Price or Fixed Price and/or a combination thereof, for
            the term of this Agreement.

DEFINITIONS

      BASIS FIXED CONTRACT: Price based upon the Chicago Board of Trade ("CBOT")
      soybean oil futures plus an established processing fee. Under contract
      terms, volume and delivery dates are established at the beginning of the
      contract. USS selects when to fix the price on a given volume prior to the
      established pricing date.

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      BASIS FIXED CONTRACT WITH MAXIMUM GUARANTEED PRICE: Price based upon the
      CBOT soybean oil futures plus an established processing fee plus option
      premiums (based on market conditions and maximum price selected by USS).
      Contracts extending beyond actively trading CBOT soybean oil options will
      also be subject to a market risk premium agreed upon between USS and SDSP.
      Under contract terms, volume, delivery dates and maximum prices are
      established at the beginning of the contract. USS selects when to fix the
      price on a given volume prior to the established pricing date.

      BASIS FIXED CONTRACT WITH MAXIMUM/MINIMUM GUARANTEED PRICE: Price based
      upon the CBOT soybean oil futures plus an established processing fee plus
      option premiums (based on market conditions and the maximum/minimum price
      selected by USS). Contracts extending beyond actively trading CBOT soybean
      oil options will also be subject to a market risk premium agreed upon
      between USS and SDSP. Under contract terms, volume, delivery dates and
      maximum/minimum price are established at the beginning of the contract.
      USS selects when to fix pricing on a given volume prior to the established
      pricing date.

      FIXED PRICE CONTRACT: Contract terms of volume, delivery dates and price
      are established at the beginning of the contract. USS may fix the price of
      vegetable oil for up to three years. Price will be established upon the
      weighted average of active CBOT soybean oil futures and full carry from
      the last active trading month until the end of the contract plus
      established processing fee.

      2.4.  Processing fees will be established for each quality specification
            and each Facility(s). See Addendum "B".

      2.5.  Payment terms are net 30 days of shipment.

3.    QUALITY AND SPECIFICATIONS

      3.1.  Quality specifications for each contract will be mutually agreed
            upon by USS and SDSP. USS and SDSP realize the market will be
            evolving with new applications. As specifications are mutually
            agreed upon they will be added to Addendum "C" of this Agreement.
            Amendments to quality specifications may be made to the contract
            agreement if mutually agreed upon.

      3.2.  USS and SDSP will establish agreed upon standardized testing
            procedures and a referee lab(s) to be included in this Agreement as
            Addendum "D".

      3.3.  SDSP warrants that the vegetable oil sold hereunder shall conform to
            the specifications on each individual contract. SDSP GIVES NO OTHER
            WARRANTY, EXPRESSED OR IMPLIED, AS TO DESCRIPTION, QUALITY,
            MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, PRODUCTIVENESS,
            OR ANY OTHER MATTER, OF ANY VEGETABLE OIL SUPPLIED BY SDSP. SDSP
            SHALL IN NO WAY BE

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            RESPONSIBLE FOR THE PROPER USE OF THE VEGETABLE OIL. THE SOLE AND
            EXCLUSIVE LIABILITY OF SDSP AND THE SOLE EXCLUSIVE REMEDY OF USS
            FOR BREACH OF ANY PROVISION OF THIS AGREEMENT BY SDSP ARE LIMITED
            EXCLUSIVELY TO REPLACEMENT OF THE AFFECTED VEGETABLE OIL, OR AT
            THE OPTION OF SDSP AND USS, AN AGREED UPON DISCOUNT FOR THE
            AFFECTED VEGETABLE OIL. SDSP SHALL NOT BE LIABLE UNDER ANY
            CIRCUMSTANCES FOR ANY INCIDENTAL, CONSEQUENTIAL OR ANY OTHER
            DAMAGES. USS ASSUMES ALL RISK AND LIABILITY FOR THE RESULTS
            OBTAINED BY THE USE OF THE PRODUCTS COVERED BY THIS AGREEMENT,
            WHETHER USED SINGLY OR IN COMBINATION WITH OTHER PRODUCTS.

4.    USS's MARKET VOLUME AND SDSP's PRODUCTION CAPACITY

      4.1.  USS will supply a three year market forecast updated in six month
            intervals to SDSP. When USS's market forecast would require new
            products or additional production capacity, SDSP will update its
            market supply/production capacity plan and submit the plan to USS
            within 90 days of receipt of USS's market forecast. SDSP will
            include preliminary pricing information if a new Facility(s) or new
            products are required to meet USS's market forecast.

      4.2.  SDSP agrees to meet USS's vegetable oil demand up to the design
            capabilities of SDSP's Facility(s) and marketing capabilities.

      4.3.  SDSP's nondelivery or default as to any installment shall not be
            deemed a breach of this Agreement except as to such installment.
            SDSP's certified weights are to govern settlement. Such nondelivery
            or default shall not relieve USS from its obligation to accept and
            pay for any subsequent or prior installment. Any changes in the
            selling price or other terms of this Agreement caused by a change in
            government regulations shall entitle SDSP to cancel any unshipped
            portion thereof.

5.    CLAIMS

      5.1.  Should quality disputes arise that cannot be mutually resolved, the
            official retained sample held by SDSP will be submitted to an
            approved referree lab. Quality tests will be run in accordance to
            section 3.2, Addendum "D". Referee lab results are binding upon both
            parties. The party against whom the decision results will assume all
            costs related to the handling and testing of the retained sample.

6.    TERMS OF AGREEMENT

      6.1.  This Agreement shall commence on the first date set forth above and
            shall continue for five (5) years unless terminated in accordance to
            Sections 6 of this Agreement.

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      6.2.  This Agreement may be terminated by either party on or after the
            fifth anniversary date of SDSP's Facility(s) becoming operational.
            The terminating party must give written notice of termination to the
            other party at least one (1) year prior to the proposed termination
            date.

            6.2.1. If, during the term of this Agreement, SDSP commits to
                   additional Facility(s) that USS and SDSP mutually agree to
                   build, each new Facility(s) will carry a minimum five (5)
                   year term of this Agreement starting when each new
                   Facility(s) becomes operational. Termination will be in
                   accordance with terms set forth in Section 6 of this
                   Agreement.

            6.2.2. USS and SDSP shall mutually agree upon the date that any new
                   Facility(s) becomes operational. For the purpose of this
                   Agreement, the Facility(s) shall be considered operational
                   when the Facility(s) is actually producing physical stocks of
                   the product for commercial sale.

            6.2.3. The terminating party, acting unilaterally from the other
                   party, agrees not to compete against the other party during
                   the term of this Agreement and for a period of three (3)
                   years beyond the termination date.

      6.3.  If either party suspends its business, becomes bankrupt or
            insolvent, or if a receiver or similar official is appointed for all
            or substantially all of its assets, the other party may terminate
            this Agreement by giving thirty (30) days' prior written notice to
            such party.

      6.4.  This Agreement may be terminated: (a) in accordance with the
            provisions in Sections 6.2 through 6.4 and/or the subsections found
            in Section 6 of this Agreement, (b) by mutual written agreement of
            the parties, or (c) in the event of a breach of this Agreement.

            6.4.1. The non-breaching party may terminate this Agreement if the
                   breach continues for thirty (30) days after the non-breaching
                   party provides notice to the breaching party. The notice of
                   breach described in this Section 5.3.1 shall contain
                   identification of the breach and the steps the breaching
                   party needs to take to cure the breach. Notice is to be sent
                   by certified mail.

      6.5.  Termination of this Agreement as specified herein shall not
            terminate any liability arising out of conduct prior to the actual
            date of termination.

7.    ASSIGNMENTS, SALES, MERGERS, CONSOLIDATIONS

      7.1.  Neither USS nor SDSP may transfer or assign this Agreement, or any
            rights or obligations contained in this Agreement, without the prior
            written consent of the other party.

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      7.2.  Subject to the other provisions of this Agreement, all of the terms,
            convents and conditions of this Agreement shall inure to the benefit
            of and shall bind the parties hereto and their successors and
            permitted assigns.

      7.3.  Neither party shall offer or accept any offer for a "New Equity
            Partner", or for the sale or other disposition, voluntarily or
            involuntarily, of substantially of its assets or business without
            first giving written notice to the other party of the intention to
            take on a "New Equity Partner", or sell or make any other
            disposition thereof, and giving the other party the right of first
            refusal to match any bonafide offer.

            7.3.1. Such notice shall include the name of the proposed "New
                   Equity Partner" purchaser or recipient, the price for the
                   business or portion thereof, and the terms of the proposed
                   "New Equity Partner", transaction, sale or other disposition
                   and written documentation of the bonafide offer.

            7.3.2. The other party shall have ninety (90) days from the date of
                   the receipt of such notice to, as its option, become the "New
                   Equity Partner", or purchase the assets or business offered
                   for sale or other disposition at the same price and upon the
                   same terms and conditions as the bonafide offer.

            7.3.3. In the event that either party fails to make such a
                   transaction with a "New Equity Partner" sale or other
                   disposition within a one hundred eighty (180) day period of
                   its notice to the other party, the offering party shall again
                   comply with the terms of section 7.3.2 of this Agreement as a
                   condition precedent to any subsequent transaction with a "New
                   Equity Partner", sale or other disposition of the assets or
                   business thereof.

8.    FORCE MAJEURE

      8.1.  SDSP shall not be deemed to have defaulted or failed to perform
            hereunder if SDSP's inability to perform or default is caused by an
            event or events beyond the control and without the fault of SDSP,
            including, without limitation, equipment failures, acts of God or
            public enemy, fire, flood, explosions, or weather conditions of any
            kind, strikes, labor disputes, riots, or commotion, governmental
            action of any kind, or any other inability to procure necessary raw
            materials, supplies, or equipment due to car vessel or truck
            shortages, freight embargoes, shortage of fuel or other types of
            energy, or any other causes reasonably beyond SDSP's control. In
            addition, SDSP shall not be liable in any way for any failure or
            delay in performance hereunder arising or resulting from a shortage
            of fuel or other types of energy which may be within SDSP's control.

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9.    MISCELLANEOUS

      9.1.  USS represents that it is not insolvent, as the term is defined
            under any applicable state or federal law, and that it is able to
            perform its obligations under this Agreement. In entering into this
            Agreement, USS acknowledges that SDSP has expressly relied on such
            representations.

      9.2.  The invalidity, illegality, or unenforceability of any one or more
            provisions of this Agreement shall in no way affect or impair the
            validity, legality, or enforceability of the remaining provisions
            hereof, which shall remain in full force and effect.

      9.3.  No waiver of any provision of this Agreement on any one occasion
            shall constitute a waiver of any other provision on said occasion or
            on any other occasion, nor shall it constitute a waiver of the
            waived provision on any other occasion. No waiver shall be
            enforceable unless it is in writing and signed by the party against
            whom such waiver is sought to be enforced.

      9.4.  This Agreement shall be binding upon and inure to the benefit of the
            parties hereto, their successors and assigns.

      9.5.  This instrument is intended by the parties as a final expression of
            their agreement and as a complete and exclusive statement of its
            terms. No course of prior dealings between the parties and no usage
            of trade shall be relevant or admissible to supplement, explain, or
            vary any of the terms of this Agreement. No representations,
            understandings, or agreements have been made or relied upon in the
            making of this Agreement other than those specifically set forth
            herein. This Agreement may be modified only by an instrument signed
            by both parties.

      9.6.  Any notices required or permitted to be given under this Agreement
            shall be given or made in writing and shall be delivered personally,
            by mail in the United States, postage prepaid, first class mail, or
            by facsimile to the parties at the following addresses:

                              Mr. John Wawak
                              Vice President & General Manager
                              Urethane Soy Systems Company, Inc.
                              P.O. Box 569
                              Princeton, Ill. 61356
                              Facsimile: 815/643-2998

                              Mr. Rodney Christianson
                              Chief Executive Officer
                              South Dakota Soybean Processors, Inc.
                              100 Caspian Ave.
                              P.O. Box 500
                              Volga, SD 57071
                              Facsimile: 605/627-5869

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or to such other address, telecopier number, or persons as the parties may
designate in writing. Any notice given in accordance with the provisions of this
paragraph shall be deemed to be effective, if delivered personally or
telecopied, on the date of such delivery or if mailed, upon the third day next
following the date of mailing of such notice. Each party shall give notice to
each of the other parties of a change of its address, telecopier number, or
identification of the person to whom notice is given for the purpose of giving
notice under this paragraph which thereafter, until changed by like notice,
shall be the address or identification of the person who shall receive
notification on behalf of such party for all purposes of this Agreement.

      9.7.  This Agreement shall be construed in accordance with the laws of the
            State of South Dakota.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written:

      SOUTH DAKOTA SOYBEAN PROCESSORS, INC.


      By  /s/ Rodney Christianson
            -------------------------------------

      Its  Chief Executive Officer
          ----------------------------------------


      URETHANE SOY SYSTEMS COMPANY, INC.


      By  /s/ John Wawak
          --------------------------------------

      Its  Vice President
          --------------------------------------



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                  ADDENDUM TO VEGETABLE OIL SUPPLY AGREEMENT

      WHEREAS Urethane Soy Systems Company, Inc.  ("USS") and South Dakota
Soybean  Processors,  Inc.  ("SDSP")  have entered into a Vegetable Oil Supply
Agreement Dated August 2, 1999.

      WHEREAS the terms of said agreement did not anticipate the probable long
range viability of this Vegetable Oil Supply Agreement;

      WHEREAS Section 6. TERMS OF AGREEMENT provides in Subsection 6.2. that
"This Agreement may be terminated by either party on or after the fifth
anniversary date of SDSP's Facility (s) becoming operational." And said "fifth
anniversary" is too short of a time period considering all factors relating to
this Agreement.

      THEREFORE, the parties agree this 10th day of January, 2001 to the
following amendments to the Agreement dated August 2, 1999:

      Section 6.2. shall be revised as follows:

      6.2.    This Agreement may be terminated by either party on or after the
              fifteenth (15th) anniversary date of SDSP's Facility(s) becoming
              operational. The terminating party must give written notice of
              termination to the other party at least one (1) year prior to the
              proposed termination date.

Section 6.2.1. shall be revised as follows:

      6.2.1.  If, during the term of this Agreement, SDSP commits to additional
              Facility(s) that USS and SDSP mutually agree to build, each new
              Facility(s) will carry a minimum five (5) year term of this
              Agreement starting when each new Facility(s) becomes operational
              provided this new term extends the contract term enumerated and
              set forth in Section 6.2. Termination will be in accordance with
              terms set forth in Section 6 of this Agreement.


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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written:

      SOUTH DAKOTA SOYBEAN PROCESSORS, INC.


      By  /s/ Rodney G. Christianson
          --------------------------

      Its  CEO
          --------------------------


      URETHANE SOY SYSTEMS COMPANY, INC.


      By  /s/ John Wawak
          --------------------------

      Its  Vice President
          --------------------------