**Exhibit10.12**

 

**UnitedStates Department of Agriculture**

**RuralDevelopment**

 

**RuralBusiness-Cooperative Service - Rural Housing Service - Rural Utilities Service**

**Washington,DC  20250**

 

**VALUE-ADDEDAGRICULTURAL PRODUCT SET DEVELOPMENT GRANT**

**AGREEMENT(VADG)**

 

This Grant Agreement (Agreement) dated September 20, 2001, betweenDakota Corn Growers Cooperative d/b/a Great Plains Ethanol LLC (Grantee), andthe United States of America, acting through the Rural Business-CooperativeService of the Department of Agriculture (Grantor), for $401,704 in grant fundsunder the VADG program, delineates the agreement of the parties.  NOW, THEREFORE, in consideration of thegrant;

 

The parties agree that:

 

1.                                       All the terms and provisions of theapplication submitted by the Grantee for this VADG grant, including anyattachments or amendments, are incorporated and included as part of thisAgreement.  Any changes to thesedocuments or this agreement must be approved in writing by the Grantor.

 

2.                                       As a condition of the Agreement,the Grantee certifies that it is in compliance with and will comply in thecourse of the Agreement with all applicable laws, regulations, ExecutiveOrders, and other generally applicable requirements, which are incorporatedinto this agreement by reference, and such other statutory provisions as arespecifically contained herein.  TheGrantee will comply with title VI of the Civil Rights Act of 1964, section 504of the Rehabilitation Act of 1973, and Executive Order 12250;

 

3.                                       The provisions of 7 CFR part 3015,“Uniform Federal Assistance Regulations,” part 3016, “Uniform AdministrativeRequirements for Grants and Cooperative Agreements to State and LocalGovernments” or part 3019, “Uniform Administrative Requirements for Grants andAgreements with Institutions of Higher Education, Hospitals, and OtherNonprofit Organizations,” as applicable are incorporated herein and made a parthereof by reference.

 

FURTHER, the Grantee agrees that it will:

 

1.                                       Not use grant funds to plan,repair, rehabilitate, acquire, or construct a building or facility (including aprocessing facility); or to purchase, rent, or install fixed equipment.

 

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2.                                       Use grant funds only for thepurposes and activities specified in the proposal approved by the Agencyincluding the approved budget.  Any usesnot provided for in the approved budget must be approved in writing by theAgency in advance of obligation by the Grantor.

 

3.                                       Submit a feasability study,business operations plans, and other studies and plans required by the Grantorif any part of the grant will be used to establish a working capital account.

 

4.                                       Deliver the results of a study oractivity to the Grantor upon completion of each task outlined in theproposal.  These include, but are notlimited to, feasibility studies, marketing plans, business operations plans,articles of incorporation and bylaws, and accounting of how working capitalfunds were spent.  All items deliveredto the Grantor will be held in confidence to the extent provided by law.

 

5.                                       Request any cash advances in theminimum amount needed and timed to the actual, immediate cash requirements forcarrying out the grant purpose. Standard Form 270, “Request for Advance or Reimbursement,” will be usedfor this purpose.

 

6.                                       Submit a Standard Form 269,“Financial Status Report” and list expenditures according to agreed upon budgetcategories on a semi-annual basis. Reports are due by April 30 and October 30 after the grant is awarded.

 

7.                                       Provide periodic reports asrequired by the Grantor.  A financialstatus report and a project performance report will be required on asemi-annual basis (due April 30 and October 30).  The financial status report must show how grant funds andmatching funds have been used to date and project the funds needed and theirpurposes for the next quarter.  A finalreport may serve as the last performance report.  The Grantee shall constantly monitor performance to ensure thattime schedules are being met and projected goals by time periods are beingaccomplished.  The project performancereports shall include the following:

 

a.                                       A comparison of actualaccomplishments to the objectives for that period.

 

b.                                      Reasons why established objectiveswere not met, if applicable.

 

c.                                       Reasons for any problems, delays,or adverse conditions which will affect attainment of overall programobjectives, prevent meeting time schedules or objectives, or preclude theattainment of particular objectives during established time periods.  This disclosure shall be accomplished by astatement of the action taken or planned to resolve the situation.

 

d.                                      Objectives and timetablesestablished for the next reporting period.

 

e.                                       The final report will also addressthe following:

 

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(i)                                     What have been the most challengingor unexpected aspects of this program?

 

(ii)                                  What advice you would give to otherorganizations planning a similar program. These should include strengths and limitations of the program.  If you had the opportunity, what would youhave done differently?

 

(iii)                               If an innovative approach was usedsuccessfully, the grantee should describe their program in detail so that otherorganizations might consider replication in their areas.

 

8.                                       Collect and maintain data onproducer-members by race, sex, and national origin.  As required by the Grantor, the Grantee must ensure that theirrecipients also collect and maintain data on beneficiaries by race, sex, andnational origin as required by title VI of the Civil Rights Act of 1964 andmust be provided to the Agency for compliance review purposes.

 

9.                                       Provide Financial ManagementSystems which will include:

 

a.                                       Records that identify adequatelythe source and application of funds for grant-supported activities.  Those records shall contain informationpertaining to grant awards and authorizations, obligations, unobligatedbalances, assets, liabilities, outlays, and income;

 

b                                         Effective control over andaccountability for all funds, property, and other assets.  Grantees shall adequately safeguard all suchassets and shall ensure that they are used solely for authorized purposes;

 

c.                                       Accounting records supported bysource documentation; and

 

d.                                      Grantee tracking of fund usage andrecords that show matching funds and grant funds are used in equalproportions.  The grantee will provideverifiable documentation regarding matching fund usage, i.e., bank statementsor copies of funding obligations from the matching source.

 

10.                                 Retain financial records,supporting documents, statistical records, and all other records pertinent tothe grant for a period of at least 3 years after grant closing, except that therecords shall be retained beyond the 3-year period if audit findings have notbeen resolved.  Microfilm or photocopiesor similar methods may be substituted in lieu of original records.  The Grantor and the Comptroller General ofthe United States, or any of their duly authorized representatives, shall haveaccess to any books, documents, papers, and records of the Grantee’s which arepertinent to the specific grant program for the purpose of making audits,examinations, excerpts, and transcripts.

 

11.                                 Not encumber, transfer or disposeof the equipment or any part thereof, acquired wholly or in part with grantfunds without the written consent of the Grantor.

 

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12.                                 Not duplicate other programpurposes for which monies have been received, are committed, or are applied tofrom other sources (public or private).

 

Grantor agrees to make available to Grantee for the purpose of thisAgreement funds in an amount not to exceed the Grant Funds.  The funds will be reimbursed or advancedbased on submission of Standard Form 270.

 

IN WITNESS WHEREOF, Grantee has this day authorized and caused thisAgreement to be executed by

 
| Attest                             |
|------------------------------------|
|                               |
| By                                 | /s/ Darrin Ihnen |   |
|                               | (Grantee) |   |
|                               |   |
| (Title)                            | President - Dakota Corn Processors Coop  d/b/a Great Plains Ethanol, LLC |
|                               |   |
| UNITED STATES OF AMERICA           |   |
| RURAL BUSINESS-COOPERATIVE SERVICE |   |
|                               |   |
| By                                 | /s/ Lynn D. Jensen |   |
|                               | (Grantor)   Lynn D. Jensen |   |
|                               |   |   |
| (Title)                            | State Director Rural Development |
|                                    |  |  |  |

 

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