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Fagen Owner Transaction Party Parties Letter of
Intent
 Transaction Documents Closing Date
 1.
    
    The Transaction.The Parties agree that the Transaction will consist of the following:
 (a)
    
    Fagen agrees to provide Owner with those services as described in this Letter
of Intent which are necessary for Owner to develop a detailed description of a fifty
(50) million gallons per year (MGY) expansion, including production modifications,
but not including any grains or distillers grains shipping and receiving modifications
or any ethanol storage or ethanol loadout modifications or pile caps, (the
Expansion), to its existing fifty (50) MGY dry grind ethanol production facility
located at Jackson, Nebraska (the Plant) and to establish a price for which Fagen
would provide design, engineering, procurement of equipment and construction services
for the Expansion. The description of the Expansion will be sufficiently detailed to
permit an analysis of the Owners lump-sum cost to develop the Expansion and to develop
an economic pro forma sufficient to determine if the Expansion can be financed. Owner
acknowledges




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that Fagen has no control over cost of labor, materials, equipment, or services
furnished by others, over other contractors methods of determining prices, or other
competitive bidding or market conditions. Fagens estimates of project construction
cost will be made on the basis of its experience and qualifications and will
represent Fagens best judgment as experienced and qualified professionals familiar
with the construction industry. Fagen does not guarantee that proposals, bids, or
actual construction cost will not vary from its estimates of project cost and Owner
acknowledges the same.(b)
    
    Fagen will also provide Owner with conceptual design and technical information
required to support Owners application for a construction air permit prior to the
commencement of Plant Construction.(c)
    
    If Owner determines that the Expansion is economically feasible and desires to
proceed with the development of the Expansion, then Owner agrees to enter into a
Lump Sum Design-Build contract with Fagen for the design, procurement of
equipment and construction of the Expansion (the Design-Build Expansion
Agreement).(d)
    
    Owner agrees that the Design-Build Expansion Agreement will be Fagens chosen
form of Design-Build Expansion Agreement and will contain among other things,
those terms and conditions set forth in the General Terms and Conditions section
of this Letter of Intent.
 2.
    
    Contract Price.Owner shall pay Fagen Fifty-six Million Eight Hundred Seventy-five Thousand
Four Hundred Thirty-three Dollars ($56,875,433.00) (the Contract Price) as full
consideration to Fagen for complete performance of the services described in the Design-Build
Expansion Agreement and all costs incurred in connection therewith.
 (a)
    
    The Contract Price shall not include any costs related to sales tax on process
equipment, union labor or prevailing wage requirements. If any action by Owner, a
change in Applicable Law, or a Governmental Authority (as those terms are defined in
the Design-Build Expansion Agreement) acting pursuant to a change in Applicable Law,
shall require Fagen to pay sales tax, employ union labor or compensate labor at
prevailing wages, the Contract Price shall be adjusted upwards to include any
increased costs associated with such tax, labor or wages. Such adjustment shall
include, but not be limited to, anticipated taxes, increased labor, subcontractor, and
material and equipment costs resulting from any union or prevailing wage requirement;
provided, however, that if an option is made available to either employ union labor,
or to compensate labor at prevailing wages, such option shall be at Fagens sole
discretion and that if such option is executed by Owner without Fagens agreement,
Fagen shall have the right to terminate this Letter of Intent or the Design-Build
Expansion Agreement, as




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applicable, and receive compensation pursuant to Paragraph 4(c) hereof or the
terms of the Design-Build Expansion Agreement, whichever is applicable.
 (b)
    
    If the Construction Cost Index published by Engineering News-Record Magazine
(CCI) for the month in which a Notice to Proceed is. given to Fagen is greater
than 7882.53 (October 2006), the Contract Price shall be increased by a
percentage amount equal to the percentage increase in CCI.(c)
    
    Due to rapidly accelerating costs of certain specialty materials required for
Plant
Construction, in addition to any adjustment provided for in Paragraph 2(b) hereof,
Fagen shall also add a surcharge to the Contract Price of one half of one percent
(0.50%) for each calendar month that has passed between October 2006 and the
month in which a valid Notice to Proceed is given to Fagen. By way of example,
if a valid Notice to Proceed is given one year after October 2006 and the CCI has
increased two percent (2%) over such period of time, the total adjustment to the
Contract Price shall be two percent (2%) in accordance with Paragraph 2(b) plus
one half of one percent (0.50%) for each of the twelve months from October 2006
to the delivery of a valid Notice to Proceed in accordance with this paragraph, for
a total adjustment of eight percent (8%).
 3.
    
    General Terms and Conditions.The consummation of the Transaction will be subject to the
Design-Build Expansion Agreement containing the following conditions:
 (a)
    
    Fagen will have no responsibility for and will not perform any site
preparation work. Owners site responsibilities will include, but will not be limited
to:
 i.
    
    Obtaining land and legal authority to use the site for its intended purpose;ii.
    
    site grading including soil stabilization and the costs connected therewith;iii.
    
    final grading, seeding, and mulching;iv.
    
    site security, including any
site fencing;v.
    
    procuring boundary and topographic surveys;vi.
    
    procuring soil borings and geotechnical reports;vii.
    
    obtaining all operating permits,
including any fees, bonding, and required
testing;viii.
    
    obtaining storm water runoff permit;ix.
    
    obtaining any necessary pollutant elimination discharge permit;x.
    
    obtaining a natural gas supply and service agreement and providing all gas
piping to the use points, providing burner tip pressures as specified by Fagen,
and supplying a digital flowmeter;xi.
    
    securing temporary and permanent electrical service, including all
infrastructure design and installation for any line/service extensions,
substation, primary feed and metering system, and on-site electrical
distribution system up to and including the service transformers;xii.
    
    supplying a water source, storage, and water supply lines of appropriate




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quality and quantity;xiii.
    
    paying for a water pre-treatment
system should the project require such a
system, the cost of which is not included in the Contract Price, and which
shall be provided by Fagen pursuant to a separate side-letter agreement
executed by Owner and Fagen at Fagens standard time plus material rates
during the relevant time period and at the relevant locale;xiv.
    
    providing wastewater discharge piping, septic tank and drainfield or
connect to a municipal system as required for the sanitary sewer
requirements of the Expansion;xv.
    
    providing and maintain required ditches and permanent roads;xvi.
    
    constructing, furnishing, and equipping the administration building;xvii.
    
    providing maintenance and power equipment and spare parts;xviii.
    
    providing all rail design, engineering, and construction, including any
railroad permits or approvals;xix.
    
    supplying drawings of rail
system and administration building to Fagen;
andxx.
    
    paying for the required fire protection system for the
Plant, the cost of
which is not included in the Contract Price, and which shall be provided
by Fagen pursuant to a separate side-letter agreement executed by Owner
and Fagen at Fagens standard time plus material rates during the relevant
time period and at the relevant locale.
 (b)
    
    Owner will enter into a Pre-Engineering Services Agreement
with Fagen Engineering, LLC. The Pre-Engineering Services Agreement provides
for Fagen Engineering, LLC to commence work on the Phase I and Phase II
engineering for the Expansion project as set forth therein. The Phase I
engineering shall consist of engineering and design of the Expansion site and
shall include: property layout; grading, drainage and erosion control plan
drawings; roadway alignment drawings; culvert cross sections and details; and
seeding and landscaping, if required. The Phase II engineering shall consist
of engineering and design of site work and utilities for the Expansion, all
within the property line of the Expansion, including: property layout; site
grading and drainage drawings; roadway alignment; all utility layout including
fire loop, potable water, well water if applicable, sanitary sewer, utility
water blowdown, and natural gas; geometric layout; site utility piping tables;
tank farm layout; tank farm details; sections and details drawing, if
required, and miscellaneous details drawing, if required. Owner will pay Fagen
Engineering, LLC Ninety-two Thousand Five Hundred Dollars ($92,500.00) for
such engineering services pursuant to the terms of that agreement, the full
amount of which shall be included in and credited to the Contract Price.
Notwithstanding the foregoing sentence, if a Notice to Proceed is not issued
pursuant to the terms of the Design-Build Expansion Agreement, or Financial
Closing is not obtained, then Fagen Engineering, LLC shall keep the full
amount paid under the Pre-Engineering Services Agreement as compensation for
the services provided thereunder.




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(c)
    
    Fagen will provide reasonable assistance to Owner in obtaining Owners permits,
approvals and licenses.(d)
    
    Owner will provide: surveys describing the propertys boundaries;
geotechnical
studies describing subsurface conditions; temporary and permanent easements,
zoning and other requirements and encumbrances to enable Fagen to perform the
work; a legal description of the site; as-built and record drawings of any existing
structures; environmental studies, reports, and statements describing
the
environmental conditions, including hazardous conditions at the site.(e)
    
    Owner will be responsible for securing and executing all necessary real estate
agreements to secure the site and is responsible for all costs incurred in obtaining
those agreements.(f)
    
    Fagen may subcontract portions of the work.(g)
    
    Fagen will provide up to two (2) weeks of training for Owners employees and,
if
applicable, Owners Operators employees required for the operation
and
maintenance of the Expansion.(h)
    
    Fagen shall coordinate with Owner the timely and full integration of
installation and start-up of the Expansion into the Plant so as to coincide as much as
possible with the periods of non-operation (whether scheduled or otherwise) of the
Plant. Fagen shall perform all services reasonably necessary to fully integrate the
Expansion into the Plant so that the Expansion operates in accordance with the
Transaction Documents and maintains the Performance Guarantee Criteria.(i)
    
    Fagen shall use its best efforts to minimize any interruption to the Plant
resulting from the design, construction, and integration of the Expansion. However,
Fagen makes no guarantees as to, and shall not be held liable for, any effect the
design, construction, and integration of the Expansion shall have on the performance
of the Plant during Fagens performance of the services provided pursuant to the
Design-Build Expansion Agreement.(j)
    
    Owner must obtain Financial Closing prior to the issuance of a Notice to Proceed.(k)
    
    Owner will pay all reasonable costs incurred by Fagen for frost removal so
that winter construction can proceed. Such costs will be in addition to, and not
included in, the Contract Price.(l)
    
    Fagen will utilize certain proprietary property and information of ICM, Inc.,
a Kansas corporation (ICM), in the design and construction of the project, and may
incorporate proprietary property and information of ICM into the project.




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Owners use of the proprietary property and information of ICM shall be
governed by the terms and provisions of a license agreement between Owner and ICM
which shall be attached as an exhibit to the Design-Build Expansion Agreement.
Owner will be responsible for negotiating any requested changes to the ICM license
directly with ICM, not Fagen.(m)
    
    All drawings, specifications, calculations, data, notes and other materials and
documents, including electronic data furnished by Fagen to Owner under the Design-Build
Expansion Agreement (Work Product) will be instruments of service and Fagen will
retain the ownership and property interests therein, including copyrights thereto.(n)
    
    Upon payment in full under the Design-Build Expansion Agreement, Fagen will
grant Owner a limited license to the Work Product for use solely in connection with
the operation, maintenance, and repair of the Plant. The limited license will not
permit Owner to use the Work Product in connection with any expansion or enlargement
of the Plant, however, nothing in the limited license granted to Owner is intended to
limit Owners use of the Plants actual production capability as built.(o)
    
    Work will commence following receipt of Owners written valid notice to
proceed (Notice to Proceed). The Notice to Proceed cannot be given until (1) the
Owner has title to the real estate on which the project will be constructed; (2) the
site work required of Owner is completed; (3) the air permit(s) and/or other
applicable local, state or federal permits necessary for construction to begin have
been obtained; (4) Owner has obtained Financial Closing; (5) if applicable, Owner
executes a sales tax exemption certificate and provides to Fagen; (6) Owner provides
the name of its property/all-risk insurance carrier and the specific requirements for
fire protection; (7) Owner has provided an insurance certificate or copy of insurance
policy demonstrating that Owner has obtained builders risk insurance; and (8) Fagen
has provided Owner written notification of its acceptance of the Notice to Proceed,
provided that Fagen shall not be required to accept the Notice to Proceed prior to
October 22, 2007. If Owner has not fulfilled its requirements for the issuance of a
Notice to Proceed as set forth in this Paragraph 3(o) by the date referenced in item
number 8 of this Paragraph, Fagen may, at its sole option, terminate the Design-Build
Expansion Agreement, thus releasing Fagen of all obligations.(p)
    
    Substantial Completion will be the date on which the Expansion
construction has been completed to a point that the Expansion is ready to grind the
first batch of corn for producing ethanol and begin operation for its intended use as
a fifty (50) MGY dry grind ethanol production facility. No production capacity is
guaranteed on the Substantial Completion date, but the Expansion is largely completed
as of that date.




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(q)
    
    Substantial Completion will occur within Five Hundred and Forty-Five (545) days
after the date of the Notice to Proceed.(r)
    
    Fagen will be entitled to an early completion bonus of Ten Thousand Dollars
($10,000.00) for each day that Substantial Completion occurs in advance of Three
Hundred Ninety (390) days (Early Completion Bonus). The Early Completion Bonus is
earned for achieving Substantial Completion early, but is not due until the final
payment.(s)
    
    Final Completion will be achieved once Owner reasonably determines
that: Substantial Completion has been achieved; any outstanding amounts owed by Fagen
to Owner have been paid; remaining items of work have been completed; clean-up of the
site has been completed; all permits required to have been obtained by Fagen have been
obtained; certain information including an affidavit stating that there are no
outstanding liens, a release from further compensation, consent to final payment, and a
hard copy of the as-built plans (which will remain Work Product) has been provided to
Owner; releases and waivers of all claims and liens from Fagen and subcontractors have
been provided; and the Performance Tests have been successfully completed. Final
Completion will occur no more than ninety (90) days after the actual Substantial
Completion date. The 90-day period between Substantial Completion and Final Completion
will be tied directly to actual Substantial Completion. By way of example, if
Substantial Completion is achieved 10 days early, then the 90-day period to Final
Completion would begin on that earlier date.(t)
    
    Fagen will demonstrate certain performance guarantee criteria through
performance testing performed following Substantial Completion but prior to Final
Completion (Performance Tests). Air permit testing shall be done by a third party
contractor retained by Owner.(u)
    
    Owner will take control of the Expansion after completion and acceptance of
the Performance Tests. The Performance Tests will be completed by Owners personnel
under Fagens direction.(v)
    
    Fagen will pay liquidated damages at a daily amount of Ten Thousand Dollars
($10,000.00) for each day past 90 days after Substantial Completion that Final
Completion is not attained. Fagens liability for liquidated damages shall be capped
at and shall not exceed Five Hundred Thousand Dollars ($500,000).(w)
    
    The aggregate liability of Fagen, its Subcontractors, vendors, suppliers,
agents and employees, to Owner (or any successor thereto or assignee thereof) for any
and all claims and/or liabilities arising out of or relating in any manner to the work
or to Fagens performance or non-performance of its obligations under the Design-




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Build Expansion Agreement, whether based on contract, tort (including
negligence), strict liability, or otherwise, shall not exceed in the aggregate, the
Contract Price and shall be reduced, upon the issuance of each Application for
Payment, by the total value of such Application for Payment; provided, however, that
upon the earlier of Substantial Completion or such point in time that requests for
payment pursuant to the Design-Build Expansion Agreement have been made for ninety
percent (90%) of the Contract Price, Fagens aggregate liability shall be limited to
the greater of (1) Ten Percent (10%) of the Contract Price or (2) the amount of
insurance coverage available to respond to the claim or liability under any policy
of insurance provided by Fagen under the Design-Build Expansion Agreement.(x)
    
    The warranty period for work completed pursuant to the Design-Build Expansion
Agreement will extend for one year past Substantial Completion. The Warranty will not
apply to defects caused by abuse, alterations, or failure to maintain the work by
persons other than Fagen or anyone for whose acts Fagen may be liable. The warranty
period will be extended one day for each day that such part of the work repaired under
such warranty is malfunctioning or not in conformance with project requirements
provided that Owner must report such non-conformance or malfunction within seven (7)
days of the appearance of such non-conformance or malfunction.(y)
    
    Owner will pay Fagen a mobilization fee in the amount of Five Million Dollars
($5,000,000.00) as soon as possible following the execution of the Design-Build
Expansion Agreement, and at the latest, at the earlier to occur of financial closing
or the issuance of a Notice to Proceed.(z)
    
    Fagen will request payment and Owner will pay Fagen in accordance with the
following procedures:
 i.
    
    Fagen will submit to Owner a request for payment (an
Application for Payment) on or before the twenty-fifth (25th)
day of each month following the acceptance of Notice to Proceed. Along
with each Application for Payment, Fagen will submit to Owner signed lien
waivers for the work included in the Application for Payment submitted for
the immediately preceding pay period and for which payment has been
received.ii.
    
    The Application for Payment will constitute Fagens
representation that the work has been performed consistent with the
Transaction Documents and has progressed to the point indicated in the
Application for Payment. No additional documentation will be provided to
Owner in support of the Application for Payment. The work completed at the
site and the comparison of the Application for Payment against the Schedule
of Values shall provide sufficient substantiation to Owner of the accuracy
of the




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Application for Payment. The Schedule of Values subdivides the
work into its respective parts, includes values for all items
comprising the work, and serves as the basis for the monthly progress
payments.iii.
    
    The Application for Payment may request payment for equipment and
materials not yet incorporated into the .project only if Owner is reasonably
satisfied that the materials and equipment are suitably stored at the
site or elsewhere and are protected by suitable insurance. Upon
payment, Owner will receive title to such equipment and materials.iv.
    
    Owner shall make payment within ten (10)
days of receipt of the Application for Payment. Failure to make such
payment will result in the accrual of interest at a rate of eighteen
percent (18%) per annum commencing five (5) days after the payment
is due. Failure to make such payment, except if due to appropriate
withholding of payment due to a good faith dispute, entitles Fagen
to stop work.v.
    
    If Owner wishes to dispute any portion
of the Application for Payment, Owner must notify Fagen in writing
at least five (5) days prior to the date payment is due. Such
notice must state the specific amounts Owner intends to withhold,
the reasons and contractual basis for withholding, and the specific
measures Fagen must take to rectify Owners concerns. Regardless of
a dispute as to a portion of the Application for Payment, Owner
must pay all undisputed amounts by the payment due date.vi.
    
    Retainage on progress payments made pursuant to the Design-Build
Expansion Agreement will be capped at five percent (5%) of the total
price. Owner will retain ten percent (10%) of each payment up to a maximum
of five percent (5%) of the total Contract Price. Once five percent (5%)
of the total price has been retained, Owner will not retain any additional
amounts from subsequent payments. Owner will release retainage, less the
amount equal to the value of subcontractor lien waivers not yet obtained,
upon completion of the Performance Tests.vii.
    
    Upon Final Completion,
Fagen will deliver to Owner a request for final payment. Owner will make
the final payment within 30 days after the receipt of such request.
Owners failure to make Final Payment will void any and all warranties,
whether express or implied, provided by Fagen pursuant to the Design-Build
Expansion Agreement.
 (aa)
    
    Fagen will not be responsible for any hazardous condition
encountered at the site and may stop work in an affected area until such
hazardous condition is removed by Owner.(bb)
    
    Fagen will not be responsible for differing site conditions
including concealed or latent physical conditions or subsurface conditions and
will be entitled to a price adjustment to the Contract Price to the extent
that its cost and/or time of performance is adversely impacted by the
differing site conditions.




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(cc)
    
    Force Majeure Events shall mean any cause or event beyond the
reasonable control of, and without the fault or negligence of a Party claiming Force
Majeure, including, without limitation, an emergency, floods, earthquakes, hurricanes,
tornadoes, adverse weather conditions not reasonably anticipated or acts of God;
sabotage; vandalism beyond that which could reasonably be prevented by a Party
claiming Force Majeure; terrorism; war; riots; fire; explosion; blockades;
insurrection; strike; slow down or labor disruptions (even if such difficulties could
be resolved by conceding to the demands of a labor group); economic hardship or delay
in the delivery of materials or equipment that is beyond the control of a Party
claiming Force Majeure, and action or failure to take action by any governmental
authority after the effective date of the Design-Build Expansion Agreement (including
the adoption or change in any rule or regulation or environmental constraints lawfully
imposed by such governmental authority), but only if such requirements, actions, or
failures to act prevent or delay performance; and inability, despite due diligence, to
obtain any licenses, permits, or approvals required by any governmental authority.(dd)
    
    If Fagen is delayed at any time in the commencement or progress of the work
due to a delay in the delivery of, or unavailability of, essential materials or labor
to the project as a result of a significant industry-wide economic fluctuation or
disruption beyond the control of and without the fault of Fagen or its subcontractors
which is experienced or expected to be experienced by certain markets providing
essential materials, equipment, or labor to the project during the performance of the
work and such economic fluctuation or disruption adversely impacts the price,
availability, and delivery timeframes of essential materials and equipment (such event
an Industry-Wide Disruption). Fagen shall be entitled to an equitable extension of
the Contract Time on a day-for-day basis equal to such delay and an equitable
adjustment to the Contract Price. The Owner and Fagen shall undertake reasonable steps
to mitigate the effect of such delays. Notwithstanding any other provision to the
contrary, Fagen shall not be liable to the Owner for any expenses, losses or damages
arising from a delay, or unavailability of, essential materials or labor to the
project as a result of an Industry-Wide Disruption.
 4. Exclusivity, No Solicitation or Negotiations.
 (a)
    
    Neither Owner, nor its affiliates, shareholders, members or other equity
owners, or
their officers, representatives, agents or employees will solicit or negotiate,
directly or indirectly, with any third party to obtain the services contemplated by
this Letter of Intent.(b)
    
    During the term of this Letter of Intent the Owner agrees that Fagen will have
the
exclusive right to provide to Owner the services contemplated by the Letter of




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Intent. Owner will not disclose any information related to this Letter of
Intent to a competitor or prospective competitor of Fagen.(c)
    
    Should Owner choose not to develop the project or to develop or pursue a
relationship with a company other than Fagen to provide the preliminary
engineering or design-build services for the project, then Owner will reimburse
Fagen for all expenses Fagen has incurred in connection with the project based
upon Fagens standard rate schedule plus all third party costs incurred from the
date of this Letter of Intent. Such expenses include, but are not limited to, labor
rates and reimbursable expenses such as legal charges for document review and
preparation, travel expenses, reproduction costs, long distance phone costs, and
postage.(d)
    
    In the event Fagens services are terminated by Owner, title to the technical
data,
which may include preliminary engineering drawings and layouts and proprietary
process related information, will remain with Fagen and any copies thereof will be
returned to Fagen.(e)
    
    Owner acknowledges that the technical data provided by Fagen under this Letter
of Intent is preliminary and may not be suitable for construction. Owner agrees
that any use of such technical data following termination of Fagens services will
be at Owners sole risk.
 5.
    
    Commitment Fee.Immediately upon the execution of this Letter of Intent, Owner shall pay
Fagen Five Hundred Thousand Dollars ($500,000.00) as a non-refundable commitment fee
(Commitment Fee). The Commitment Fee will be credited against the Contract Price upon
the occurrence of: (i) the execution of the Transaction documents; and (ii) timely acceptance
of Notice to Proceed pursuant to the Design-Build Expansion Agreement. If Owner chooses
not to proceed with the Expansion or the Transaction Documents are not executed and
delivered by the Closing Date or Owner fails to provide a timely Notice to Proceed pursuant
to the Design-Build Expansion Agreement, Fagen shall retain the full amount of the
Commitment Fee and Owner shall not be entitled to any refund or credit. Should Owner fail
to pay the Commitment Fee within ten (10) days of the execution of this Letter of Intent, this
Letter of Intent shall terminate and Fagen shall have the right to receive compensation
pursuant to Paragraph 4(c) hereof.6.
    
    Confidentiality.Owner will hold in confidence and will use only for the purposes of
completing the Transaction any and all confidential information disclosed to it except that
Owner may disclose confidential information to its lenders, lenders agents, prospective
investors, advisors and/or consultants as may be reasonably necessary to enable them to
advise Owner on the Transaction, provided that any party to whom confidential information
is disclosed is informed of the existence of this confidentiality obligation and agree to be
obligated to keep such information confidential. The term confidential information
will




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mean (i) any and all information concerning the Transaction, including that Fagen and
Owner are negotiating the consummation of the Transaction, and (ii) all information which
Owner, directly or indirectly, may acquire from Fagen, but confidential information will not
include information falling into any of the following categories:
 (a)
    
    information that, at the time of disclosure hereunder, is in the public domain;(b)
    
    information that, after disclosure hereunder, enters the public domain other
than
by breach of this Agreement or the obligation of confidentiality;(c)
    
    information that, prior to disclosure hereunder, was already in the Owners
possession, either without limitation on disclosure to others or subsequently
becoming free of such limitation;(d)
    
    information obtained by the Owner from a third party having an independent
right
to disclose this information; and(e)
    
    information that is available through discovery by independent research without
use of or access to the confidential information acquired from Fagen.
 Owners obligation to maintain confidential information in confidence will be deemed performed
if Owner observes with respect thereto the same safeguards and precautions which Owner observes
with respect to its own confidential information of the same or similar kind. It will not be
deemed to be a breach of the obligation to maintain confidential information in confidence if
confidential information is disclosed upon the order of a court or other authorized governmental
entity, or pursuant to other legal requirements. However, if Owner is required to file the
Transaction Documents or a portion thereof with a governmental entity, it agrees that it will
not do so without first informing Fagen of the requirement and seeking confidential treatment of
the Transaction Documents prior to filing the documents or a portion thereof. Owners
confidentiality obligations under this section shall survive the expiration or termination of
this Letter of Intent and shall be a legally binding obligation of Owner for five (5) years
following the later to occur of termination of this Letter of Intent or completion of the
Expansion contemplated by the Transaction Documents.
 7.
    
    Publicity.Neither Owner nor any of its affiliates, shareholders, subcontractors, or vendors
or their officers, representatives, agents and employees will issue any press or publicity
release or otherwise release, distribute, announce, or disseminate any information for
publication concerning the Transaction, the existence of the negotiations among Fagen and
Owner, the participation of Fagen in the Transaction, or any other matter affecting Fagen
hereunder, without the prior written consent of Fagen, which consent may be withheld for any
reason, except where such press or publicity release is required by order of a court or
necessary or appropriate under the rules or regulations of any governmental agency.




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The Parties will jointly agree on the timing and content of any public disclosure by
Owner, including but not limited to, press releases, relating to Fagens involvement in Owners
project, and no such disclosure will be made without Fagens consent and approval, except as
may be required by applicable law.8.
    
    Disclaimer of Consequential Damages.In no event will either Fagen or Owner be liable to
the other pursuant to this Letter of Intent, or for activities conducted under this Letter of
Intent, under any theory of recovery for any indirect, special, incidental or consequential
damages (including, without limitation, loss of revenues or profits, loss of use, cost of
replacement, cost of capital and claims of customers, interest charges, or increased costs of
nature whatsoever).9.
    
    Legal Effect.Although this Letter of Intent does not contain all matters upon which
agreement must be reached in order for the Transaction to be consummated, Fagen and
Owner wish to set forth, prior to the execution of the Transaction Documents, their mutual
agreement as to the material terms and conditions of the Transaction. Each Party agrees to
negotiate in good faith towards entering into the written, definitive and legally binding
Transaction Documents containing, among other terms and conditions, those terms and
conditions set forth in this Letter of Intent including, without limitation, those terms set
forth
in Paragraphs 2 and 3 hereof; provided, however, that except as specifically identified and set
forth herein, nothing in this Agreement shall be read to promise, guarantee, or otherwise
secure on Owners behalf any specific construction start date with respect to the Plant
including but not limited to any pour concrete date, scheduling slots or dates for the delivery
of design packages or to entitle Owner to any rights, privileges, or claims with respect thereto
or any right, privilege, or claim to any place on Fagens construction
schedule. Notwithstanding the foregoing, the provisions of this Paragraph and of Paragraphs 1, 4, 5, 6,
7, 8, 11, 12, 14, 17 and 18 hereof are agreed to be legally binding obligations of the Parties
upon the execution and acceptance of this Letter of Intent.10.
    
    Negotiation of Definitive Agreements.The Transaction Documents will contain reasonable
terms and conditions regarding releases, payment obligations, cooperation as to tax planning
and structuring, other financial matters, legal opinions, confidentiality, limitations of
liability,
assignment, breach, dispute resolution, events of default, remedies,
representations,
warranties, indemnifications and other provisions customary for similar transactions. Time is
of the essence in the performance of this Letter of Intent in all respects.11.
    
    Termination.This Letter of Intent will terminate on December 31, 2007 unless the basic
size and design of the Expansion have been determined and mutually agreed upon, a specific
site or sites have been determined and mutually agreed upon, and at least 10% of the
necessary equity has been raised. This date may be extended upon mutual written agreement
of the Parties. Furthermore, unless otherwise agreed to by the Parties, this Letter of Intent
will terminate:




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(a)
    
    at the option of either Fagen or Owner if the Design-Build Expansion Agreement
is not completed and executed by Closing Date; or(b)
    
    upon the execution and delivery of the Transaction Documents.
 12.
    
    Governing Law.This Letter of Intent and Transaction are governed by, and will be
construed and interpreted in accordance with the laws of the State of Minnesota, without
regard to any conflicts of law or choice of law rules.13.
    
    Expenses.Except as set forth in Paragraph 4(c) above, unless otherwise agreed by Fagen and
Owner, each Party will bear its own expenses in connection with the negotiation and
execution of definitive documentation for the transactions contemplated herein.14.
    
    Indemnification.Each Party will indemnify, defend and hold harmless the other Party and
its respective agents, servants, officers, directors, employees and affiliates from and against
any loss, cost, liability, claim, damage, expense (including reasonable attorneys and
consultants fees and disbursements), penalty or fine incurred in connection with any claim or
cause of action arising from or in connection with this Letter of Intent to the extent caused by
the negligence, misrepresentation, fraud, fault or misconduct of the indemnifying Party.15.
    
    Assignability; Binding Effect; Benefit.This Letter of Intent will inure to the benefit of
and
be binding upon the Parties and their respective successors and assigns. Nothing in this
Letter of Intent, either expressed or implied, is intended to confer on any person other than
the Parties and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Letter of Intent. Neither Fagen nor Owner
shall, without the written consent of the other, assign or transfer this Letter of Intent. Any
sale, transfer, or disposition by Owner of over fifty percent (50%) of its assets or any sale,
transfer, or disposition of more than fifty percent (50%) of Owner to any single entity by one
or more entities holding interest in Owner shall be deemed an assignment subject to this
paragraph. Notwithstanding any consent granted by Fagen to any assignment, Owner shall
remain jointly liable for any failure of any assignee to fulfill its obligations under this
Letter
of Intent, including but not limited to any payment and confidentiality obligations established
hereunder.16.
    
    Further Action.Each Party agrees to execute and deliver all further instruments, legal
opinions and documents, and take all further action not inconsistent with the provisions of
this Letter of Intent that may be reasonably necessary to complete performance of the Parties
obligations hereunder and to effectuate the purposes and intent of this Letter of Intent.17.
    
    Amendments.The Parties agree that this Letter of Intent may be modified only by written
agreement by the Parties.18.
    
    Integration; Letter of Intent.This Letter of Intent represents the entire understanding




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between the Parties in relation to the subject matter hereof, and supersedes any and all
previous agreements, arrangements or discussions between the Parties (whether written or oral)
in respect of the subject matter hereof. No change, amendment or modification of this Letter
of Intent will be valid or binding upon the Parties unless such change, amendment or
modification will be in writing and duly executed by both Parties.
 19.
    
    No Representation, Warranties or Covenants.Notwithstanding anything contained herein
to the contrary, Fagen is not making any representation, warranty or covenant of any kind
with respect to any design, engineering or construction scheduling, or with respect to
projections, estimates or budgets heretofore delivered to or made available to Owner of future
revenues, expenses or expenditures, future results of operations (or any component thereof)
or the future business and operations of the Owner, nor any other commitments or assurances
except as may be provided in the Transaction Documents.20.
    
    Counterparts.This Letter of Intent may be executed in one or more counterpart, each of
which when so executed and delivered will be deemed an original, but all of which taken
together constitute one and the same instrument. Signatures which have been affixed and
transmitted by facsimile or other electronic means will be binding to the same extent as an
original signature, although the Parties contemplate that a fully executed counterpart with
original signatures will be delivered to each Party.
  Yours sincerely,Fagen, Inc./s/ Roland Ron Fagen

By: Roland Ron FagenTitle: President and CEO
 
 Siouxland Ethanol, LLC
 /s/ Tom Lynch

By: Tom LynchTitle: President