**Exhibit 10.3**

 

**CONTRACT FOR SALE OF EQUIPMENT**

 

[Hand crossed off and written:  May 10]

This Agreement is entered into on ~~April ~~   , 2005, by and between ICM, Inc.(Seller) and East Kansas Agri-Energy, LLC (Buyer).

 

**Recitals**

 

**1.     ICM. **ICM, Inc., is aKansas corporation with its principal place of business in Colwich,Kansas.  It is an engineering firmengaged in the design of fuel ethanol plants.

 

**2.     EastKansas Agri-Energy.**  East Kansas Agri-Energy, LLC is a Kansaslimited liability company.  It is engagedin the business of owning and operating a fuel ethanol plant.

 

**3.     TheDesign/Build Contract.**  Seller and Buyer are parties to an Agreementbetween Owner and Design/Builder on the basis of a stipulated price, dated August 9,2004 (the Design/Build Contract). Pursuant to the Design/Build Contract, Seller has designed and isbuilding for Buyer a dry mill fuel-grade ethanol plant located in or nearGarnett, Kansas (the Garnett Ethanol Plant).

 

**4.     Purposeof Agreement.** The purpose of this Agreement is to set forth the terms and conditionspursuant to which Seller will provide and install, for the benefit of Buyer andas part of the Garnett Ethanol Plant, a steam turbine electric generator, asmore fully described below.

 

**Terms and Conditions**

 

**5.     TheEquipment.**  Aspart of the Garnett Ethanol Plant being constructed pursuant to theDesign/Build Contract, Seller will provide and install a Tuthill Energy SystemsMurray steam turbine electric generator, the specifications for which are morefully described in the attached Exhibit A (the Equipment).

 

**6.     Timeof Performance.** Seller will provide and install the Equipment so that it will be inplace and operational on the Substantial Completion date set forth in theDesign/Build Contract.

 

**7.     PurchasePrice.**  ThePurchase Price for the Equipment, which includes the costs of installation ofthe Equipment, is $1,760,274.  Buyer willpay the Purchase Price to Seller in accordance with the terms of the attachedPromissory Note and Security Agreement attached as Exhibit B, which willbe executed by Buyer at the time of execution of this Agreement.

 

**8.     ExpressWarranties**. Seller makes to Buyer thefollowing express warranties regarding the Equipment:

 

a.                                       ConformanceWarranty. The Equipment will conform to the description and specificationsset forth in Exhibit A.

 

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b.                                      TitleWarranty,. Seller warrants that Buyer will receive title to the Equipmentfree and dear of all liens and encumbrances arising by, through or underSeller.

 

c.                                       PerformanceWarranty. Seller warrants to Buyer that the Equipment will provide anoutput of 1,250 kilowatts of electricity when the Garnett Ethanol Plant isoperated at a production rate of 35GPY (35 million gallons per year ofdenatured fuel-grade ethanol) and at a steam production rate of 45,900 lbs.lhr(45,900 pounds per hour of steam), and provided that Buyer is operating theGarnett Ethanol Plant and Equipment in compliance with the following:

 

(1)                                  theEquipment is properly serviced and maintained in good working condition;

 

(2)                                  Buyercomplies with all of the droner requirements of the DesignBuild Contract;

 

(3)                                  Buyerfollows the training and operational recommendations provided by Sellerto Buyer pursuant to Exhibit G of the Design/Build Contract;

 

(4)                                  Buyerfollows the standard operating procedures for the plant provided by Seller toBuyer; and

 

(5)                                  Buyerfollows the manufacturer’s recommendations and instructions for maintenance andoperation of the Equipment.

 

The Buyer will also receive the benefit of the warranty for theEquipment provided by the ,manufacturer of the goods. Seller shallassign to Buyer all manufacturer warranties for the Equipment.

 

These express warranties are provided by Seller to Buyer in lieu of anyand all other express or implied warranties that might otherwise arise from thesale of the Equipment. There are no warranties which extend beyond the facehereof.

 

**9.     Titleto Equipment**. Title to the Equipment (whichis now located at the Garnett Ethanol Plant), and all risk of loss to theEquipment, shall pass to Buyer upon execution of this Agreement. Buyer shallmaintain insurance covering the Equipment as required by the terms of theDesign/Build Contract, including builders risk and property insurance. Theprovisions of sections 5.04, 5.05, 5.06, 5.07 and 5.08 (relating to insurance)of the Design/Build Contract are incorporated by reference into this Agreementby reference.

 

**10.  Waiverof Incidental and Consequential Damages**.Seller and Buyer hereby waive the right to claim or recover from each other anyincidental or consequential damages that might otherwise be recoverable upon abreach of this Agreement.

 

**11.  Limitationof Buyer’s Remedies**. In the event of analleged breach of this Agreement by Seller, Buyer shall notify Seller of thespecific nature of the alleged breach, and after receipt of such notificationSeller shall have a reasonable amount of time to repair, replace or otherwisecause the Equipment to comply with the terms and conditions of this Agreement.In the event that Seller is unable to remedy a breach of this

 

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Agreement within a reasonable amount of time, Buyer’s remedy shall be limitedas follows: upon delivery of possession and title to the Equipment to Seller,Buyer shall be entitled to recover from Seller all amounts paid by it towardthe purchase price of the Equipment, less the reasonable value of Buyer’s useof the Equipment through the date possession and title to the Equipment isdelivered to Seller.

 

**12.  SecurityInterest**. Buyer shall grant to Seller aperfected purchase money security interest in the Equipment in order to securepayment of the Purchase Price, all as more fully set forth in the attachedPromissory Note and Security Agreement.

 

**13.  ProprietaryProperty**. It is agreed that Seller’s meansand methods of installation and incorporation of the Equipment into the GarnettEthanol Plant are Proprietary Property covered by Exhibit F of the Design/Bu..d Contract.

 

**14.  Notices**.All notices required or permitted to be given under this Agreement shall be inwriting and given as follows:

 

If to Seller:                                       JerryJones

Chief Financial Officer ICM, Inc.

310 N. First Street

Colwich, Kansas

 

If to Buyer:                                    BillPracht

Chairman

East Kansas Agri-Energy, LLC 210 ‘Y2 E.

4th Avenue

Garnett, Kansas 66032

 

**15.  Successors and Assigns**.This Agreement shall be binding upon and shall inure to the benefit of theparties and their respective legal representatives, successors and assigns;provided, that neither this Agreement nor any rights under it may be assignedby either party without the express written consent of the other party.

 

**16.  Indemnification**.Buyer shall defend, indemnify and hold harmless Seller from any and all claimsthat may arise from Seller’s use of the Equipment.

 

**17.  Use and Location of Equipment**.Until such time as the Purchase Price has been paid in full, Buyer will notalter the Equipment or move the Equipment from the location within the GarnettEthanol Plant at which it is installed by Seller.

 

**18.  Entire Agreement**.This Agreement embodies the entire agreement of the parties with respect to itssubject matter and supersedes all prior agreements. This Agreement may beamended, and any of its provisions waived, only in a writing signed by bothparties.

 

**19.  Counterparts.**Two originals of this Agreement shall be executed, one to be given to Sellerand one to be given to Buyer.

 

**20.  Severability.**The invalidity or unenforceability of any particular provision of thisAgreement

 

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shall not affect the remaining provisions. Inthe event of a binding finding that a provision of this Agreement is invalid orunenforceable, the parties hereby agree that this Agreement shall be reformedto replace such provision with a valid and enforceable provision that comes asclose as possible to expressing the intention of the stricken provision.

 

**21.  Governing Law.**This Agreement shall be governed, construed and enforced according to the lawsof the State of Kansas.  The partiesagree that any dispute that might arise under this Agreement shall be resolvedin the manner provided for resolution of disputes under the Design/BuildContract.  This Agreement has beendrafted by the combined efforts of Seller and Buyer.

 

 
| SELLER:                   | ICM, Inc.          | BUYER:            | East Kansas Agri-Energy, LLC |
|---------------------------|-------------------------|-------------------|------------------------------|
|                      |                    |
|                      |                    |
| By:                       | /s/ David Vander Griend |              |                         | By: | /s/ Bill Pracht |   |
| Name: David Vander Griend |                    | Name: Bill Pracht |
| Title: President          |                    | Title: Chairman   |
|                           |                         |                   |                              |  |  |  |  |  |

 

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**EXHIBIT A**

 

**Equipment Specifications**

 

**TURBINE OPERATING CONDITIONS & PERFORMANCE**

 

**PERFORMANCE DATA**

 
| **Operating  Condition**    | ** ** | **Part Load** | ** ** | **Maximum Flow** |
|-----------------------------|------------|--------------------|------------|------------------|
| Inlet Pressure (PSIG)       |       | 120                |       | 120              |
| Inlet Temperature (Deg F)   |       | 350 (D&S)      |       | 350 (D&S)    |
| Exhaust Pressure (PSIG)     |       | (Atmos.)           |       | (Atmos.)         |
| Exhaust Temperature (Deg F) |       | 212                |       | 212              |
| Exhaust Moisture Content    |       | 6.0%               |       | 7.0%             |
| Steam Flow (LB/HR)          |       | 32,000             |       | 53,310           |
| Turbine Speed (RPM)         |       | 6,000              |       | 6,000            |
| Generator Speed (RPM)       |       | 1,800              |       | 1,000            |
| Generator Output (KW)       |       | 834                |       | 1,597            |

 

Note: The turbine will be designed to withstand continuous operation at inletsteam temperature up to 500 Deg F.

 

**TURBINEDATA**

 
| Turbine Frame                |   | KD2                |
|------------------------------|--------|--------------------|
| Number of Stage              |   | Two                |
| Inlet Valves                 |   | Single             |
| Inlet Size / Flange Rating   |   | 8” / 300#     |
| Inlet Location               |   | Left Side          |
| Extraction / Bleed Openings  |   | None               |
| Exhaust Size / Flange Rating |   | 24”/ 125#     |
| Exhaust Location             |   | Up                 |
| Thrust Bearings              |   | Tilting – Pad |
| Radial Bearings              |   | Sleeve             |
| Shaft Seals                  |   | Carbon ring        |
| Trip Valve                   |   | Posi-Seal          |
| Turbine Governor             |   | Digital Electronic |

 

* Viewed from governor end of turbine.

 

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**TURBINEFEATURES AND ACCESSORIES**

 

•                                          High-performance butterfly trip valve, limitswitch, 80-120 PSI air to open, spring to close

 

•                                          Removable stainless steel steam straineraround the governor valve

 

•                                          Single inlet valve controlled by governor

 

•                                          Manual hand valve for part load economy

 

•                                          PLC based turbine control include in turbinecontrol panel. The PLC will give NEMA class D control and will havecapabilities similar to a Woodward DG-505 governor.

 

•                                          Electro-hydraulic actuator for governor

 

•                                          Mechanical bolt type overspeed governor withback-up overspeed trip accomplished through the turbine control system

 

•                                          Stainless steel nozzles and blades

 

•                                          Stainless steel diaphragm vanes

 

•                                          Built-up rotor construction

 

•                                          Sleeve type journal bearings

 

•                                          Kinsbury tilt pad type thrust bearing

 

•                                          Carbon ring gland seals sprayed shaft in endgland carbon ring zones

 

•                                          Sentinel warning valve mounted on exhaustcasing

 

•                                          Blanket Insulation around high temperatureportions of turbine

 

•                                          Solenoid trip mechanism

 

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**TURBINEFEATURES AND ACCESSORIES**

 

•                  Removable thrustcollar

 

•                  Free standingpedestal type gag-board with 3 steam pressure gages, (steam inlet, steam ringand exhaust steam) and tachometer indicator noted below.

 

•                  Electronictachometer with digital indicator

 

•                  7 probe BentlyNevada system including probes, transmitters, cable and junction box for 2vibration probes in each journal bearing, 2 axial displacement probes and onekey phasor.  Monitoring to be done by OPLCin turbine generator control panel.

 

•                  2 temperaturesensors in thrust bearing and one temperature sensors in each journal bearing(RTD—platinum).  Temperature sensormonitoring to be done by PLC in turbine generator control panel.

 

•                  Drain line sightflow indicators and dial type thermometer for each radial bearing and thrustbearing drain line.

 

•                  Manifold carbonsteel supply and carbon steel drainpipe with welded fittings and ASA flanges,terminating at the coupling end of the turbine.

 

•                  Gland leak-offarranged for piping to sewer at atmospheric pressure

 

•                  One common airconnection to supply-air for the bearing seal purge system, including allnecessary filters, regulators and tubing. Air supply @ 80-120 psig, instrument qualify, by others.

 

•                  Turbine outlineDrawing and 6 sets instruction manuals

 

•                  Factory testperformed and document test as required by NEMA Standard SM-24

 

**REDUCTION GEAR**

 
| Type               |   | Single reduction, double helical                           |
|--------------------|--------|------------------------------------------------------------|
| Input Shaft Speed  |   | 6000 rpm                                                   |
| Output Shaft Speed |   | 1800 rpm                                                   |
| AGMA SF            |   | Minimum of 1.3                                             |
| Lubrication        |   | Forced Lubrication                                         |
| Accessories:       |   | Shaft driven main oil pump                                 |
|               |   | One pressure gauge with isolation valve in oil spray pipe. |
|               |   | 4 dial type thermometers, 1 each bearing                   |
|               |   | One RTD in each radial bearing                             |

 

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**COUPLINGS**

 

Non-lubricated coupling between turbine and gear with guard

Grease-packed, gear type coupling between gear and generator with guard

 

**BASEPLATE**

 

Fabricated steel baseplate under turbine, gear and generator

Lifting Lugs

Horizontal Positioning Screws for turbine, gear, and generator

Vertical Positioning Screws for turbine, gear, and generator

 

**LUBRICATING OIL SYSTEM**

 

Lube system console, reservoir mounted equipment including thefollowing

 

•                  Main oil pumpdriven by gear shaft and included in gear scope

•                                ACmotor driven auxiliary oil pump including pump, motor piping

•                                Dual25 micron absolute (10 micron nominal) oil filters with transfer valve

•                                Singleshell and tube type oil cooler. Stainless steel tubes.

•                                Carbonsteel reservoir with 3 minute retention time

•                                4relief valves:  2 fore individual pumpprotection, 1 for control oil, 1 for lube oil

•                  2 AshcroftThermometers, 1 before and 1 after cooler

•                                Flangedand welded schedule 80 carbon steel piping

•                                Oiltemperature control valve

•                                Lowoil pressure alarm switch

•                                Lowoil pressure trip switch

•                                Aux.oil pump switch

 

**GENERATOR DESCRIPTION**

 
| Type             |   | Horizontal Synchronous                               |
|------------------|--------|------------------------------------------------------|
| Excitation       |   | Brushless                                            |
| Location         |   | Indoor                                               |
| Enclosure        |   | Open drip-proof with sound attenuation               |
| Noise Level      |   | 90-92 dBA at 3 feet                                  |
| Duty             |   | Continuous                                           |
| Terminal         |   | wye connection                                       |
| KW               |   | 2,000                                                |
| KVA              |   | 2,353 at elevations up to 5000 feet above sea level  |
| Voltage          |   | 4160                                                 |
| Frequency        |   | 60hase                                               |
| Insulation Class |   | F                                                    |
| Temperature      |   | 80 Deg C rise by resistance above a 40 Deg C ambient |
| Leads            |   | 6                                                    |

 

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**GENERATOR ELECTRICAL FEATURES**

 

Damper windings

Insulation system to be VIP complete stator

Field suitable for excitation from brushless exciter

Six (6) leads for differential protection

 

**GENERATOR MECHANICAL FEATURES**

 

Two (2) pressure lubricated (bracket mounted) sleeve bearings

One RTD per radial bearing

Mechanical rotor balance per NEMA standards

Generator to be capable of 125% over-speed without mechanical injury

Open drip-proof construction with sound attenuation.

Ambient air to be clean and within a temperature range of 60-100 Deg F.

 

**GENERATOR ACCESSORIES**

 

Six (6) stator temperature detectors, RTD type, 3 wire, 100 ohmplatinum

Space heaters

Main terminal box

Brushless exciter

Permanent magnet alternator (PMA)

 

**STATIC VOLTATGE REGULATOR SYSTEM**

 

Static voltage regulator

K125-10B, 3 Phase Sensing, +/- 1% Voltage Regulation

 

**GENERATOR CONTROL PANEL / SWITCHGEAR**

 

Turbine and Generator Controls

 

PLC- Allen Bradley Logix5000

•                  CompactLogix CPUwith analog and discrete I/O as described below

•                  Controller willinteract with the electronic governor to start, auto-synchronize, soft-load thegenerator and engage process control such as inlet or exhaust pressure control,kW limiting, kW control, power import/export control

•                  PLC includeslube system control logic

 

HMI – Panel Plus 10 inch color operator interface

•                  Machinemonitoring

•                  Monitoring anddisplay of all control and operating parameters including shaft vibration data,bearing, stator, lube oil and process temperatures, process and lube oilpressures

•                  Display ofelectrical data

 

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•                  Real-timetrending of turbine and electronical data

•                  Display andsetting of system variables such as:

•                  Control modes

•                  Setpoints withrange limits as desired to prevent operator error

•                  Alarms andshutdowns with sequence of events and time stamping

•                  Last 999 alarmsare stored in a buffer and can be viewed

 

**Communications and Data Archiving**

•                  Communications

•                  The systemfeatures communication between the PLC and other devices as may be required forthis application.

•                  Additionalcommunications options including Profibus, Industrial Ethernet (Modbus overEthernet), TCP/IP over Ethernet, DataHighway Plus and others areavailable.  These networks can be use dotconnect the controls to the plant DCS or LAN. Please consult factory for pricing.

•                  Data Archiving

•                  Data such astemperatures, pressures, vibration, electrical metering, system status, etc canbe archive either to a Compact Flash card located in the panel, or to anetworked server or PC.

 

**Machinery Monitoring**

•                  Vibration

•                  X-Y Vibration InTurbine Journal Bearings and Two Axial Displacement Probes (6 Channels)

•                  Bearing andGenerator Stator Temperature

•                  Bearing RTD’s inThrust and Journal Bearings (10 Channels)

•                  Generator StatorTemperature (3 Channels)

•                  Steam Parameters

•                  Inlet SteamPressure

•                  Exhaust Pressure

•                  Exhaust SteamTemperature

•                  Lube Oil

•                  Lube OilPressure

•                  Lube OilTemperature

•                  Other

•                  Delta PhaseAngel transmitter and Delta Frequency Transmitter for synchronizing

•                  Speed

•                  **Discrete Inputs—**The base system includes switch inputs inaddition to internal inputs.  Additionalinputs are available as an option.  Theinputs will be monitored and displayed on the HMI.

•                  Trip ValvePosition

•                  Emergency TripPushbutton

•                  TurbineOverspeed Trip from tachometer (supplied by TG manufacture)

•                  Low Lube OilPressure Tip

•                  GeneratorProtection Relay Lockout

 

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•                  GeneratorCircuit Breaker Position

•                  GeneratorCircuit Breaker Lockout

•                  Local TripButton On Turbine Skid

•                  Remote Trip

•                  High ExhaustPressure Alarm and/or Trip

•                  High OilTemperature Alarm and/or Trip

•                  High Oil FilterDifferential Pressure Alarm and/or Trip

•                  VoltageRegulator Status

•                  PF ControllerStatus

•                  Other switchesas may be required

 

•                  **Discrete Outputs—**The base system includes 8 switch outputsin addition to internal outputs. Additional outputs are available as an option.  The outputs will be monitored and displayedon the HMI.

•                  Circuit BreakerOpen (Trip)

•                  Circuit BreakerClose (Trip)

•                  Turbine Trip

•                  Aux oil pumpstart

•                  Emergency oilpump start

•                  Common alarm

•                  Common Trip

 

**Other Door Mounted Components**

•                  Digital voltageRegulator with auto voltage matching (supplied by generator manufacturer)

•                  Circuit BreakerPosition Lights

•                  Emergency Stopmushroom head maintain position switch

 

**Synchronizing**

•                  PLC controlledfully automatic synchronizing including voltage and frequency matching

•                  Delta frequencytransmitter

•                  Synchscope

•                  Scynch checkfunction active in both auto and manual synchronizing

•                  Pistol grip, twoposition, spring-return-to-center switches for:

•                  Circuit BreakerControl

•                  Raise/LowerFrequency (speed)

•                  Auto/ManualSynch Mode

 

**Electronic Governor**

 

The systemincludes a Woodward 2301D0ST digital governor. The electronic governor will receive commands from the PLC and the PLCwill handle all process control (such as exhaust pressure control) andsynchronizing but the electronic governor will perform the final valve control.The governor includes the following functions:

•                  Speed Control

•                  Start Valve Ramp

 

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•                  OverspeedProtection

•                  Shutdown LogicAlarm Logic Platform Diagnostics

•                  Manual Start,Semi-Automatic Start,

•                  Automatic Startoption

•                  Self PoweredActuator option

•                  Critical SpeedAvoidance logic

•                  RemoteSpeed/Load set point

•                  Droop/IsochControl

 

**Electronic Metering**

•                  Multi-functionpower monitor, Electro Industries DMMS 300+ or equal, 0.5% accuaracy, formeasurement of:

•                  Voltage, perphase average, L-L an L-N

•                  Current, perphase average

•                  Power (kW)

•                  kWh

•                  kVAR

•                  kVA

•                  Frequency

•                  Power Factor

•                  Three-line,bright LED display and can display voltage, current and power valuessimultaneously.

•                  Othermeasurements are available by using keypad.

•                  Min/Max readingsare available for all measured parameters.

•                  Utility revenuegrade construction

 

**Generator Protection**

•                  SEL 300G utilitygrade multifunction generator protection relay, with the followingfunctions.  Relay settings by others.

•                  100% StatorGround

•                  Phase (optional)or Ground Differential

•                  Volts/Hertz

•                  Reverse or LowForward Power

•                  BackupOvercurrent Protection

•                  Negative-SequenceOvercurrent

•                  Loss-of-Field

•                  Six Levels ofOver-or Under Frequency, Plus Time Accumulators

•                  Over-/Undervoltage

•                  Loss-of-Potential

•                  Sychronism Check

•                  Out-of-Step (1or 2 blinder schemes)

•                  Full EventReports and Sequential Events Records (SER)

•                  Breaker Monitorand Battery Monitor

•                  High AccuracyMetering

 

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**5 kV Circuit Breaker Circuit Breaker**

•                  GE Switchgear 5kV, 250 MVA, tin plated copper, 1200 amp

•                  Indoor enclosurewith side access

•                  Drawout vacuumcircuit breaker, 5-cycle close, with auxiliary contacts.  Control power is 125 VDC (by others).

•                  Metering andrelaying current transformers, 6 in enclosure, 6 shipped loose, GE/ITI Model780

•                  Metering andrelaying potential transformers, drawout, fused, quantity 3

•                  SEL 587transformer protection relay

•                  Breakertrip/close switch and indicating lights

 

**Skid Terminal Box**

System I/O and turbine generator skid wiring in a terminal box designedto be mounted on the skid.  This willdrastically reduce field wiring between the skid and the controls.  Skid could be up to 1000 feet from thecontrol panel.  Wiring between skidterminal box I/O and the control panel will be one communication cable.  Safety wiring such as turbine trip andemergency stop will be “hard” wired.

 

**Auxiliary Control Station**

Auxiliary Control Station with:

•                  HMI for controland display of monitoring data

•                  Emergency stopswitch, red mushroom head

•                  Alarm horn

•                  Approximatedimensions:  24 x 30 x 10 inches

 

**Neutral Grounding Resistor**

Neutral grounding resistor manufactured by IPC
| • |   | Volts (l-L)                                                                 | : | 4160                                                                                              |
|--------|--------|-----------------------------------------------------------------------------|---|---------------------------------------------------------------------------------------------------|
| • |   | Volts (L-N)                                                                 | : | 2400                                                                                              |
| • |   | Amps                                                                        | : | 40                                                                                                |
| • |   | Ohms                                                                        | : | 6                                                                                                 |
| • |   | Duty                                                                        | : | 10 Seconds                                                                                        |
| • |   | Temp. Rise                                                                  | : | 760o C                                                                                            |
| • |   | Resistor                                                                    | : | Stainless steel edgewound elements, individually insulated and  supported on aluminum frames with |
|   |   | stainless steel inner-connections.                                          |
| • |   | C.T.                                                                        | : | 5kV @ 400:5 ratio, T200 relay accuracy, 60 Hz enclosed with and wired  to the resistor.           |
| • |   | Enclosure                                                                   | : | NEMA 3R outdoor rated with a solid top, removable solid front, rear  and side covers, and a       |
|   |   | screened bottom, Steel construction with mill galvanized finish. No  paint. |
| • |   | Dimensions                                                                  | : | 48” W x 32” D x 37” H.                                                             |
| • |   | Weight                                                                      | : | 500 lbs. (approximate)                                                                            |
| • |   | Bushings                                                                    | : | None. Both the neutral and ground connections via bottom entry access  to insulated 250 MCM       |
|   |   | compression lugs.                                                           |

 

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**EXHIBIT B**

 

**Promissory Note and Security Agreement**

 

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**PROMISSORY NOTE AND SECURITY AGREEMENT**

 
|           |       |                | **[Hand crossed out and written: May 10]**             |
|----------------|------------|---------------------|-------------------------------------------------------------|
| **$1,760,274** | ** ** | **Colwich, Kansas** | **April         , 2005** |
|                |            |                     |                                                             |  |

 

FOR VALUE RECEIVED, **East Kansas Agri-Energy,LLC (Buyer)**PROMISES to pay order of **ICM, Inc.,310 N. First Street, Colwich, Kansas (Seller),**the sum of **One Million Seven-Hundred Sixty Thousand Two Hundred Seventy FourDollars ($1,760, 274)**, together with interest form the date of thisnote at a rate of 1 percent per annum above the Prime Rate as most recently publishedby the *Wall Street Journal* (Eastern Edition)(1),with the interest rate changing quarterly on the first day of January, April, July andOctober during the term of this note, payable in the followinginstallments:

 
| **Payment Date**     | ** ** | **Payment Amount**                                                                                            |
|----------------------|------------|---------------------------------------------------------------------------------------------------------------|
| October 1, 2005 |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| January 1, 2006 |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| April 1, 2006   |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| July 1, 2006    |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| October 1, 2006 |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| January 1, 2007 |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| April 1, 2007   |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| July 1, 2007    |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| October 1, 2007 |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| January 1, 2008 |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| April 1, 2008   |       | $146,689.50 in principal plus all accrued interest on the entire  balance of the note to the date of payment. |
| July 1, 2008    |       | the entire remaining balance of principal and interest due on the  note                                       |

 

All paymentsshall first be applied to accrued interest, and then to the principal of thisnote.

 

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(1)   If the *Wall Street Journal*is not published or the Prime Rate isnot stated in that publication on the effective date of any interest ratechange, then the Prime Rate in the most recently published edition of that publicationshall be used.

 

Having executed this note, and in order to secure payment, Buyerpledges as Collateral the following items of personal property (theCollateral):

 

The Tuthill Energy Systems Murry steam turbine electric generator

Installed at the Garnett Ethanol Plant having an address of 210 1⁄2 E.

4th Avenue, Garnett, Kansas, as more fully described in theattached

Contract for Sale of Equipment.

 

Now, in the event of default of payment of the note, Buyer gives toSeller full power and authority to sell and to do all necessary acts totransfer the Collateral, or any part or portion of it, at public or privatesale, at the option of the holder of this note, on the nonperformance of theabove promise, or at any time thereafter, and without advertising that same orotherwise giving to Buyer any notice, and apply the proceeds to the payment ofthis note and the costs of sale and transfer. Buyer agrees to make good and deficit of the proceeds of such saleshould not be sufficient to pay this note. Any surplus will be paid to Buyer.

 

Buyer agree that this Note and Security Agreement is subject to theUniform Commercial Code, and all the following additional provisions:

 

1.     **Names For This Agreement:**  The maker of the note shall be called Buyerand the holder of the note shall be called Seller.

 

2.     **Title:**  Except for the security interest granted toSeller and a blanket security interest in favor of Home Federal Saving Bankwhich shall be subordinate to Seller’s security interest, the Collateral is orwill be owned by Buyer free form any lien, security interest or encumbrance ofany kind; Buyer will defend its title and the Collateral against all adverseclaims of title, lein, security or other interest of any character.  Buyer will not sell, encumber, transfer ordispose of the Collateral or any par of it without prior written consent ofSeller.

 

3.     **Insurance:**Buyers will at all times keep the Collateral insured as provided in theattached Contract For Sale of Equipment. Al such policies shall provide lossespayable to the Seller and Buyer as their interests appear. Copies of theinsurance policy or policies shall be provided to the Seller by the Buyer.Evidence of payment of insurance premiums shall be provided to the Seller.

 

4.     **Location of Collateral:** Buyer willmaintain the Collateral at the Garnett Ethanol Plant.

 

5.     **Perfection:**Buyer hereby irrevocably authorizes Seller at any time and from time to time tofile in any jurisdiction any initial financing statements and amendmentsthereto that (a) describe the Collateral as set forth above, and (b) containany other information required by the UCC for the sufficiency or filing officeacceptance of any financing statement or

 

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amendment. Itis agreed that the Equipment will remain readily removable from the GarnettEthanol Plant property and is therefore not a “fixture” within the meaning ofQ.S.A. 84-9-102(41), notwithstanding any protective fixture filing that mightbe made by Seller.

 

6.     **Maintenance:**Buyer will timely pay any and all taxes, assessments, license fees, or otherproper charges arising from the ownership, use or operation of the Collateral.Buyer will keep the Collateral free from any adverse lien, other than a blanketsecurity interest in favor of Home Federal Saving Bank which shall be subordinateto Seller’s security interest, and in good order and repair, will not modify,waste or destroy the Collateral or any part of it. Buyer will not use theCollateral in violation of any applicable law, statute, ordinance or policy ofinsurance. All accessions to the Collateral shall be subject to this Agreement.The Collateral may be examined and inspected by Seller at any reasonable timeor times wherever it may be located.

 

7.     **Future Advances**: At hisoption, Seller may pay any taxes, liens, charges, encumbrances or assessmentsat any time levied against the Collateral; may place and pay for insurance onit; may order and pay for repair, maintenance, restoration, recovery, andpreservation of it; and pay any transfer, recording or filing fees. Buyer agreesto reimburse Seller for any such payments or expenses made or incurred. Anyinsurance premiums paid by Seller shall be refunded to Seller in the event ofcancellation. Seller shall give Buyer reasonable notice of intent to performunder this paragraph and then allow Buyer a reasonable time to perform therequisite act. Upon failure of Buyer to perform and to make payments or incurexpenses, such amount may be added to the debt. Within a reasonable time afteradvancing any such sums, Seller shall in writing advise Buyer of the amount ofsums advanced, charges and any revised payment schedule occasioned bythese advances. In the event any insurance is so purchased, Seller will deliverto Buyer a proper certificate or notice of insurance. Seller may make a financecharge for sums so advanced at a rate not in excess of the interest ratespecified in this note.

 

8.     **Default**: Any of thefollowing events shall constitute a default: (1) the failure of Buyer totimely perform any of the duties and meet any of the obligations specified inthis note; (2) any warranty, representation or statement made or f mashedto Seller by or on behalf of Buyer which induced Seller to make the loan andthis Agreement which is false in any material respect; (3) the loss,theft, substantial damage, destruction, material alteration, sale, orencumbrance to or of the Collateral, or any part of it, unless insuranceproceeds covering such Collateral are applied to payment on this note; or (4) thedissolution, termination of existence, insolvency, business failure,appointment of a receiver of any part of the property, assignment for thebenefit of creditors, or the commencement of any proceeding under anybankruptcy or insolvency laws by or against Buyer. Waiver of an act of defaultshall not be nor constitute waiver of any other default in the future.

 

9.     **Remedies Upon Default / Acceleration of Payment**:Upon default by the Buyer, Seller, at its option, may declare all obligationsto be immediately due and payable (subject to Buyer’s right to cure default inpayment) and shall have the right to demand and take immediate possession ofthe Collateral. Buyer, upon demand, shall make the Collateral available toSeller. When Collateral is in Seller’s possession, Seller shall have noobligation except to use reasonable care in the custody and physicalpreservation of the Collateral. The risks of accidental loss or damages are onthe Buyer to the extent of any deficiency in any effective insurance coverage.Expenses of retaking, holding, restoring, preparing for sale, selling, etc.,shall be paid

 

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from the sale of Collateral proceeds, including Seller’s reasonableattorney’s fees to the extent permitted by law.

 

10.   **Successors:**All rights of the Seller shall inure to the benefit of its successors and assigns.All obligations and rights of Buyer shall bind and inure to the benefit of itslegal representatives, successors and assigns.

 

IN WITNESSWHEREOF, the Buyer subscribed its name effective on the date first abovewritten.

 
|   | EAST KANSAS A GM-ENERGY, LLC |
|--------|------------------------------|
|   |                         |
|   |                         |
|   | By:                          | /s/ Bill Pracht |   |
|   | Name: Bill Pracht            |
|   | Title: Chairman              |

 

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