Document:

Exhibit 10.1

 

ETHANOL
MARKETING CONTRACT
TERMINATION

 

THIS
ETHANOL MARKETING CONTRACT
TERMINATION (the “Ethanol Marketing Contract
Termination”) is made and entered into this 4th day of November,
2005 by and between Ethanol Products, LLC, a South Dakota limited liability
company (“Ethanol Products”) and Dakota Ethanol,
L.L.C., a South Dakota limited liability company (“Dakota
Ethanol”).

 

RECITALS:

 

WHEREAS,
Ethanol Products (by assignment from Broin Enterprises, Inc.) and Dakota
Ethanol are parties to a certain Ethanol Marketing Contract, dated as of
October 7, 1999, as amended on June 7, 2001 and as further amended on November
26, 2002 (the “Ethanol Marketing Contract”),
relating to Ethanol Products’ marketing of fuel grade ethanol produced by
Dakota Ethanol at its facility located in Lake County, South Dakota (the “Plant”);

 

WHEREAS,
pursuant to the Ethanol Marketing Contract, Ethanol Products agreed to market
all fuel grade ethanol produced at the Plant, and Dakota Ethanol agreed to pay
Ethanol Products a marketing fee for ethanol sold and administrative services
fee for administrative services performed on behalf of Dakota Ethanol;

 

WHEREAS,
Ethanol Products’ duties under the Ethanol Marketing Contract commenced upon
the start of production of ethanol at the Plant and under the terms of the
Ethanol Marketing Contract expires on September 1, 2006, a date five (5) years
from the start of production of ethanol;

 

WHEREAS,
each of the parties desires to terminate the Ethanol Marketing Contract under
the terms and conditions stated herein;

 

NOW
THEREFORE, in consideration of the mutual
representations, warranties and covenants contained herein and of other good
and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties agree as follows:

 

1.             Termination
of Ethanol Marketing Contract. 
Effective as of the close of business on December 31, 2005 (the “Termination Date”), the Ethanol Marketing Contract shall be
terminated in accordance with the provisions of this Ethanol Marketing Contract
Termination.

 

A.            Notwithstanding
the foregoing, Dakota Ethanol shall be permitted continued dial up access
through PCAnywhere through January 5, 2006 in order to allow for the orderly
deactivation and removal of the proprietary Ethanol Products systems.  On
January 6, 2006, Ethanol Products shall disable Dakota Ethanol’s access to
PCAnywhere.

 

B.            From
and after the Termination Date, Dakota Ethanol shall assume all rights and
responsibilities arising from the services previously undertaken by Ethanol

 

 

Products under the Ethanol Marketing Contract and under the outstanding
contracts listed on Exhibit A
attached hereto and incorporated herein by this reference.  Without limiting the foregoing, Dakota
Ethanol shall be responsible for completing any outstanding futures, options,
hedges or other contracts outstanding as of the Termination Date as set forth
on Exhibit A hereto, which Ethanol Products represents and warrants is a
complete list of all such contracts; provided that Ethanol Products shall not enter
into any futures, options, hedges or other contracts on behalf of Dakota
Ethanol after the date hereof without the express written consent of Dakota
Ethanol.  Dakota Ethanol shall further be
responsible for transferring any existing risk management or hedging accounts
established by Ethanol Products for the benefit of Dakota Ethanol to similar
accounts established by Dakota Ethanol, at the sole expense of Dakota
Ethanol.  Without limiting the foregoing,
on or prior to the Termination Date, Dakota Ethanol shall have made
arrangements to transfer the data on the Plant to Excel with respect to bills
of lading, denaturant receipts, certificates of analysis and similar data.

 

C.            Ethanol
Products shall be obligated to make reasonable efforts to collect accounts
receivable outstanding as of the Termination Date and to remit to Dakota
Ethanol payments received therefrom, less any amounts owed to Ethanol
Products.  The list of outstanding
accounts receivable as of the date of this Ethanol Marketing Contract Termination
is attached hereto as Exhibit B, and on January 3, 2006, Ethanol Products shall provide
Dakota Ethanol with an updated list of accounts receivable outstanding as of
the Termination Date.  If the accounts
receivable are not collected after reasonable attempts to do so, Ethanol
Products shall assign such accounts receivable to Dakota Ethanol and Ethanol
Products’ obligations with respect to the collection of such accounts shall be
terminated.

 

D.             Any
and all outstanding invoices, billing statements, and other amounts due and
owing to Dakota Ethanol pursuant to the Ethanol Marketing Contract shall be
paid in full by Ethanol Products as of the Termination Date, except for the
accounts receivable outstanding as of such date but not yet collected.

 

E.             Dakota
Ethanol and Ethanol Products each acknowledge and agree that they will not
directly or indirectly, verbally or in writing, make statements to any third
party which defames the other party, or disparages or reflects adversely on the
reputation or business of the other party.

 

2.             Payments
to Ethanol Products.

 

A.            Dakota Ethanol shall
pay Ethanol Products the amount of Four Hundred Thirty Five Thousand Fifty
Dollars ($435,050.00), as follows: 
Dakota Ethanol will receive a credit of $200,000 for the amount payable
to Dakota Ethanol by Ethanol Products under the terms of the Redemption
Agreement dated of even date herewith (the “Redemption Agreement”), between
Dakota Ethanol and Ethanol Products, and the balance in the amount of Two
Hundred Thirty Five Thousand Fifty Dollars ($235,050.00) shall be payable by
Dakota Ethanol to Ethanol Products on or before December 31, 2005.  Ethanol Products agrees that the amounts
payable to Ethanol Products hereunder

 

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represent fair and sufficient consideration for termination of the
Ethanol Marketing Contract as provided herein.

 

B.            Notwithstanding
anything to the contrary contained herein, subsequent to the Termination Date,
Ethanol Products may receive payment on sales and services performed prior to
the Termination Date.  Upon receipt of
such amounts, Ethanol Products shall calculate the amounts payable to Dakota
Ethanol consistent with the terms of the Ethanol Products Marketing Contract
and related agreements and shall promptly remit the amounts payable to Dakota
Ethanol in accordance with current practices existing among the parties.

 

C.            Dakota
Ethanol agrees that it shall not enter into any financing agreements,
covenants, or restrictions or other agreements or covenants that would prohibit
or restrict Dakota Ethanol from paying the amounts in Section 2(A) above to
Ethanol Products by the required deadline.

 

D.           Dakota
Ethanol shall be responsible for payment of all taxes and charges now or
hereafter imposed (whether by federal, state, municipal or other public
authority), by reason of the Ethanol Marketing Contract or Dakota Ethanol’s
performance of its obligations thereunder, including, but not limited to sales
or use taxes, but excluding any income tax imposed upon the net profits of
Ethanol Products.

 

3.            Mutual Release and
Indemnification.  Solely with
respect to the Ethanol Marketing Contract, the parties hereby agree as follows:

 

A.            Dakota
Ethanol hereby releases Ethanol Products and agrees to indemnify and hold Ethanol
Products and its officers, directors, employees, and agents harmless from any
and all claims, right to contribution or indemnity, suits, damages, injuries,
demands, causes of action, obligations, agreements, debts, and liabilities
whatsoever, both at law and in equity, that Dakota Ethanol may have against
Ethanol Products, except for any claims for breach of this Agreement.

 

B.            Ethanol
Products hereby releases Dakota Ethanol and agrees to indemnify and hold Dakota
Ethanol and its officers, directors, employees, and agents harmless from any
and all claims, right to contribution or indemnity, suits, damages, injuries,
demands, causes of action, obligations, agreements, debts, and liabilities
whatsoever, both at law and in equity, that Ethanol Products may have against
Dakota Ethanol, except for any claims for breach of this Agreement.

 

C.            Notwithstanding
the foregoing, Dakota Ethanol agrees that any and all liability related to or
arising in respect of the product of Dakota Ethanol, including the quantity and
quality thereof, shall remain the sole liability of Dakota Ethanol, and Dakota
Ethanol shall indemnify Ethanol Products and its officers, directors, employees
and agents from and against any and all claims, actions, damages, fines,
penalties, liabilities and expenses, including, but not limited to, attorneys’
and other professional fees, in connection with any such liability related to
or arising in respect of the product of Dakota 

 

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Ethanol.

 

4.            Further Assurances.  Each of the parties hereto agrees to use its
best efforts to take, or cause to be taken, all appropriate action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws, statutes, ordinances, codes, rules, and regulations to consummate and
make effective the transactions contemplated by this Ethanol Marketing Contract
Termination in the most expeditious manner practicable, including but not
limited to, the execution and delivery of all additional or ancillary documents
or agreements which are reasonably necessary to consummate the transactions
contemplated herein and therein.

 

5.            Equipment and
Property.  Ethanol Products
represents that the property listed on Exhibit C,
which is incorporated herein by this reference, was purchased with Ethanol
Product’s own funds, and based upon such representation, Dakota Ethanol agrees
that all machinery, equipment, and other property listed on Exhibit C shall remain the sole property of Ethanol
Products, and shall be removed from the Plant by Ethanol Property or its
designated representative within thirty (30) days following the
Termination Date.  Ethanol Products shall
repair, at its sole cost and expense, any damage caused by such removal.  All other property located or used in the
operation of the Plant shall remain the sole and exclusive property of Dakota
Ethanol.

 

6.            Drafting
Presumption.  The parties
acknowledge and agree that they have participated equally in the drafting and
preparation of this Ethanol Marketing Contract Termination, and that in the
event of a dispute having its origins in or relating to the provisions of this
Ethanol Marketing Contract Termination, or any document, instrument or
ancillary agreement delivered pursuant to this Ethanol Marketing Contract
Termination, no presumption shall arise in favor of or against either party by
virtue of their having participated in the drafting of this Ethanol Marketing
Contract Termination.

 

7.            Benefit.  This Ethanol Marketing Contract Termination
shall bind the parties hereto and shall inure to and be binding upon their
respective successors and permitted assigns.

 

8.            Entire Agreement:
Waiver.  This Ethanol Marketing
Contract Termination and any exhibits or schedules attached hereto or
incorporated herein contain the entire agreement of the parties as to the
subject matter contained herein.  The
terms, conditions, and provisions contain in this Ethanol Marketing Contract
Termination supercede any contradicting terms, conditions, and provisions
contained in the Ethanol Marketing Contract.

 

9.            Severability.  The parties agree that if any part, term,
paragraph, or provision of this Ethanol Marketing Contract Termination is in
any manner held to be invalid, illegal, void, or in any manner unenforceable,
or to be in conflict with any law of the State of South Dakota, then the
validity of the remaining portions or provisions of this Ethanol Marketing
Contract Termination shall not be affected, and such part, term, paragraph or
provision shall be construed and enforced in a manner designed to effectuate
the intent expressed in this Ethanol Marketing Contract Termination to the
maximum extent permitted by law.

 

10.          Assignment.  Except as otherwise provided in this Ethanol
Marketing Contract

 

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Termination, this Ethanol Marketing Contract
Termination is made for the personal and individual benefit of the parties
hereto, and no party may assign this Ethanol Marketing Contract Termination, or
any part thereof, or delegate any duty or obligation imposed by this Ethanol
Marketing Contract Termination without the express written consent of the
opposite party or parties hereto.

 

11.          Captions.  The captions and titles utilized in this
Ethanol Marketing Contract Termination are for convenience of reference only,
and shall not be deemed to define or limit any of the terms, conditions, or
provisions of this Ethanol Marketing Contract Termination.

 

12.          Governing Law; Forum.  This Ethanol Marketing Contract Termination
and all obligations created hereunder or required to be created hereby shall be
governed by and construed and enforced in accordance with the laws of the State
of South Dakota, and the parties hereby agree that the Circuit Court situated
in Lake or Minnehaha Counties in South Dakota, shall
be the exclusive jurisdiction and venue of any disputes relating to this
Ethanol Marketing Contract Termination.

 

13.          Notices.  All notices required to be given by this
Ethanol Marketing Contract Termination shall be made in writing either by (i) personal
delivery to the party requiring notice and securing a written receipt; or (ii)
mailing notice in the United States mail to the address of the party requiring
notice which is set forth below, by certified mail, return receipt requested.  The effective date of the notice shall be the
date of the written receipt or the date of the return receipt, as
applicable.  The refusal of a party to
accept a certified mail letter shall be treated as the delivery of the letter
on the date of refusal.

 

If to Dakota Ethanol:

 

Dakota
Ethanol, LLC

PO Box 100

Wentworth, SD 57075

Telephone:  (605) 483-2676

Facsimile:   (605) 483-2681

 

With a copy to (which shall not constitute
notice):

 

Douglas J.
Hajek

Davenport,
Evans, Hurwitz & Smith, LLP

P.O. Box 1030

Sioux Falls,
SD 57101-1030

Telephone:  (605) 336-2880

Facsimile:   (605) 335-3639

 

If to Ethanol Products:

 

Ethanol
Products, LLC

9530 East 37th
Street North

 

5

 

Wichita, KS
67226

Telephone:  (316) 303-1380

Facsimile:   (316) 267-1071

 

With a copy to (which shall not constitute
notice):

 

Gregg S.
Greenfield

Boyce,
Greenfield, Pashby & Welk, L.L.P.

P.O. Box 5015

Sioux Falls,
SD 57117-5015

Telephone:  (605) 336-2424

Facsimile:   (605) 334-0618

 

or to such other address as the parties may
specify in writing by sending notice thereof to the opposite party.

 

14.          Counterparts.  This Ethanol Marketing Contract Termination
may be executed simultaneously in two or more counterparts, each of when duly
executed and delivered shall be deemed an original and all of which shall
constitute one and the same instrument. 
This Ethanol Marketing Contract Termination may be executed and
delivered by facsimile, which facsimile signature pages shall be deemed
originals.

 

15.          Exercise of Rights
and Remedies.  Except as
otherwise provided herein, no delay of or omission in the exercise of any
right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Ethanol Marketing Contract Termination
shall impair any such right, power or remedy, nor shall it be construed as a
waiver or acquiescence in any such breach or default, or of any similar breach
or default occurring later; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default occurring before or
after that waiver.

 

16.          Time of the Essence.  Time is of the essence with respect to this
Ethanol Marketing Contract Termination. 
Notwithstanding anything to the contrary contained herein, it is a
condition precedent to the parties’ obligations hereunder that the Redemption
Agreement be executed and delivered by the parties contemporaneously herewith.

 

17.          Remedies Cumulative.  No right, remedy or election given by any
term of this Ethanol Marketing Contract Termination shall be deemed exclusive
but each shall be cumulative with all other rights, remedies and elections
available at law or in equity.

 

[Remainder of Page Intentionally Omitted]

 

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IN WITNESS WHEREOF, the parties hereto have
executed this Ethanol Marketing Contract Termination as of the date first
written above for the purposes herein contained.

 

 

	
   

  	
  DAKOTA ETHANOL, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
        /s/
  Brian Woldt

  	
   

  
	
   

  	
   

  	
  Brian Woldt, Chairman, Board of Managers

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ETHANOL PRODUCTS, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
        /s/ Bob Casper

  	
   

  
	
   

  	
   

  	
  Bob Casper, Its President

  

 

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EXHIBIT A

 

OUTSTANDING CONTRACTS

 

8

 

EXHIBIT B

 

OUTSTANDING ACCOUNTS RECEIVABLE

 

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EXHIBIT C

 

PROPERTY AND EQUIPMENT OF ETHANOL PRODUCTS,
LLC

 

•      Ethanol Products “Reference Guide” training manuals.

•      Unused Ethanol Products “Bill of Lading” paper stock.

•      PERS Stickers.

•      Railcar placards.

•      Railcar gaskets.

•      Railcar man-way bolts.

•      Ethanol Products market reports.

•      Ethanol Products board reports.

 

10Exhibit 10.2

 

REDEMPTION AGREEMENT

 

This Redemption
Agreement (this “Agreement”) is made as of
this 4th day of November, 2005, between Ethanol Products, LLC, a South Dakota
limited liability company (“Ethanol Products”)
and Dakota Ethanol, LLC, a South Dakota limited liability company (referred to
herein as the “Member”).  Capitalized terms used, but not otherwise
defined herein, shall have the meaning assigned to such terms in the Operating
Agreement (as defined hereinbelow).

 

RECITALS:

 

Whereas, the Member currently owns 200,000 Class B Capital
Units and 131,750 Class B Income Units (collectively, the “Class
B Membership Interests”) of Ethanol Products, which interests
are governed by the Amended and Restated Operating Agreement of Ethanol
Products, LLC, dated as of July 2, 2001 (the “Operating
Agreement”);

 

Whereas, Ethanol Products has an option to purchase
the Class B Class B Membership Interests pursuant to the terms set forth in the
Class B Member Agreement of Ethanol Products, LLC, dated as of June 7, 2000
(the “Class B Member Agreement”),
upon the occurrence of certain events, including a termination of its marketing
contract with Ethanol Products or a termination of its management agreement
with Broin Management, LLC;

 

Whereas, the
Member terminated the Marketing Agreement dated October 7, 1999 (the “Marketing Agreement”), between
Dakota Ethanol, LLC and Ethanol Products, LLC, effective as of December 31,
2005, pursuant to the terms and conditions of the Ethanol Marketing Contract
Termination, dated of even date herewith (the “Termination
Agreement”);

 

Whereas, as
a result of the termination of the Marketing Agreement, pursuant to the terms
of Section 5 of the Class B Member Agreement, Ethanol Products has elected its
option to purchase, and the Member has agreed to sell, the Member’s Class B
Membership Interests on the terms and conditions set forth herein.

 

In consideration
of the mutual promises and covenants of the parties, and subject to the terms
and conditions set forth herein, the parties agree as follows:

 

AGREEMENT:

 

I. Redemption of the Class B Membership Interests

 

A.            Purchase
and Sale of Class B Membership Interests.  
Pursuant to Section 5 of the Class B Member Agreement, Ethanol Products
hereby exercises its right to purchase, and the Member agrees to sell to
Ethanol Products, on the terms and conditions set forth herein, the Member’s
Class B Membership Interests, free and clear of all security interests,
pledges, liens, charges and encumbrances, on the Closing Date (as hereinafter
defined).   At the Closing (as
hereinafter defined), the Member shall transfer good, valid and marketable
title to the Class B Membership Interests and shall deliver to Ethanol Products
an assignment of such Class B Membership Interests.

 

 

B.            Consideration.  In accordance with Section 9 of the Class B
Member Agreement, the purchase price (the “Purchase Price”)
for the redemption of the Class B Membership Interests is an amount equal to
$1.00 per Class B Capital Unit, or Two Hundred Thousand Dollars
($200,000).  The Member shall further be
entitled to receive profits or be responsible for losses occurring through the
Closing Date.

 

C.            Payment.  In connection with the termination of the
Marketing Contract, the Member has agreed to pay Ethanol Products a termination
payment as set forth in the Termination Agreement in the amount of Four Hundred
Thirty-Five Thousand Fifty Dollars ($435,050) (the “Termination
Payment”).  The Purchase
Price shall be credited toward Dakota Ethanol’s payment of the Termination
Payment, and the balance of the Termination Payment shall be paid in accordance
with the Termination Agreement.  The
parties acknowledge that such credit shall be in full payment of the Purchase
Price obligations of Ethanol Products hereunder.

 

                D.            Effect
of Redemption.   Upon consummation of
the transactions at Closing, the Member shall cause any of its representatives
to resign from any manager or officer positions of Ethanol Products, and it no
longer shall no longer have any right or authority to bind Ethanol Products,
contractually or otherwise.  Likewise,
Ethanol Products shall have no rights or authority to bind Dakota Ethanol,
contractually or otherwise.

 

II. Representations and Warranties.

 

A.            Representations
and Warranties – Member. 
The Member represents and warrants to Ethanol Products, as follows:

 

1.             Organization
and Standing of the Member. The Member is duly organized, validly existing
and in good standing under the laws of South Dakota. The Member has full power
and authority to carry out the transactions contemplated hereunder.

 

2.             Title.    The Class B Membership Interests represent
all of the Capital Units and Income Units of the Member in Ethanol Products,
and the Member is the sole legal and equitable owner of the Class B Membership
Interests, free and clear of any encumbrances, and such Class B Membership
Interests are fully paid and non-assessable. 
There are no understandings of any kind affecting or relating to the
voting, issuance, purchase, redemption, repurchase or transfer of Class B
Membership Interests, except as contemplated herein and in the Operating
Agreement.

 

3.             Authority.   The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary actions of the Member,
none of which actions has been modified or rescinded and all of which actions
are in full force and effect. This Agreement constitutes and, upon execution
and delivery will constitute, a valid and binding agreement and obligation of
the Member, enforceable in accordance with its terms.

 

2

 

4.             No
Conflicts.  The execution and
delivery of this Agreement, and the performance of the obligations of the
Member hereunder do not and will not conflict with or constitute a default
under the Articles of Incorporation, Operating Agreement or other
organizational agreement of the Member, or any contract, agreement, lease,
commitment or understanding to which the Member is a party or its assets or
business are subject, or any law, ordinance, regulations, order, award,
judgment, injunction or decree applicable to the Member or its assets or
business.

 

5.             Litigation
and Proceedings.   There are no
actions, suits or proceedings pending or overtly threatened against or
affecting the Member, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, that relates directly or indirectly
to the Class B Membership Interests or the transactions contemplated by this
Agreement.

 

6.             No
Consent.   Excepting registration or
approvals required under South Dakota law, no authorization, consent or
approval of any person, entity, court or governmental body or authority is
necessary to the validity of the transfer of the Class B Membership Interests
to Ethanol Products.

 

7.             Distributions.   On or before January 31, 2006, the Member
will have received all distributions of earnings or profits and dividends that
have been declared or have accrued and become payable or allocated to the
Member in respect of its Class B Membership Interests through the Termination
Date as paid by Ethanol Products to all Members in the ordinary course of
business.

 

8.             Loans.   Except as provided in this Agreement and the
Termination Agreement, Ethanol Products has no outstanding loans, promissory
notes or other amounts payable to the Member, nor is the Member entitled to
receive any reimbursement of expenses or other amounts from Ethanol Products.

 

9.             Independent
Decision.  The Member has conducted
its own due diligence in determining whether to undertake the transactions
contemplated herein, and has been represented by legal counsel in the
negotiation of this Agreement and it has made an independent and informed
decision to proceed with the redemption of its Class B Membership Interests as
set forth in this Agreement.

 

B.            Representations
and Warranties of Ethanol Products. 
Ethanol Products hereby represents and warrants as follows:

 

1.             Organization
and Standing of Ethanol Products. Ethanol Products is duly organized,
validly existing and in good standing under the laws of South Dakota. Ethanol
Products has full power and authority to carry out the transactions contemplated
hereunder.

 

2.             Authorization.  The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary actions of Ethanol
Products, none of which actions has been modified or

 

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rescinded and all of
which actions are in full force and effect. This Agreement constitutes and,
upon execution and delivery will constitute, a valid and binding agreement and
obligation of Ethanol Products enforceable against it in accordance with its
terms.

 

3.             No
Conflicts.  The execution and
delivery of this Agreement, and the performance of the obligations of Ethanol
Products hereunder do not and will not conflict with or constitute a default
under the Articles of Incorporation, Operating Agreement or other
organizational agreement of Ethanol Products, or any contract, agreement,
lease, commitment or understanding to which Ethanol Products is a party or its
assets or business are subject, or any law, ordinance, regulations, order,
award, judgment, injunction or decree applicable to Ethanol Products or its
assets or business.

 

4.             Litigation
and Proceedings.   There are no
actions, suits or proceedings pending or overtly threatened against or
affecting Ethanol Products, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind, that relates
directly or indirectly to the redemption of the Class B Membership Interests by
Ethanol Products as contemplated herein.

 

5.             No
Consent.   Excepting registration or
approvals required under South Dakota law, no authorization, consent or
approval of any person, entity, court or governmental body or authority is
necessary to the validity of the transfer of the Class B Membership Interests
to Ethanol Products.

 

6.             Distributions.   On or before January 31, 2006, Ethanol
Products will have paid to the Member all distributions of earnings or profits
and dividends that have been declared or have accrued and become payable or
allocated to the Member in respect to its Class B Membership Interests through
the Termination Date as paid by Ethanol Products to all its Members in the
ordinary course of business.

 

7.             Loans.   Except as provided in this Agreement and the
Termination Agreement, Ethanol Products has no outstanding loans, promissory
notes or other amounts receivable from the Member, nor is Ethanol Products
entitled to receive any reimbursement of expenses or other amounts from the
Member.

 

8.             Independent
Decision.  Ethanol Products has
conducted its own due diligence in determining whether to undertake the
transactions contemplated herein, and has been represented by legal counsel in
the negotiation of this Agreement and it has made an independent and informed
decision to proceed with the redemption of the Member’s Class B Membership
Interests as set forth in this Agreement.

 

III.           Additional Covenants

 

A.            Delivery
of Books and Records.  At the
Closing, the Member will deliver to Ethanol Products any limited liability
company books, records, data and papers, or other assets of Ethanol Products in
the possession or control of the Member, including, without limitation, any
board

 

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packets, minutes of
meetings or similar information, but may keep copies of such documents as the
Member deems necessary for tax, regulatory and other purposes.

 

B.            Between
the date of this Agreement and the Closing Date, the Member will not (i)
solicit any offer from or negotiate with any third party for the direct or
indirect acquisition or Transfer (as defined in the Class B Member Agreement)
of its Class B Membership Interests, (ii) grant any options, warrants or similar
rights to acquire any direct or indirect interest, whether legal or beneficial,
in the Class B Membership Interests, or (iii) pledge, hypothecate, mortgage or
otherwise encumber said Class B Membership Interests.

 

IV.  The
Closing.

 

A.            Closing
Date.  The closing on the
transactions contemplated herein (the “Closing”)
shall take place at the offices of Ethanol Products on or before December 31,
2005 (the “Closing Date”), at 9:00 o’clock
a.m. or at such other date, time and place as may be mutually agreed upon by
the parties.  The Member waives any
provision in the Member Agreement requiring a closing prior to such date and
time.

 

B.            Closing.  At the Closing, Ethanol Products shall credit
the Purchase Price toward the Termination Payment, and shall pay to Ethanol
Products as soon as practicable following Closing, in good and available funds,
any accrued and unpaid distributions or allocations or profit, and the Member
shall deliver an assignment of the Class B Membership Interests, duly endorsed.   The Member shall further deliver the
resignations of any officer or manager appointed or elected by the Member.

 

V. Nature and Survival of Representations and
Warranties.

 

All
representations and warranties set forth herein will remain operative and in
full force and effect, and will survive the Closing and the Closing Date and
the delivery of all consideration and documents under to this Agreement for a
period of three (3) years.

 

VI. Release; Indemnification.

 

A.           The
Member hereby releases Ethanol Products and agrees to Ethanol Products and its
officers, directors, employees, and agents harmless from any and all claims,
right to contribution or indemnity, suits, damages, injuries, demands, causes
of action, obligations, agreements, debts, and liabilities whatsoever, both at
law and in equity, that the Member may have against Ethanol Products, except
for any claims for breach of this Agreement.

 

B.            Ethanol
Products hereby releases the Member and agrees to indemnify and hold the Member
and its officers, directors, employees, and agents harmless from any and all
claims, right to contribution or indemnity, suits, damages, injuries, demands,
causes of action, obligations, agreements, debts, and liabilities whatsoever,
both at law and in equity, that Ethanol Products may have against the Member,
except for any claims for breach of this Agreement.

 

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C.            With respect
to any third party claim or demand which might be subject to a claim for
indemnification under this Agreement, the party(ies) potentially entitled to
indemnification (“Indemnitee”) will promptly notify the party(ies) potentially
required to indemnify under this Agreement (“Indemnitor”), and the Indemnitor
may defend, in good faith and at its expense, any such claim or demand, and the
Indemnitee, at its expense, will have the right to participate in the defense
in any such third party claim. So long as the Indemnitor is defending in good
faith any such third party claim, the Indemnitee will not settle or compromise
such third party claim. The Indemnitee will make available to the Indemnitor or
its representatives, all records and other materials reasonably required by
them for its use in contesting any third party claim and will cooperate fully
with the Indemnitor in the defense of all such claims. If the Indemnitor does
not so elect to defend any such third party claim, the Indemnitee will have no
obligation to do so.

 

VII. Expenses.

 

 Ethanol Products and
the Member will pay their own expenses (including without limitation counsel
and accounting fees and expense) incident to the preparation and carrying out
of this Agreement and the consummation of the transactions contemplated herein.

 

VIII. Notices.

 

The parties agree
that all notices under this Agreement will be in writing and will either be
delivered personally to a party, transmitted by facsimile transmission, or sent
by overnight courier or certified mail, to the address set forth below, or to
such other address as may be furnished by either party to the other from time
to time:

 

If to Dakota Ethanol:

 

Dakota Ethanol, LLC

PO Box 100

Wentworth, SD 57075

Telephone: 
(605) 483-2676

Facsimile:  
(605) 483-2681

 

With a copy to (which shall not constitute notice):

 

Douglas J. Hajek

Davenport, Evans, Hurwitz & Smith, LLP

P.O. Box 1030

Sioux Falls, SD 57101-1030

Telephone: 
(605) 336-2880

Facsimile:  
(605) 335-3639

 

6

 

If to Ethanol Products, LLC

 

Ethanol Products, LLC.

9530 E. 37th Street North

Wichita, KS 67226

Telephone:  (316) 303-1380

Facsimile:   (316) 267-1071

 

With a copy to (which shall not constitute notice):

 

Gregg S. Greenfield

Boyce, Greenfield, Pashby & Welk, L.L.P.

P.O. Box 5015

Sioux Falls, SD 57117-5015

Telephone: 
(605) 336-2424

Facsimile:  
(605) 334-0618

 

or to such other address as the parties may specify in writing by
sending notice thereof to the opposite party.

 

Receipt of notice shall be deemed to be the
earlier of the following dates: (1) the date notice was received by the named
recipient or his agent; or (2) if the recipient refuses or fails to accept
notice, the date of such refusal, which shall include, but not be limited to,
the date the notice was returned by the postal or other service as
undeliverable, refused or otherwise returned pursuant to actions on behalf of
the recipient.

 

Either party may
designate a different address by written notice given to the other party.

 

IX. Miscellaneous.

 

A.            Binding
Effect.  This Agreement will be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns and the heirs, executors, administrators and
personal representatives.

 

B.            Section
and Paragraph Headings.  The section
and paragraph headings of this Agreement are for reference purposes only and
will not affect in any way the meaning or interpretation of this Agreement.

 

C.            Amendment.
 This Agreement may be amended only
by an instrument in writing executed by the parties.

 

D.            Entire
Agreement.  This Agreement and the
exhibits, schedules, certificates and documents referred to herein constitute
the entire agreement of the parties and supersede all understandings of the
parties.

 

7

 

E.             Waiver.  No waiver will be valid against any party
hereto unless made in writing and signed by the party against whom enforcement
of such waiver is sought and then only to the extent of such writing. No delay
or failure on the part of any party in exercising any right, power or privilege
under this Agreement or any document contemplated hereby will impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein.

 

F.             Benefit
and Assignment.  No party hereto will
assign this Agreement, in whole or in part, whether by operation of law or
otherwise, without the prior written consent of the other party, and any
purported assignment contrary thereto will be null and void and of no force or
effect. No person or entity other than the parties is or will be entitled to
bring any action to enforce the provisions of this Agreement, and the covenants
and agreements set forth herein will be solely for the benefit of, and will be
enforceable only by, the parties or their respective successors and assigns as
permitted hereunder.

 

G.            Counterparts.  This Agreement may be executed in
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument.

 

H.            Governing
Law; Forum. This Agreement will be construed in accordance and governed by
the laws of the State of South Dakota. 
The parties hereby agree that the Circuit Court situated in Lake or
Minnehaha Counties, South Dakota, shall be the exclusive jurisdiction and venue
of any disputes relating to this Agreement.

 

I.              
Reformation.  It is agreed that if
any part, term, paragraph, or provision of this Agreement is determined by the
courts or any tribunal to be illegal, void, or unenforceable, or to be in
conflict of any law of the State of South Dakota, the validity of the remaining
portions or provisions shall not be affected, and the rights and obligations of
the parties shall be construed and enforced as if this Agreement did not
contain the particular part, term, paragraph, or provision determined to be
invalid, illegal, void, or unenforceable and that such particular part, term,
paragraph or provision be reformed to the minimum extent necessary for such
particular part, term, paragraph or provision to be enforceable.

 

 

[Remainder of Page
Intentionally Omitted]

 

8

 

IN WITNESS WHEREOF, this
Redemption Agreement has been duly executed by the parties as of the date first
above written.

 

	
   

  	
  DAKOTA ETHANOL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Woldt

  
	
   

  	
   

  	
  Brian Woldt, Its Chairman of Board of
  Managers

  
	
   

  	
   

  	
   

  
	
   

  	
  ETHANOL PRODUCTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bob Casper

  
	
   

  	
   

  	
  Bob Casper, Its President

  
				

 

9

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