Industrial

                  Services,
                    LLC

                


        

      

       

    

     

    May
      17,
      2007

    


    Southern
      Iowa BioEnergy 

    115
      S.
      Linden Street

    Lamoni,
      IA 50140

    Attn:
      William T. Higdon

    


    Third
      Inning Solutions

    6151
      Thornton Ave., Suite 130 

    Des
      Moines, IA 50321

    Attn:
      Phil Stover

    


    Subject:
      Interim Agreement - SIBE Bio Diesel Plant in Osceola or Lamoni, Iowa


    


    Dear
      Mr.
      Higdon & Mr. Stover:

    


    It
      was a
      pleasure meeting with you and
      your
      team on
      Monday
      March 5, 2007. 

    


    Ball
      Industrial Services is excited to join the SIBE Team as your
      Engineering,
      Procurement,
      Construction (EPC)
      Contractor. As such we will be providing services to construct a 30 MGPY
      Biodiesel facility; coordinating all design, construction and commissioning
      services.

    


    The
      intent of this Interim Agreement is to establish a base line from which we
      will
      execute a definitive agreement unless sooner terminated. The Interim
      Agreement
      shall
      remain in place until the later of (a) the date the definitive agreement is
      executed, or (b) August 1, 2007.

    


    Team
      Approach

    


    As
      the
      EPC Contractor for your project, Ball Industrial Services will act as the prime
      contractor to SIBE and will directly manage other key prime contractors. Ball
      Industrial Services will utilize existing SIBE relationships with key subs
      for
      the project.

    


    Ball
      Industrial Services

    


    The
      services to be provided by Ball in connection with the Facility shall include,
      but are not limited to, the following:

    


    
      	 	
              a)

            	
              Preparation
                of a proposed Guaranteed Maximum Price Agreement (GMAX Agreement)
                for the
                design, construction and start-up of the Facility, including a preliminary
                schedule.

            


      	 	 	 


    

    
      	 	
              b)

            	
              Design,
                construct and startup the Facility in accordance with the GMAX
                Agreement.

            


      	 	 	 


    

    
      	 	
              c)

            	
              All
                other items agreed to in the GMAX
                Agreement.

            


    

    


    Ball
      will
      not limit its assistance to the service specifically enumerated above, but
      will
      extend its services and assistance as reasonably required and requested by
      the
      Company to provide for the successful implementation of the plan of financing
      and the design, construction and startup of the Facility. (Please refer to
      Appendices A, B, C, D for more details.)

     

    6601
      Westown Parkway - Suite 240 - West Des Moines, IA 50266

    Ph:
      515.276.8788 Fax: 515.221.1840

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    We
      will
      provide project coordination for building design, civil engineering, trade
      procurement for site, concrete, erection, carpentry and design as required
      for
      the project.

    


    In
      addition, Ball will be responsible for all coordination of technology providers,
      contracts, cash management, and schedule performance. As the controlling
      contractor, we are responsible for OSHA activities, documentation and
      implementation to ensure a safe worksite.

    


    In
      order
      to ensure communication with the SIBE, LLC Board regarding critical issues
      on
      budget and schedule, Ball Industrial Services shall supply monthly a progress
      report for use by the board and financing partners.

    


    All
      subcontracts and licenses to be entered into by Ball Industrial Services and
      Bratney Companies shall be subject to prior review and approval by
      SIBE.

    


    Ball
      Industrial and Bratney Companies shall use commercially reasonable efforts
      to
      obtain and provide to SIBE as soon as reasonably practicable the proposed
      forms of any licenses, sublicenses or similar agreements relating to technology
      to be provided by third parties (including, without limitation, Westfalia and
      CIMBRIA SKET), and shall reasonably cooperate with SIBE in negotiating such
      agreements to provide SIBE with such rights and protections as SIBE deems
      necessary or appropriate in connection with such underlying
      technology.

    


    Bratney
      Companies

    


    Bratney
      will be the technology provider for this project. They will provide the design
      process, process license, and detailed engineering services for
      the
      plant &
      process. 

    


    Bratney
      will be a subcontractor to Ball Industrial Services. Bratney will provide
      proprietary process equipment and services. Both Ball and SIBE will contract
      directly with Bratney for the license,
      design
      services
      and
      process equipment supply.

    


    Bratney
      will be responsible
      for the
      engineering,
      design,
      procurement and construction
      for all
      components of the main process plant. They will also be responsible for vessel
      fabrication & erection and system commissioning. 

    


    Ball
      Industrial
      will be
responsible
      for the
      engineering,
      design,
      procurement and construction
      for the
      components of the project which are not part of the main process plant. This
      includes the design of the process buildings, equipment supports, design of
      feedstock
      handling systems and equipment,
      storage
      and load out equipment, biodiesel
      & glycerin
      storage
      and load out;
      water
& waste
      water
      treatment, steam generation, cooling water system, chemical storage and
      handling. 

    


    Scope
      & Budget

    


    Ball
      Industrial Services will be acting as the EPC contractor for this project
and
      as
      such will be responsible
      for all
      direct
      engineering
      and subcontractors
      including
      the management
      of Bratney. We will work with Bratney, and our subcontractor base to establish
      a
      base line scope and price to produce a 30 MG PY facility. It is imperative
      that
      we accurately
      forecast
      all
      factors affecting the
      cost
      and
      timing of project completion. We are in a very dynamic marketplace and the
      currently strong demands on market
      resources
      can produce unforeseen
      costs and
      delays.

    


    Schedule

    


    Ball
      Industrial Services estimates a sixteen to eighteen month construction cycle.
      The schedule will commence when long lead time equipment has been placed on
      order. Although the SIBE estimate for ground breaking for the Osceola or Lamoni
      site is set for August 1, 2007, Ball Industrial Services will commence
      construction activities earlier if given direction from the Owner, once
      financing is in place.

    


    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    Key
      Elements to Proposed Schedule:

    


    SIBE
      has
      the responsibility to obtain all required permits. Ball Industrial Services
      will
      work with SIBE to obtain all appropriate permits. The time for this activity
      may
      be a critical path item for the schedule and may require schedule adjustments
      based upon the critical timeline to procure.

    


    Ball
      Industrial Services is forecasting availability of equipment and manpower from
      key subcontractors on the project. Material shortages, labor agreements and
      SIBE
      down payments will affect and drive the overall schedule for the project. It
      is
      imperative that we establish accurate lead times for critical path items. Ball
      Industrial Services will provide monthly schedule and budget updates to
      SIBE.

    


    Contract:

    


    Ball
      Industrial Services proposes a cost plus fee Guaranteed Maximum Price contract
      as a prime contract for the SIBE
      project. 
      Except
      as otherwise directed by SIBE, all subcontracts shall be competitively bid
      as
      part of the Ball Industrial Services package. All contracts shall be reviewed
      prior to execution with SIBE. All costs shall be made available for review
      by
      the SIBE team at anytime.

    


    Interim
      Agreement:

    


    Ball
      Industrial Services and SIBE have executed this interim agreement to cover
      project management, engineering and equipment procurement costs associated
      with
      the project. The Target Price for the Project will be prepared within 8 weeks
      of
      execution and funding of this Interim Agreement.

    


    EPC
      Agreement:

    


    It
      is the
      intention of Ball Industrial Services and SIBE to execute a prime contract
      for
      EPC services with a Guaranteed Maximum Price ("GMAX").
      The
      rights and obligations of the parties with respect to the Facility will be
      set
      forth in the GMAX agreement to be executed by the parties (the "GMAX
      Agreement").
      The
      completion of the GMAX Agreement is subject to and contingent upon the parties
      reaching agreement on the terms and conditions thereof. After this interim
      agreement is executed by the Company and returned to Ball industrial
      Services
      together with the down payment, the parties will enter into good faith
      negotiations for the preparation of the GMAX Agreement. Either party may
      terminate such negotiations at any time and for any reason. If this interim
      agreement is terminated by SIBE, Ball Industrial Services will refund the down
      payment paid less expenses incurred and fee earned by Ball Industrial Services
      as a result of this interim agreement. If this interim agreement is terminated
      by Ball Industrial Services, Ball Industrial Services will refund the down
      payment paid by SIBE.

    


    Ball
      Industrial GMAX pricing shall include GMAX pricing for Ball Industrial Services
      and all subs and primes plus an agreed to project contingency. GMAX pricing
      will
      be established by the time the Project Design and Development documents are
      80%
      complete.

    


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    Fees

    


    Project
      Fee: Ball Industrial Services proposes a 10% cost of work fee on all
      subcontracts under Ball Industrial Services EPC agreement. Ball Industrial
      Services proposes a 10% cost of work fee for prime contracts managed by Ball
      Industrial Services.

    


    Shared
      Savings: Ball Industrial Services proposes a 60/40 split on all savings
      generalized by the prime contractors below the GMAX price. 60% for SIBE and
      40%
      Ball Industrial Services which will be shared pro rate with the prime
      subs.

    


    Schedule
      Bonus: Prior to the GMAX Agreement being finalized, Ball Industrial Services
      proposes developing a schedule incentive plan with SIBE. If the performance
      guarantee is achieved on or before the expiration of the eighteenth month,
      this
      incentive shall be shared pro rata with each key subcontractor to ensure
      performance. In the event the parties agree to such a schedule incentive plan,
      Ball Industrial Services will also agree to pay liquidated damages in an
      identical amount for each day after eighteen months that the project is not
      complete.

    


    General
      Liability

    


    General
      Liability fee of .60% of the cost of work shall be applied to the Ball
      Industrial Services EPC contract.

    


    Payment
      Terms: 

    


    Initial
      Down Payment:

    


    Upon
      execution of this interim agreement SIBE will provide a series of initial down
      payments to start project design. Ball Industrial Services shall make deposits
      to Bratney, and design engineers, to begin engineering. Ball Industrial Services
      will require a payment of $750,000 for preconstruction engineering, design,
      deposits and other initial project expenses. Ball Industrial Services will
      provide SIBE with a weekly accounting of any such payments and
      deposits.

    


    Subcontractor
      Retention:

    


    Ball
      Industrial Services reserves the right to contract or change subcontractors
      to
      deliver the project as required to meet the project timelines, subject to SIBE’s
      prior written consent, which shall not be unreasonably withheld.

    


    Ball
      Industrial Services

    


    The
      remaining contractors shall invoice bimonthly for work completed. SIBE shall
      pay
      all invoices in Net 15 days after receipt of invoices. Ball Industrial Services
      shall prepare an estimated draw schedule which will be reviewed and agreed
      to by
      Ball Industrial Services and SIBE.

    


    Equipment
      Down Payments

    


    There
      will be several long lead items involved with the SIBE project. They shall,
      from
      time to time, require deposits or non-refundable deposits to secure production
      slots. If such deposits are approved by SIBE, SIBE shall direct wire such
      payments directly to the contractor vendors. Ball Industrial Services shall
      track and report monthly all such deposits so SIBE can maintain accurate records
      of non-refundable deposits.

    


    Warranties
      

    


    Mechanical
      & Process:

     

    The
      Bratney
      Companies
      and their technology provider will provide mechanical and process performance
      warranties. These will be developed prior to execution of the GMAX
      Agreement. 

    


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    


    Workmanship:

     

    Ball
      Industrial Services will provide a one year warranty agreement for workmanship
      and materials. 

    


    SIBE
      Responsibilities

    


    
      	 	
              ·

            	
              Payment
                of all prime contracts as well as associated licensing and performance
                requirements.

            


      	 	 	 


    

    
      	 	
              ·

            	
              All
                site costs associated with ground acquisition and due
                diligence

            


      	 	 	 


    

    
      	 	
              ·

            	
              All
                costs associated with debt financing

            


      	 	 	 


    

    
      	 	
              ·

            	
              Obtaining
                state, city, or county incentives for the
                project

            


      	 	 	 


    

    
      	 	
              ·

            	
              Application,
                securing and payment of all applicable licensing and permits related
                to
                the project.

            


    

    


    This
      is
      an approved understanding and agreement between Ball Industrial Services and
      Southern Iowa Bio Energy, LLC,

     

    
      	Ball
              Industrial
              Services, LLC	 	 	Southern
              Iowa Bio
              Energy, LLC
	 	 	 	 
	/s/ Rick Ball	 	 	/s/
              William T.
              Higdon
	
              
                

              

              Rick Ball

              President

              Date: 5-17-07 

            	 	 	
              
                

              

              William T. Higdon

              President

              Date: 5-17-07

            


    

     

    Attachments:

    


    Appendix
      A:   Engineer/Contractor
      Responsibilities

    Appendix
      B:   Owner’s
      Responsibilities

    Appendix
      C:   Ownership
      of Documents

    Appendix
      D:   Feedstock
      Risk Assessment

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    Appendix
      A:
      Engineer/Contractor Responsibilities

    


    Engineering
      services shall be performed under the direct supervision of Ball Industrial.
      

    


    The
      following Engineering Services shall be provided:

    


    
      	
              Project
                costing developed 

            
	 
	
              Project
                Cash Flow Projection for the project (with definition of payment
                terms)

            
	 
	
              Utility
                Requirements definition to Owner

            
	 
	
              Site
                Lay-out Plan development (with utilities, rail, roads, and building
                orientations) with Owner representatives input. (This does NOT include
                Civil Engineering for final design)

            
	 
	
              Process
                Area Lay-out. (equipment location and orientation by level in the
                structure)

            
	 
	
              Process
                Engineering Package development. (Material and Energy Balance, process
                flow sheets, index flow sheets)(utility consumption rates
                defined)

            
	 
	
              Process
                wastewater and air emissions information transferred to Owner’s
                Environmental Engineer.

            
	 
	
              Design
                detail development of Process Structure and foundations.
                

            
	 
	
              Project
                Milestone Schedule (detailed) and full Project Scope definition
                document.

            
	 
	
              Development
                of detailed Piping and Instrumentation Diagrams
                (P&ID)

            
	 
	
              Design/Build
                Construction Contract Developed. (GMAX format)

            
	 
	
              Identification
                of Long Lead Time Equipment and Procurement Plan for Westfalia, Cimbria
                and Bratney provided equipment.

            
	 
	
              Definition
                of electrical requirements and electrical design
                details.

            
	 
	
              Definition
                of ISBL and OSBL tank farm sizing recommendations to
                Owner.

            
	 
	
              Definition
                of fire prevention and detection equipment and installation
                requirements.

            
	 
	
              Development
                of control logic documents (functional descriptions), control code
                and
                control graphics for process equipment.

            
	 
	
              Design
                details of instrumentation input and output requirements. (loop drawings)
                

            
	 
	
              Definition
                of insulation requirements for piping and equipment.

            
	 
	
              Completion
                of a HAZOP review of process with owner’s representatives in
                attendance

            
	 
	
              Specification
                of all Bratney provided instruments, piping, valves, pumps and fittings.
                

            
	 
	
              Definition
                of painting requirements for piping and
                equipment.

            


    

    


    Project
      Schedule The
      developed schedule shall show the activities of the Owner and the
      Engineer/Contractor necessary to meet the Owner’s completion requirements with
      ownership designation on individual tasks.

    


    Target
      Pricing Ball
      Industrial will work with the Owner to develop the Target Price for the defined
      scope of work. This will occur within 8 weeks of execution and funding of this
      Interim Agreement. 

    


    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    Appendix
      B: Owner’s
      Responsibilities

    


    The
      Owner
      shall provide to Ball Industrial all relevant information for the Project,
      including the Owner’s Program and intentions, which is an initial description of
      the Owner’s objectives, including budgetary and time criteria, space
      requirements and relationships, flexibility and expandability requirements,
      special equipment and systems, and site requirements.

    


    The
      Owner
      shall review and timely approve schedules, estimates, schematic design documents
      and other documents that are provided under this Agreement.

    


    If
      the
      Owner elects not to proceed with the Project, the Owner shall have no further
      obligation to Ball Industrial other than the payment of compensation as set
      forth in this Agreement.

    


    The
      Owner
      shall provide Ball Industrial all known information regarding site and the
      site
      attributes that are needed to complete the project scope.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    


    Appendix
      C: Ownership
      of Documents

    


    All
      documents, work papers, plans, designs, and related work product generated
      or
      produced pursuant to this Interim Agreement shall remain the property of Ball
      Industrial and its subcontractors prior to handing-over of the completed plant
      to the Owner, subject, however, to a non-assignable license to the Owner to
      complete the proposed plant in or near Osceola or Lamoni, Iowa and to use
      such materials in connection with such plant, provided that the Owner has paid
      all amounts owing to such parties. This includes notes, photos, memorandums,
      drawings generated as part of the scope of this Interim Agreement. The ownership
      of technology specific information and/or information regarding the Connemann
      Process Patent will remain in ownership by the Bratney Companies and Westfalia
      in the event the project is stopped during or after the duration of this work
      phase.

    


    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    


    Appendix
      D: Feedstock
      Risk Assessment

    


    If,
      during the completion of work outlined in this agreement, the feedstock plan
      for
      the facility dictates other than soy or palm oil to be used, a Feedstock Risk
      Assessment activity will be completed as soon as possible under the direction
      of
      Ball Industrial / Bratney. This assessment will be completed as an expense
      to
      the Owner. This step is being dictated due to the influx of potential feedstock
      for Biodiesel production that may highly variable in quality.

    


    The
      Owner
      will be asked to provide liquid samples of all feedstock types planned other
      than soybean or palm oil. These samples must be considered representative and
      “typical” of the supply that will eventually be resourced to supply the
      operating Biodiesel facility.

    


    Ball
      Industrial / Bratney will engage a third party testing laboratory to analyze
      these materials in detail. Properties such as wax content, free fatty acid
      content, phosphorous content, sulfur content, moisture level, unsaponifiables
      and other impurities will be measured.

    


    Ball
      Industrial / Bratney will coordinate a review session of the test results with
      the Owner and the Owner’s representative. Cimbria/SKET and Westfalia
      representatives will be involved in the data review also.

    


    The
      test
      results will be reviewed and if concerns are raised regarding the viability
      of
      any feedstock to successfully produce in-specification Biodiesel using the
      Connemann Diesel process, any of several next steps may be completed. For
      example:

    


    
      	 	
              
                ·

              

            	
              Additional
                testing

            


      	 	 	 


    

    
      	 	
              
                ·

              

            	
              Repeat
                testing

            


      	 	 	 


    

    
      	 	
              
                ·

              

            	
              Pilot
                scale testing to produce Biodiesel for analysis and
                review

            


      	 	 	 


    

    
      	 	
              
                ·

              

            	
              Same
                or additional testing by another
                lab

            


    

    


    These
      additional steps will be made at Owner’s expense. Additionally, technical
      adjustments may be possible to the processing steps and/or conditions of
      processing to mitigate the concerns and should be considered.

    


    If
      concerns persist regarding the feedstock’s viability, Ball Industrial / Bratney
      will discuss options such as removal of the feedstock from consideration in
      the
      supply of materials and from the project scope or in a worst case, cancellation
      of the project.

    


    If
      no
      concerns exist, the work outlined under this agreement will continue as per
      planned content and schedule.

    


    
      
        
        

      

      
        -9-