Document:

Exhibit 10.5

CORN PROCUREMENT
AGREEMENT 

BETWEEN MILLENNIUM ETHANOL, LLC AND FREMAR, LLC

THIS CORN PROCUREMENT
AGREEMENT (the “Agreement”), made and entered into this 5th day of June, 2006 by and between Millennium
Ethanol, LLC, a South Dakota limited liability company (“Millennium”), and
FREMAR, LLC, a Minnesota limited liability company (“FREMAR LLC”).

WITNESSETH:

WHEREAS, FREMAR LLC is a
joint venture grain and agronomy company in Marion, South Dakota jointly owned
by FREMAR COOPERATIVE and ADM-Benson Quinn, a division of Archer Daniels
Midland Co.;

WHEREAS, Millennium
desires to buy from FREMAR LLC and FREMAR LLC desires to sell to Millennium com
required for any ethanol production (the “Corn”) at Millennium’s proposed 100
million gallon per year ethanol plant to be located near Marion, South Dakota
(the “Plant”) which will be managed by FREMAR FARMERS COOPERATIVE, INC. (“FREMAR
COOPERATIVE”); and

WHEREAS, the parties
desire to purchase and sell the Corn, and receive and provide such services, in
accordance with the fees, price formula, payment, delivery and other terms set
forth in this Agreement.

NOW, THEREFORE, in
consideration of the foregoing premises and the mutual covenants and conditions
herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by both parties, it is hereby
agreed:

1.             Commitment and Term.
Subject to the terms of this Agreement, FREMAR LLC hereby agrees to sell and
deliver, and Millennium hereby agrees to purchase and receive, Corn required
for ethanol production at the Plant. Millennium hereby further agrees that
during the initial term and any renewal term corn or grain products used to
produce ethanol at the Plant shall be purchased from FREMAR LLC. The initial term
of this Agreement shall be for five (5) years, commencing on the date of
written notification by Millennium to FREMAR LLC to proceed, but not later than
after the date the Plant begins producing ethanol. The parties shall execute a
memorandum setting forth the actual date of commencement of the term. This
Agreement shall be automatically renewed for successive one (1) year terms
thereafter unless either party gives written notice to the other party of its
election not to renew, not later than six (6) months prior to the expiration of
the then current term. This Agreement shall automatically terminate if
Millennium permanently abandons its efforts to construct the Plant.

2.             Price; Payment; Right
of Refusal; Storage.

A.          Price. For all “Direct Plant Delivered”
Corn delivered to the Plant by FREMAR LLC, Millennium shall pay FREMAR LLC a
price equal to the Delivered Plant Price plus Four Cents ($.04) per bushel. The
Delivered Plant Price will be (i) for the respective Direct Plant Delivered
seller, applied on a FIFO basis, the contract price, or (ii) for spot
deliveries, the current days posted price. All Direct Plant Delivered corn must
be priced. “Direct Plant Delivered” means corn bought by FREMAR LLC to be
delivered to Millennium’s grain receiving facility. There shall be no
procurement fee for Corn delivered to the Plant by FREMAR LLC from elevators
owned, leased or operated by FREMAR LLC and Millennium shall pay FREMAR LLC a
price equal to the contract price using average daily grades for the Corn
delivered. For purposes of this section, the “Delivered Plant Price” shall mean
the actual

contract or spot price of Corn less any quality
discounts using the Price Discount Schedule contained in Exhibit A.

B.           Payment. On a daily basis, weekends and
holidays excluded, FREMAR LLC shall be provided with certified weight
certificates for the previous day’s receipts of Corn. Transmittal of said
weight certificates may be electronically transmitted in a medium acceptable to
the parties. The certificates shall determine the quantity and quality of Corn
received at the Plant for each delivery. FREMAR LLC shall invoice Millennium,
either by facsimile or electronically to the fax number or email provided to
FREMAR LLC by Millennium, the Delivered Plant Price defined in paragraph 2.A
above for all properly documented deliveries. Invoices shall be payable without
interest if payment is received within seven (7) calendar days after
transmission of said invoice by FREMAR LLC. Thereafter, invoices will accrue
interest at a per annum rate equal to the Prime Rate (as published in the “Money
Rates” section of the Wall Street Journal)
minus one percent (1%). Millennium shall pay all invoices within fifteen (15)
calendar days of the invoice date. Millennium shall make payment of funds to
FREMAR LLC electronically into an account designated by FREMAR LLC.

C.           Storage. FREMAR LLC shall allow Millennium
to store any corn purchased from FREMAR LLC; provided that (i) FREMAR LLC shall
not be required to store more than 1.1 million bushels of such corn at any one
time, and (ii) such storage will be at the posted tariff and terms in effect at
FREMAR LLC’s facilities from time to time. All storage fees will be due and
payable upon delivery to Millennium.

3.                                      Delivery and
Title.

A.          Place. The place of delivery for all Corn
sold by FREMAR LLC pursuant to this Agreement shall be Delivered Plant. FREMAR
LLC and its agents shall be given access to the Plant in a manner and at all
times reasonably necessary and convenient for FREMAR LLC to make delivery as provided
herein. Millennium shall direct the unloading and receiving of all Corn
purchased hereunder.

B.           Unloading Schedule. On Friday of each week
during the term of this Agreement, FREMAR LLC shall give Millennium a schedule
of quantities of Corn to be delivered during the next receiving week (Monday
through Sunday). In the event FREMAR LLC delivers some or all of the Corn by
truck or rail, FREMAR LLC shall give Millennium sufficient advance notice to
allow Millennium to provide the required unloading services.

C.           Production Schedule. FREMAR LLC shall
provide Corn in quantities necessary to permit Millennium to maintain its usual
production schedule.

D.           Title. Title, risk of loss and
responsibility for the quality of Corn shall pass to Millennium upon unloading
the Corn at the Plant and acceptance by Millennium.

4.                                      Quantity and
Weights.

A.          No Representation. It is understood that
the Corn required for the production of the ethanol shall be determined by
Millennium’s production schedule and that no warranty or representation has
been made by Millennium as to the exact quantities of Corn required.

B.           Estimate. The
estimated amount of Corn required for the production of ethanol at the Plant is
36 million bushels per year.

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C.           Meters and Scales. The weight of Corn
delivered by FREMAR LLC to the Plant shall be established by meter or weight
certificates. The Plant shall obtain truck weights on the meters or scales at
the Plant, which shall be maintained by the Plant as required by applicable
laws, rules and regulations; and rail weights shall be obtained on any
certified railroad meters or scales. Whenever the Plant’s truck meters or
scales are unavailable or inoperable, any certified meters or scales may be
used, at the Plant’s sole cost and expense, until the Plant’s meters or scales
are available and operable. These inbound weight certificates shall be
determinative of the quantity of Corn for which the Plant is obligated to pay
pursuant to paragraph 2 above.

D.           Rail Cars. All rail cars for Corn shall be
grain hopper cars.

5.                                      Quality.

A.          Standards. FREMAR LLC understands that
Millennium intends to utilize the Corn purchased from FREMAR LLC as the base
stock for ethanol production and that the Corn is subject to minimum quality
standards for such use. FREMAR LLC warrants that purchase contract terms for
Corn delivered to the Plant shall meet the Corn Specification contained in the
Quality Standards in Exhibit A attached hereto and shall be acceptable under
current industry standards in the grain trade industry. The Quality Standards
in Exhibit A are subject to change as may be mutually agreed in writing by and
between the parties, provided, however, that such changes shall be in
conformance with generally acceptable industry standards.

B.           Compliance. FREMAR LLC warrants that it
will maintain all necessary State and Federal licenses to perform its
obligations under this Agreement and that the purchase contract terms will
state the Corn will not be adulterated or misbranded within the meaning of the
Federal Food, Drug and Cosmetic Act and that the Corn may lawfully be
introduced into interstate commerce under said Act. Unless otherwise agreed
between the parties to this Agreement, and in addition to other remedies
permitted by law, Millennium may, without obligation to pay, reject any Corn
before unloading for the failure of the Corn to comply with the representations
and warranties in this paragraph. Should any of the Corn be seized or condemned
by any federal or state department or agency for any reason, except noncompliance
by Millennium with applicable federal or state requirements, such seizure or
condemnation shall operate as a rejection by Millennium of the Corn seized or
condemned and Millennium shall not be obligated to offer any defense in
connection with the seizure or condemnation.

C.           Non-Specification Products. If FREMAR LLC
delivers Corn which does not meet the Corn Specifications contained in Exhibit A, then Millennium agrees to
purchase such Corn in accordance with the Price Discount Schedule contained in Exhibit A, unless such Corn may be rejected in accordance
with Exhibit A.

6.                                      Insurance.

A.          Policies. Millennium warrants to FREMAR
LLC that all Millennium’s employees shall be covered as required by law by
worker’s compensation and unemployment compensation insurance, and such worker’s
compensation insurance shall provide a waiver of subrogation on behalf of
FREMAR LLC.

B.           FREMAR LLC Vehicles. FREMAR LLC agrees to
carry such insurance on its vehicles and personnel operating on Millennium’s
property as FREMAR LLC reasonably deems appropriate.  Upon request, FREMAR LLC shall provide a
certificate of insurance to Millennium to establish the coverage maintained by
FREMAR LLC.

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C.           Other Claims. Nothing herein shall be
construed as a waiver by either party against the other party of claims, causes
of action or other rights which either party may have or hereafter acquire
against the other party for damage or injury to its agents, employees,
invitees, property, equipment or inventory, or third party claims against the
other party for damage or injury to other persons or the property of others.

7.                                      Representations
and Warranties.

A.          Each party represents
and warrants that it is an entity in good standing under the laws that it is
organized and has all the requisite power and authority to carry on its
business as it has been and to own, lease, and operate the properties and
assets used in connection therewith.

B.           In addition to the
representations and warranties herein regarding the quality of Corn, FREMAR LLC
represents and warrants that the Corn delivered to Millennium shall be free and
clear of liens and encumbrances.

C.           Each individual
executing this Agreement in a representative capacity, by his or her execution
hereof, represents and warrants that such person is fully authorized to do so
on behalf of the respective party hereto, and that no further action or consent
on the part of the party for whom such signatory is acting is required for the
effectiveness and enforceability of this Agreement against such party, following
such execution.

8.                                      Termination.

A.          For Cause. Either party may terminate this
Agreement without liability for cause by providing thirty (30) days prior
written notice to the other party. For purposes of this paragraph, “cause”
shall include, but not be limited to, the happening of an event of default
discussed in paragraph 10 below, or any other material breach of any provision
of this Agreement, or material violation of any applicable law, regulation or
ruling.

B.           Without Cause. Except as provided in Section
9.A., this Agreement may not be terminated in advance of its expiration date
without mutual agreement of the parties in writing.

9.                                      Events Of Default
The occurrence of any of the following shall be an event of default under this
Agreement: (1) failure of either party to make payment to the other when due,
if such nonpayment has not been cured within ten (10) days of written notice
thereof; (2) default by either party in the performance of any material
covenant, condition or agreement imposed upon that party by this Agreement, if
such nonperformance has not been cured within thirty (30) days of written
notice thereof; or (3) if either party shall become insolvent, or make a
general assignment for the benefit of creditors or to an agent authorized to liquidate
any substantial amount of its assets, or be adjudicated bankrupt, or file a
petition in bankruptcy and such petition is not dismissed within ninety (90)
days following the date of filing, or apply to a court for the appointment of a
receiver for any of its assets or properties with or without consent, and such
receiver shall not be discharged within sixty (60) days following appointment.

10.                               Remedies. Upon the
happening of an event of default under paragraph 10, the parties hereto shall
have all remedies available under applicable law with respect to an event of
default by the other party, including but not limited to the recovery of
attorneys’ fees and other costs and expenses. Without limiting the foregoing,
the parties shall have the following remedies whether in addition to or as one
of the remedies otherwise available to them: (1) to declare all amounts owed
immediately due and payable; and (2) to terminate this Agreement in accordance
with the provisions of paragraph 9.

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11.          Force Majeure. Neither
Millennium nor FREMAR LLC will be liable to the other for any failure or delay
in the performance of any obligation under this Agreement due to events beyond
its reasonable control, including, but not limited to, fire, storm, flood,
earthquake, explosion, act of the public enemy or terrorism, riots, civil
disorders, public emergency, sabotage, strikes, lockouts, labor disputes, labor
shortages, war, stoppages or slowdowns initiated by labor, transportation
embargoes, failure or shortage of materials, acts of God, or acts or
regulations or priorities of the federal, state or local government or branches
or agencies thereof.

12.          Indemnification.

A.          Except as otherwise
provided in this Agreement, Millennium shall indemnify, defend and hold FREMAR
LLC and its officers, managers, employees and agents harmless, from any and all
losses, liabilities, damages, expenses (including reasonable attorneys’ fees),
costs, claims, demands, that FREMAR LLC or its officers, managers, employees or
agents may suffer, sustain or become subject to, or as a result of (i) any
misrepresentation or breach of warranty, covenant or agreement of Millennium
contained herein or (ii) Millennium’s negligence or willful misconduct.

B.           Except as otherwise
provided in this Agreement, FREMAR LLC shall indemnify, defend and hold
Millennium and its officers, managers, employees and agents harmless, from any
and all losses, liabilities, damages, expenses (including reasonable attorneys’
fees), costs, claims, demands, that Millennium or its officers, managers,
employees or agents may suffer, sustain or become subject to, or as a result of
(i) any misrepresentation or breach of warranty, covenant or agreement of
FREMAR LLC contained herein or (ii) FREMAR LLC’s negligence or willful
misconduct.

13.          Relationship of Parties.
This Agreement creates no relationship other than those of seller and buyer
between the parties hereto. Specifically, there is no agency, partnership,
joint venture or other joint or mutual enterprise or undertaking created
hereby. Nothing contained in this Agreement authorizes one party to act for or
on behalf of the other and neither party is entitled to commissions from the
other.

14.          Trade Rules. As may
be applicable, all purchases and sales of Corn made hereunder shall be governed
by the Grain Trade Rules of the National Grain and Feed Association, unless
otherwise specified. Said Trade Rules, shall to the extent applicable, be a
part of this Agreement as if fully set forth herein.

15.          Audits; Financial
Information.

A.          Audits. Millennium (either directly or by
the use of accountants or other agents or representatives) may audit, inspect,
and review, at Millennium’s expense, FREMAR LLC’s files, records, and books
pertaining to amounts invoiced to Millennium pursuant to Direct Plant Delivered
corn under this Agreement. Such audits shall be performed on reasonable notice,
and conducted during normal business hours or at such other times as may be
agreed to by the parties.

B.           Financial Information. Millennium will
provide financial and other information reasonably requested by FREMAR LLC, at
FREMAR LCC’s cost, to determine the amount and terms of credit to be made
available to Millennium in connection with its purchase of corn hereunder.

16.          Dispute Resolution.
All disputes, claims, and other matters related to this Agreement will be
governed by the National Grain and Feed Association Arbitration Rules (the “NFGA
Rules”). The arbitrator(s) will be selected according to the NGFA Rules. Unless
otherwise agreed to by the parties, the location for any arbitration
proceedings concerning this Agreement or disputes hereunder shall

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be in Turner County, South Dakota. The arbitrators are
to decide only the issuer(s) presented to them and will not vary the terms of
this Agreement. Any decision by the arbitrators will be binding and judgment
may be entered upon it in accordance with applicable law.

17.          Miscellaneous.

A.          This Agreement, together
with any attachments or other information which is expressly incorporated
herein and made an integral part of this Agreement, is the complete
understanding of the parties to this Agreement with respect to the subject
matter of this Agreement, and no other representations or agreements shall be
binding upon the parties, or shall be effective to interpret, change or
restrict the provisions of this Agreement.

B.           No course of prior
dealings between the parties and no usage of trade, except where expressly
incorporated by reference, shall be relevant or admissible to supplement,
explain, or vary any of the terms of this Agreement.

C.           Acceptance of, or
acquiescence in, a course of performance rendered under this or any prior
agreement shall not be relevant or admissible to determine the meaning of this
Agreement even though the accepting or acquiescing party has knowledge of the
nature or the performance and an opportunity to make objection.

D.           This Agreement may be
executed in multiple counterparts, all of which shall constitute but one and
the same instrument. Facsimile signatures shall be deemed as originals as
between the parties.

E.           This Agreement can only
be modified by a writing signed by all of the parties or their duly authorized
agents.

F.           The paragraph headings
herein are for reference purposes only and shall not in any way control or
affect the meaning or construction of any provisions of this Agreement.

G.           This Agreement shall be
construed and performed in accordance with the laws of the State of South
Dakota.

H.           The respective rights,
obligations and liabilities of the parties under this Agreement are not assignable
or delegable without the prior written consent of the other party, which shall
not be unreasonably withheld. Notwithstanding the above, Millennium may assign
its rights under this Agreement to its lenders.

I.                                    Time
shall be of the essence in the performance of this Agreement.

 

J.            This Agreement shall
be binding upon, and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

18.          Notices. Unless a
different method of notice is provided herein, notice shall be deemed to have
been given to the party to whom it is addressed forty-eight (48) hours after it
is deposited in certified U. S. mail, postage prepaid, return receipt
requested, addressed as follows:

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If to Millennium:

Millennium Ethanol, LLC

P.O. Box 357 

Marion, SD 57043 

Attn: CEO

If to FREMAR LLC:

FREMAR, LLC 

300 North Broadway 

Marion, SD 57043 

Attn: General Manager

with copies to:

Fremar Farmers Cooperative, Inc.

300 North Broadway 

Marion, SD 57043 

Attn: General Manager

and to:

ADM-Benson Quinn

301 South., 4th Avenue, Suite 1075 

Minneapolis, Minnesota 55415-0226 

Attn: President

Either party may change
the address for notices hereunder by giving notice of such change to the other
party in the manner above provided.

IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed the day and year first above
written.

	
  

  	
  MILLENNIUM
  ETHANOL, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dennis J.
  Koerner

  	
   

  
	
   

  	
  By: Dennis J.
  Koerner

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FREMAR,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ L.N. Neumann

  	
   

  
	
   

  	
  By: L.N. Neumann

  
	
   

  	
  Title: Vice President

  
				

 

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EXHIBIT A

Quality Standards

	
  Corn Specification:

  	
   

  
	
   

  	
   

  
	
  Grade:

  	
  U.S. No. 2 Yellow Corn

  
	
  Moisture:

  	
  15.5%

  
	
  Aflatoxin:

  	
  None

  
	
   

  	
   

  
	
  Price Discount Schedule:

  
	
   

  
	
  Moisture:

  	
  -a shrink factor of 1.35% for each 1% of moisture
  above 15.5%

  
	
   

  	
   

  
	
  Aflatoxin:

  	
  -Greater than 0 is subject to rejection

  
	
   

  	
   

  
	
  Broken Kernel and/or Foreign Material:

  	
  -$0.02 each 1% from 3.1% to 5.0%

  
	
   

  	
  -$0.03 each 1%
  from 5.1% to 7.0%

  
	
   

  	
  -Over 7.0% May
  Be Subject to Rejection

  
	
   

  	
   

  
	
  Damage:

  	
  -$0.01 each 1% over 5.0%

  
	
   

  	
  -Over 25% may be
  subject to rejection

  
	
   

  	
   

  
	
  Heat Damage:

  	
  -$0.01 each 1/10 of 1% over 2/10 of 1%

  
	
   

  	
  -Over 3% subject
  to rejection

  
	
   

  	
   

  
	
  Test Weight:

  	
  -$0.01 each lb. under 54# to 50#

  
	
   

  	
  -$0.02 each lb.
  under 50#

  
	
   

  	
  -Less than 45
  lbs subject to rejection

  
				

 

Corn that is found to be musty, heating, sour or
possessing a commercially objectionable foreign odor may be rejected.

Corn containing 2 or more live weevils or 10 or more
live grain insects per sample will be discounted $0.05 per bushel. Corn containing
rodent or bird contamination, stones, glass or other commercially undesirable
foreign material will be rejected.

 8Exhibit
10.6

DDGS SALE AND PURCHASE
AGREEMENT

THIS DDGS SALE AND PURCHASE AGREEMENT the
(“Agreement”) is entered into this 15th of June, 2006, with an effective date
as stipulated in Section 1 (a) below, by and between Archer Daniels Midland
Company, a Delaware corporation with its principal place of business in
Decatur, Illinois (“ADM”), and Millennium Ethanol, LLC, a South Dakota limited
liability company with its principal place of business in Marion, South Dakota
(“Millennium”).

BACKGROUND

WHEREAS, Millennium produces
distillers dried grain (“DDGS”) as a byproduct of its ethanol production; and

WHEREAS, Millennium and ADM
believe that it would be in their mutual best interests for ADM to purchase
DDGS produced by the planned ethanol production facility to be located in
Marion, South Dakota (the “Millennium Production Facilities”); and

WHEREAS, Millennium and ADM
desire to enter into this Agreement, for purposes of setting out the terms and
conditions of the business arrangement;

NOW, THEREFORE, the parties to
this Agreement hereby covenant and agree as follows:

AGREEMENT

1.                                      TERMS
OF THIS AGREEMENT

(a)                                  The Initial Term.  The term of this Agreement will be for one
year with the effective date being the first day of the month of which
production of ethanol begins at the Millennium facility.  For example, if production begins on October
15, 2007, then October 1, 2007 will be the effective date of this
Agreement.  The one-year period referred
to herein will hereafter be referred to as the “Initial Term.”

(b)                                 The Renewal Terms.  Unless this Agreement is terminated in the
manner described below in Section 2, this Agreement will automatically renew
for successive additional terms of one year each.  These additional terms will each be referred
to hereafter as a “Renewal Term.”

2.                                      TERMINATION.  This Agreement may be terminated under the
circumstances set out below.

(a)                                  Termination for Intentional Misconduct.  If either party engages in intentional
misconduct reasonably likely to result in significant adverse consequences to
the other party, the party harmed or likely to be harmed by the intentional
misconduct may terminate this Agreement immediately, upon written notice to the
party engaging in the intentional misconduct.

(b)                                 Termination for Uncured Breach.  If one of the parties breaches the terms of
this Agreement, the other party may give the breaching party a notice in
writing which specifically sets out the nature and extent of the breach, and
the steps that must be taken to cure the breach.  After receiving the written notice, the
breaching party will then have thirty (30) days to cure the breach, if the
breach does not involve a failure to make any payments which are required by
this Agreement.

If the breach does involve a failure to make any
payments which are required by this Agreement, then the breaching party will
have five (5) days after receiving the written notice to cure the breach.  If the breaching party does not cure any
breach within the applicable cure period, then the non-breaching party will
have the right to terminate this Agreement immediately.

(c)                                  Termination at the End of the Initial Term or Any
Renewal Term.  Either party
may terminate this Agreement at the end of the Initial Term, or at the end of
any Renewal Term, by providing the other party with a written notice of intent
to terminate.  Such a written notice of
intent to terminate must specify the proposed termination date, and must be
received by the non-terminating party at least ninety (90) days before the
proposed termination date.

(d)                                 Termination by Mutual Written Agreement.
This Agreement may also be terminated upon any terms and under any conditions,
which are mutually agreed upon in writing by the parties.

3.                                      REPRESENTATIONS
AND WARRANTIES OF MILLENNIUM.  In
connection with its sale of DDGS to ADM under this Agreement, Millennium makes
the following representations and warranties, for the benefit of ADM:

(a)                                  Good Title. 
Millennium will have good and marketable title to all of the DDGS sold
to ADM under this Agreement, free and clear of all liens and encumbrances.

(b)                                 Corporate Existence and Good Standing.  Millennium is a South Dakota limited
liability company validly existing and in good standing under the laws of the
State of South Dakota.

(c)                                  Corporate Authority and Corporate Approval.  Millennium has the power and authority to
enter into this Agreement.  Further,
Millennium has taken all corporate action necessary to authorize it to execute,
become bound by, and perform its duties and obligations under this Agreement.

(d)                                 No Conflicts as to Law or Agreements.  The execution of this Agreement by
Millennium, the sale and transfer of DDGS from Millennium to ADM, and the
taking of all actions by Millennium under this Agreement do not require the
consent of any person, entity, or agency; do not violate any law, rule, or
regulation; and do not breach or violate any contract or agreement to which
Millennium is a party, or by which Millennium is bound.

(e)                                  Compliance with Laws.  Millennium is now in compliance, and during
the entire term of this Agreement will remain in compliance, with all
applicable federal, state, 

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and local laws, ordinances, orders, rules, and regulations (“Laws”),
other than Laws where neither the costs or potential costs of failing to
comply, nor the costs or potential costs of causing compliance, would be
material to Millennium or its business or assets.  The definition of Laws set out above
includes, but is not limited to, the Toxic Substances Control Act (“TOSCA”),
the Comprehensive Environmental Response, Compensation and Liability Act, the
Clean Air Act, the Federal Water Pollution Control Act of 1986, the Emergency
Planning and Community Right-to-Know Act of 1986, the Occupational Safety and
Health Act, the Resource Conservation and Recovery Act, any state equivalent thereof,
and all other laws related to the protection of the environment (“Environmental
Laws”).

(f)                                    Complete and Accurate Disclosure.  Millennium has not withheld from ADM any
Material documents, information, or material facts relating to Millennium ethanol
and DDGS production capabilities, and/or relating to the business operations of
Millennium.  Further, to Millennium’s
knowledge, no representation or warranty in this Agreement, or in any letter,
certificate, exhibit, schedule, statement, or other document furnished or to be
furnished pursuant to this Agreement, contains any untrue statement of a
material fact.

(g)                                 Licenses and Permits.  Millennium will have at all times during the
term of this Agreement, all of the licenses and permits necessary to operate
the Millennium Production Facilities.

(h)                                 Production Capacity.  The amount of DDGS that Millennium is capable
of producing each year, based on the nameplate design capacity of all of the
Millennium Production Facilities, will hereafter be referred to as Millennium “Annual
Production Capacity.”  The Annual
Production Capacity is 320,000 short tons of DDGS per year.

(i)                                     Product Quality.  All of the DDGS sold to ADM by Millennium
under this Agreement will be of merchantable quality, free from defects, and fit
for animal feed.  Millennium hereby
guarantees the DDGS will not be adulterated or misbranded within the meaning of
the Federal Food, Drug and Cosmetic Act, as amended, or any applicable Federal,
State or Municipal law in which the definitions of adulterations and
misbranding are substantially the same as those contained in said Act, as
amended, or will be an article which may not under the provisions of any such
law be introduced into interstate commerce. 
In addition, all DDGS must be cool and sweet upon arrival at
destination, meet all applicable National Grain and Feed Association standards,
and meet all of ADM’s specifications (which shall be based on industry
standards) as notified to Millennium from time to time.

(j)                                     Patent Infringement.  Millennium is not now, and will not be at any
time in the future during the term of this Agreement, infringing upon any
patents or other intellectual property rights held by any other parties.

4.                                      REPRESENTATIONS
AND WARRANTIES OF ADM.  In connection with providing the
services on behalf of Millennium which are described in this Agreement, ADM
makes the following representations and warranties, for the benefit of
Millennium:

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(a)                                  Corporate Existence and Good Standing.  ADM is a Delaware corporation validly
existing and in good standing under the laws of the State of Illinois.

(b)                                 Corporate Authority and Corporate Approval.  ADM has the power and the authority to enter
into this Agreement.  Further, ADM has
taken all corporate action necessary to authorize it to execute, become bound
by, and perform its duties and obligations under this Agreement.

(c)                                  No Conflicts as to Law or Agreements.  The execution of this Agreement by ADM, the
purchasing of DDGS from Millennium by ADM, and the taking of all actions by ADM
under this Agreement do not require the consent of any person, entity, or
agency; do not violate any law, rule, or regulation; and do not breach or
violate any contract or agreement to which ADM is a party, or by which ADM is
bound.

(d)                                 Complete and Accurate Disclosure.  ADM has not withheld from Millennium any
Material documents, information, or material facts relating to ADM ethanol and
DDGS production capabilities, and/or relating to the business operations of
ADM.  Further, to ADM’s knowledge, no
representation or warranty in this Agreement, or in any letter, certificate,
exhibit, schedule, statement, or other document furnished or to be furnished
pursuant to this Agreement, contains any untrue statement of a material fact.

5.                                      QUANTITY.  During the entire term of this Agreement,
Millennium agrees to sell to ADM, and ADM agrees to purchase from Millennium,
all of the DDGS produced by Millennium at the “Millennium Production
Facilities, subject to the right of ADM to not purchase excess DDGS produced by
Millennium, as described in Section 7 below.

6.                                      PRODUCTION
ESTIMATES.  As of the effective date
of this Agreement, Millennium will provide ADM with Millennium’s best estimate
of Millennium’s anticipated monthly DDGS production for the next twelve (12)
months, to assist ADM in developing appropriate marketing strategies for the
DDGS to be produced by Millennium.

On or before the first day of each month, Millennium
will provide ADM with its updated best estimate of Millennium’s anticipated
monthly DDGS production for the next twelve (12) months, so that ADM will have
DDGS production estimates from Millennium twelve (12) months into the future
during the entire time that this Agreement is in effect.

Millennium will immediately report any change in
production that may result in the volume of DDGS produced being greater or
lesser than the amount estimated by Millennium in the most recent twelve-month
production estimate.

Once this Agreement has been terminated under Section
2(a), Section 2(b), or Section 2(d) above, Millennium will no longer be
required to provide ADM with any further monthly DDGS production estimates,
except to the extent required in any written termination agreement between the
parties entered into under Section 2(d) above.

Once either party has sent a written notice of intent
to terminate this Agreement under Section 2(c) above, Millennium’s monthly DDGS
production estimates must continue to 

 4
 

cover the time period
through the proposed termination date, but need not extend to any months after
the proposed termination date.

7.                                      EXCESS
DDGS PRODUCTION.  If Millennium
produces DDGS in any month in excess of Millennium’s most recent monthly
production estimates, or if during any twelve-month period, Millennium produces
in excess of 120% of Millennium’s Annual Production Capacity, ADM will have the
right, but not the obligation, to purchase such excess production of DDGS from
Millennium.  Millennium may not sell to
any other parties any of the excess DDGS that it produces.

8.                                      INDEPENDENT
CONTRACTOR STATUS OF ADM, AND EMPLOYMENT STATUS OF ADM’S EMPLOYEES.  Nothing contained in this Agreement,
including the services to be provided by ADM on behalf of Millennium, will make
ADM the agent of Millennium for any purpose. 
ADM and its employees shall be deemed to be independent contractors,
with full control over the manner and method of performance of the services
they will be providing on behalf of Millennium under this Agreement.

9.                                      SEPARATE
ENTITIES.  Millennium and ADM are
separate entities.  Nothing in this
Agreement or otherwise shall be construed to create any rights or liabilities
of either party to this Agreement with regard to any rights, privileges,
duties, or liabilities of the other party to this Agreement, except to the
extent otherwise provided in this Agreement, or in any other agreement between
the parties to this Agreement.

10.                               DEVELOPMENT
OF ORDERING AND SHIPPING PROCEDURES. 
Because Millennium and ADM have not done business in the past in the
manner described in this Agreement, they have not yet attempted to develop
efficient and effective procedures related to ordering DDGS, delivering DDGS
and shipping DDGS, in connection with ADM’s DDGS purchases from
Millennium.  After this Agreement becomes
effective, ADM and Millennium agree to work together promptly and in good faith
to develop effective and efficient policies and procedures to cover these
matters, based on their mutual experiences working together under this
Agreement.

Once those policies and procedures have been developed
and mutually agreed upon, ADM and Millennium intend to document them, in the
form of an addendum to this Agreement.

11.                               PRODUCT
TESTING.  With each shipment unit
during the term of this Agreement, Millennium agrees to provide ADM with
analysis of all samples of the DDGS produced at the Millennium Production
Facilities, or agrees to provide ADM the sample when requested so that ADM can
test Millennium’s product quality on a regular basis and have it available to
the end customer.  ADM agrees to provide
Millennium with the information Millennium will need in order to collect, pack,
and ship these DDGS samples to ADM in a manner satisfactory to ADM.

12.                               COLLECTION
AND RETENTION OF PRODUCT SAMPLES.

(a)                                  Collection of Product Samples.  During the entire term of this Agreement,
Millennium agrees to collect samples of not less than 500 grams each from each
shipment of DDGS that leaves the Millennium Production Facilities under this
Agreement.  Each 

 5
 

such product sample will be labeled to include the production date, the
plant at which the product sample was produced, and any other applicable
information.

(b)                                 Retention of Product Samples.  Millennium agrees to retain these product
samples for at least three months after the date of the shipment from which
each product sample was taken, in a manner which preserves the integrity of
each individual product sample.  Further,
Millennium agrees to promptly provide any of these samples to ADM, at the
request of ADM.

13.                               THE
ACTUAL PRICE FOR DDGS SOLD TO ADM BY MILLENNIUM.  ADM agrees to pay Millennium a price for all
DDGS sold to ADM by Millennium under this Agreement that is equal to the “Best
Market Bid,” as defined and determined in this Section.

(a)                                  Daily Bids:  The
Best Market Bid will be calculated on a daily basis in the following manner:

1)                                      Select the best
bids available in the following ADM distribution markets for like kind,
quantity and quality of DDGS and for the same shipment periods, to be sold to
ADM hereunder from third party destinations that are equipped with hard car
unloading equipment, less all tariff freight rates, less all fuel surcharges
associated with tariff freight at the time of shipment, less all hopper car
equipment charges:

a)                                      Rail
California – hard car unload receivers only

b)                                     Rail
Hereford/Summerfield TX

c)                                      Rail
Optima OK

d)                                     Rail
to River Points for Export

e)                                      Rail to Container
Transload Points for Export – hard car unload receivers only

(b)                                 Freight Rates and Fuel Surcharges at time of
shipment:  Any increase or
decrease in freight rates and/or fuel surcharges from the time of pricing to
the time of shipment shall change the purchase and be for Millennium’s account.

(c)                                  Long Term Marketing Options:  ADM will provide bids for a
definitive volume of DDGS pursuant to the procedures set forth in this Section
for spot shipments up to a maximum of shipments for a 12 month period.  Any DDGS in excess of the definitive volume
for which ADM provided such bid will be priced in the same manner as set forth
in this Section but only at such time as Millennium desires to sell such excess
DGDS to ADM.

14.                               SHORTFALLS
IN DDGS PRODUCTION.  To the extent
that Millennium has priced a definitive volume of DDGS pursuant to Section 13,
and Millennium fails to deliver such DDGS to ADM, then to that extent ADM will
have the right, but not the obligation, to purchase DDGS elsewhere, in a
commercially reasonable manner, in order to cover any such shortfall.  In addition to any and all other remedies to
which ADM may be entitled pursuant to law, equity or this Agreement, Millennium
shall pay to ADM all costs and expenses related to such purchases which are in
excess of the costs and expenses that ADM would have incurred in the absence of
such a shortfall.

 6
 

15.                               MONTHLY
RECONCILIATION OF SHIPMENT VOLUMES. 
On a monthly basis, Millennium and ADM will compare and reconcile their
information related to the volumes of DDGS shipped from the Millennium
Production Facilities, in order to minimize disputes and disagreements between
them under this Agreement.

In the event that the parties are unable to agree on
which party’s numbers are correct for any month, the numbers proposed by ADM
will be used, subject to the right of Millennium’s right to challenge ADM’s
books and records through an independent public accounting firm, subject to a
mutually acceptable confidentiality agreement..

16.                               FINANCIAL
INFORMATION.  On a monthly basis,
Millennium will provide ADM with copies of current balance sheets, income
statements, and other financial statements (audited if available) related to
Millennium and its affiliated entities.

17.                               HANDLING
OF CONFIDENTIAL INFORMATION.  The
parties acknowledge that they will be exchanging information about their
businesses under this Agreement which is confidential and proprietary, and the
parties agree to handle that confidential and proprietary information in the
manner described in this Section.

(a)                                  Definition of Confidential Information.  For purposes of this Agreement, the term “Confidential
Information” will mean information related to the business operations of
Millennium or ADM that meets all of the following criteria:

(i)                                     The information
must not be generally known to the public, and must not be a part of the public
domain, must not be information that the receiving party was already in
possession of, must not be information that the receiving party receives from a
third party without violating any confidentiality obligation owed to the
disclosing party, and must not be information that is independently developed
by the receiving party without relying upon the Confidential Information supplied
by the disclosing party.

(ii)                                  The information must
belong to the party claiming it is confidential, and must be in that party’s
possession.

(iii)                               The information must
have been protected and safeguarded by the party claiming it is confidential by
measures that were reasonable under the circumstances before the information
was disclosed to the other party.

(iv)                              The disclosure of the
information to third parties must be likely to result in adverse consequences
to the party claiming it is confidential.

(v)                                 Written information
must be clearly designated in writing as “CONFIDENTIAL INFORMATION” by the
party claiming it is confidential before it is disclosed to the other party,
except that all 

 7
 

information about financial or production information relating to
Millennium, or costs and prices will always be considered Confidential
Information under this Agreement, without the need for specifically designating
it as such.

(vi)                              Verbal Confidential
Information which is disclosed to the other party must be summarized in
writing, designated in writing as “CONFIDENTIAL INFORMATION,” and transmitted
to the other party within ten (10) days of the verbal disclosure.

(b)                                 Limitations on the Use of Confidential Information.  Each party agrees that it will not use any
Confidential Information that it obtains about the other party for any purpose,
other than to perform its obligations under this Agreement.

(c)                                  The Duty Not to Disclose Confidential Information.  The parties agree that they will not disclose
any Confidential Information about each other to any person or organization
without first getting written consent to do so from the other party.  This will be the case both while this
Agreement is in effect, and for a period of five (5) years after it has been
terminated.

(d)                                 The Duty to Notify the Other Party in Cases of
Improper Use or Disclosure.  Each party agrees to immediately notify the
other party if either party becomes aware of any improper use of or any
improper disclosure of the Confidential Information of the other party at any
time while this Agreement is in effect, and for a period of five (5) years
after it has been terminated.

(e)                                  Protection of the Confidential Information.  Each party agrees to develop effective
procedures for protecting the Confidential Information that it obtains from the
other party, and to implement those procedures with the same degree of care
that it uses in protecting its own Confidential Information.

(f)                                    Return of the Confidential Information.  Immediately upon the termination of this Agreement,
each party agrees to return to the other party all of the other party’s
Confidential Information that is in its possession or under its control.

18.                               RIGHT
OF OFFSET.  ADM will have the right
to withhold payments for its purchases under this Agreement as an offset
against any payments that Millennium fails to make to ADM under this Agreement.

If ADM exercises its right of offset at any time,
Millennium may request a written explanation from ADM that includes the amount
of the offset claimed by ADM, and the basis for ADM’s exercise of its right of
offset.  Upon receiving a written request
from Millennium for such an explanation, ADM will promptly provide a reasonably
detailed written explanation.

Millennium will have the right to withhold shipment or
delivery of DDGS to ADM during any period for which payments from ADM to
Millennium are past due.  If payments are
more than seven (7) days overdue, then Millennium may sell DDGS produced by 

 8
 

the Millennium Production
Facilities to third parties and those amounts shall be reduced from the amounts
to be sold to ADM under this Agreement.

19.                               INSURANCE.  During the entire term of this Agreement,
Millennium will maintain insurance coverage which is standard, in the
reasonable opinion of ADM, for a company of its type and size which is engaged
in the business of producing and selling ethanol.  At a minimum, Millennium’s insurance coverage
must include:

(i)                                     Comprehensive General Product and Public Liability
Insurance, naming ADM as an additional named insured, with liability
limits of at least five million dollars ($5,000,000) in the aggregate.

(ii)                                  Property and Casualty Insurance adequately
insuring the Millennium Production Facilities and Millennium’s other assets
against theft, damage, and destruction, on a replacement cost basis.

(iii)                               Workers’ Compensation Insurance, to the
extent required by law.

On or before the effective date of this Agreement,
Millennium will provide ADM with a Certificate of Insurance Coverage verifying
that insurance coverage complying with the requirements of this Section 19 is
in place.  Millennium will not change its
insurance coverage during the term of this Agreement, except to increase it or
enhance it, without the prior written consent of ADM.

20.                               INDEMNIFICATION.  If any third party makes a claim against ADM
or any person or organization related to ADM as a result of the actions or
omissions of Millennium or any person or organization related to Millennium,
including but not limited to claims related to the quality of the ethanol produced
by Millennium, then Millennium agrees to indemnify ADM and its related persons
and organizations, and to hold all of them harmless from any liabilities,
damages, costs, and/or expenses, including costs of litigation and reasonable
attorneys’ fees, which they incur as a result of any such claims made against
them by third parties.

21.                               SURVIVAL
OF REPRESENTATIONS, WARRANTIES, AGREEMENTS, AND CLAIMS.  All representations, warranties, and
agreements made in connection with this Agreement will survive the termination
of this Agreement.  The parties will
therefore be able to pursue claims related to those representations,
warranties, and agreements after the termination of this Agreement, unless
those claims are barred by the applicable statutes of limitation.

Similarly, any claims that the parties have against
each other that arise out of actions or omissions that take place while this
Agreement is in effect will survive the termination of this Agreement.  This means that those claims may be pursued
by the parties even after the termination of this Agreement, unless those
claims are barred by the applicable statutes of limitation.

22.                               COSTS
AND ATTORNEYS’ FEES IN DISPUTE RESOLUTION PROCEEDINGS, AND FOLLOWING UNCURED
BREACHES.  The parties agree that the
prevailing party in any dispute 

 9
 

resolution proceedings related to this Agreement shall
be entitled to collect reasonable costs, expenses, and reasonable attorneys’
fees from the other party.

The same shall be true if one of the parties incurs
costs, expenses, or attorneys’ fees in connection with the enforcement or the
protection of its rights under this Agreement, as a result of an uncured breach
by the other party.  The breaching party
shall reimburse the other party for reasonable costs and expenses, and reasonable
attorneys’ fees incurred after the expiration of the applicable cure period,
regardless of whether or not the enforcement or the protection of the rights of
the other party involved judicial proceedings, arbitration proceedings, or
other formal dispute resolution proceedings.

23.                               TITLE
AND RISK OF LOSS.  With regard to the
DDGS sold to ADM by Millennium under this Agreement, title to and risk of loss
for such DDGS will pass from Millennium to ADM when the DDGS leaves the
premises (not the Production Facilities) of Millennium.

24.                               GOVERNING
LAW.  The Agreement will be governed
by, interpreted under, and enforced in accordance with the substantive laws of
the State of Illinois, without regard to its conflict of law principles.

25.                               NOTICES.  All notices related to this Agreement which
relate to breaches of this Agreement, indemnification claims or other claims
being made under this Agreement, challenges to the books and records of the
parties, or the termination of this Agreement (the “Significant Notices”) must
be in writing, and must be delivered personally or sent by certified or
registered mail, return receipt requested. 
All Significant Notices will be effective, and will be deemed to have
been received, upon the actual receipt of the Significant Notice by its
intended recipient, meaning either Millennium or ADM.

Subject to change upon ten (10) days written notice to
the other party, all written notices to Millennium provided for in this
Agreement will be addressed as follows:

Millennium Ethanol, LLC

300 North Broadway

Marion, SD 57043

Attn:  Steve
Domm, CEO

with a copy to:

Lindquist & Vennum PLLP

4200 IDS Center

80 South Eighth Street

Minneapolis, MN  55402-2274

Attn:  Mark J.
Hanson

 10
 

and notices to ADM will
be addressed as follows:

with a copy to:

Archer-Daniels-Midland
Company

4666 Faries Parkway

Decatur, Illinois 62526

Attn: General Counsel

Written notices required or permitted under this
Agreement which are not Significant Notices may be hand delivered, sent by
mail, or sent via facsimile.  These
written notices will be effective, and will be deemed to have been received,
upon the actual receipt of the written notices by their intended recipients,
meaning either Millennium or ADM.

26.                               ASSIGNMENT;
SUCCESSORS AND ASSIGNS.  Neither
party may assign its rights or obligations under this Agreement without the
written consent of the other party, which consent will not be unreasonably
withheld.  This Agreement will be binding
on the successors of the parties, and their assigns.

27.                               NO
WAIVER.  If any party to this
Agreement fails to insist upon strict performance of any obligation under this
Agreement, that failure will not result in a waiver of that party’s right to
demand strict performance in the future. 
This will still be the case, no matter how long the failure to insist
upon strict performance continues.

28.                               ENTIRE
AGREEMENT.  This Agreement, and the
other documents related to the business transactions described in this
Agreement which are referred to either generally or specifically in this
Agreement, set out the entire agreement between the parties regarding the
business transactions described in this Agreement.  This Agreement and those other documents
supersede all prior understandings between the parties with respect to the
subject matter of this Agreement.  The
parties agree that there are no other oral or written understandings or
agreements between them regarding the subject matter of this Agreement.

29.                               AMENDMENT,
MODIFICATION, OR WAIVER.  No
amendment, modification, or waiver of any provision of this Agreement or any
other related document will be effective unless it is made in writing, unless
it is signed by the parties to be bound by it, and unless it clearly specifies
the extent and nature of the amendment, modification, or waiver.

30.                               SEVERABILITY.  If any provision of this Agreement or any
other related document is held to be invalid or unenforceable under any
applicable law, that holding will not affect the validity or enforceability of
the rest of this Agreement, or the other related document.  Also, any provision of this Agreement or any
other related document which is held to be invalid or unenforceable will not be
completely invalidated, but will instead be considered amended to the extent
necessary to remove the cause of the invalidity or unenforceability.

31.                               INTERPRETATION.  This Agreement and any other documents
related to it will be interpreted in a fair and neutral manner, without
favoring one party over the other.  No
provision 

 11
 

of this Agreement or any other document related to it
will be interpreted for or against either party because the provision was
drafted by that party, or its legal representative.

32.                               UNDERSTANDING
OF AND VOLUNTARY EXECUTION OF THE AGREEMENT.  The parties acknowledge and agree that they
have read this Agreement, that they understand it, and that they are entering
into it willingly and voluntarily.  The
parties further acknowledge that they either consulted with their respective
legal counsel, or had ample opportunity to consult with their respective legal counsel,
before entering into this Agreement.

33.                               HEADINGS
AND CAPTIONS.  The headings and
captions of the sections and subsections of this Agreement are inserted for
convenience of reference only, and do not constitute part of the Agreement.

34.                               SUPERSEDING
OF OTHER AGREEMENTS.  It is the
intent of the parties that this Agreement be consistent with any other
documents or agreements related to the same subject matter covered in this
Agreement.  However, in the event of any
inconsistencies, the parties agree that this Agreement will supersede and take
priority over the other inconsistent documents or agreements, except in cases
where there is specific contract language to the contrary which has been agreed
upon by both parties.

[Signature page
follows this page

 12
 

IN WITNESS WHEREOF,
the parties have executed this Agreement effective as of the day and year set
forth above.

	
  ARCHER DANIELS MIDLAND COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MILLENNIUM
  ETHANOL, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
   

  
						

 

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