Memorandum
        of Understanding

      Southern
        Iowa BioEnergy, LLC and SAFER Energy, LLC

       

    

    Southern
      Iowa BioEnergy, LLC ("SIBE") and SAFER Energy, LLC ("SAFER") set forth in this
      Memorandum
      of Understanding (the “MOU”) and in the “Proposal For: Southern Iowa Bio-Energy,
      LLC attached hereto as EXHIBIT
      A,
      and by
      this reference incorporated herein (the “Proposal”), dated as of this 6th day of
      November,
      2007,
      an outline of the material terms of the purchase by SIBE of a 40 million gallon
      biodiesel production plant from SAFER, subject to good
      faith negotiations towards definitive documentation (the "Definitive Agreement")
      and as otherwise stated in this MOU. All dollar amounts are in US
      currency.

    


    1) Product
      and Services: SAFER
      will design, manufacture and install a Biodiesel processing plant
      with a rated capacity of 40 million gallons per year (the "Plant") for the
      gross
      purchase price
      of
      $27.5 million payable as follows: $16.5 million in cash and $11 million of
      Equity ("Shares"),
      payable as set forth herein. The Plant shall be capable of producing biodiesel
      to ASTM 6751 and EN 14214 standards and shall be installed at the Osceola site
      in Clarke County, Iowa.

    


    2) Design
      Phase. Upon
      the
      payment to SAFER by SIBE of $1.65 million in cash, and the issuance of
$1.1
      million of Shares to SAFER to be held in escrow and disbursed as provided in
      Section 11 of this MOU (the "Design Deposit"), SAFER shall begin the design
      and
engineering
      of the Plant (the "Design Services") and shall coordinate with the contractor
      chosen
      by
      SIBE for site design and facilities design. If; during the Design Phase, SIBE
      determines
      it is unable to go forward, it shall notify SAFER in writing, which may be
      by
facsimile
      or other electronic means, to stop work. If so notified, SAFER shall stop work
      and refund
      to
      SIBE any portion of the Design Deposit not used by SAFER for costs incurred
      by
SAFER
      for
      such Design Services.

    


    3) Manufacturing
      Phase. Upon
      the
      payment to SAFER by SIBE of $3.3 million in cash, and the issuance
      of $2.2 million of Shares to SAFER, with such Shares to be held in escrow and
      disbursed as provided in Section 11 of this MOU (the "Manufacturing Deposit"),
      SAFER shall begin
      the
      manufacturing of the Plant and the equipment to be installed in the Plant (the
      "Equipment")
      (collectively, the "Manufacturing Services"). Thereafter, beginning four (4)
      weeks
      after the payment of the Manufacturing Deposit, SIBE shall make further payments
      to SAFER
      totaling $4.95 million and $3.3 million of Shares in six equal installments
      of
      $825 thousand
      in cash and $550 thousand of Shares each payable every four (4) weeks
      (collectively, with the Manufacturing Deposit, the "Manufacturing Payment"),
      with such Shares to be held in escrow and disbursed as provided in Section
      11 of
      this MOU. Alternatively, If SIBE chooses the
      Letter of Credit method of payment to sub contractors then SIBE shall make
      one
      payment of
      $8.25
      million in cash and issue $5.5 million of Shares to SAFER (with such
Shares
      to
      be held in escrow and disbursed as provided in Section 11 of this
      MOU)
      at the
      time of the Manufacturing Deposit.

    


    4) Completion
      Phase. SIBE
      shall make payments to SAFER during the Completion Phase contingent
      upon the occurrence of certain events for which SAFER is responsible, as more
      fully set forth in the Definitive Agreement. Upon delivery of the manuals
      to SIBE by SAFER, SIBE shall pay $825,000 in cash and issue $550,000 of Shares
      to SAFER,
      with
      such
Shares
      to
      be held in escrow and disbursed as provided in Section 11 of this MOU. Upon
      verification by SAFER to SIBE that the Equipment has been shipped, SIBE
shall
      pay
      to SAFER $1.65 million in cash and issue $1.1 million of Shares to SAFER,
with
      such
Shares
      to
      be held in escrow and disbursed as provided in Section 11 of this
      MOU.
      Upon
      delivery of the
      Equipment to the Building Site, SIBE shall pay to SAFER $1.65 million in cash
      and issue $1.1 million of Shares to SAFER, with such Shares
      to
      be held in escrow and disbursed as provided in Section 11 of this
      MOU.
      Subject
      to reductions negotiated by the parties and included in the Definitive
      Agreement, upon verification of output and production of the Equipment (the
      "Commissioning"),
      SIBE shall pay to SAFER $1.65 million in cash and
      issue
      $1.1 million of Shares to SAFER, ("Commissioning
      Payment") with
      such
Shares
      to
      be held in escrow and disbursed as provided in Section 11 of this
      MOU.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5) Retainage.
      At
      the
      conclusion of 12 months from the completion of the Completion Phase and
      contingent upon final acceptance of the Plant by SIBE, SIBE shall pay to SAFER
      $825,000
      less any costs incurred by SIBE related to repair or adjustment to the Plant
      necessary
      to cause the Plant to perform to the certain engineering specifications and
      not
previously
      reimbursed to SIBE by SAFER, and issue the remaining $550,000 Shares to
SAFER.

    


    6) Risk
      of Loss. SAFER
      shall be responsible for any and all risks of loss of the Plant through
and
      including the completion of the Completion Phase. SIBE shall secure Builders
      Risk & Hot
      testing insurance, acceptable to SAFER.

    


    7) Governing
      Law and Dispute Resolution. This
      MOU
      and the Definitive Agreement shall
      be
      governed by the laws of the State of Kansas without consideration of its
      conflicts of laws
      and
      SAFER and the parties shall use best efforts to negotiate in good faith
      resolution of any
      disputes between them.

    


    8) Contingencies.
      SAFER
      understands and agrees that SIBE’s obligations as set forth in this MOU are
      contingent upon execution of a Definitive Agreement and upon SIBE securing
      financing, on terms and conditions
      acceptable to SIBE, to perform under this MOU or any subsequent Definitive
      Agreement, and that any such financing may include provisions and requirements
      to
      be
      included in any Definitive Agreement. Under no circumstances is SIBE obligated
      to perform under this MOU, other than working towards negotiating the Definitive
      Agreement,
      unless and until such financing is secured and, further, SIBE’s payment of the
Initial
      Deposit shall not obligate SIBE to make any further payments to
      SAFER.

    


    9) Title.
      SIBE
      shall not have title to any engineering designs, drawings, and other work
completed
      by SAFER encompassed in the Design Phase until such time as all payments have
      been
      made
      to SAFER by SIBE. Title to the Plant shall transfer to SIBE upon the completion
      of
      the
      Completion Phase.

    


    10)
      Payment. SIBE
      shall pay SAFER the sum of $100,000.00 in cash on execution of this MOU.
$50,000
      of this amount will be fully refundable to SIBE should for any reason the two
      parties not
      be
      able to execute the Definitive Agreement. The remaining $50,000 will be fully
      refundable to SIBE in the event SAFER fails to proceed in good faith toward
      the
      execution of the Definitive Agreement.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11) Escrow
      for Shares.
      All
      Shares to be issued by SIBE to SAFER pursuant to this MOU shall be issued in
      SAFER’s name at the time and upon the conditions set forth herein, but shall be
      held in escrow until the final payment is due to SAFER as described in Section
      5
      of this MOU, and as more specifically set forth in the Definitive Agreement.
      Such Shares shall be held in escrow pursuant to a written escrow agreement
      to be
      executed by the parties simultaneous with the execution of the Definitive
      Agreement. During the term of such escrow, SAFER shall not enjoy any rights
      or
      benefits of ownership.

    


    12)
      Additional Terms.
      The
      Definitive Agreement shall contain additional representations, warranties,
      covenants, conditions, indemnities and other terms as are customary for
      agreements and transactions of the scope and nature described herein.


    


    [Signatures
      on following page]


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

     

    	 SAFER
            Energy, LLC	 	 	 Southern
            Iowa BioEnergy, LLC
	 	 	 	 
	 	 	 	 
	/s/ Robert
            Carneu	 	 	/s/ William
            T. Higdon
	
            
Robert
            Carneu	 	 	
            
William
            T. Higdon
	Printed
            Name	 	 	Printed
            Name
	 	 	 	 
	Title: Chief
            Executive Officer	 	 	Title: Chair
            and CEO
	 	 	 	 
	Date signed: 6
            November 2007	 	 	Date signed: 11-6-07



     

         


    
      
         

      

      
         

        
          

        

      

      
         

      

    


     

    EXHIBIT
      A

     

    


     

    [attach
      Safer Proposal]