**Exhibit 10.12**

** **

**TERM NOTE 4 (with reducing revolver feature)**

 
| Note Date:      | June 23,  2003 |   | $5,000,000.00 |
|-----------------|---------------------|--------|---------------|
| Maturity  Date: | June 1, 2008   |   |          |

 

**FORVALUE RECEIVED, LSCP, L.P.,**an Iowa limitedpartnership (“BORROWER”) promises to pay to the order of First National Bank ofOmaha (“BANK”), at its principal office or such other address as BANK or holdermay designate from time to time, the principal sum of Five Million and No/100Dollars ($5,000,000.00), or the amount shown on the BANK’s records to beoutstanding, plus interest (calculated on the basis of actual days elapsed in a360-day year) accruing each day on the unpaid principal balance at the annualinterest rates defined below.  Absentmanifest error, the BANK’s records shall be conclusive evidence of the principaland accrued interest owing hereunder.

 

This promissory note isexecuted pursuant to a Construction Loan Agreement (“CONSTRUCTIONLOAN AGREEMENT”) between BORROWER and BANK dated as ofJuly 25,  2002, which, togetherwill all amendments thereto, is collectively called the “AGREEMENT”.  All capitalized terms not otherwise definedin this note shall have the meanings provided in the CONSTRUCTION LOANAGREEMENT.

 

**INTERESTACCRUAL. **Intereston the principal amount outstanding shall accrue based on a one month LIBOR+380 bps.  Interest shall be calculatedon the basis of a 360-day year, counting the actual number of days elapsed.

 

**REVOLVINGFEATURE. **TheBORROWER may reborrow, on a revolving basis, that principal amount repaid onthis promissory note which remains at a variable interest rate.  Pursuant to this revolving loan feature theBANK will lend the BORROWER, from time to time until maturity of this note suchsums in integral multiples of $10,000.00 as the BORROWER may request byreasonable same day notice to the BANK, received by the BANK not later than11:00 A.M. on Friday, or the next BUSINESS DAY thereafter, each week but whichshall not exceed in the aggregate principal amount at any one timeoutstanding, $5,000,000.00.  TheBORROWER may borrow, repay and reborrow hereunder, from the date of thisAGREEMENT until the maturity of this note, said amount or any lesser sum which is $10,000.00or an integral multiple thereof.

 

**INCENTIVEPRICING. **Theinterest rate applicable to this promissory note is subject to reduction aftera date six months subsequent to CONSTRUCTION COMPLETION DATE, based on thebusiness results of BORROWER.  In theevent that BORROWER maintains the following ratios, measured monthly, theinterest rates will adjust accordingly:

 

----

 
| **If INDEBTEDNESS  to NET WORTH  is:**                           |   | **Interest  rate will be:**            |
|------------------------------------------------------------------|--------|----------------------------------------|
| Greater than  1.30 : 1.00                                        |   | One month  LIBOR plus 380 basis points |
| Greater than 1.10 : 1.00, but less than or equal to  1.30 : 1.00 |   | One month  LIBOR plus 355 basis points |
| Greater than .90 : 1.00, but less than or equal to 1.10 : 1.00   |   | One month  LIBOR plus 330 basis points |
| Greater than .70: 1.00, but less than or equal to .90 : 1.00     |   | One month  LIBOR plus 305 basis points |
| Less than or  equal to .70 : 1:00                                |   | One month  LIBOR plus 280 basis points |

 

Following repayment of TERMNOTE 3, when regular quarterly principal payments are applied to this note, theamount available to be borrowed under the revolving loan feature will becorrespondingly reduced, so that the maximum amount outstanding under thispromissory note will decreaseaccordingly.

 

**REPAYMENTTERMS. **Interestand Principal shall be due and payable in the amounts described in the AGREEMENT, which will beapplied to this Note and an additional Note, in the manner described in theAGREEMENT.  Any remaining principalbalance, plus any accrued butunpaid interest, shall be fully due and payable on June 1, 2008, if notsooner paid.

 

**PREPAYMENT. **TheBORROWER may prepay this promissory note in full or in part at any time.  Provided, however, a condition of anyprepayment is that a fee shall be paid to BANK sufficient to make BANK wholefor any expenses related to breaking fixed interest rates.  Each prepayment may be applied in inverse order of maturity or as the BANK in its sole discretion may deemappropriate.  Such prepayment shall notexcuse the BORROWER from making subsequent payments each quarter until theindebtedness is paid in full.  Nopayment of EXCESS CASH FLOW shall be the cause of a payment to BANK forinterest rate breakage fees or otherwise result in any prepayment fee.

 

**ADDITIONAL TERMS AND CONDITIONS. **The LOAN AGREEMENT,and any amendments or substitutions, contains additional terms and conditions,including default and acceleration provisions, which are incorporated into thispromissory note by reference.  TheBORROWER agrees to pay all costs of collection, including reasonable attorneysfees and legal expenses incurred by the BANK if this promissory note is not paid as provided above.  This promissory note shall be governed bythe substantive laws of the State of Nebraska.

 

**WAIVEROF PRESENTMENT AND NOTICE OF DISHONOR. **BORROWERand any other person who signs, guarantees or endorses this promissory note, tothe extent allowed by law, hereby waives presentment, demand for payment,notice of dishonor, protest, andany notice relating to the acceleration of the maturity of this promissorynote.

 

(signatures on next page)

 

----

 
|               |   | LSCP, L.P.,  an Iowa Limited Partnership  By Little Sioux Corn Processors, L.L.C., Its  General Partner |
|--------------------|--------|---------------------------------------------------------------------------------------------------------|
|               |   |                                                                                                    |
|               |   |                                                                                                    |
|               |   | By:                                                                                                     | /s/ Daryl J.  Haack |   |
|               |   | Daryl J. Haack, President of Little   Sioux Corn Processors, L.L.C.                                     |
|               |   |                                                                                                    |
|               |   |                                                                                                    |
| STATE OF  IOWA     | )      |                                                                                                    |   |
|               | ) ss.  |                                                                                                    |   |
| COUNTY OF Cherokee | )      |                                                                                                    |   |

 

On this 20 day ofJune 2003, before me, the undersigned, a Notary Public, personally appearedDaryl J. Haack, President of Little Sioux Corn Processors, L.L.C., General Partner of LSCP, L.P., onbehalf of said entity, who executed the foregoing instrument, and acknowledgedthat he executed the same as his voluntaryact and deed.

 
| [SEAL] |           | /s/ Becky J.  Nothem |   |
|--------|----------------|----------------------|--------|
|   | Notary  Public |

 

----

 

**SCHEDULE I to Third Amendment****to****Construction Loan Agreement**

 

AMORTIZATION SCHEDULE - USRule, 360 Day Year
| **#**       |   | **Date**  |       | **Principal**                |       |
|-------------|--------|-----------|------------|------------------------------|------------|
| 1           |   | 01-Sep-03 |       | 323,497.83                   |       |
| 2           |   | 01-Dec-03 |       | 323,268.13                   |       |
| 2003 Totals |   |      |       | 646,765.96                   |       |
|        |   |      |       |                         |       |
| 3           |   | 01-Mar-04 |       | 326,602.11                   |       |
| 4           |   | 01-Jun-04 |       | 328,297.76                   |       |
| 5           |   | 01-Sep-04 |       | 331,720.81                   |       |
| 6           |   | 01-Dec-04 |       | 336,777.45                   |       |
| 2004 Totals |   |      |       | 1,323,398.13                 |       |
|        |   |      |       |                         |       |
| 7           |   | 01-Mar-05 |       | 341,810.48                   |       |
| 8           |   | 01-Jun-05 |       | 342,254.96                   |       |
| 9           |   | 01-Sep-05 | ** ** | 345,823.54                   | ** ** |
| 10          |   | 01-Dec-05 |       | 350,872.34                   |       |
| 2005 Totals |   |      |       | 1,380,761.32                 |       |
|        |   |      |       |                         |       |
| 11          |   | 01-Mar-06 |       | 355,894,25                   |       |
| 12          |   | 01-Jun-06 |       | 356,798.55                   |       |
| 13          |   | 01-Sep-06 |       | 360,518.77                   |       |
| 14          |   | 01-Dec-06 |       | 365,559.39                   |       |
| 2006 Totals |   |      |       | 1,438,770.96                 |       |
|        |   |      |       |                         |       |
| 15          |   | 01-Mar-07 |       | 370,569.71                   |       |
| 16          |   | 01-Jun-07 |       | 371,953.15                   |       |
| 17          |   | 01-Sep-07 |       | 375,831.38                   |       |
| 18          |   | 01-Dec-07 |       | 380,863,49                   |       |
| 2007 Totals |   |      |       | 1,499,217.73                 |       |
|        |   |      |       |                         |       |
| 19          |   | 01-Mar-08 |       | 384,791.46                   |       |
| 20          |   | 01-Jun-08 |       | Entire remaining balance due |       |

 

----