Document:

exv10w1

 

EXHIBIT 10.1

DESIGN-BUILD

INSTITUTE OF AMERICA

Standard Form of Agreement Between

Owner and Design-Builder ¥ Lump Sum*

This document has important legal consequences. Consultation with

an attorney is recommended with respect to its completion or modification.

*Portions omitted pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission.

     This AGREEMENT is made as of the 8th day of December in the year of 2004, by
and between the following parties, for services in connection with the Project identified below.

OWNER:

(Name and address)

Lincolnway Energy, LLC

975 W. Lincoln Hwy Suite B

Nevada, IA 50201

DESIGN-BUILDER:

(Name and address)

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN 56241

PROJECT:

(Include Project name and location

as it will appear in the Contract

Documents)

50 MGY Coal-fired Dry Grind Ethanol Plant

In consideration of the mutual covenants and obligations contained herein, Owner and Design-Builder agree
as set forth herein.

      

			
	DBIA Document No. 525 • Standard Form of Agreement

Between Owner and Design-Builder — Lump Sum

©1998 Design-Build Institute of America
	 	Page 1

 

 

Article I

Scope of Work

1.1 Design-Builder shall perform all design and construction services, and provide all material,
equipment, tools and labor, necessary to complete the Work described in and reasonably inferable
from the Contract Documents.

Article 2

Contract Documents

2.1 The Contract Documents are comprised of the following:

	 	.1	 	All written modifications, amendments and change orders to this Agreement
issued in accordance with DBIA Document No. 535, Standard Form of General Conditions
of Contract Between Owner and Design-Builder (1998 Edition) (“General Conditions of
Contract”);
	 
	 	.2	 	This, Agreement, including all exhibits and attachments, executed
by Owner and Design-Builder, said Exhibits being:

Exhibit A – Performance Guarantee Criteria — (2) Pages;

Exhibit B – General Project Scope — (3) Pages;

Exhibit C – Owner ‘s Responsibilities — (6) Pages;

Exhibit D – License of Proprietary Property of ICM, Inc.- (5) Pages;

Exhibit E – Start-up Services to be Provided to Owner (1) Page.

	 	.3	 	Written Supplementary Conditions, consisting of three pages, to the General
Conditions of Contract;
	 
	 	.4	 	The General Conditions of Contract;
	 
	 	.5	 	Preliminary Construction Documents prepared by Design-Builder; and
	 
	 	.6	 	The following other documents, if any: N/A

Article 3

Interpretation and Intent

3.1 The Contract Documents are intended to permit the parties to complete the Work and all
obligations required by the Contract Documents within the Contract Time(s) for the Contract Price.
The Contract Documents are intended to be complementary and interpreted in harmony so as to avoid
conflict, with words and phrases interpreted in a manner consistent with construction and design
industry standards. In the event of any inconsistency, conflict, or ambiguity between or among the
Contract Documents, the Contract Documents shall take precedence in the order in which they are
listed in Section 2.1 hereof.

3.2 Terms, words and phrases used in the Contract Documents, including this Agreement, shall have
the meanings given them in the Supplementary Conditions and General Conditions of Contract.

3.3 The Contract Documents form the entire .agreement between Owner and Design-Builder and by
incorporation herein are as fully binding on the parties as if repeated herein. The Contract
Documents supercede any prior letters of intent between the parties, and such letters of intent
are now null and void. No oral representations or other agreements have been made by the parties except as specifically
stated in the Contract Documents.

      

			
	Page 2
	 	DBIA Document No. 525 • Standard Form of Agreement

Between Owner and Design-Builder — Lump Sum

©1998 Design-Build Institute of America

 

 

Article 4

Ownership of Work Product

4.1 Work Product. All drawings, specifications and other documents and electronic data
furnished by Design-Builder to Owner under this Agreement (“Work Product”) are deemed to be
instruments of service and Design-Builder shall retain the ownership and property interests
therein, including the copyrights thereto.

4.2 Owner’s Limited License Upon Payment in Full. Upon Owner’s payment in full for all Work
performed under the Contract Documents, Design-Builder shall vest in Owner a limited license to use
the
Work Product in connection with Owner’s occupancy and repair of the Project and Design-Builder
shall
provide Owner with a copy of the “as built” plans, conditioned on Owner’s express understanding
that its use
of the Work Product and its acceptance of the “as built” plans is at Owner’s sole risk and without
liability or legal exposure to Design-Builder or anyone working by or through Design-Builder,
including Design Consultants of any tier (collectively the “indemnified Parties”), provided,
however, that any performance guarantees and warranties (of equipment or otherwise) shall remain in
effect according to the terms of this Agreement. Owner shall be entitled to use the Work Product
for the purpose relating to this Project, but shall not be entitled to use the Work Product on any
other projects, including expansion of this Project. The limited license to use the Work Product
granted herein by Design-Builder to Owner shall be governed by and construed in accordance with the
same terms and provisions contained in the License Agreement between Owner and ICM, attached hereto
as Exhibit D and incorporated herein by reference thereto, except (i) references in such License
Agreement to ICM and Proprietary Property shall refer to Design-Builder and Work Product,
respectively, (ii) the laws of the State of Minnesota shall govern such limited license, and (iii)
the arbitration provisions contained in Article 10 of the General Conditions shall apply to any
breach or threatened breach of Owner’s duties or obligations under such limited license other than
Design-Builder shall have the right to seek injunctive relief in a court of competent jurisdiction
against Owner or its Representatives for any such breach or threatened breach. Design-Builder is
utilizing certain proprietary property and information of ICM, Inc., a Kansas corporation (“ICM”),
in the design and construction of the Project, and Design-Builder may incorporate proprietary
property and information of ICM into the Work Product. Owner’s use of the proprietary property and
information of ICM shall be governed by the terms and provisions of the License Agreement between
Owner and ICM, attached hereto as Exhibit D, to be executed by such parties in connection with the
execution of this Agreement. The preceding last three sentences of this paragraph also apply to
Articles 4.3 and 4.4 below.

4.3 Owner’s Limited License Upon Owner’s Termination for Convenience or Design-Builder’s Election
to Terminate. If Owner terminates the Project for its convenience as set forth in Article 8 hereof,
or if Design-Builder elects to terminate this Agreement in accordance with Section 11.4 of the General
Conditions of Contract, Design-Builder shall, then upon Owner’s payment in full of the amounts due
Design-Builder under the Contract Documents, vest in Owner a limited license to use the Work
Product to complete the Project and subsequently occupy and repair the Project, subject to the
following:

	 	.1	 	Use of the Work Product is at Owner’s sole risk without liability or legal
exposure to any Indemnified Party; provided, however, that any “pass through”
warranties regarding
equipment or express warranties regarding equipment provided by this Agreement shall
remain in effect according to their terms; and
	 
	 	.2	 	If the termination for convenience is by Owner or if Design-Builder elects to
terminate this ‘Agreement in accordance with Section 11.4 of the General Conditions of
Contract, then Owner agrees to pay Design-Builder — the additional sum of One Million
Dollars ($1,000,000.00) as compensation for the limited right to use the Work Product
(completed
“as is” on the date of termination) in accordance with this Article 4.

      

			
	DBIA Document No. 525 Standard Form of Agreement

Between Owner and Design-Builder — Lump Sum

©1998 Design-Build Institute of America
	 	Page 3

 

 

4.4 Owner’s Limited License Upon Design-Builder’s Default. If this Agreement is terminated
due to Design-Builder’s default pursuant to Section 11.2 of the General Conditions of Contract
and (i) it is determined that Design-Builder was in default and (ii) Owner has fully satisfied
all of its obligations under the Contract Documents through the time of Design-Builder’s default,
then Design-Builder shall grant Owner a limited license to use the Work Product in connection
with Owner’s completion and occupancy and repair of the Project. This limited license is
conditioned on Owner’s express understanding that its use of the Work Product is at Owner’s sole
risk and without liability or legal exposure to any Indemnified Party; provided, however, that
any “pass through” warranties regarding equipment or express warranties regarding equipment
provided by
this Agreement shall remain in effect according to their terms. This limited license would grant
Owner the ability to repair the Project at Owner’s discretion.

4.5 Owner’s Indemnification for Use of Work Product. If Owner uses the Work Product under any
of the circumstances identified in this Article 4, Owner shall defend, indemnify and hold
harmless the Indemnified Parties from and against any and all claims, damages, liabilities,
losses and expenses,
including attorneys’ fees, arising out of or resulting from the use of the Work Product;
provided, however, that any “pass through” warranties regarding equipment or express warranties
regarding equipment provided by this Agreement shall remain in effect according to their terms.

Article 5

Contract Time

5.1 Date of Commencement. The Work shall commence within five (5) days of Design-Builder’s
receipt of Owner’s written Notice to Proceed (“Date of Commencement”) unless the parties mutually
agree otherwise
in writing. The parties agree that a valid Owner’s Notice to Proceed cannot be given until: 1)
Owner has title to the real estate on which the project will be constructed; 2) a Letter of
Commitment for all necessary financing
to construct the project is received; 3) the Phase I site work required of Owner, as described in
Exhibit “C” is completed along with Phase II sufficiently completed to allow construction as
determined by Design-Builder;
4) the air permit(s) and/or other applicable local, state or federal permits necessary so that
construction can begin, have been obtained; 5) it appears reasonable that financial close on the
Letter of Commitment will occur within sixty (60) days of the issuance of said Notice to Proceed;
and 6) Owner shall execute a sales tax exemption certificate and provide to Design-Builder.

5.2 Substantial Completion and Final Completion

5.2.1 Substantial Completion of the entire Work shall be achieved no later than Four hundred
eighty-five (485) calendar days after the Date of Commencement.

5.2.2 Interim milestones and/or Substantial Completion of identified portions of the Work shall be
achieved as follows: Owner shall provide the following within 90 days of Design-Builder’s receipt
of Owner’s Notice to Proceed, as described in Section 5.1 of this Agreement:

	 	•	 	Owner shall determine its water source and provide Design-Builder an independent
analysis of the water source, and
	 
	 	•	 	Owner shall provide the name of its property/all risk insurance carrier and the
specific requirements for fire protection.

5.2.3 Final Completion of the Work or identified portions of the Work shall be achieved as
expeditiously as reasonably practicable.

5.2.4 All of the dates set forth in this Article 5 (“Contract Time(s)”) shall be subject to
adjustment in accordance with the General Conditions of Contract. Specifically, if delays in the
Contract Time occur because of delay in the delivery of materials or equipment that is beyond
the control of Design-Builder, the Contract Time will be adjusted, without penalty to Design-Builder, pursuant to Sections
8.2.1 and 8.2.2 of the General Conditions of Contract.

      

			
	Page 4
	 	DBIA Document No: 525 • Standard Form of Agreement

Between Owner and Design-Builder — Lump Sum

©1998 Design-Build Institute of America

 

 

5.3 Time is of the Essence. Owner and Design-Builder mutually agree that time is of the essence
with
respect to the dates and times set forth in the Contract Documents.

Article 6

Contract Price

6.1 Contract Price. Owner shall pay Design-Builder in accordance with Article 6 of the
General Conditions of Contract the sum of seventy million, four hundred one thousand fifteen and
00/100 Dollars ($70,401,015.00) (“Contract Price”), in the manner and subject to satisfaction of
the conditions set forth below, and subject to adjustments made in accordance with the General
Conditions of Contract. Unless otherwise provided in the Contract Documents, the Contract Price is
deemed to include all sales, use, consumer and other taxes mandated by applicable Legal
Requirements. The Contract Price assumes use of non-union labor, and such Contract Price will be
subject to an escalation adjustment if union labor is used. To further clarify, sixty-seven
million, one hundred fifty-one thousand fifteen and 00/100 Dollars ($67,151,015.00) will be
payable in cash, and the remaining $3.25 million will be payable as follows:

	 	(i)	 	$1.25 million in subordinated debt* consisting of a 15-year note bearing interest at
4% payable quarterly beginning at Substantial Completion of the plant.

     Plus, if Substantial Completion occurs on or before March 1, 2006, the Owner shall also pay
Design-Builder:

	 	(ii)	 	$1.00 million in subordinated debt* consisting of a 5-year note bearing interest at 4%
payable quarterly beginning at substantial completion of the plant.

Plus, if production of the plant exceeds 4.34 million gallons of denatured ethanol during each
month of the six (6) month period immediately following Substantial Completion (“Qualification
Period”), the Owner shall also pay Design-Builder:

	 	(iii)	 	$1.00 million in subordinated debt* consisting of a 10-year non-interest bearing note
payable quarterly.

If during the Qualification Period, the Owner chooses to operate the plant at a reduced rate,
then the Qualification Period shall be correspondingly extended. if Substantial Completion
does not occur on or before March 1 , 2006 or the ethanol production does not exceed 4.34
million gallons during the Qualification Period, the Design-Builder shall not be entitled to
additional payments as provided in subsections (ii) and (iii) above.

 

	*	 	The foregoing notes and all payment to the Design-Builder under the notes shall, at all
times, be subordinated and subject to the terms and conditions of any debt financing
arrangements between the Owner and its lenders. The Owner shall not be required to make any
payment to Design-Builder under such notes if such payment would cause the Owner to breach or
violate the provisions of any debt financing arrangement between Owner and its lenders. Each
of the foregoing notes are unsecured.

6.2 Markups for Changes. If the Contract Price requires an adjustment due to changes in the Work,
and the cost of such changes is determined under Sections 9.4.1.3 or 9.4.1.4 of the General
Conditions of Contract, the following markups shall be allowed on such changes: The parties agree
that changes shall not occur pursuant to Sections 9.4.1.3 or 9.4.1.4 of the General Conditions
 of Contract, but may occur pursuant to the other provisions therein.

      

			
	DBIA Documerit.No. 525 • Standard Form of Agreement

Between Owner and Design-Builder – Lump Sum

©1998 Design-Build Institute of America
	 	Page 5

 

 

Article 7

Procedure for Payment

7.0 Payment at Financial Close. As part of the Contract Price, Owner shall pay
Design-Builder Three Million Dollars ($3,000,000) as soon as allowed by its organizational
documents, the Escrow Agreement and any other relevant agreements or laws (such payment to
possibly occur prior to Financial Close) as a mobilization fee. Provided, however, that said
payment, if not made earlier, shall be paid at Financial Close. Financial Close is defined as
Owner executing final loan documents obtaining all necessary financing to construct the project
and funds are available to pay disbursements. Said Three Million ($3,000,000) Dollar payment
shall be subject to the retainage as provided by Article 7.2.1.

7.1 Progress Payments

7.1.1 Design-Builder shall submit to Owner on the twenty-fifth ( 25th) day of each
month, beginning with the first month after the Date of Commencement, Design-Builder’s
Application for Payment in accordance with Article 6 of the General Conditions of Contract.

7.1.2 Owner shall make payment within ten (1 0) days after Owner’s receipt of each properly
submitted and accurate Application for Payment in accordance with Article 6 of the General
‘Conditions of Contract, but in each case less the total of payments previously made, and less
amounts properly withheld under Section 6.3
of the General Conditions of Contract.

7.2 Retainage on Progress Payments

7.2.1 Owner will retain ten percent (10%) of each payment provided, however, that when fifty
percent (50%) of the Work ($35,200,507.50 aggregate payment) has been completed by Design-Builder,
Owner will not
retain any additional amounts from Design-Builder’s subsequent payments, except as provided below,
unless there is less than $3,520,050.75 total retainage. Owner will also reasonably consider
reducing retainage for Subcontractors completing their work early in the Project. Notwithstanding
the above, Owner will retain ten percent (10%) of all payments attributable to the application of
coal to the project, including but not limited to the individual dryers.

7.2.2 Upon Substantial Completion of the entire Work or, if applicable, any portion of the Work,
pursuant to Section 6.6 of the General Conditions of Contract, Owner shall release to
Design-Builder all retained amounts relating, as applicable, to the entire Work or completed
portion of the Work, less an amount equal to the reasonable value of all remaining or incomplete
items of Work as noted in the Certificate of Substantial Completion, provided that such payment
shall only be made if Design-Builder has met the Performance Guarantee Criteria listed in Exhibit
A.

7.3 Final Payment. Design-Builder shall submit its Final Application for Payment to Owner in
accordance with Section 6.7 of the General Conditions of Contract. Owner shall make payment on
Design-Builder’s properly submitted and accurate Final Application for Payment within thirty (30)
days after Owner’s receipt of the Final Application for Payment, provided that Design-Builder has
satisfied the requirements for final payment set forth in Section 6.7.2 of the General Conditions of Contract and Design-Builder has
met the Performance Guarantee Criteria listed in Exhibit A.

7.4 Interest. Payments which are due and unpaid by Owner to Design-Builder, whether progress
payments or final payment, shall bear interest commencing five (5) days after payment is due at
the rate of
ten percent (10%) per annum.

7.5 Record Keeping and Finance Controls. With respect to changes in the Work performed on a cost
basis by Design-Builder pursuant to the Contract Documents, Design-Builder shall keep full and
detailed accounts and exercise such controls as may be necessary for proper financial management,
using accounting and control systems in accordance with generally accepted accounting principles
and as may be provided in
the Contract .Documents. During the performance of the Work and for a period of three (3) years
after Final Payment, Owner and Owner’s accountants shall be afforded access from time to time, upon
reasonable
notice, to Design-Builder’s records, books, correspondence, receipts, subcontracts, purchase
orders,

      

			
	Page 6
	 	DBIA Document No. 525 • Standard Form of Agreement

Between Owner and Design-Builder — Lump Sum

©1998 Design-Build Institute of America

 

 

vouchers, memoranda and other data relating to changes in the Work performed on a cost basis
in accordance with the Contract Documents, all of which Design-Builder shall preserve for a
period of three (3) years after Final Payment.

Article 8

Termination for Convenience

8.1 Upon ten (10) days’ written notice to Design-Builder, Owner may, for its convenience and
without cause, elect to terminate this Agreement. In such event, Owner shall pay Design-Builder
for the following:

	 	.1	 	All Work executed, and for proven loss, cost or expense in connection with the Work;
	 
	 	.2	 	The reasonable costs and expenses attributable to such termination, including
demobilization costs and amounts due in settlement of terminated contracts with
Subcontractors and Design Consultants; and
	 
	 	.3	 	Overhead and profit margin in the amount of fifteen percent (15 %) on the sum
of items .1 and .2 above, except that overhead and profit shall not be due regarding
amounts due in settlement of terminated contracts with subcontractors and design
consultants.

8.2 In addition to the amounts set forth in Section 8.1 above, Design-Builder shall be entitled
to receive one of the following as applicable: all retainage withheld by Owner.

8.3 If Owner terminates this Agreement pursuant to Section 8.1 above-and proceeds to design and
construct the Project through its employees, agents or third parties, Owner’s rights to use the
Work Product shall be as set forth in Section 4.3 hereof.

Article 9

Representatives of the Parties

9.1 Owner’s Representatives

9.1.1 Owner designates the individual listed below as its Senior Representative (“Owner’s Senior
Representative”), which individual has the authority and responsibility for avoiding and resolving
disputes under Section 10.2.3 of the General Conditions of Contract: (Identify individual’s
name, title, address and telephone numbers)

     TBD

9.1.2 Owner designates the individual listed below as its Owner’s Representative, which
individual has the authority and responsibility set forth in Section 3.4 of the General Conditions
of Contract: (Identify individual’s name,
title, address and telephone numbers)

     TBD

9.2 Design-Builder’s Representatives

9.2.1 Design-Builder designates the individual listed below as its Senior Representative
(“Design-Builder’s Senior Representative”), which individual has the authority and responsibility
for avoiding and resolving disputes under Section 10.2.3 of the General Conditions of Contract:
(Identify individual’s name, title, address and telephone numbers)

      

			
	DBIA Document No. 525 • Standard Form of Agreement

Between Owner and Design-Builder — Lump Sum

©1998 Design-Build Institute of America
	 	Page 7

 

 

Roland
“Ron” Fagen, CEO and President 501 

W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone: (320) 564-3324

9.2.2 Design-Builder designates the individual listed below as its Design-Builder’s
Representative, which individual has the authority and responsibility set forth in Section 2.1.1
of the General Conditions of Contract:

(Identify individual’s name, title, address and telephone numbers)

     TBD

Article 10

Bonds and Insurance

	10.1	 	Insurance. Design-Builder shall procure in accordance with Article 5 of the General
Conditions of Contract the following insurance coverage: A certificate of insurance will be
provided prior to starting construction. Policy limits shall be as follows:

	 	 	 	 	 	 	 	 	 
	Commercial General Liability:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	General Aggregate	 	$	2,000,000	 
	 
	 	 	 	Products-Comp/Op AGG	 	$	2,000,000	 
	 
	 	 	 	Personal & Adv Injury	 	$	1,000,000	 
	 
	 	 	 	Each Occurrence	 	$	1,000,000	 
	 
	 	 	 	Fire Damage (Any one fire)	 	$	50,000	 
	 
	 	 	 	Med Exp (Any one person)	 	$	5,000	 
	 
	 	 	 	 	 	 	 	 
	Automobile Liability:	 	 	 	 
	 
	 	 	 	Combined Single Limit	 	$	1,000,000	 
	 
	 	 	 	 	 	 	 	 
	Excess Liability — Umbrella Form	 	 	 	 
	 
	 	 	 	Each Occurrence	 	$	20,000,000	 
	 
	 	 	 	Aggregate	 	$	20,000,000	 
	 
	 	 	 	 	 	 	 	 
	Workers Compensation and	 	 	 	 
	 	 	Employers’ Liability:	 	 	 	 
	 	 	Statutory Limits:	 	 	 	 
	 
	 	 	 	      Each Accident	 	$	1,000,000	 
	 
	 	 	 	      Disease-Policy Limit	 	$	1,000,000	 
	 
	 	 	 	      Disease-Each Employee	 	$	1,000,000	 

Owner shall obtain a builder’s risk policy naming Owner as the insured, with Design-Builder
as additional insured, in an amount not less than the Contract Price. Owner shall also
obtain Boiler and Machinery Insurance protecting Owner, Design-Builder, Design Consultants,
Subcontracts and Subcontractors. In addition, Owner shall obtain terrorism coverage as
described by the Terrorism Risk Insurance Act of 2002.

      

			
	Page 8
	 	DBIA Document No. 525 — Standard Form of Agreement

Between Owner and Design-Builder — Lump Sum

©1998 Design-Build Institute of America

 

 

Article 11

Other Provisions

11.1 Other provisions, if any, are as follows:

	 	•	 	Performance Guarantee: The Design-Builder guarantees the Criteria listed in Exhibit
A. If there is a performance shortfall, Design-Builder will pay all design and
construction costs associated with making the necessary corrections. Design-Builder
retains the right to use its sole discretion in determining the method to remedy any performance related issues.
	 
	 
	 	•	 	Price Guarantee: The Design-Builder guarantees the Contract Price for the Work
delineated by the Contract Documents. Any and all price increases would require, in
addition to Owner’s approval, the approval of Owner’s senior lender.
	 
	 	•	 	Winter Construction: Owner shall have no responsibility for any winter construction
related activities including, but not limited to, special material costs, sheltering,
heating, and equipment rental, except that Owner shall pay all the reasonable costs
incurred for frost removal including, but not limited to, equipment costs, equipment
rental costs, and associated labor costs so that winter construction can proceed.
	 
	 	•	 	Design-Builder shall obtain or cooperate in obtaining a performance bond if such a
bond is requested by Owner. If the bond is obtained by Design-Builder, Owner shall pay
Design-Builder for the cost of the bond, plus pay Design-Builder a fee of 7.5%, said
fee calculated by multiplying 7.5% on the cost of the bond. If purchased by Owner,
Owner shall pay all costs of obtaining the bond.
	 
	 	•	 	Design-Builder warrants that within six (6) months following the date of Substantial
Completion, the atmospheric emissions of the ethanol plant shall meet the requirements
as currently prescribed, as of the date hereof, by the State of Iowa Department of
Natural Resources. Verification shall be provided by a written report from
Design-Builder.
	 
	 	•	 	Owner will identify a Design-Builder employee to serve as an advisor to Owner’s Board of Directors.

In executing this Agreement, Design-Builder represents that it has the necessary financial
resources to fulfill its obligations under this Agreement and has the necessary corporate approvals
to execute this Agreement and perform the services described herein. Owner represents that it has
the necessary organizational approvals to execute this Agreement; that Owner is seeking financing
for the project and that Owner agrees to keep Design-Builder informed of Owner’s progress in
obtaining commitments for and closing on such financing. Owner and Design-Builder agree that this
Agreement is subject to Owner receiving a complete full funding commitment within 180 days of the
signing of this Agreement, and if a full funding commitment is not received within 180 days of the
signing of this Agreement, the terms and conditions of this Agreement terminate.

	 	 	 
	OWNER:

	 	DESIGN-BUILDER:
	 
	 	 
	Lincolnway Energy, LLC

	 	Fagen, Inc.
	 

	 	 
	(Name of Owner)

	 	(Name of Design-Builder)
	 
	 	 
	          /s/ William D. Couser

	 	          /s/ Roland Fagen
	 

	 	 
	(Signature)

	 	(Signature)
	 
	 	 
	          William D. Couser

	 	          Roland “Ron” Fagen
	 

	 	 
	(Printed Name)

	 	(Printed Name)

      

			
	DB1A Document No. 525 Standard Form of Agreement

Between Owner and Design-Builder — Lump Sum

01998 Design-Build Institute of America
	 	Page 9

 

 

	 	 	 	 	 
	President of LWE	 	CEO and President
	 	 	 
	(Title)

	 	 	 	                                        (Title)
	 
	 	 	 	 
	Date:

	 	12/15/2004
	 	Date: 12/20/04
	 

	 	 
	 	 

      

			
	Page 10
	 	DBIA Document No. 525 — Standard Form of Agreement

Between Owner and Design-Builder — Lump Sum

©1998 Design-Build Institute of America

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

EXHIBIT A

Performance Guarantee Criteria

Table 1

	 	 	 	 	 	 	 
	Criteria	 	Specification	 	Testing Statement	 	Documentation
	 
	Plant Capacity –

fuel grade ethanol

	 	Operate at a rate of
50 million gallons
per (353 day) year
of denatured fuel
grade ethanol
meeting the
specifications of
ASTM 4806
	 	Seven day

performance test
	 	Production records
and a written report
by Design-Builder.
	Dried Distillers

Grains with

Solubles (DDGS)

	 	Dry all DDGS to
produce 10%
moisture DDGS
	 	Seven day

performance test
	 	Production records
and written analysis
by Design-Builder.
	Corn to Ethanol
Conversion ratio;
Corn must be #2
Yellow or better ,
16% or less
moisture, zero
aflatoxin tolerance

	 	Not be less than
2.80 denatured
gallons of ethanol
per bushel (56#) of
corn
	 	As determined by
meter readings
during a seven day
performance test.
	 	Production records
and written analysis
by Design-Builder.
	Electrical Energy

	 	[ * ] kWh per
denatured gallon of
fuel grade ethanol
(less CO2 plant and
chiller, and water
supply and
treatment).
	 	As determined by
meter readings
during a seven day
performance test.
	 	Production records
and written analysis
by Design-Builder.
	Coal

	 	Shall not exceed
[ * ] Btu per
denatured gallon of
fuel grade ethanol.
(This Performance
Criteria relates to
production of
ethanol and
excludes any energy
usage that may
occur for drying
corn.)
	 	As determined by
meter readings
during a seven day
performance test.
	 	Production records
and written analysis
by Design-Builder.
	Process Water

	 	Zero gallons under
	 	Process discharge
	 	Control System
	Discharge

	 	normal operations
	 	meter
	 	reports

					
	 	 	 	 	 
	 
	 	1
	 	Exh. A to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

EXHIBIT A — continued

DISCLAIMER:
Owner’s failure to materially comply with the operating
procedures issued by ICM, Inc./Fagen, Inc. shall void all performance guaranties and warranties set forth in
this Design-Build Agreement.

Owner understands that the startup of the plant requires resources and cooperation of the Owner,
vendors and other suppliers to the project. Design-Builder disclaims any liability and Owner
indemnifies Design-Builder for non-attainment of the Performance Guarantee Criteria directly or
indirectly caused by material non-performance or negligence of third parties not retained by
Design-Builder. Design-Builder shall provide notice to Owner of
any material non-performance or negligence of third parties within five (5) working days
of Design-Builder’s knowledge or expectation of such non-performance or negligence of third
parties.

 

*Portion omitted pursuant to a request for confidential treatment and filed separately with
the Securities and Exchange Commission.

					
	 	 	 	 	 
	 
	 	2
	 	Exh. A to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

EXHIBIT B

General Project Scope

Construct a 50 million-gallon per year (MGY) coal-fired ethanol plant near Nevada, Iowa, The
plant will grind approximately 17.9 million bushes per year to produce approximately 50 MGY year
of fuel grade ethanol denatured with five percent gasoline. The plant will also produce
approximately 160,750 tons per year of 10% moisture dried distillers grains with solubles
(DDGS), and approximately 151,250 tons per year of raw carbon dioxide (CO2) gas.

Delivered corn will be dumped in the receiving building. The receiving building will have two
truck grain receiving bays and a rail receiving bay, including an underground conveyor from the
rail pit to the second truck receiving bay both of which share a common receiving leg. Said
receiving building shall have sufficient height to accommodate end-dump trailers. The truck
driver will drive onto the scale located near the administration building, be weighed and
sampled, then drive to the receiving building, dump the grain, then proceed back to the scale
and obtain a final weight ticket from the scale operator. The trucks will not be required to
move during the unloading process in the receiving building. Maximum truck dump time is ten
minutes. Two independent 15,000-bushel legs will lift the corn to one of two 250,000 – bushel
concrete storage bins or corn day bin. A dust collection system will be installed on the grain
receiving system to limit particulate emissions as described in the Air Quality Permit
application. There is also a RR car scale for receiving corn by rail and loading DDGS in rail
and trucks.

Ground corn will be mixed in a slurry tank, routed through a pressure vessel and steam flashed
off in a flash vessel. Cooked mash will continue through liquefaction tanks and into one of the
fermenters. Simultaneously, propagated yeast will be added to the mash

as the fermenter is filling. After batch fermentation is complete, the beer will be pumped to
the beer well and then to the beer column to vaporize the alcohol from the mash.

Alcohol streams are purifiedin the rectifier column and the side stripper, and dehydrated in the
molecular sieve system. Two hundred proof alcohol is pumped to the
tank farm day tank and blended with five percent natural gasoline as the product is being pumped into one
of two 1,000,000 gallon final storage tanks. Loading facilities for truck and rail cars will be
provided. Tank farm tanks include: one tank for 190 proof storage, one tank for 200 proof
storage, one tank for denaturant storage and two 1,000,000 gallon tanks for denatured ethanol
storage.

Corn mash from the beer column is dewatered in the centrifuge(s). The solids, called wet cake are
conveyed to the dryer system. The liquid, called thin stillage is routed to the evaporators where
moisture is removed. The wet cake and syrup are routed to the drying

					
	 	 	 	 	 
	 
	 	1
	 	Exh. B to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

system. The drying system will consist of three steam tube dryers. The exhaust from the
drying system will be routed as combustion air to the coal combustor.

A modified wet or wet cake pad is located along side the DDGS dryer building to divert modified
wet or wet cake to the pad when necessary such as start up or for limited production of
modified wet or wet cake for sales. DDGS is pneumatically conveyed to flat storage in the DDGS
storage building. Shipping is accomplished by scooping and pushing the product with a front-end
loader into an in-floor conveyor system. The DDGS load out pit has capacity for approximately
one semi-trailer load. DDGS is weighed with a bulk weigh system.

Steam will be generated in a waste heat boiler driven by the flue gases from the coal
combustor. Since the dryer exhaust is routed to the coal combustor for combustion air, the coal
combustor destroys VOCs and acts like a Thermal Oxidizer. The combustion air is routed in such
fashion that it also fluidizes a sand bed in which the coal is introduced to combust. The
combustor requires natural gas or propane for start up. To achieve
emission constraints, limestone will be metered in with the coal to react with sulfur. The
layout of the combustor, , boiler, and economizer are intended to provide drop out points for
fly ash. The final item in the layout before the induced draft fan is a dust collector.
All ash exiting the system will exit as fly ash. Both fly ash and limestone silos are included.
The fly ash and limestone silos have nominal storage capacities of seven
days.

The steam system will be inspected and approved by the appropriate Iowa authorities, as Iowa
has not adopted the most recent versions of the ASME Boiler and Pressure Vessel Code.

Coal, received by truck delivery, will be stored in two silos with a combined storage capacity
of seven days. At the outlet of each coal silo, coal will be sized
(3/4” minus) and limestone added before being routed to the coal feeder bunkers. The coal combustor will
also utilize anhydrous ammonia for NOx emission reduction. A CEMS (Continuous emission
monitoring system) is included.

Fresh water for the boilers, cooking, cooling tower and other processes will be obtained from
the Owner supplied water pretreatment system. Boiler water conditioned in regenerative
softeners will be pumped through a deaerator scrubber and into a deaerator tank. Appropriate
boiler chemicals will be added as preheated water is sent to the boiler.

The process will be cooled by circulating water through heat exchangers, a chiller, and a
cooling tower.

The design includes a compressed air system consisting of air compressor(s), a receiver tank,
pre-filter, coalescing filter, and double air dryer(s).

					
	 	 	 	 	 
	 
	 	2
	 	Exh. B to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

The design also incorporates the use of a clean-in-place (CIP) system for cleaning cook,
fermentation, distillation, evaporation, centrifuges, and other systems. Fifty percent caustic
soda is received by truck and stored in a tank.

Under normal operating circumstances, the plant will not have any wastewater discharges that
have been in contact with corn, corn mash, cleaning system, or contact process water. An
ICM/Phoenix Bio-Methanator will reduce the organic acids in process water allowing complete
reuse within the plant. The plant will have blowdown discharges from the cooling tower and may
have water discharge from any water pre-treatment processes. Owner shall provide on-site
connection to sanitary sewer or septic system.

Most plant processes are computer controlled by a Siemens/Moore APACS distributed control system
with graphical user interface and three workstations. The process control room control console
will have dual monitors to facilitate operator interface between two graphics screens at the
same time. Additional programmable logic controllers (PLCs) will control certain process equipment. Design Builder provides lab equipment.

The cooking system requires the use of anhydrous ammonia, and other systems require the use of
sulfuric acid. Therefore, a storage tank for ammonia and a storage tank for
acid will be on site to provide the quantities necessary. The ammonia storage requires that
plant management implement and enforce a Process Safety Management (PSM) program. The plant
design may require additional programs to ensure safety and to satisfy regulatory authorities.

					
	 	 	 	 	 
	 
	 	3
	 	Exh. B to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

EXHIBIT C

Owner’s Responsibilities

The Owner shall perform and provide the permits, authorizations, services and construction as
specifically described hereafter:

	1)	 	Land and Grading – Owner shall provide a site near or in Nevada, IA. Owner shall obtain
all legal authority to use the site for its intended purpose and perform technical due
diligence to allow Design-Builder to perform including, but not limited to, proper zoning
approvals, building permits, elevation restrictions, soil tests, and water tests. The site
shall be rough graded per Design-Builder specifications and be +/- three inches of final
grade including the rough grading for Site roadways. The site soils shall be modified as
required to provide a minimum allowable soil bearing pressure as described in Table 1.

	 	 	Other items to be provided by the Owner include, but are not limited to, the following:
initial site survey (boundary and topographic) as required by the Design-Builder, layout of
the property corners including two construction benchmarks, Soil Borings and subsequent
Geotechnical Report describing recommendation for Roads, foundations and if required, soil
stabilization/remediation, land disturbance permit, erosion control permit, site grading as
described above with minimum soil standards, placement of erosion control measures, plant
access road from a county, state or federal road designed to meet local county road
standards, plant storm and sanitary sewers, fire water system with hydrants and plant water
main branches taken from the system to be within five feet of the designated building
locations, all tanks, motors and other equipment associated with or necessary to operate the
fire water loop and associated systems, plant roads as specified and designed for the
permanent elevations and effective depth, “construction” grading plan as drawn (including
site retention pond), plant water well and associated permit(s). Owner shall also provide
the final grading, seeding and mulching, and site fencing at the site.

	 	 	Owner is encouraged to obtain preliminary designs/information and estimates of the cost of
performing all Owner required permits and services as stated in this Exhibit C.
Specifically, the cost of the fire water systems (including associated fire water pumps,
required tank, building (if required), sprinklers, and all other equipment and materials
associated with the fire water delivery systems) is estimated being in excess of $400,000.
The requirements of each state and the decisions of each Owner will increase or decrease the
actual cost.

	 	 	The Owner’s required activities related to site preparation for construction are to be
divided into Phase I and Phase II activities as described below:

               Deliverables by Owner prior to start of Phase 1 Civil Design:

                    Procure Boundary & Topographic Survey (to one foot contours)

					
	 	 	 	 	 
	 
	 	1
	 	Exh. C to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

	 	 	Procure Soil Borings and Geotechnical Report with recommendations (at Design-Builder’ s
requested locations and depth)

Phase 1 (Deliverable Site):

Design-Builder provides engineering services to develop these items:

	 	1.	 	Final Plant Layout with FFE and Top of Road Elevations
	 
	 	2.	 	Final Cut/Fill Quantity Calculations
	 
	 	3.	 	Grading and Erosion Control Plan
	 
	 	4.	 	Clear & Grubbing Plan — graded to +/- 3” of subgrade
Subgrade is defined as 1’ below proposed Building FFE and
Administration Building FFE and 20” to 30” (based on rail designer input) below top
of rail for the rail spurs. Subgrade for the in-plant roads will be determined upon
recommendations from the geotechnical engineer (12” to 24” below final top of road)

 

*Owner shall prepare site according to Design-Builder’s engineering plans for the above items.

Plant Access Road and all in-plant roads (which will act as base for final roadway system)

Soil Stabilization

Site Grading

Replacement Fill

Construction Layout (parking, laydown, access areas, temp. drainage) 

Storm Water Drainage & Detention

Phase 2 Site Work (Final Civil Design Plans):

Design-Builder provides engineering services to develop these items:

     Site Utilities (Within Property Line):

	 	1.	 	Sanitary Sewer System
	 
	 	2.	 	Potable Water Supply and Distribution
	 
	 	3.	 	Process Water Supply and Distribution
	 
	 	4.	 	Gas Supply and Distribution.
	 
	 	5.	 	Fire Loop and Fire Protection System
	 
	 	6.	 	Site Electric
	 
	 	7.	 	Site Natural Gas/Propane

Wells and Well Pumps (supply of sufficient quantity for construction activities)

Minimum 3 Phase, 480 Volt, 1,000 KVA Electrical Power Available for Construction at two locations
(at Design-Builder’s requested location)

					
	 	 	 	 	 
	 
	 	2
	 	Exh. C to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

	 	 	Design/Builder shall be reimbursed on a “Time & Material” basis for any management of these
Owner requirements and any design engineering requested by the Owner not otherwise required
to be provided by Design-Builder pursuant to this Agreement.

	2)	 	Permits – Owner shall obtain all Operating Permits including, but not limited to, air
quality permits, in a timely manner to allow startup of the plant as designed by
Design-Builder. Owner shall obtain all testing and site inspections required to secure the
necessary operating permits.
	 
	3)	 	Storm Water Runoff Permit – Owner shall obtain the construction storm – water runoff
permit, permanent storm-water runoff permit, and the erosion control/land disturbance
permit.
	 
	4)	 	Iowa Pollutant Elimination Discharge Permit – Owner shall obtain a permit to discharge
cooling tower water and reverse osmosis (“R.O.”) reject water and any other waste water
directly to a designated waterway or other location Owner shall supply the discharge
piping to transport to the designated waterway or other location.
	 
	5)	 	Natural Gas, Propane, Coal Supply and Ash Disposal Agreements – Owner shall procure and
supply a supply of natural gas or propane for the preheat and start up of the coal
combustor and operation of the RTO. For the coal combustor, two separate gas burners will
require natural gas or propane: the underbed air preheater rated for 20 mmbtu/hr and the
overfire air preheater rated for 50 mmbtu/hr. Consumption will start at approximately 30 %
of the total rating and be ramped up to maximum over a nominal 8 hr period, depending on
the starting temperature. Minimum demand will be 21 mm btu/hr and
ramp up to a maximum of 70 mm btu/hr. The RTO will demand 5 mmbtu/hr of natural gas or propane. Owner
shall provide all natural gas and/or propane piping to the use points and supply meters,
regulators, and vaporizers to provide burner tip pressures as specified by Design-Builder.
Owner shall also supply a digital flowmeter on-site with appropriate output for monitoring
by the plant’s computer control system.
	 
	 	 	The coal combustor design will be based on typical analysis of coal provided by owner, which
to date is from the Powder River Coal Company’s North Antelope mine located in Gillette,
Cambell County, Wyoming. Planned emission control is to mix limestone with the coal, as the
sulfur content is .24%. The as received heat value is 8,800 btu/lb, and the expected
consumption will be 300 tons/day at the 50 mm gpy production rate. Procurement and supply of
coal and limestone will be the responsibility of the owner.
	 
	 	 	Ash is noted to be 5.3%, so a nominal 18 tons/day of ash will need to be removed from the
site each day. All ash is removed from the system as fly ash. Disposal will be at owner’s
responsibility.
	 
	6)	 	Electrical Service – (1) The Owner is responsible to secure continuous service from an
energy supplier to serve the facility. The service from the energy supplier shall be of
sufficient size to provide at a minimum 10 MW of electrical capacity to the site. (2) The
Owner is responsible for procurement, installation and maintenance of the site
distribution

					
	 	 	 	 	 
	 
	 	3
	 	Exh. C to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

	 	 	system, including but not limited to the required substation and all associated distribution
lines, switchgear, sectional cabinets, distribution transformers, transformer pads, etc. An
on-site primary digital meter is also to be supplied for monitoring of electrical usage and
demand. This meter must have the capability to be monitored via a telephone line or other
electrical, signal. (3) The responsibility of the Design-Builder starts at the secondary
electrical terminals of the site distribution system transformers that have been installed
by Owner (i.e., the 480 volt terminals for the process building transformers; the 480 volt
terminals for the energy center transformers; the 480 volt terminals for the grains
transformer; the 480 volt terminals for the pumphouse transformer; and the 4160 volt
terminals for the chiller transformer; and the 4160 volt terminals of the thermal oxidizer
transformer). (4) The site distribution system requirements, layout, and meters are to be
determined jointly by the Owner, the Design-Builder and the energy supplier.
	 
	 	 	Design-Builder will be providing soft start motor controllers for all motors greater than
150 horsepower and where demanded by process requirements. Owner is encouraged to discuss
with its electrical service supplier whether additional soft start motor controllers are
advisable for this facility and such can be added, with any increased cost being an Owner’s
cost.

	7)	 	Water Supply and Service Agreement – Owner shall supply on-site process wells or other
water source capable of providing a quantity of water which includes process water, R.O.
feed water, cooling tower make-up water, of a quality which will allow discharges to
comply with NPDES limits. Owner should consider providing a redundant supply source.
Design-Builder shall provide the standard zeolite water softener system. Any increased
costs incurred for another water treatment system if water does not meet the quality
requirements shall be the responsibility of the Owner. Owner will supply one process fresh
water supply line terminating within five (5) feet of the point of entry designated by
Design-Builder, one potable supply line terminating within five (5) feet of the process
building at a point of entry designated by Design-Builder, and one potable supply line to
the administration building at a point of entry designated by administration building
contractor.
	 
	 	 	Owner is advised that most projects require a reverse osmosis system. Such system is an
Owner’s cost and Owner is advised that the purchase and installation cost of such a reverse
osmosis system may exceed $400,000. Owner is also advised that such systems may be leased if
Owner desires to avoid the costs of owning such a system.
	 
	8)	 	Wastewater Discharge System, Permits and/or Service Agreement – Owner shall provide
the discharge piping, septic tank and drainfield system or connect to municipal system as
required for the sanitary sewer requirements of the Plant. These provisions shall comply

with all federal, state, and local regulations, including any permitting issues.
	 
	9)	 	Roads and Utilities – Owner shall provide and maintain the ditches and permanent roads,
including the gravel, pavement or concrete, with the roads passing standard compaction
tests. (Design-Builder will maintain aggregate construction roads during construction of
the Plant and will return to original pre-construction condition prior to Owner completing
final grade and surfacing.)

					
	 	 	 	 	 
	 
	 	4
	 	Exh. C to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

	 	 	Except as otherwise specifically stated herein the Owner shall install all utilities so that
they are within five (5) feet of the designated building/structure locations.
	 
	10)	 	Administration Building – The administration building – one story free standing, office
computer system, telephone system, office copier and fax machine and office furniture and any
other office equipment and personal property for the administration building shall be the
sole and absolute cost and responsibility of Owner and Design-Builder shall have no
responsibility in regards thereto.
	 
	11)	 	Maintenance and Power Equipment – The maintenance and power equipment as described in Table
2 and any other maintenance and power equipment as required by the plant or desired by Owner
shall be the sole and absolute cost and responsibility of Owner and Design-Builder shall have
no responsibility in regards thereto.
	 
	12)	 	Railroads – Owner is responsible for any costs associated with the railroads including, but
not limited to, all rail design and engineering and construction and Design-Builder shall
have no responsibility in regards thereto.
	 
	13)	 	Drawings – Owner shall supply drawings to Design-Builder-of items supplied under items 10)
and 12) and also supply Phase II redline drawings.
	 
	14)	 	Fire Protection System – Fire protection system requirements vary by governmental
requirements per location and by insurance carrier requirements. Owner is responsible to
provide the required fire protection system for the Plant. This may include storage tanks,
pumps, underground fire water mains, fire hydrants, foam or water monitor valves, sprinkler
systems, smoke and heat detection, deluge systems, or other provisions as required by
governmental codes or Owner’s insurance carrier’s fire protection criteria. Design-Builder
will provide assistance to the Owner on a “Time & Material” basis for design and/or
construction of the Fire Protection Systems required for the plant.

Table 1 Minimum Soil Bearing Pressure – Responsibility of Owner

	 	 	 	 	 
	 	 	Required Allowable Soil Bearing Pressure
	Description	 	(pounds per square foot)
	 
	Grain Storage Silos
	 	 	6,000	 
	Cook Water Tank
	 	 	3,500	 
	Methanator Feed Tank
	 	 	3,500	 
	Liquifaction Tank #1
	 	 	3,500	 
	Liquifaction Tank #2
	 	 	3,500	 
	Coal Combustor
	 	 	4,000	 
	Coal Surge Silo #1
	 	 	6,000	 
	Coal Surge Silo #2
	 	 	6,000	 
	Boiler
	 	 	4,000	 
	Dust Collector
	 	 	3,500	 

					
	 	 	 	 	 
	 
	 	5
	 	Exh. C to Lincolnway Energy, LLC

 

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

	 	 	 	 	 
	 	 	Required Allowable Soil Bearing Pressure
	Description	 	(pounds per square foot)
	 
	Fermentation Tank #1
	 	 	4,000	 
	Fermentation Tank #2
	 	 	4,000	 
	Fermentation Tank #3
	 	 	4,000	 
	Fermentation Tank #4
	 	 	4,000	 
	Beerwell
	 	 	4,000	 
	Whole Stillage Tank
	 	 	3,500	 
	Thin Stillage Tank
	 	 	3,500	 
	Syrup Tank
	 	 	3,500	 
	190 Proof Day Tank
	 	 	3,000	 
	200 Proof Day Tank
	 	 	3,000	 
	Denaturant Tank
	 	 	3,000	 
	Fire Water Tank
	 	 	3,000	 
	Denatured Ethanol Tank #1
	 	 	4,000	 
	Denatured Ethanol Tank #2
	 	 	4,000	 
	All Other Areas
	 	 	3,000	 

Table 2 Maintenance and Power Equipment — Responsibility of Owner

	 	 	 
	Description	 	Additional Description
	 
	Spare Parts

	 	Spare parts
	 

	 	Parts bins
	 

	 	Misc. materials, supplies and equipment
	Shop supplies and

	 	One shop welder
	equipment

	 	One portable gas welder
	 

	 	One plasma torch
	 

	 	One acetylene torch
	 

	 	One set of power tools
	 

	 	Two sets of hand tools with tool boxes
	 

	 	Carts and dollies
	 

	 	Hoists (except centrifuge overhead crane)
	 

	 	Shop tables
	 

	 	Maintenance office furnishings & supplies
	 

	 	Fire Extinguishers .
	 

	 	Reference books
	 

	 	Safety manuals
	 

	 	Safety cabinets & supplies, etc.
	Rolling stock

	 	Used 1 1/2 yard front end loader
	 

	 	New Skid loader
	 

	 	Used Fork lift
	 

	 	Used Scissors lift, 30 foot
	 

	 	Used Pickup truck
	 

	 	Track Mobile

					
	 	 	 	 	 
	 
	 	6
	 	Exh. C to Lincolnway Energy, LLC

 

 

Exhibit
D

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (this “License Agreement”) is entered into and made effective
as of the 8 day of December , 2004  (“Effective Date”) by and
between Lincolnway Energy, LLC , a  Limited Liability  corporation (“OWNER”),
and ICM, Inc., a Kansas Corporation (“ICM”).

     WHEREAS, OWNER has entered into that certain  Design Builder  Contract
dated  December 8 , 200 4  (the “Contract”) with Fagen, Inc., a Minnesota
corporation (“Fagen”), under which Fagen is to design and construct a  50 
million gallon per year ethanol plant for OWNER to be located in or near  Nevada, Iowa 
(the “Plant”);

     WHEREAS, ICM has granted Fagen the right to use certain proprietary technology and
information of ICM in the design and construction of the Plant; and

     WHEREAS, OWNER desires from ICM, and ICM desires to grant to OWNER, a license to use such
proprietary technology and information in connection with OWNER’s ownership and operation of the
Plant, all upon the terms and conditions set forth herein;

     NOW, THEREFORE, the parties, in consideration of the foregoing premises and the mutual
promises contained herein and for other good and valuable consideration, receipt of which is
hereby acknowledged, agree as follows:

1. Upon OWNER’s payment in full of all amounts due and owing to Fagen under the Contract, ICM
agrees to grant to OWNER a limited license to use the Proprietary Property (hereinafter
defined) solely in connection with the design, construction, operation,
maintenance and repair of the Plant, subject to the limitations provided herein (the
“Purpose”).

2. The “Proprietary Property” means, without limitation, documents, Operating Procedures
(hereinafter defined), materials and other information that are furnished by ICM to OWNER,
whether directly or indirectly through Fagen, in connection with the Purpose including,
without. limitation, the design, arrangement, configuration, and specifications of
(i) the combinations of distillation, evaporation, and alcohol dehydration equipment
(including, but
not limited to, pumps, vessels, tanks, heat exchangers, piping, valves and associated
electronic control equipment) and all documents supporting those combinations; (ii) the
combination of the distillers grain drying (DGD), and heat recovery steam generation
(HRSG) equipment (including, but not limited to, pumps, vessels, tanks, heat exchangers,
piping and associated electronic control equipment) and all documents supporting those
combinations; and (iii) the computer system, known as the distributed control system (DCS
and/or PLC) (including, but not limited to, the software configuration, programming,
parameters, set points, alarm points, ranges, graphical interface, and system hardware
connections) and all documents supporting that system. The “Operating Procedures” means,
without limitation, the process equipment and specifications manuals, standards of quality,
service protocols, data collection methods, construction specifications, training methods,
engineering standards and any other information prescribed by ICM from time to time
concerning the Purpose. Proprietary Property shall not include any information or materials
that OWNER can demonstrate by written documentation: (i) was lawfully in the possession
of OWNER prior to disclosure by ICM; (ii) was in the public domain prior to disclosure by
ICM; (iii) was disclosed to OWNER by a third party having the legal right to possess and

1

 

disclose such information or materials; or (iv) after disclosure by ICM comes into the public
domain through no fault of OWNER or its directors, officers, employees, agents, contractors,
consultants or other representatives (hereinafter collectively referred to as
"Representatives”). Information and materials shall not be deemed to be in the public
domain merely because
such information is embraced by more general disclosures in the public domain, and any combination
of features shall not be deemed to be within the foregoing exceptions merely because individual
features are in the public domain if the combination itself and its
principles of operation are not in the public domain.

3. OWNER shall not use the Proprietary Property for any purpose other than the Purpose. OWNER
shall not use the Proprietary Property in connection with any expansion or enlargement of the
Plant.

4. OWNER’s failure to materially comply with the Operating Procedures shall void all guarantees,
representations and warranties, whether expressed or implied, if any, that were given by ICM to
OWNER, directly or indirectly through Fagen, concerning the performance
of the Plant. OWNER agrees to indemnify, defend and hold harmless ICM, Fagen and their respective
Representatives from any and all losses, damages and expenses including, without limitation,
reasonable attorneys’ fees resulting from, relating to or arising out of Owner’s or
its Representatives’ (i) failure to materially comply with the Operating Procedures or, (ii)
negligent or unauthorized use of the Proprietary Property.

5. Any and all modifications to the Proprietary Property by OWNER or its Representatives shall be
the property of ICM. OWNER shall promptly notify ICM of any such modification and OWNER agrees to
assign all of its right, title and interest in such modification to ICM; provided, however, OWNER
shall retain the right, at no cost, to use such modification in connection with the Purpose.

6. ICM has the exclusive right and interest in and to the Proprietary Property and the goodwill
associated therewith. OWNER will not, directly or indirectly, contest ICM’s ownership of the
Proprietary Property. OWNER’s use of the Proprietary Property does not
give OWNER any ownership interest or other interest in or to the Proprietary Property except
for the limited license granted to OWNER herein.

7. OWNER shall pay no license fee or royalty to ICM for OWNER’s use of the Proprietary Property
pursuant to the limited license granted to OWNER, the consideration for this limited license is
included in the amounts payable by OWNER to Fagen for the construction of the Plant under the
Contract.

8. OWNER may not assign the limited license granted herein, in whole or in part, without the prior
written consent of ICM, which will not be unreasonably withheld or delayed. Prior
to any assignment, OWNER shall obtain from such assignee a written instrument, in form
and substance reasonably acceptable to ICM, agreeing to be bound by all the terms and provisions of
this License Agreement. Any assignment of this License Agreement shall not release OWNER from (i)
its duties and obligations hereunder concerning the disclosure and
use of the Proprietary Property, or (ii) damages to ICM resulting from, or arising out of, a breach
of such duties or obligations by OWNER or its Representatives. ICM may assign its right, title and
interest in the Proprietary Property, in whole or part, subject to the limited license granted
herein.

2

 

9.
The Proprietary Property is confidential and proprietary. OWNER shall keep the Proprietary Property confidential and shall use all reasonable efforts to maintain the
Proprietary Property as secret and confidential for the sole use of OWNER and its
Representatives for the Purpose. OWNER shall retain all Proprietary Property at its principal
place of business and/or the Plant. OWNER shall not at any time without ICM’s prior written
consent, copy, duplicate, record, or otherwise reproduce the Proprietary Property, in whole or
in part, or otherwise make the same available to any unauthorized person. OWNER shall not
disclose the Proprietary Property except to its Representatives who are directly involved with
the Purpose, and even then only to such extent as is necessary and essential for
.such Representative’s involvement. OWNER shall inform such Representatives of the
confidential and proprietary nature of such information. OWNER shall make all reasonable
efforts to safeguard the Proprietary Property from disclosure by its Representatives to anyone
other than permitted hereby. In the event that OWNER or its Representatives are required by law
to disclose the Proprietary Property, OWNER shall provide ICM with prompt written notice of
same so that ICM may seek a protective order or other appropriate remedy. In the event that
such protective order or other appropriate remedy is not obtained, OWNER or its Representatives
will furnish only that portion of the Proprietary Property which in the reasonable opinion of
its or their legal counsel is legally required and will exercise its reasonable efforts to
obtain reliable assurance that the Proprietary Property so disclosed will be accorded
confidential treatment.

10. OWNER agrees to indemnify ICM for any and all damages (including, without
limitation, reasonable attorneys’ fees) arising out of or resulting from any unauthorized
disclosure or use of the Proprietary Property by OWNER or its Representatives. OWNER agrees
that ICM would be irreparably damaged by reason of a violation of the provisions contained
herein and that any remedy at law for a breach of such provisions would be inadequate.
Therefore, ICM shall be entitled to seek injunctive or other equitable relief in a court of
competent jurisdiction against OWNER or its Representatives for any unauthorized disclosure or
use of the Proprietary Property without the necessity of proving actual monetary loss or
posting any bond. It is expressly understood that the remedy described herein shall
not be the exclusive remedy of ICM for any breach of such covenants, and ICM shall be entitled
to seek such other relief or remedy, at law or in equity, to which it may be entitled as a
consequence of any breach of such duties or obligations.

11 . All provisions of this License Agreement shall survive and remain in full force and effect
notwithstanding any termination or expiration of the Contract or the license granted herein
under paragraph 12.

12. ICM may terminate the limited license granted to OWNER herein upon written notice to OWNER
if OWNER willfully or wantonly uses the Proprietary Property for any purpose, or discloses the
Proprietary Property to anyone, other than permitted herein. Upon termination

of the license, OWNER, upon request by ICM, shall promptly return to ICM all documents in
OWNER’ s or its Representatives’ possession that contain Proprietary Property.

13. The laws of the State of Kansas, United States of America, shall govern the validity of the
provisions contained herein, the construction of such provisions, and the interpretation of the
rights and duties of the parties. Any legal action brought to enforce or construe the
provisions of this License Agreement shall be brought in the federal or state courts located in
Kansas, and the parties agree to and hereby submit to the exclusive jurisdiction of such courts
and agree that they will not invoke the doctrine of forum non conveniens or other similar
defenses in any such action brought in, such courts. In the event the Plant is
located in, or OWNER is organized under the laws of, a country other than the United States of
America,

3

 

OWNER hereby specifically agrees that any injunctive or other equitable relief granted by a court
located in the State of Kansas, United States of America, or any award by a court located in the
State of Kansas, shall be specifically enforceable as a foreign judgment in the country in which
the Plant is located, OWNER is organized or both, as the case may be, and agrees not to contest
the validity of such relief or award in such foreign jurisdiction, regardless of whether the laws
of such foreign jurisdiction would otherwise authorize such injunctive or other equitable relief,
or award.

14. OWNER hereby agrees to waive all claims against ICM and ICM’s Representatives for any
consequential damages that may arise out of or relate to this License Agreement, the Contract or
the Proprietary Property whether arising in contract, warranty, tort (including negligence),
strict liability or otherwise, including but not limited to losses of use, profits, business,
reputation or financing.

15. The terms and conditions of this License Agreement constitute the entire agreement between
the parties with respect to the subject matter hereof and supersede any prior understandings,
agreements or representations by or between the parties, written or oral. Any rule of
construction to the effect that any ambiguity is to be resolved against the drafting party shall
not be applicable in the interpretation of this License Agreement. This License Agreement may not
be modified or amended at any time without the written consent of the parties.

16. All notices, requests, demands, reports, statements or other communications (herein referred
to collectively as “Notices”) required to be given hereunder or relating to this License
Agreement shall be in writing and shall be deemed to have been duly given if transmitted by
personal delivery or mailed by certified mail, return receipt requested, postage prepaid, to the
address of the party as set forth below. Any such Notice shall be deemed to be delivered and
received as of the date so delivered, if delivered personally, or as of the second business day
following the day sent, if sent by certified mail. Any party may, at any time, designate a
different address to which Notices shall be directed by providing written notice in the manner
set forth in this paragraph.

17. In the event that any of the terms, conditions, covenants or agreements contained in this
License Agreement, or the application of any thereof, shall be held by a court of competent
jurisdiction to be invalid, illegal or unenforceable, such term, condition, covenant or agreement
shall be deemed void ab initio and shall be deemed severed from this License Agreement.
In such event, and except if such determination by a court of competent jurisdiction materially
changes the rights, benefits and obligations of the parties under this License Agreement, the
remaining provisions of this License Agreement shall remain unchanged unaffected and unimpaired
thereby and, to the extent possible, such remaining provisions shall be construed such that the
purpose of this License Agreement and the intent of the parties can be achieved in a lawful
manner.

18. The duties and obligations herein contained shall bind, and the benefits and advantages shall
inure to, the respective successors and permitted assigns of the parties hereto.

19. The waiver by any party hereto of the breach of any term, covenant, agreement or condition
herein contained shall not be deemed a waiver of any subsequent breach of the same or any other
term, covenant, agreement or condition herein, nor shall any custom, practice or course of
dealings arising among the parties hereto in the administration hereof be construed as a waiver
or diminution of the right of any party hereto to insist upon the
strict performance by any other party of the terms, covenants, agreement and conditions herein
contained.

4

 

\

20. In this License Agreement, where applicable, (i) references to the singular shall
include the plural and references to the plural shall include the singular, and (ii) references to
the male, female, or neuter gender shall include references to all other such genders where the
context so requires.

IN WITNESS WHEREOF, the parties hereto have executed this License Agreement, the Effective
Date of which is indicated on page 1 of this License Agreement.

	 	 	 	 	 
	OWNER:

	 	ICM:
	 	/s/ David Vander Griend
	 
	 	 	 	 
	 	 	ICM, Inc.
	 
	 	 	 	 
	By: /s/ William D. Couser

	 	By:
	 	David Vander Griend
	 
	 	 	 	 
	Title: President

	 	Title:
	 	CEO
	 
	 	 	 	 
	Date Signed: 2/17/05	 	Date Signed:     2/26/05
	 
	 	 	 	 
	Address for giving notices:	 	Address for giving notices:
	 
	 	 	 	 
	 	 	301 N First Street
	 	 	Colwich, KS 67030

5

 

Design Build Contract

Lincolnway Energy, LLC

December 8, 2004

EXHIBIT “E”

START-UP SERVICES TO BE PROVIDED TO OWNER

     Start-up services will be provided to Owner as follows: Electrical and instrumentation
checkout, and approximately two (2) weeks of on-site training at the US Energy Partners Plant
(USEP) in Russell, Kansas, or other location, such to be provided for project Owner employees,
including operators, laboratory personnel, general, plant and maintenance managers. (Other
personnel of the project Owner can be provided such on-site training by separate agreement and
as time is available.) All trainer and costs associated with the trainer, including labor and
all training materials will be provided to Owner without cost. The Owner will be responsible
for all travel and related expenses of its employees and the project Owner will pay all wages
for its personnel during the training and will cover all other expenses related to the on-site
training. Said training services will include training on computers, lab procedures, field
operating procedures, and overall plant section performance expectations. Two persons shall be
provided to lead the Owner during the initialization and start-up of the plant. The Owner will
provide all other personnel and pay all other costs related to start-up of the plant. Personnel
will be maintained on-site by Design-Builder or a subcontractor until all performance testing
is complete and accepted by the Owner, unless the Owner fails to execute or allow performance
testing within 30 days after receiving a written request from Design-Builder or its
subcontractor to begin performance testing or the work on the project work is substantially
stopped for any reason for a period of 30 days or more. Design-Builder or its subcontractor
will provide an additional one month on-site support after Substantial Completion start-up of
the plant and from date of Substantial Completion start-up will provide six (6) months of off
site technical and operating procedure support by telephone, computer modem, the Internet and email.

     Design-Builder shall deliver to Owner all manuals, instructions or other written materials
that it receives from equipment manufacturers and suppliers/vendors of equipment.exv10w2

 

Exhibit 10.2

MLA No. RI0218

MASTER LOAN AGREEMENT

     THIS MASTER LOAN AGREEMENT is entered into as of March 24, 2005, between FARM
CREDIT. SERVICES OF AMERICA, FLCA (“Farm Credit”) and LINCOLNWAY ENERGY,
LLC, Nevada, Iowa (the “Company”).

BACKGROUND

          From time to time Farm Credit may make loans to the Company. In order to reduce
the amount of paperwork associated therewith, Farm Credit and the Company would like
to enter into a master loan agreement. For that reason, and in
consideration of Farm Credit making one or more loans to the Company, Farm Credit and
the Company agree as follows:

     SECTION 1. Supplements. In the event the Company desires to borrow from Farm
Credit and Farm Credit is willing to lend to the Company, or in the event Farm Credit
and the Company desire to consolidate any existing loans hereunder, the parties will
enter into a Supplement to this agreement (a “Supplement”). Each Supplement will set
forth the amount of the loan, the purpose of the loan, the interest rate or rate
options applicable to that loan, the repayment teens of the loan, and any other
terms and conditions applicable to that particular loan. Each
loan will be governed by the terms and conditions contained in this agreement
and in the Supplement relating to the loan.

     SECTION 2. Sale of Participation. Interests and Appointment of
Administrative Agent. The Company acknowledges that concurrent with the execution of
this Master Loan Agreement and related Supplements, Farm Credit is selling a
participation interest in this Master Loan Agreement and Supplements executed
concurrently herewith to CoBank, ACB (“CoBank”) (a 100% interest). Pursuant to an
Administrative Agency Agreement dated March 24, 2005, (“Agency Agreement”), Farm Credit
and CoBank appointed CoBank to act as Administrative Agent ("Agent”) to act
in place of Farm Credit hereunder and under the Supplements and any security documents
to be executed thereunder. All funds to be advanced hereunder shall be made by Agent,
all repayments by the Company hereunder shall be made to Agent, and all notices to be
made to Farm Credit hereunder shall be made to Agent. Agent shall be solely responsible
for the administration of this agreement, the Supplements and the security documents to
be executed by the Company thereunder and the enforcement of all rights and remedies of
Farm Credit hereunder and thereunder. Company acknowledges the appointment of the
Agent and consents to such appointment.

     SECTION 3. Availability. Loans will be made available on any day on which Agent
and the Federal Reserve Banks are open for business upon the telephonic or written
request of the Company. Requests for loans must be .received no later than
12:00 Noon Company’s local time on the date the loan is desired. Loans will be made
available by wire transfer of immediately available funds to such account or
accounts as. may be authorized by the Company. The Company shall furnish to
Agent a duly completed and executed copy of a Delegation and Wire and Electronic
Transfer Authorization Form of the Agent, and Agent shall be entitled to rely on
(and, shall incur no liability to the Company in acting on) any
request or direction furnished in accordance with the terms thereof.

     SECTION 4. Repayment. The Company’s obligation, to repay each loan
shall be evidenced by the promissory note set forth in the Supplement relating to that
loan or by such replacement note as Agent shall require. Agent shall maintain a record
of all loans, the interest accrued thereon, and all payments made with respect thereto,
and such record shall, absent proof of manifest error, be conclusive evidence

 

 

			
	Master Loan Agreement R10218

Lincolnway Energy, LLC

Nevada, Iowa
	 	-2-

of the outstanding principal and interest on the loans. All payments shall be made by wire
transfer of immediately available funds, by check, or by automated clearing house or other
similar cash handling processes as specified by separate agreement between the Company and Agent,
Wire transfers shall be made to ABA No. 307088754 for advice to
and credit of Agent (or to such other account as Agent may direct by notice). The Company shall give Agent telephonic notice no
later than 12:00 Noon Company’s local time of its intent to pay by wire and funds received after
3:00 p.m. Company’s local time shall be credited on the next business day. Checks shall be mailed
to CoBank, ACB, Department 167, Denver, Colorado 80291-0167 (or to such other place as Agent may
direct by notice). Credit for payment by check will not be given until the later of: (a) the day
on which Agent receives immediately available funds; or (b) the next business day after receipt
of the check.

     SECTION 5. Capitalization. The Company agrees to purchase voting (Class D) or.
non-voting (Class E) stock in Farm Credit Services of America, ACA (currently a minimum of
$1,000.00 worth of stock consisting of at least 200 shares of $5.00 par value stock) as required
under the policy of Farm Credit at the time of acquisition. Farm Credit policy may change from
time to time. Farm Credit shall have a, first lien on the stock for payment of any
liability of the Company to Farm Credit. Said stock shall be owned as follow

	 	 	 
	Owner Name: Lincolnway Energy, LLC
	 	SSN/TIN: 20-1118105

The Company authorizes and appoints the following to act on behalf .of all owners, to
vote the Class D stock, and to accept, receive and receipt for any dividends declared on the
stock.

Bill Couser, Board President, Voter

     SECTION 6. Security. The Company’s obligations under this agreement, all Supplements
(whenever executed), and all instruments and documents contemplated hereby or thereby, shall be
secured by a statutory first lien on all equity which the. Company may now own or
hereafter acquire in Farm Credit. In addition, the Company agrees to grant to Farm Credit, by
means of such instruments and documents as Agent shall reasonably require; a first lien (subject
only to exceptions approved in writing by Agent) on all personal property of the Company, and on
all real property of the Company, whether now existing or hereafter acquired. As additional
security for those obligations: (i) the Company agrees to grant to Farm Credit, by means of such
instruments and documents as Agent shall. reasonably require, a first priority lien on such of its
other assets, whether now existing or hereafter acquired, as Agent may from time to time require;
and (ii) the Company agrees to grant to Farm Credit, by means of such instruments and.
documents as Agent shall require, a first priority lien on all realty which the Company may from
time to time acquire after the date hereof. Farm Credit may at its discretion assign
collateral to the Agent under the Agency Agreement.

     SECTION .7. Conditions Precedent.

          (A) Conditions to Initial Supplement. Farm Credit’s obligation .to extend credit
under the initial Supplement hereto is subject to the conditions precedent that Agent receive,
in form and substance satisfactory to Agent, each of the following:

                    (i) This Agreement, Etc. A duly executed copy of this Agreement and all instruments and
documents contemplated hereby.

 

 

			
	Master Loan Agreement R10218 

Lincolnway Energy, LLC

Nevada, Iowa
	 	-3-

          (ii) Security Agreement. A security agreement granting to Farm Credit a first lien
(subject only to exceptions approved in writing by Agent) on all personal property of the
Company, whether now owned or hereafter acquired.

          (iii) Mortgage/Deed of Trust. A mortgage or deed of trust granting to Farm Credit a first
lien (subject only to exceptions approved in writing by Agent) on the Company’s Property (as that
term is defined in the applicable Supplements) located near Nevada, Iowa.

          (iv) Title Opinion for Company Mortgage. A title opinion from the Company’s counsel, in
form and content acceptable to Agent, stating that the Company’s mortgage or deed of trust to
Farm Credit is a first priority lien on the Property encumbered thereby, subject only to
exceptions approved in writing by Agent. The Company agrees to pay the cost of such title opinion
and also agrees that if, for any reason, a final title opinion is not issued by the date that is
ninety (90) days after the date of this Agreement or such later date as may be agreeable to
Agent, then an “Event of Default” shall be deemed to have occurred under this Agreement:

          (v) Opinion of Counsel. An opinion of the Company’s counsel (in form and substance
acceptable to Agent) confirming due authorization and execution of the loan documents.

          (vi) Environmental Audit. A written report of an environmental audit pertaining to the
Property, produced by an independent national or regional environmental consulting firm with
full. service capabilities whose selection has been approved by Agent, and dated not
more than sixty (60) days prior to the submission thereof, which report shall show to Agent’s
satisfaction that all appropriate inquiry was made and that the past or present use or condition
of the Property poses neither material health or safety hazards nor potential financial exposure
that Agent, in. its sole discretion, finds unacceptable, or such other information as
is acceptable to Agent in its sole discretion.

          (vii) Insurance. Certificates from the insurance carrier for the general contractor or
contractors (and if the Company is not adequately insured therein, from the Company’s insurance
carrier) evidencing workers’ compensation and liability insurance (including contractual
liability) carried during the course of construction, with liability limits for death of or
injury to persons and for damages to property in amounts acceptable to Agent or such other limits
if any are established under the construction contract(s). Without limiting the provision in
Section 9(D) herein or the foregoing, the Company agrees to obtain Builder’s Risk casualty
insurance covering fire and other casualty with extended coverage including vandalism and
malicious mischief.

          (viii) Evidence of Capital. Such evidence as Agent may require that the Company has obtained
equity capital, or acceptable binding commitments thereof, in an amount no less than $38,300,000.00
with terms and conditions acceptable to Agent.

          (ix) Appraisal. An appraisal of the Property by a licensed, independent appraiser
satisfactory to Agent, such appraisal to include a value for the proposed ethanol facility to be
located on the Company’s real property located near Nevada, Iowa.

 

 

			
	Master Loan Agreement R10218 

Lincolnway Energy, LLC

Nevada, Iowa
	 	-4-

          (x) Survey. An ALTA quality survey of the Property by a licensed surveyor satisfactory to
Agent verifying no encroachments by any Improvements on the Property (as that term is defined in
the applicable Supplements) onto adjoining property, or such other information as may be
required by Agent.

          (xi) Flood Insurance. A flood zone determination on all real property security and
evidence of flood insurance if such determination requires flood insurance.

          (xii) Process/Yield Guarantee. Acceptable Process/Yield Guarantee from the design engineer
and contractor, acceptable to Agent, as well as a minimum one-year warranty on all work
performed.

          (xii) Engineering and Construction Contracts. Copies of all engineering and construction
contracts with warranty provisions acceptable to Agent.

          (xiv) Utilities. A certificate from the Company’s engineer, or a report from Agent’s
inspecting engineer satisfactory to Agent, as to the .availability of water supply,
electricity, natural gas, and other utilities, and for the disposal of wastewater, all in
locations and capacities sufficient to meet the reasonable requirements of the Property and the
Improvements and otherwise satisfactory to Agent.

          (xiv) Project Budget and Schedule, Contracts and Plans. Project budget, schedule, contracts
and plans as follows: (i) a budget setting forth the total estimated direct costs for construction
(including real property acquisition, site preparation, railroad siding, sales taxes related to
construction, and contingencies) not to exceed an aggregate total of $81,000,000.00 for the
Improvements, and indirect costs, (including capital interest, costs to organize and obtain
financing, and for preproduction expenses, but excluding working capital) not to exceed an
aggregate total of $3,300,000.00, including line item cost breakdowns for all direct costs by
trade, job, and subcontractor, and a schedule of all sources of funds to pay such costs (the
“Project Budget”); (ii) schedule setting forth, by trade, job, and subcontractor, the estimated
dates of commencement and completion of construction of the Improvements (the “Project Schedule”);
(iii) a schedule of the amounts and times of advances anticipated to be requisitioned by the
Company from time to time during the term of construction of the Improvements (the “Disbursement
Schedule”); (iv) a list of all subcontractors and materialmen who have been, or, to the extent then
determined by the Company, will be supplying labor, materials or goods for the Improvements; (v)
two sets of the Plans with a. certification from the Company and from the Company’s architect or
engineer, or with other evidence satisfactory to Agent as to the following matters: (a) that the
Improvements can be completed. by May 31, 2006, (the “Completion Date”); (b) that the
Project Budget, Project Schedule, Disbursement Schedule and the Plans satisfactorily provide
.for the construction of the Improvements; and (c) that the Improvements upon
completion will comply with all Laws (as defined in Section 9(B) hereof), including, without
limitation, all Laws relating to the environment, and all approvals, consents, permits and licenses
required under such Laws (the “Project Approvals”) which have been obtained or are to be obtained
by the Company relating in any way to the acquisition, construction or the contemplated operation
of the Improvements (including, without limitation, those relating to zoning, building, use and
occupancy, fire prevention and health); and (vi) a list of the Project Approvals indicating those
Project Approvals obtained and to be obtained (and a schedule for obtaining such Project
Approvals).

 

 

			
	Master Loan Agreement RI0218 

Lincolnway Energy, LLC 

Nevada, Iowa
	 	-5-

          (xvi) Escrow Agreement. An escrow agreement for distribution of loan funds acceptable to
Agent specifically providing for a Title/Abstract Company to distribute all funds. Costs of
said agreement are to be paid by the Company.

          (xvii) Coal Procurement. Plans acceptable to Agent for the purchase of coal and delivery
of same to the facility site, and for the disposal of fly ash.

     (B) Conditions to Each Supplement. Farm Credit’s obligation to extend credit under each
Supplement, including the initial Supplement, is subject to the conditions precedent that Agent
receive, in form and content satisfactory to Agent, each of the following:

          (i) Supplement. A duly executed copy of the Supplement and all instruments and documents
contemplated thereby.

          (ii) Evidence of Authority. Such certified board resolutions, evidence of incumbency, and
other evidence that Agent may require that. the Supplement, all instruments and
documents executed in connection therewith, and, in the case .of initial Supplement
hereto, this agreement and all instruments and documents executed in connection herewith, have
been duly authorized and executed.

          (iii) Fees and Other Charges. All fees and other charges provided for herein or in the
Supplement.

          (iv) Evidence of Perfection, Etc. Such evidence as Agent may require that Farm Credit
has a duly perfected first priority lien on all security for the Company’s obligations, and
that the. Company is in compliance with Section 9(D).hereof.

     (C) Conditions to Each Loan. Farm Credit’s obligation under each Supplement to make any
loan to the Company thereunder is subject to the condition that no “Event of Default” (as
defined in Section 12 hereof) or event which with .the giving of notice and/or the
passage of time would become an Event of Default hereunder (a “Potential Default”), shall have
occurred and be continuing.

   SECTION 8. Representations and Warranties.

     (A) This Agreement. The Company represents and warrants to Farm Credit and Agent that as
of the date of this Agreement:

          (i) Compliance. The Company and, to the extent contemplated hereunder, each “Subsidiary”
(as defined below), is in compliance with all of the terms of this agreement, and no Event of
Default or Potential Default exists hereunder.

          (ii)
Subsidiaries. The Company has no “Subsidiary(ies)” (as defined below).
For purposes hereof, a “Subsidiary” shall mean a corporation of which shares of stock having
ordinary voting power to elect a majority of the board of directors or other managers
of such corporation are owned, directly or indirectly, by the ‘Company.

     (B) Each Supplement. The execution by the Company of each Supplement hereto shall
constitute a representation and warranty to Agent that:

 

 

			
	Master Loan Agreement R10218

Lincolnway Energy, LLC

Nevada, Iowa
	 	-6-

          (i) Applications. Each representation and warranty and all information set forth in
any application or other documents submitted in connection with, or to induce Farm
Credit to enter into, such Supplement, is correct in all material respects as of the date
of the Supplement.

          (ii) Conflicting Agreements, Etc: This agreement, the Supplements, and all security
and other instruments and documents relating hereto and thereto (collectively, at any time, the
“Loan Documents”), do not conflict with, or require the consent of any party to, any other
agreement to which the Company is a party or by which it or its property may be bound or
affected, and do not conflict with any provision of the Company’s operating agreement and
articles of organization.

          (iii) Compliance. The Company and, to the extent contemplated hereunder, each
Subsidiary, is in compliance with all of the terms of the Loan Documents (including,
without limitation, Section 9(A) of this agreement on eligibility to borrow from Farm Credit).

          (iv) Binding Agreement. The Loan Documents create legal, valid, and binding
obligations of the Company which are enforceable in accordance with their terms, except to the
extent that enforcement may be limited by applicable bankruptcy, insolvency, or similar laws
affecting creditors’ rights generally.

   SECTION 9. Affirmative Covenants. Unless otherwise agreed to in writing by Agent
while this agreement is in effect, the Company agrees to, and with respect to Subsections 9(B)
through 9(G) hereof, agrees to cause each Subsidiary to:

     (A) Eligibility. Maintain its status as an entity eligible to borrow from Farm
Credit pursuant to the terms of the Farm Credit Act of 1971, as amended, 12 USC 2001, et seq.

     (B) Company Existence, Licenses, Etc. (i) Preserve and keep in full force and effect
its existence and good standing in the jurisdiction of its formation; (ii) qualify and remain
qualified to transact business in all jurisdictions where such qualification is required; and
(iii) obtain and maintain all licenses, certificates, permits, authorizations, approvals, and the
like which are material to the conduct of its business or required by law, rule, regulation,
ordinance, code, order, and the like (collectively, “Laws”).

     (C) Compliance with Laws. Comply in all material respects with all applicable Laws,
including, without limitation, all Laws relating to environmental protection. In addition, the
Company agrees to cause all persons occupying or present on any of its properties, and to cause
each Subsidiary to cause all persons occupying or present on any of its properties to comply in
all material respects with all environmental protection Laws.

     (D) Insurance: Maintain insurance with insurance companies or associations
reasonably acceptable to Agent in such amounts and covering such risks as are usually carried by
companies engaged in the same or similar business and .similarly situated, and make
such increases in the type or amount of coverage as Agent may reasonably request. All such
policies insuring any collateral for the Company’s obligations to Farm Credit shall have mortgagee
or lender loss payable clauses or endorsements in form and content, acceptable to Agent. At
Agent’s request, all policies (or such other proof of compliance with this Subsection as may be
satisfactory to Agent) shall be delivered to Agent.

 

 

			
	Master Loan Agreement R10218 

Lincolnway Energy, LLC

Nevada, Iowa
	 	-7-

(E)  Property Maintenance. Maintain all of its property that is
necessary to or useful in the proper conduct of its business in good working condition,
ordinary wear and tear excepted.

(F) Books and Records. Keep adequate records and books of account in which
complete entries will be made in accordance with generally accepted accounting
principles (“GAAP”) consistently applied

(G) Inspection. Permit Agent or its agents, upon reasonable notice and during
normal business hours or at such other times as the parties may agree, to examine its
properties, books, and records, and to discuss its affairs, finances, and accounts, with
its respective officers, directors, employees and independent certified public
accountants.

(H) Reports and Notices. Furnish to Agent:

          (i) Annual Financial Statements. As soon as available, but in no event more than
90 days after the end of each fiscal year of the Company occurring during the term hereof,
annual consolidated and consolidating financial statements of the Company and its consolidated
Subsidiaries, if any, prepared in accordance with GAAP consistently applied. Such financial
statements shall: (a) be audited by independent certified public accountants selected by the
Company and acceptable to Agent; be accompanied by a report of such accountants containing an
opinion thereon acceptable to Agent; be prepared in reasonable detail and in comparative forth;
and (d) include a balance sheet, a statement, of income, a statement of retained earnings, a
statement of cash flows, and all notes and schedules relating thereto.

          (ii) Interim Financial Statements. As soon as available, but in no event more than 30 days
after the end of each month, a consolidated balance sheet of the Company and its consolidated
Subsidiaries, if any, as of the end of such month, a. consolidated statement of income
for, the Company and its consolidated Subsidiaries, if any for such period and for the period
year to date, and such other interim statements as Agent may reasonably request, all prepared in
reasonable detail and in comparative form in accordance with GAAP consistently applied and, if
required by written notice from Agent, certified by an authorized officer or employee of the
Company acceptable to Agent.

          (iii) Notice of Default. Promptly after becoming aware thereof, notice of the occurrence
of an-Event ‘of Default or a Potential Default.

          (iv) Notice of Non-Environmental Litigation. Promptly after the commencement thereof,
notice of the commencement of all actions, suits, or proceedings before any court, arbitrator,
or governmental department, commission, board, bureau, agency, or instrumentality
affecting the Company or any Subsidiary which, if determined adversely to the Company or any such
Subsidiary, could have a material adverse effect on the financial condition, properties, profits,
or operations of the Company or any such Subsidiary.

          (v) Notice of Environmental Litigation, Etc. Promptly after receipt thereof, notice of the
receipt of all pleadings, orders, complaints, indictments, or any other communication alleging a
condition that may require the Company or any Subsidiary to undertake or to contribute to a
cleanup or other response under environmental laws, or which seek penalties, damages, injunctive
relief, or criminal

 

 

			
	Master Loan Agreement R10218 

Lincolnway Energy, LLC

Nevada, Iowa
	 	-8-

sanctions related to alleged violations of such Laws, or which claim personal injury or
property damage to any person as a result of environmental factors or conditions.

          (vi) Formation Documents. Promptly after any change in the Company’s operating agreement
or articles of organization (or like documents), copies of all such changes, certified by the
Company’s Secretary.

          (vii) Budgets. As soon as available, but in no event more than 90 days after the end of
any fiscal year of the Company occurring during the term hereof copies of the Company’s
board-approved annual budgets and forecasts of operations and capital expenditures.

          (viii) Compliance Certificate. Together with each set of financial statements furnished to
Agent pursuant to Section 9(H) hereof for a period corresponding to a period for which one or
more of the financial covenants set forth in Section 11 hereof are required to be tested, a
certificate of an officer or employee of the Company acceptable to Agent setting forth
calculations showing compliance with each of the financial covenants that require
compliance at the end of the period for which the statements are being furnished.

          (ix) Other Information. Such other information regarding the condition or operations,
financial or otherwise, of the Company or any Subsidiary as Agent may from time to time
reasonably request, including but not limited to copies of all pleadings, notices, and
communications referred to in Subsections 9(H)(iv) and (v) above.

        (I) Policies/Contracts. Enter into: (i) risk management policies and programs/strategies
acceptable to Agent pertaining to grain procurement and ethanol marketing by no later than
December 1, 2005; and (ii) distillers grain and ethanol marketing plans and retention of
marketing organizations acceptable to Agent experienced in marketing these products by no later
than six months prior to plant start-up; and

        (K) Performance Bonds. Provide performance bonds, in form and content acceptable to Agent,
for construction and related contracts upon request by Agent.

     SECTION 10. Negative Covenants: Unless otherwise agreed to in writing by Agent, while this
agreement is in effect the Company, will not:

        (A) Borrowings. Create, incur, assume, or allow to exist, directly or indirectly, any
indebtedness or liability for borrowed money (including trade or bankers’ acceptances), letters of
credit, or the deferred purchase price of property or services, except for: (i) debt to
Farm Credit; (ii) accounts payable to trade creditors incurred in the ordinary course of business;
(iii) current operating liabilities (other than for borrowed money) incurred in the ordinary
course of business; (iv) unsecured debt of the Company to Fagen, Inc., in an aggregate amount not
to exceed $3,250,000.00 with terms and conditions satisfactory to Agent, provided that such debt
is subordinate to all indebtedness of the Company to Farm Credit; (v) debt of the
Company to Fagen Inc., in an aggregate amount not to exceed $1,100,000.00, with terms and
conditions satisfactory to Agent, provided that such debt is subordinate to all indebtedness of
the Company to Farm Credit; and (vi) debt of the Company to miscellaneous creditors, in an
aggregate amount not to exceed $1,290,000.00 on terms and conditions satisfactory to Agent,
provided that such debt is subordinate to all indebtedness of the Company to Farm Credit.

 

 

			
	Master Loan Agreement R10218 

Lincolnway Energy, LLC

Nevada, Iowa
	 	-9-

     (B) Liens. Create, incur, assume, or allow to exist any mortgage, deed of trust, pledge,
lien (including the lien of an attachment, judgment, or execution), security interest, or other
encumbrance of any kind upon any of its property, real or personal (collectively, “Liens”). The
foregoing restrictions shall not apply to: (i) Liens in favor of Farm Credit; (ii) Liens for
taxes, assessments, or governmental charges that are not past due; (iii) Liens and deposits
under workers’ compensation, unemployment insurance, and social security Laws; (iv) Liens and
deposits to secure the performance of bids, tenders, contracts (other than contracts for the
payment of money), and like obligations arising in the ordinary course of business, as
conducted on the date hereof; (v) Liens imposed by Law in favor of mechanics, materialmen,
warehousemen, and like persons that secure obligations that are not past due; (vi) easements,
rights-of-way, restrictions, and other similar encumbrances which, in the aggregate, do not
materially interfere with the occupation, use, and enjoyment of the property or assets
encumbered thereby in the normal course of its business or materially impair the value of the
property subject thereto; (vii) subordinate Liens in favor of Fagen, Inc., to secure
indebtedness permitted hereunder; and (viii) subordinate Liens in favor of miscellaneous
creditors to secure indebtedness permitted hereunder.

     (C) Mergers, Acquisitions, Etc. Merge or consolidate with any other entity or acquire all or
a material part of the assets of any person or entity, or form or create any new Subsidiary or
affiliate, or commence operations under any other name, organization, or entity, including any
joint venture.

     (D) Transfer of Assets. Sell, transfer, lease, or otherwise dispose of any of its assets,
except in the ordinary course of business.

     (E) Loans. Lend or advance money, credit, or property to any person or entity, except for
trade credit extended in the ordinary course of business.

     (F) Contingent Liabilities. Assume, guarantee, become liable as a surety, endorse,
contingently agree to purchase, or otherwise be or become liable, directly or indirectly
(including, but not limited to, by means of a maintenance agreement, an asset or stock purchase
agreement, or any other agreement designed to ensure any creditor against loss), for or on
account of the obligation of any person or entity, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary course of the
Company’s business.

     (G) Change in Business. Engage in any business activities or operations
substantially .different from or unrelated to the Company’s planned business activities
or operations as stated in its Operating Agreement.

     (H) Capital Expenditures. Beginning with fiscal year ending 2007, expend, in the aggregate,
during any fiscal year more than $600,000.00 for the acquisition of fixed or capital
assets (including all obligations under capitalized leases authorized under the terms of this
agreement, but excluding obligations under operating leases).

     (I) Leases. Create, incur, assume, or permit to exist any obligation as lessee under operating
leases or leases which should be capitalized in accordance with GAAP for the rental or hire of any
real or personal property, except leases which do not in the aggregate require the Company to make
scheduled payments to the lessors in any fiscal year of the Company in excess of $100,000.00.

 

 

			
	Master Loan Agreement R10218 

Lincolnway Energy, LLC 

Nevada, Iowa
	 	-10-

          (J) Changes to Operating Agreements. Amend or otherwise make any material changes to the
Company’s Articles of Organization, Operating Agreement, and ethanol and distillers grain
marketing contracts.

          (K) Dividends, Etc. Declare or pay any dividends, or make any distribution of assets to the
member/owners, or purchase, redeem, retire or otherwise acquire for value any of its equity, or
allocate or otherwise set apart any sum for any of the foregoing, except that for each fiscal
year commencing with the fiscal year ending 2006, a distribution may be made to the Company’s
members/owners of up to 40% of the net profit (according to GAAP) for such fiscal year after
receipt of the audited financial statements for the pertinent fiscal year, provided that the
Company has been and will remain in compliance with all loan covenants, terms and conditions.
Furthermore, with respect to fiscal year ending 2006 and each subsequent fiscal year, a
distribution may be made to its members/owners in excess of 40% of the net profit for such fiscal
year if the Company has made the required “Free Cash Flow” payment to Agent for such fiscal
year as provided in Construction and Term Loan Supplement dated Match 24, 2005, and
numbered R10218TO1 and any renewals, restatements and amendments thereof, and will remain in
compliance with all other loan covenant, terms and conditions.

     SECTION 11. Financial Covenants. Unless otherwise agreed to in writing, while this
agreement is in effect:

          (A) Working Capital. The Company will have at the end of each period for which financial
statements are required to be furnished pursuant to Section 9(H) hereof, an excess of current
assets over current liabilities (both as determined in accordance with GAAP consistently
applied) of not less than: (i) $4,500,000.00 at the earlier of plant start-up, upon
certification of a successful “performance test,” or by May 31, 2006; and (ii) in any event,
increasing to $5,000,000.00 at fiscal year ending 2007, and thereafter, except that in
determining current assets, any amount available under the Revolving Term Loan Supplement hereto
(less the amount that would be considered a current liability under GAAP if fully advanced) may
be included.

          (B) Net Worth. The Company will have at the end of each period for which financial
statements are required to be furnished under Section 9(H) hereof an excess of total assets over
total liabilities (both as determined in accordance .with GAAP consistently applied)
of not less than: (i) $36,000,000.00; (ii) increasing to $39,500,000.00 at fiscal year ending
2006; and (iii) increasing to $42,000,000.00 at fiscal year ending 2007 and
thereafter.

          (C) Debt
Service Coverage Ratio. The Company will have at the end of each fiscal
year of the Company, effective with the fiscal year ending 2007, a “Debt Service
Coverage Ratio” (as defined. below) for that year of not less than 1.25 to 1.00. For
purposes hereof, the term “Debt Service Coverage Ratio”
shall mean the following (all
as calculated for the most current year-end in accordance with GAAP consistently applied): (i)
net income (after taxes), plus depreciation and amortization; divided by (ii) all current portion
of long term debt for the prior period (previous year-end).

     SECTION 12. Events of Default. Each of the following shall constitute an “Event of
Default” under this agreement:

          (A) Payment Default. The Company should fail to make any payment to Agent, or purchase
any equity in Farm Credit, when due.

 

 

			
	Master Loan Agreement RI0218 

Lincolnway Energy, LLC 

Nevada, Iowa
	 	-11-

          (B) Representations and Warranties. Any representation or warranty made or deemed made by the
Company herein or in any Supplement, application, agreement, certificate, or other document related
to or furnished in connection with this agreement or any Supplement, shall prove to have been false
or misleading in any material respect on or as of the date made or deemed made.

          (C) Certain Affirmative Covenants. The Company or, to the extent required hereunder, any
Subsidiary should fail to perform or comply with Sections 9(A) through 9(H)(ii), 9(H)(vi) through
9(H)(viii) or any reporting covenant set forth in any Supplement hereto, and such failure continues
for 15 days after written notice thereof shall have been delivered by Agent to the Company.

          (D) Other Covenants and Agreements. The Company or, to the extent required hereunder, any
Subsidiary should fail to perform or comply with any other covenant or agreement contained herein
or in any other Loan Document or shall use the proceeds of any loan for an unauthorized purpose.

          (E) Cross-Default. The Company should, after any applicable grace period, breach or be in
default under the terms of any other agreement between the Company and Farm Credit.

          (F) Other Indebtedness. The Company or any Subsidiary should fail to pay when due any
indebtedness to any other person or entity for borrowed money or any long-term obligation for the
deferred purchase price of property (including, any capitalized lease), or any other event occurs
which, under any agreement or instrument relating to such indebtedness or obligation, has the
effect of accelerating or permitting the acceleration of such indebtedness or obligation, whether
or not such indebtedness or obligation is actually accelerated or the right to accelerate is
conditioned on the giving of notice, the passage of time, or otherwise.

          (G) Judgments. A judgment, decree, or order for the payment of money shall be rendered
against the Company or any Subsidiary and either; (i) enforcement proceedings shall have been
commenced, or (ii) a Lien prohibited under Section 10(B) hereof shall have been obtained, or (iii)
such judgment, decree, order, or Lien shall continue unsatisfied and in effect for a period of 20
consecutive days without being vacated, discharged, satisfied, or stayed pending appeal.

          (B) .Insolvency; Etc. The Company or any Subsidiary shall: (i) become insolvent or
shall generally not, or shall be unable. to, or shall admit in writing its inability
to, pay its debts as they come due; or (ii) suspend its business operations or a material part
thereof or make an assignment for the benefit of creditors; or (iii) apply for, consent
to, or acquiesce in the appointment of a trustee, receiver, or other custodian for it or any of
its property or, in the absence of such application, consent, or acquiescence, a trustee,
receiver, or other custodian is so appointed; or (iv) commence or have commenced against it any
proceeding” under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution,
or liquidation Law of any jurisdiction.

          (I) Material Adverse Change. Any material adverse change occurs, as reasonably determined
by Agent, in the Company’s financial condition, results of operation, or ability to perform its
obligations hereunder or under any instrument or document contemplated hereby.

     SECTION 13. Remedies. Upon the occurrence and during the continuance of an Event of Default
or any Potential Default, Farm Credit shall have no obligation to continue to extend credit to
the

 

 

			
	Master Loan Agreement RI0218 

Lincolnway Energy, LLC 

Nevada, Iowa
	 	-12-

Company and may discontinue doing so at any time without prior notice. For all purposes
hereof, the term “Potential Default” means the occurrence of any event which, with
the passage of time or the giving of notice or both would become an Event of Default. In
addition, upon the occurrence and during the continuance of any Event of Default, Farm Credit
or Agent may, upon notice to the Company, terminate any commitment and declare the entire
unpaid principal balance of the loans, all accrued interest thereon, and all other amounts
payable under this agreement, all Supplements, and the other Loan Documents to be immediately
due and payable. Upon such a declaration, the unpaid principal balance of the loans and all
such other amounts shall become immediately due and payable, without protest, presentment,
demand, or further notice of any kind, all of which are hereby expressly waived by the
Company. In addition, upon such an acceleration:

          (A) Enforcement. Farm Credit or Agent may proceed to protect, exercise, and enforce such
rights and remedies as may be provided by this agreement, any other Loan Document or under
Law. Each and every one of such rights and remedies shall be cumulative and may be exercised
from time to time, and no failure on the part of Farm Credit or Agent to exercise, and no
delay in exercising, any right or remedy shall operate as a waiver thereof, and no single or
partial exercise of any right or remedy shall preclude any other or future exercise thereof,
or the exercise of any other right. Without limiting the foregoing, Agent may hold and/or set
off and apply against the Company’s obligations to Farm Credit cash collateral held by
Farm Credit or Agent; or any balances held by Farm Credit or Agent for the
Company’s account (whether or not such balances are then due).

               (8) Application of Funds. Agent may apply all payments received by it to the Company’s
obligations to Farm Credit in such order and manner as Agent may elect in its sole
discretion.

In addition to the rights and remedies set forth above: (i) if the. Company fails
to purchase any equity in Farm Credit when required or fails to make any payment to Agent when
due, then at Agent’s option in each instance, such payment shall bear.
interest from the date due to the date paid at 4% per annum in excess of the rate(s) of
interest that would otherwise be in effect on that loan; and (ii) after the maturity of any
loan (whether as a result of acceleration or otherwise), the unpaid principal balance of such
loan (including without limitation, principal, interest, fees and expenses) shall,
automatically bear interest at 4% per annum in excess of the rate(s) of interest that would
otherwise be in effect on that loan. All interest provided for herein shall be payable on
demand and shall be calculated on the basis of a year consisting of 360 days.

     SECTION 14. Broken Funding Surcharge. Notwithstanding any provision contained in any
Supplement giving the Company the right to repay any loan prior to the date it would otherwise
be due and payable, the Company agrees that in the event it repays any fixed rate balance prior
to its scheduled due date or prior to the last day of the fixed rate period applicable thereto
(whether such payment is made voluntarily, as a result of an acceleration, or otherwise), the
Company will pay to Agent a surcharge in an amount equal to the .greater of: (i) an
amount that would result in Farm Credit, Agent, and all subparticipants being made whole (on a
present value basis) for the actual or imputed funding losses incurred by Farm Credit, Agent,
and all subparticipants as a result thereof; or (ii) $300.00. Notwithstanding the foregoing, in
the event any fixed rate balance is repaid as a .result of the Company refinancing
the loan with another lender or by other means, then in lieu of the foregoing, the Company
shall pay to Agent a surcharge in an amount sufficient (on a present value basis) to enable
Farm Credit, Agent, and all subparticipants to maintain the yield they would have earned during
the fixed rate period on the amount repaid. Such surcharges will be calculated in accordance
with methodology established by

 

 

			
	Master Loan Agreement R10218 

Lincolnway Energy, LLC

Nevada, Iowa
	 	-13-

Farm Credit, Agent, and all subparticipants (copies of which will be made available to the
Company upon request).

     SECTION 15. Complete Agreement, Amendments. This agreement, all Supplements, and all
other instruments and documents contemplated hereby and thereby, are intended by the
parties to be a complete and final expression of their agreement. No amendment or modification
of this Agreement shall be effective unless in writing signed by both parties hereto. No
waiver of any provision hereof, and no consent to any departure by either party herefrom, shall
be effective unless approved in writing by the other party, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given.
In the event this agreement is amended or restated, each such amendment or restatement shall be
applicable to all Supplements hereto.

     SECTION 16. Other Types of Credit. From time to time, Farm Credit may extend other types
of credit to or for the account of the Company to expedite or facilitate the loans extended
hereunder. In the event the parties desire to do so under the terms of this agreement, such
extensions of credit may be set forth in any Supplement hereto and this agreement shall be
applicable thereto.

     SECTION 17. Applicable Law. Except to the extent governed by applicable federal law, this
agreement and each Supplement shall be governed by and construed in accordance with the laws of
the State of Colorado, without reference to choice of law doctrine.

     SECTION 18. Notices. All notices hereunder shall .be in
writing and shall be deemed to be duly given upon delivery if personally delivered or sent by
telegram or facsimile transmission, or three days after mailing if sent by express, certified or
registered mail, to the parties at the following addresses (or such other address for a
party as shall be specified by like notice):

	 	 	 
	If to Agent, as follows:

	 	If to the Company, as follows:
	 
	 	 
	For general correspondence purposes:

	 	Lincolnway Energy, LLC
	CoBank, ACB

	 	975 West Lincoln Highway, Suite B
	P.O. Box 5110

	 	Nevada, Iowa 50201
	Denver, Colorado 80217-5110
	 	 
	 
	 	 
	For direct delivery purposes, when. desired:
	 	 
	CoBank, ACB.
	 	 
	5500 South Quebec Street
	 	 
	Greenwood Village, Colorado 80111-1914

	 	Attention: Project Coordinator / Manager
	 

	 	Fax No.: (515) 382-2417
	 
	 	 
	Attention: Credit Information Services 
	 	 
	Fax No.: (303) 224-6101
	 	 

     SECTION 19. Taxes and Expenses. To the extent allowed by law, the Company agrees to pay all
reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained or
employed by Agent, including expenses of in-house counsel of Agent) incurred by Agent and any
participants from Farm Credit in connection with the administration, collection, and enforcement of
this agreement and the other Loan Documents, including, without limitation, all costs and expenses
incurred

 

 

			
	Master Loan Agreement R10218 

Lincolnway Energy, LLC

Nevada, Iowa
	 	-14-

in perfecting, maintaining, determining the priority of, and releasing any security for the
Company’s obligations to Farm Credit, and any stamp, intangible, transfer, or like tax payable
in connection with this agreement or any other Loan Document.

     SECTION 20. Effectiveness and Severability. This agreement shall continue in effect
until: (i) all indebtedness and obligations of the Company under this agreement, all Supplements,
and all other Loan Documents shall have been paid or satisfied; (ii) Agent has no commitment to
extend credit to or for the account of the Company under any Supplement; and (iii) either party
sends written notice to the other terminating this agreement. Any provision of this agreement or
any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or enforceability without
invalidating the remaining provisions hereof or thereof.

     SECTION 21. Successors and Assigns. This agreement, each Supplement, and the other Loan
Documents shall be binding upon and inure to the benefit of the Company and Farm Credit and
their respective successors and assigns, except that the Company may not assign or transfer its
rights or obligations under this agreement, any Supplement or any other Loan Document without
the prior written consent of Agent.

     SECTION 22. Participations, Etc. From time to time, Farm Credit may sell to one or more
banks, financial institutions or other lenders a participation in one or more of the
loans or other extensions of credit made pursuant to this agreement. However, no such
participation shall relieve Farm Credit of any commitment made to the Company under any
Supplement hereto. In connection with the foregoing, Farm Credit may disclose information
concerning the Company and its Subsidiaries to any participant or prospective participant,
provided that such participant or prospective participant agrees to keep such information
confidential. Farm Credit agrees that all Loans that are made by Farm Credit and that are
retained for its own account or repurchased may be entitled to patronage distributions in
accordance with the bylaws of Farm Credit and its practices and procedures related to patronage
distribution. Accordingly, all Loans that are included in a sale of participation interest and
not retained or repurchased shall not be entitled to patronage distributions from Farm Credit. A
sale of participation interest may include certain voting rights of the participants regarding
the loans hereunder (including without limitation the administration, servicing and enforcement
thereof). Farm Credit agrees to give written notification to the Company of any sale of
participation interests.

     SECTION 23. Administrative Fee. The Company agrees to pay to Agent on November 1, 2005,
and on each November 1 thereafter, for as long as the Company has commitments from Farm Credit,
an administrative fee in the amount of $25,000.00.

     SECTION 24. Counterparts. This Agreement may be executed in any number of counterparts and
by different parties to this Agreement .in separate counterparts, each of which, when
so executed, shall be deemed to be an original and all of which taken together shall constitute
one and the same Agreement.

 

 

			
	Master Loan Agreement R10218

Lincolnway Energy, LLC

Nevada, Iowa
	 	-15-

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FARM CREDIT SERVICES OF	 	LINCOLNWAY ENERGY, LLC
	AMERICA, FLCA	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By: /s/ Jeremy
Wilhelm

	 	 
	 	By:
/s/ William
D. Couser
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Title: VP

	 	 	 	Title: President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}]]