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MARKETING AGREEMENT
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NEDAK Ethanol, LLC Distillers Grain Services LLC
00000 Xxxxxxxxx Xxxx, XX Xxx 000 00000 000xx Xxx
Xxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
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This Marketing Agreement (the "Agreement"), dated as of this 22nd day of
January, 2007, is made by and between Distillers Grain Services LLC
("Distillers") and NEDAK Ethanol, LLC ("NEDAK"). NEDAK is constructing an
ethanol production facility (the "Facility") which will produce modified wet
distiller grains ("MWDG") as the exclusive and only ethanol co-product of the
plant. Distillers and NEDAK are collectively referred to as the "parties" and
individually as a "party" herein.
For good and valuable consideration, the sufficiency is hereby acknowledged, the
parties hereby agree as follows:
1. Marketing Services: For the Term (as defined below) of this Marketing
Agreement, Distillers shall have the exclusive right to purchase from
NEDAK, and shall be obligated to market, all MWDG (exclusive ethanol
co-product) produced at the Facility.
2. Term: This Marketing Agreement shall be effective for an initial term of
twenty-four months following three months of start up operations of the
Facility and beginning on a date mutually agreed by NEDAK and Distillers,
but in any case subject to complete construction of the Facility. The
Agreement shall renew for an additional twenty-four months (a "Renewal
Term") at the conclusion of the Initial Term and each Renewal Term
thereafter, unless either party has given written notice to the other 120
days prior to the expiration date of the Term, which shall include the
Initial Term and all Renewal Terms.
3. Title and Collection: Title and risk of loss to the MWDG shall transfer to
Distillers FOB Facility. The weight for pricing purposes shall be
determined when the MWDGs are weighed on NEDAK certified scales, or other
approved certified scales mutually agreed to by the parties, and loaded
into a truck or other carrier for load out (the "Delivery Location").
Collection and all risks of non-payment of accounts receivables shall be
the sole responsibility of Distillers, upon transfer of title. Distillers
shall, at its sole discretion, establish policies for credit reviews and
credit limits for Distillers present and future customers. Upon credit
approval, Distillers shall authorize shipments of MWDGs from NEDAK to
Distillers's customers.
4. Shipping and Handling:
a. The MWDG customer (e.g., a feedyard) will have the option of taking
delivery of the MWDG at the Facility or selecting a commercial freight
company of their choice to take delivery of the MWDGS, provided that
in either case the title will transfer as set forth in Section 3.
Distillers shall have sole responsibility to arrange for sufficient
trucks to transport any remaining MWDG production on a
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daily basis. No later than 12:00 p.m. each day, Distillers shall
provide to NEDAK a load out schedule for the next day and the expected
load out schedule for the following four (4) days.
b. In connection with this Agreement, NEDAK will:
(i) Determine the weight of all MWDGs delivered from the Facility to
Distillers or its customers using scales at the facility that are
inspected and certified as required by applicable law and as
otherwise required by this Agreement; and
(ii) Load the MWDGs for shipment into trucks in a timely manner, which
shall include supplying adequate labor and equipment for loading
MWDG on a twenty-four hour load out schedule, 7 days a week
including holidays.
5. Price: Distillers agrees to purchase from NEDAK all MWDGs (exclusive
ethanol co-product) produced at the Facility, FOB Atkinson, NE. Distillers
shall operate in good faith and use its best efforts to procure a market
competitive price for all MWDGs (the "Purchase Price"). Distillers shall
permit NEDAK to audit its books from time to time with reasonable notice to
ensure compliance with the intent of this provision and the Agreement. The
Purchase Price may be adjusted by the mutual written consent of the
parties.
a. NEDAK shall guarantee moisture content of MWDGs at 55% (45% dry
matter) with a tolerance of + or - of 1% points ("Moisture
Standards"). NEDAK will take and analyze an origin sample of the MWDGs
after it is weighed in accordance with Section 3 of this Agreement and
placed in a truck or other carrier for load out (the "Sample"). NEDAK
will label such Sample to indicate the date of load out; the truck or
other carrier from which the Sample was taken; and the order/shipment
number. NEDAK will retain such Samples of MWDGs for not less than five
(5) days and labeling information of such Samples of MWDGs for not
less than thirty (30) days. At a minimum, a composite analysis of
MWDGs shall be sent once a month to Distillers. It is understood that
said analysis is a composite and may not be indicative of the current
analysis.
b. Unless otherwise agreed between the parties, Distillers may inspect
the MWDGs at any time after delivery by NEDAK at the Delivery
Location. If, after inspection, Distillers claims that the moisture
content of the inspected MWDGs ("Questioned MWDGs") exceeds the
Moisture Standards, Distillers will provide NEDAK written notice of
same. At that time, NEDAK shall immediately test the Sample of the
Questioned MWDGs ("Tested Sample"). If the moisture content for the
Tested Sample exceeds the Moisture Standards, Distillers may reject
(as set forth in Section 7) the Questions MWDGs or receive a Discount
(as defined below), the option of which is subject to Distillers's
sole discretion. The Discount for the Questioned MWDGs will be 75
cents per moisture point per ton. The 75 cents per moisture point
discount is equivalent to discounting #2 corn at 4 cents
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per percent point on moisture basis. ($.04/56#x2000#/.85x.45= $.7563
per ton dry basis corn) Distillers shall have the right to audit and
confirm such records on moisture tests.
6. MWDGs Quality: NEDAK shall produce MWDGs consistent with the Moisture
Standards. NEDAK shall also provide an official feed tag with
specifications of their MWDGs. NEDAK shall represent that all MWDGs sold
under this Marketing Agreement shall be non-toxic and approved for animal
feed purposes. NEDAK will not be a party to, or have any liability or
obligation to any customer of or to Distillers itself under agreements or
contracts entered into by Distillers as a result of MWDGs quality except as
provided in this Section 6. Distillers will indemnify, defend and hold
harmless NEDAK and its Affiliates, employees and agents from and against
any and all liabilities, costs and expenses (including, without limitation,
attorneys fees) arising out of, relating to or resulting from any failure
of distiller grains (DGs) DGs to comply with the production standards or
degrading the quality of DGs which results from causes or conditions
arising after title passes to Distillers, except to the extent such
liabilities, costs and expenses arise out of the gross negligence or
intentional misconduct of NEDAK or a breach of this Agreement by NEDAK.
7. Rejection. Unless otherwise agreed between the Parties, and in addition to
other remedies permitted by law, Distillers may, without obligation to pay,
reject either before or after delivery by NEDAK at the Delivery Location,
any of the MWDGs, which when inspected, fails in a material way to conform
to the Moisture Standards. If NEDAK knows or reasonably suspects that any
of the MWDGs produced at the Facility fail to conform to the Moisture
Standards, NEDAK shall promptly notify Distillers so that such MWDGs can be
retested before entering interstate commerce. If Distillers knows or
reasonably suspects that any of the MWDGs produced by NEDAK at the Facility
fail to conform to the Moisture Standards, then Distillers may obtain
independent laboratory tests of the affected MWDGs. If such MWDGs are
tested and found to comply with the Moisture Standards, then Distillers
shall pay all testing costs; and if the MWDGs are found not to comply with
the Moisture Standards, NEDAK will pay all testing costs. Any testing
obtained by Distillers shall be performed no later than five (5) days from
the delivery of MWDGs to the Delivery Location.
8. Disposition. When rejection occurs before or after delivery by NEDAK at the
Delivery Location, at its option, Distillers may:
(a) Dispose of the rejected MWDGs after first offering NEDAK a reasonable
opportunity of examining and taking possession thereof, if the
condition of the MWDGs reasonably appears to Distillers to permit such
delay in making disposition.
(b) Work with NEDAK to dispose of the rejected DGs in any manner directed
by NEDAK that Distillers can accomplish without violation of
applicable laws, regulations or property rights.
(c) If Distillers has no available means of disposal of rejected DGs or
NEDAK fails to direct Distillers to dispose of them as provided
herein, Distillers may return the
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rejected DGS to NEDAK, upon which event Distillers's obligations with
respect to said rejected DGs shall be deemed fulfilled. Title and risk
of loss shall pass to NEDAK promptly upon proper rejection by
Distillers.
(d) NEDAK shall reimburse Distillers for all costs reasonably incurred by
Distillers in storing, transporting, returning and disposing of the
properly rejected DGS. Distillers shall have no obligation to pay
NEDAK for rejected DGS and if not reimbursed, may deduct reasonable
costs and expenses to be reimbursed by NEDAK from amounts otherwise
owed by Distillers to NEDAK.
9. Sales: Distillers shall have sole responsibility of selling all MWDGs
(exclusive ethanol co-product) produced by NEDAK at the Facility. Sales
price shall be determined on the cost of MWDGs FOB Facility as set forth by
this Marketing Agreement less marketing fee as agreed upon below. NEDAK
shall not be responsible for any costs of transporting MWDGs once title
passes to Distillers or its customers. Marketing fee referenced above shall
be based upon the current week's tonnage and shall be as follows: at $50
per ton or less - a fee of $1.50 per ton; and over $50 per ton, a fee of
three percent (3%) of tonnage, all based on a price per ton of FOB
Facility. The parties further agree that the tonnage tax, which is
currently .10 per ton, shall be the responsibility of Distillers.
10. Production: NEDAK agrees to produce MWDGs for the length of this Term and
any and all subsequent Terms renewed. Any and all modifications to the
NEDAK ethanol plant operations that affect MWDGs production output shall be
notified to Distillers in writing, the modifications and effect on
production of MWDGs, no later than 30 days prior to such modifications.
NEDAK shall notify Distillers of any and all intended substantial
reductions of MWDGs production in writing prior to 60 days of such reduced
levels of production, which both parties mutually agree upon a an
acceptable level of production. The Parties further acknowledge that this
Agreement contemplates the production of MWDGs. Nonetheless, it is the
intent of the Parties that the following provisions shall apply if NEDAK
desires to produce other products or new products derived from DGs or any
component thereof (including without limitation fats, carbohydrates or
protein) that may be developed during the Term of this Agreement or any
subsequent Terms: (A) NEDAK shall provide Distillers sixty (60) days prior
notice of its intent to produce any such product, in as much detail as
NEDAK may have on such other or new product; (B) NEDAK agrees to use
Distillers to market the other or new products, subject to Distillers
agreeing to do so; and (C) the Parties shall negotiate the pricing and
terms that are competitive to the Parties and third parties for such other
or new products.
11. Payment: Payment of the Purchase Price for MWDGs shall be made as follows.
For deliveries from Monday through Sunday, payment shall be made on the
following Friday. If such Friday is a federal holiday, payment shall be
made on the next business day. Distillers shall remit payment to NEDAK by
Electric Funds Transfer (EFT). The outbound weight certificates generated
pursuant to Section 3 will determine the quantity of MWDGs for which
Distillers is obligated to pay pursuant to this Section 11. NEDAK will
provide a copy of each such weight certificate to Distillers at the same
time that such certificate is produced.
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12. Plant Shutdowns: As soon as is commercially reasonable, NEDAK shall notify
Distillers by verbal and/or written notice of any governmental mandatory
shutdowns or planned shutdowns for plant maintenance. In such situations,
Distillers shall make arrangements with its customers to utilize MWDGs
inventories and subsequent production to carry customers through such
shutdowns. In the event of an unplanned shutdown (plant breakdown for
whatever reason) NEDAK shall notify Distillers immediately so Distillers
can implement emergency plans with its customers. NEDAK shall in its best
efforts restore plant operations as soon as possible. Distillers hereby
acknowledges this and agrees that NEDAK will not have any liability or
obligation to any purchaser or to Distillers under this Agreement or any
other agreement or contract related to any shutdown.
13. Representations and Warranties. The parties make the following warranties,
representations or guarantees as described below:
(a) Distillers represents and warrants to NEDAK that Distillers, either
through its own management or through lawful contracts entered into
with third parties, currently has and shall maintain or cause to be
maintained such licenses, permits and/or authorities as may be
required to lawfully engage in the purchase and sale of MWDGs.
(b) Distillers represents and warrants to NEDAK that: all necessary
corporate action has been taken to authorize the execution, delivery
and performance of this Agreement; the execution, delivery and
performance of this Agreement by Distillers does not, and will not,
violate or constitute a breach of or default under any governmental
requirement or any indenture, contract or other instrument to which
its assets are bound or to which the representing party's business is
subject.
(c) NEDAK represents and warrants to Distillers that: all necessary
corporate action has been taken to authorize the execution, delivery
and performance of this Agreement; the execution, delivery and
performance of this Agreement by NEDAK does not, and will not, violate
or constitute a breach of or default under any governmental
requirement or any indenture, contract or other instrument to which
NEDAK or its assets are bound or to which NEDAK's business is subject.
(d) NEDAK warrants that the MWDGs delivered to Distillers shall be free
and clear of liens and encumbrances.
14. Indemnification.
a. Indemnification By NEDAK. NEDAK agrees to indemnify and hold
Distillers harmless from any Loss suffered or incurred by Distillers
arising out of, or in any way relating to:
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(a) any personal injury or property damage related to the use,
possession, condition of, disposal of, physical contact with or
exposure to any products manufactured at the Facility;
(b) injuries or alleged injuries suffered by NEDAK's employees whether
at the Facility or elsewhere and whether or not under the direction of
Distillers and/or the NEDAK; or
(c) any violation or alleged violation of any governmental requirement
by NEDAK,
unless and to the extent such Loss was directly caused by Distillers's gross
negligence or willful misconduct and in each case only to the extent Distillers
is not otherwise compensated for such Loss by applicable insurance (to the
extent actually paid).
b. Indemnification By Distillers. Distillers agrees to indemnify and hold
NEDAK harmless from any Loss suffered or incurred by NEDAK arising out
of, or in any way relating to:
(a) injuries or alleged injuries suffered by Distillers's employees,
or leased or subcontracted by Distillers, whether at the Facility or
elsewhere; or
(b) any violation or alleged violation of any governmental requirement
by Distillers,
unless and to the extent such Loss was directly caused by NEDAK's gross
negligence or willful misconduct and in each case only to the extent NEDAK is
not otherwise compensated for such Loss by applicable insurance (to the extent
actually paid).
c. Mutual Indemnification. Each Party shall indemnify, defend and hold
the other Party harmless from all liabilities, costs and expenses
(including, without limitation, attorneys fees) that such Party may
suffer, sustain or become subject to as a result any misrepresentation
or breach of warranty, covenant or agreement of the indemnifying Party
contained herein or the indemnifying Party's gross negligence or
willful misconduct in performance of its obligations under this
Agreement.
15. Notices. All notices required or permitted under this Agreement will be in
writing and will be deemed given and made: (i) if by personal delivery, on
the date of such delivery, (ii) if by facsimile, on the date sent (as
evidenced by confirmation of transmission by the transmitting equipment),
(iii) if by nationally recognized overnight courier, on the next business
day following deposit, and (iv) if by certified mail, return receipt
requested, postage prepaid, on the third business day following such
mailing; in each case addressed to the address or facsimile number shown
below for such Party, or such other address or facsimile number as such
Party may give to the other Party by notice:
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If to Distillers:
Distillers Grain Services LLC
00000 000xx Xxx
Xxxxxxxxx XX 00000
If to NEDAK:
00000 Xxxxxxxxx Xxxx, XX Xxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
with copies to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
16. Good Standing. NEDAK and Distillers each represent that it is in good
standing with the State of Nebraska.
17. Severability. If any provision of this Marketing Agreement shall be waived
or held unenforceable by a court or regulatory authority of competent
jurisdiction, the balance of this Marketing Agreement shall remain in full
force and effect.
18. Force Majeure. The performance of this Marketing Agreement is subject to
and contingent upon strike, riots, civil disorders, accidents, fire
regulations, restrictions imposed by any governmental agency or court, or
any other delay which is beyond the parties' direct control. Failure by
either party to perform the obligations required by this Marketing
Agreement, because of the reasons in the preceding sentence, shall not void
the Marketing Agreement or occasion a claim for damages, provided, however,
that if such failure to perform continues for a period of thirty (30) days,
either party may terminate the Marketing Agreement upon thirty (30) days
prior written notice to the other.
19. Successors/Assigns. This Marketing Agreement shall be binding upon and
shall insure to the benefit of the parties thereto and their successors and
assigns. Neither party may assign this Agreement to another party without
the prior written consent of the other party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing,
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Distillers hereby consents to any collateral assignment of this Agreement
to NEDAK's lender, as may be required by lender from time to time.
20. Confidentiality: The parties hereto agree not to disclose, comment on or
otherwise make public the terms of this agreement, or any part or provision
herein contained. Parties further agree that public disclosure by either of
them of this agreement, or any provision herein contained, shall constitute
a breach of this agreement and the other party shall be entitled to all
remedies available to it by equity or by law.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nebraska, excluding any applicable
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state.
22. Dispute Resolution. In the event a dispute arises under this Agreement that
cannot be resolved by those with direct responsibility for the matter in
dispute, such dispute shall be resolved by way of the following process:
(a) Senior management from NEDAK and from Distillers shall meet to discuss
the basis for the dispute and shall use their best efforts to reach a
reasonable resolution to the dispute.
(b) If such negotiations are unsuccessful, or to prevent irreparable harm
during the pendency of the resolution process, the parties shall be
entitled to access the courts to obtain any and all remedies available in
law or in equity.
23. Insurance. During the term of this Agreement, the Parties shall, at their
own expense, carry in full force and effect those insurance policies more
fully described herein.
(a) Commercial general liability insurance, written on "occurrence" policy
forms, including coverage for premises/operations, products/completed
operations, property damage, blanket contractual liability and personal
injury, with no exclusions for explosion, collapse and underground perils,
and fire with coverage limits of, no less than $1,000,000 for each
occurrence and in the aggregate. The commercial general liability policy
shall also include a severability of interest clause and a cross liability
clause in the event more than one entity is "named insured" under the
liability policy.
(b) Pollution liability insurance, including coverage for off-site
clean-up, bodily injury and property damage, written on an occurrence or on
a "claims made" form, with limits of no less than $1,000,000.
(c) Automobile liability insurance, including coverage for owned, non-owned
and hired automobiles for both bodily injury and property damage in
accordance with statutory legal requirements, with combined single limits
of, no less than $1,000,000 per accident with respect to bodily injury,
property damage or death. Automobile insurance shall include the Motor
Carrier Act Endorsement encompassing Hazardous Materials Cleanup (MCS-90),
if applicable.
(d) Workers compensation insurance to statutory limits and employer's
liability with a limit of not less than $1,000,000 and such other forms of
insurance which is required by law to
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provide for the project, providing statutory benefits and covering loss
resulting from injury, sickness, disability or death of the employees of
the Borrower.
(e) All such policies may have deductibles of not greater than $25,000. The
deductible or waiting period as respects business interruption shall not
exceed thirty (30) days.
(f) Umbrella or excess liability insurance may be purchased in order to
satisfy the limit requirements described in Sections 23(a), 23(c) and, with
respect to employer's liability, 23(d).
(g) The insured shall provide the other Party with certificates of
insurance evidencing the above coverages not later than thirty (30) days
after the Effective Date. All policies shall contain a provision that will
provide thirty (30) days' prior written notice of cancellation or material
reduction in coverage to the other Party. All policies shall include a
waiver of subrogation against the other Party with respect to the policies
in this Section 23.
24. Remedies.
24.1 Distillers Event of Default. The following shall constitute events of
default on the part of Distillers (each, a "Distillers Event of Default")
under this Agreement:
(a) Distillers fails on two (2) separate occasions within any 12-month
period to purchase MWDG or to market MWDG in accordance with this Agreement
under circumstances where such breach or failure is not excused by this
Agreement, including by a Force Majeure condition; provided, however, that
any such failure shall not constitute a triggering occurrence hereunder
unless NEDAK has provided Distillers with written notice of each such
failure.
(b) Distillers fails to pay any amount that is due to NEDAK under this
Agreement that is not excused by this Agreement, and (i) NEDAK provides
written notice to Distillers of such failure and (ii) Distillers fails to
pay to NEDAK such past-due amount within 10 days of Distillers's receipt of
such notice;
(c) two or more incidents of willful misconduct by Distillers in the
performance of its obligations hereunder occur in any 12-month period and
NEDAK provides Distillers with written notice of each such incident, or any
one incident of willful misconduct by Distillers occurs where (i) such
willful misconduct has a Material Adverse Effect on NEDAK or, (ii) such
willful misconduct is done under the direction of or otherwise sanctioned
by Distillers's board of directors or senior management; or
(d) Distillers files a voluntary petition in bankruptcy, has filed
against it an involuntary petition in bankruptcy, makes an assignment for
the benefit of creditors, has a trustee or receiver appointed for any or
all of its assets, is insolvent or fails or is generally unable to pay its
debts when due, in each case where such petition, appointment or insolvency
is not dismissed, discharged or remedied, as applicable, within sixty (60)
days.
24.2 NEDAK Event of Default. The following shall constitute events of
default on the part of NEDAK (each, a "NEDAK Event of Default") under this
Agreement:
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(a) NEDAK fails to pay any amount that is due to Distillers under this
Agreement that is not excused by this Agreement, and (i) Distillers
provides written notice to NEDAK of such failure and (ii) NEDAK fails to
pay to Distillers such past-due amount within 10 days of NEDAK's receipt of
such notice;
(b) two or more incidents of willful misconduct by NEDAK in the
performance of its obligations hereunder occur in any 12-month period and
Distillers provides NEDAK with written notice of each such incident, or any
one incident of willful misconduct by NEDAK occurs where (i) such willful
misconduct has a Material Adverse Effect on Distillers, and (ii) such
willful misconduct is done under the direction of or otherwise sanctioned
by NEDAK's governing body or senior management; or
(c) NEDAK files a voluntary petition in bankruptcy, has filed against
it an involuntary petition in bankruptcy, makes an assignment for the
benefit of creditors, has a trustee or receiver appointed for any or all of
its assets, is insolvent or fails or is generally unable to pay its debts
when due, in each case where such petition, appointment or insolvency is
not dismissed, discharged or remedied, as applicable, within sixty (60)
days.
24.3 Remedies and Procedures.
(a) Remedies for Breach Not Constituting an Event of Default. In the
event that either Party breaches or fails to perform any commitment or
obligation contained herein, under circumstances where such breach or
failure does not constitute a Distillers Event of Default or a NEDAK Event
of Default (each, as the context requires, an "Event of Default"), and such
breach or failure is not excused by this Agreement, including by a Force
Majeure condition, the other Party (the "Non-Defaulting Party") may
exercise any remedy or right specified in this Agreement in connection with
such breach or failure. In addition, and without limiting the foregoing:
(i) in the event either Party fails to pay any amounts due to the
other Party when due, the Non-Defaulting Party shall be entitled to
charge and receive interest accrued on the unpaid amount from the date
it was due until the date actually paid at a default rate;
(ii) if a Party breaches or fails to perform in any material
respect any of its commitments or agreements contained in this
Agreement, the defaulting Party shall be liable to the Non-Defaulting
Party for damages arising out of or resulting from such breach as
provided in this Agreement (subject to the Non-Defaulting Party's duty
to mitigate its damages); and
(iii) if a Party breaches or fails to perform in any material
respect any of its commitments or agreements contained in any
Principal Document, and such breach or failure is of a continuing
nature, the Non-Defaulting Party seek injunctive relief.
24.4 Remedies for Events of Default. Upon the occurrence of an Event of
Default that has not been waived by the Non-Defaulting Party, the
Non-Defaulting Party shall have all of the following rights and
remedies in addition to the rights and remedies specified in Section
24.3 above, which may be exercised in such order or combination as
such Non-
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Defaulting Party may determine: (i) terminate this Agreement, or (ii)
pursue any other remedies available at law or in equity; provided,
however, that such Party shall not be allowed to suspend performance
except as set forth in this Agreement
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the
day and year first above written.
Distillers Grain Services LLC NEDAK
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxx Xxxxxxxxx
-------------------------- -----------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxxx Xxxxxxxxx
Title: Vice President Title: President and General Manager
/s/ Xxxx X. Xxxxx
-----------------------------
President