Document:

Exhibit
10.2

PHASE I AND PHASE II

ENGINEERING SERVICES AGREEMENT

BETWEEN

MILLENNIUM ETHANOL, LLC

AND

FAGEN ENGINEERING, LLC

December 1, 2005

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 2

  	
   

  	
  Definitions;
  Rules of Interpretation

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Rules of Construction

  	
   

  	
  1

  	
   

  
	
  1.2

  	
   

  	
  Defined Terms

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 2

  	
   

  	
  Retention of Agent

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Retention of Services

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 3

  	
   

  	
  Engineer Responsibilities

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Services

  	
   

  	
  4

  	
   

  
	
  3.2

  	
   

  	
  Phase I Design Package

  	
   

  	
  4

  	
   

  
	
  3.3

  	
   

  	
  Delivery of Phase I
  Design Package

  	
   

  	
  4

  	
   

  
	
  3.4

  	
   

  	
  The Phase II Design
  Package

  	
   

  	
  4

  	
   

  
	
  3.5

  	
   

  	
  Delivery of Phase II
  Design Package

  	
   

  	
  5

  	
   

  
	
  3.6

  	
   

  	
  Delays

  	
   

  	
  5

  	
   

  
	
  3.7

  	
   

  	
  Utility Routing and
  Design Services Limited

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 4

  	
   

  	
  Client Responsibilities

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Client’s Representative

  	
   

  	
  5

  	
   

  
	
  4.2

  	
   

  	
  Client’s Requirements

  	
   

  	
  6

  	
   

  
	
  4.3

  	
   

  	
  Other Information

  	
   

  	
  6

  	
   

  
	
  4.4

  	
   

  	
  Access to Property

  	
   

  	
  6

  	
   

  
	
  4.5

  	
   

  	
  Review of Documents

  	
   

  	
  6

  	
   

  
	
  4.6

  	
   

  	
  Consents, Approvals,
  Licenses, and Permits

  	
   

  	
  6

  	
   

  
	
  4.7

  	
   

  	
  Bids

  	
   

  	
  6

  	
   

  
	
  4.8

  	
   

  	
  Other Services

  	
   

  	
  6

  	
   

  
	
  4.9

  	
   

  	
  Services Outside Scope
  of Engineer’s Services

  	
   

  	
  6

  	
   

  
	
  4.10

  	
   

  	
  Deviation from Design

  	
   

  	
  6

  	
   

  
	
  4.11

  	
   

  	
  Developments Affecting
  Scope or Timing of Services

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 5

  	
   

  	
  Compensation And Payment

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Compensation

  	
   

  	
  7

  	
   

  
	
  5.2

  	
   

  	
  Reimbursement of
  Engineer Expenses

  	
   

  	
  7

  	
   

  
	
  5.3

  	
   

  	
  Reimbursement of
  Subcontractor Expenses

  	
   

  	
  7

  	
   

  
	
  5.4

  	
   

  	
  Fees for Work Outside
  Scope of Services

  	
   

  	
  7

  	
   

  
	
  5.5

  	
   

  	
  Collection of Unpaid
  Amounts

  	
   

  	
  7

  	
   

  
	
  5.6

  	
   

  	
  Reimbursement Schedules
  Subject to Change

  	
   

  	
  7

  	
   

  
	
  5.7

  	
   

  	
  Invoices

  	
   

  	
  8

  	
   

  
	
  5.8

  	
   

  	
  Payment

  	
   

  	
  8

  	
   

  
	
  5.9

  	
   

  	
  Late Payment and
  Interest

  	
   

  	
  8

  	
   

  
	
  5.10

  	
   

  	
  Suspension for Failure
  to Pay

  	
   

  	
  8

  	
   

  

 

Millennium Ethanol, LLC

Phase I and Phase II Engineering Agreement

December 1, 2005

 i
 

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  5.11

  	
   

  	
  Payment

  	
   

  	
  8

  
	
  5.12

  	
   

  	
  Withholding Payments

  	
   

  	
  8

  
	
  5.13

  	
   

  	
  Purchase Orders

  	
   

  	
  8

  
	
  5.14

  	
   

  	
  Changes in Project

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 6

  	
   

  	
  Construction
  Cost And Cost Estimates

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Cost Estimates

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 7

  	
   

  	
  Termination

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Termination Upon Default

  	
   

  	
  9

  
	
  7.2

  	
   

  	
  Termination Upon Abandonment of Plant

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 8

  	
   

  	
  Ownership
  of Work Product

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Work Product

  	
   

  	
  9

  
	
  8.2

  	
   

  	
  Copies Provided to Client

  	
   

  	
  9

  
	
  8.3

  	
   

  	
  Prohibited Use of Work Product

  	
   

  	
  9

  
	
  8.4

  	
   

  	
  Derogation of Engineer’s Rights to Work Product

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 9

  	
   

  	
  Successors
  and Assigns

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Successors

  	
   

  	
  10

  
	
  9.2

  	
   

  	
  Written Consent Required

  	
   

  	
  10

  
	
  9.3

  	
   

  	
  No Third-Party Beneficiaries

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 10

  	
   

  	
  Warranty

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  No Warranty Extended

  	
   

  	
  10

  
	
  10.2

  	
   

  	
  No Responsibility for Construction

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 11

  	
   

  	
  Indemnification

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Engineer’s Indemnification

  	
   

  	
  10

  
	
  11.2

  	
   

  	
  Client’s Indemnification

  	
   

  	
  11

  
	
  11.3

  	
   

  	
  Hazardous Materials Indemnification

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 12

  	
   

  	
  Dispute
  Resolution

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Arbitration

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 13

  	
   

  	
  Confidentiality

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Non-Disclosure Obligation

  	
   

  	
  12

  
	
  13.2

  	
   

  	
  Publicity and Advertising

  	
   

  	
  12

  
	
  13.3

  	
   

  	
  Term of Obligation

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 14

  	
   

  	
  Miscellaneous

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Governing Law

  	
   

  	
  12

  
	
  14.2

  	
   

  	
  Severability

  	
   

  	
  12

  
	
  14.3

  	
   

  	
  No Waiver

  	
   

  	
  13

  
								

 

 ii
 

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.4

  	
   

  	
  Captions and Headings

  	
   

  	
  13

  	
   

  
	
  14.5

  	
   

  	
  Engineer’s Accounting
  Records

  	
   

  	
  13

  	
   

  
	
  14.6

  	
   

  	
  Counterparts

  	
   

  	
  13

  	
   

  
	
  14.7

  	
   

  	
  Survival

  	
   

  	
  13

  	
   

  
	
  14.8

  	
   

  	
  No Privity with
  Client’s Contractors

  	
   

  	
  13

  	
   

  
	
  14.9

  	
   

  	
  Amendments

  	
   

  	
  13

  	
   

  
	
  14.10

  	
   

  	
  Entire Agreement

  	
   

  	
  13

  	
   

  
	
  14.11

  	
   

  	
  Notice

  	
   

  	
  13

  	
   

  
	
  14.12

  	
   

  	
  Extent of Agreement

  	
   

  	
  14

  	
   

  
	
  14.13

  	
   

  	
  Subrogation Waiver

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A 

  	
   

  	
  Fee Schedule

  	
   

  	
  16

  	
   

  
	
  EXHIBIT B 

  	
   

  	
  Reimbursable Expense Schedule

  	
   

  	
  17

  	
   

  
	
  EXHIBIT C 

  	
   

  	
  Client’s Deliverable Site Obligations

  	
   

  	
  18

  	
   

  

 

 iii

PHASE I AND PHASE
II

ENGINEERING SERVICES
AGREEMENT

THIS
PHASE I AND PHASE II ENGINEERING SERVICES AGREEMENT (the “Agreement”)
is made as of December 1, 2005, (the “Effective Date”) by and between
Millennium Ethanol, LLC, a South Dakota Limited Liability Company (the “Client”)
and Fagen Engineering, LLC a Minnesota Limited Liability Company (the “Engineer”).
Each of the Client and Engineer are referred to herein individually as a “Party”
and collectively as the “Parties.”

RECITALS

WHEREAS,
Client is developing a dry grind ethanol production facility, either a 50 or
100 MGY production capacity, to be located in Marion, SD (the “Plant”)
to be owned and operated by Client; and

WHEREAS,
Client and Fagen, Inc. (“Design - Builder”)
intend to enter into that certain Lump-Sum Design-Build Agreement (“Design-Build
Agreement”) under which Fagen, Inc., an affiliate of Engineer, will serve
as the design-builder for the Plant and provide design, engineering,
procurement and construction services for the development and construction of
the Plant; and

WHEREAS,
Client wishes to retain an entity in advance of entering into the Design-Build
Agreement to perform certain engineering and design work that will be required
under the Design-Build Agreement on the terms and conditions set forth in this
Agreement, and Engineer desires to act as such entity upon the terms and
conditions set forth in this Agreement.

NOW,
THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound by this
Agreement, the parties do hereby agree as follows:

Article 1

Definitions; Rules of
Interpretation

1.1                 Rules of
Construction.

The capitalized terms
listed in this Article 1 shall have the meanings set forth herein whenever the
terms appear in this Agreement, whether in the singular or the plural or in the
present or past tense. Other terms used in this Agreement but not listed in
this Article shall have meanings as commonly used in the English language and,
where applicable, in generally accepted construction and design-build industry
standards. Words not otherwise defined herein that have well known and
generally accepted technical or trade meanings are used herein in accordance
with such recognized meanings. In addition, the following rules of
interpretation shall apply:

(a)                    The
masculine shall include the feminine and neuter.

Millennium Ethanol, LLC 

Phase I and Phase II Engineering Agreement 

December 1, 2005

 1
 

(b)                   References
to “Articles,” “Sections,” “Schedules,” or “Exhibits” shall be to Articles,
Sections, Schedules or Exhibits of this Agreement.

(c)                    This
Agreement was negotiated and prepared by each of the Parties with the advice
and participation of counsel. The Parties have agreed to the wording of this
Agreement and none of the provisions hereof shall be construed against one
Party on the ground that such Party is the author of this Agreement or any part
hereof. The following definitions will apply in this Agreement:

1.2                 Defined Terms.

In addition to
definitions appearing elsewhere in this Agreement, the following terms have the
following meanings:

Agreement will
have the meaning given to such term in the Preamble to this Agreement.

Applicable Law means

(a)                    any
and all laws, legislation, statutes, codes, acts, rules, regulations,
ordinances, treaties or other similar legal requirements enacted, issued or
promulgated by a Governmental Authority;

(b)                   any
and all orders, judgments, writs, decrees, injunctions, Governmental Approvals
or other decisions of a Governmental Authority; and

(c)                    any
and all legally binding announcements, directives or published practices or
interpretations, regarding any of the foregoing in (a) or (b) of this
definition, enacted, issued or promulgated by a Governmental Authority;

to the extent, for each of the foregoing in (a), (b)
and (c) of this definition, applicable to or binding upon (i) a Party, its
affiliates, its shareholders, its members, it partners or their respective
representatives, to the extent any such person is engaged in activities related
to the Services; or (ii) the property of a Party, its affiliates, its
shareholders, its members, its partners or their respective representatives, to
the extent such property is used in connection with the Services or an activity
related to the Services.

Client will have
the meaning given to such term in the Preamble to this Agreement.

Client’s Representative will
have the meaning given to such term in Section 4.1

Design-Build Agreement will
have the meaning given to such term in the Recitals to this Agreement.

Effective Date will
have the meaning given to such term in the Preamble to this Agreement.

Engineer will have
the meaning given to such term in the Preamble to this Agreement.

Engineer Responsible Parties will
have the meaning given to such term in Section 4.10.

 2
 

Governmental Approvals will
mean any material authorizations or permissions issued or granted by any Governmental Authority to the Project, the Client, the Engineer, subcontractors and their affiliates in connection with any
activity related to the Services.

Governmental Authority will mean any federal, state, local or
municipal governmental body; any governmental,
quasi-governmental, regulatory or
administrative agency, commission, body
or other authority exercising or
entitled to exercise any administrative, executive, judicial,
legislative, policy, regulatory or taxing authority or power; or any court or governmental tribunal; in each case having jurisdiction over the Client, the Engineer, the Plant,
or the Site.

Monthly Invoice will have the meaning given to such term in Section 5.7.

Party or Parties will
have the meaning given to such term in the Preamble to this
Agreement.

Phase I Deliverables will
mean the Client’s deliverable
obligations pursuant to Exhibit
C  attached to this Agreement.

Phase I Design Package will
have the meaning given to such term in
Section 3.2.

Phase II Deliverables will
mean the Client’s deliverable
obligations pursuant to Exhibit
C

Phase II Design Package will
have the meaning given to such term in Section 3.4 attached to this Agreement.

Plant will have the meaning given to such term in the Recitals to this
Agreement.

Project will mean the Plant, together with all equipment,
labor, services and materials furnished under the Design-Build
Agreement.

Services will have the meaning given to such term in Section 3.1.

Site will mean the land or premises on which the Plant is located.

Subcontractor will mean any person or entity, including but not limited to independent engineers,
associates, and consultants, retained by
Engineer, or by any
person or entity retained
directly or indirectly by Engineer, in each case as an independent contractor, to perform a portion of the Services.

Work Product will have the meaning given to such term in Section 8.1.

 3
 

Article 2

Retention of the Agent

2.1      Retention of Services. On the terms and
subject to the conditions hereinafter set forth, Client hereby retains Engineer
to perform, and Engineer hereby agrees to perform, the Services. Engineer will
provide such Services solely pursuant to the terms and conditions set forth
herein including any indemnifications and limitations on liability.

Article 3

Engineer Responsibilities

3.1      Services. Engineer shall perform the Phase I
Design Package and Phase II Design Package engineering services necessary to
facilitate Client’s completion of the Phase I and Phase II Site work required
of Client prior to the issuance of a Notice to Proceed pursuant to the
Design-Build Agreement (collectively, the “Services”).

3.2      Phase I Design Package. (Grading and Drainage).
The Phase I Design Package to be provided by Engineer shall consist of the
engineering and design of the Plant Site and shall include the following
drawings:

a)                        Cover
Sheet

b)                       Property
Layout Drawing

c)                        Grading,
Drainage and Erosion Control Plan Drawing (Multiple Drawings if Required)

i.                            Used for Land Disturbance Permitting

ii.                        Site grading is held 6-inches low for topsoil
and seeding

d)                       Roadway Alignment Drawing

e)                        Culvert Cross Sections and Details (Multiple Drawings)

f)                          Seeding and Landscaping (If Required)

Plan sets along with a Bid Tabulation Sheet will be
supplied to the Client so all contractors bid the same quantities. A telephone
conference call for a Phase I pre-bid meeting will be provided upon Client’s
request.

3.3
Delivery of Phase I Design Package. Engineer shall deliver
the completed Phase I Design Package no later than 60 days after the receipt of
all Phase I Deliverables, however, this will be no sooner than February 24,
2006.

3.4
Phase II Design Package. The Phase II Design Package to be
provided by Engineer shall provide the engineering and design of Site work and
utilities for the Plant, all within the property line of Plant, and shall
consist of the following:

a)                        Cover
Sheet

b)                       Property
Layout Drawing

 4
 

c)                        Site
Grading and Drainage Drawing (Final Interior Plant Grading)

d)                       Roadway
Alignment

e)                        Utility
Layout (Fire Loop)

f)                          Utility
Layout (Potable Water)

g)                       Utility
Layout (Well Water) if using on-Site wells

h)                       Utility
Layout (Sanitary Sewer)

i)                           Utility
Layout (Utility Water Blowdown)

j)                           Utility
Layout (Natural Gas)

i.                            Fagen
Engineering provides a preferred routing through the Site, line size and pipe
specifications are typically provided by the gas supplier.

k)                        Geometric
Layout (For Project Control Verification)

l)                           Site
Utility Piping Tables Drawing

m)                     Tank
Farm Layout Drawing

n)                       Tank
Farm Details Drawing

o)                       Sections
and Details Drawing (If required)

p)                       Miscellaneous
Details Drawing (If required)

A telephone conference call for a Phase 2 pre-bid meeting will be
provided upon Client’s request.

3.5      Delivery of Phase II Design Package.
Engineer shall deliver the completed Phase II Design Package no later than 60
days after the receipt of all Phase II Deliverables.

3.6      Delays. The Parties
agree that Engineer shall not be responsible for delays in providing the
Services under this Agreement due to factors beyond Engineer’s control.

3.7      Utility Routing and Design Services
Limited. The Parties agree that Engineer shall provide the
routing and design for the utilities necessary for the Plant only within the
Plant property line and up to the Plant property line, and that, for purposes
of this Agreement, Engineer assumes a tie-in point to a city utility. The
Parties agree that, if there is no city tie-in point, Engineer will route the
utilities to the Plant property line and stop. Any special tie-in requirements
necessary to connect the utilities at the Plant property line are not included
in the compensation or the scope of this Agreement and shall only be designed
and engineered by Engineer as change in the Project which affects the Services
hereunder.

Article 4

Client Responsibilities

4.1      Client’s Representative.
Client shall, prior to the commencement of Services by Engineer, name a
representative (“Client’s Representative”) with authority to receive
information and transmit instructions for Client. Client’s Representative shall
be vested with authority to act on behalf of Client and Engineer shall be
entitled to rely on Client’s Representative’s communications with regard to the
Services.

 5
 

4.2      Client’s Requirements.
Client shall, prior to the commencement of Services by Engineer, provide
Engineer with Client’s requirements for the Project, including objectives and
constraints, design and construction standards, bonding and insurance
requirements, and contract forms.

4.3      Other Information. Prior
to the commencement of Services by Engineer, Client shall provide Engineer with
all other information available to Client and pertinent to the Project and the
Services including, but not limited to, all items required pursuant to Exhibit
C. The items required by Client pursuant to this Section 4.3 shall be furnished
at Client’s expense, and Engineer shall be entitled to rely upon the accuracy and
completeness thereof.

4.4      Access to Property. Prior
to the commencement of Services and as necessary during the performance of
Services, Client shall arrange for access by Engineer upon public and private
property, as required for the performance of the Services under this Agreement.

4.5      Review of Documents. As
related to the performance of Services hereunder, Client shall examine
documents presented by Engineer, obtain legal and other advice as Client deems
appropriate, and render written decisions within reasonable time. The items
required by Client pursuant to this Section 4.5
shall be furnished at Client’s expense, and Engineer shall be
entitled to rely upon the accuracy and completeness thereof.

4.6      Consents, Approvals, Licenses and Permits.
Prior to the commencement of Services and as necessary during the performance
of the Services, Client shall obtain all consents, approvals, licenses,
permits, and other Governmental Approvals necessary for the Project and for the
performance of the Services. The items required by Client pursuant to this
Section 4.6 shall be furnished at Client’s expense, and Engineer shall be
entitled to rely upon the accuracy and completeness thereof.

4.7      Bids. Client shall
advertise for and open bids when scheduled.

4.8      Other Services. Client
shall furnish all legal, accounting and insurance counseling services as may be
necessary at any time for the Services, including auditing services the Client
may require to verify the monthly invoices or to ascertain how or for what
purposes the Engineer and/or Subcontractors have used the money paid by or on
behalf of the Client.

4.9      Service Outside Scope of Engineer’s
Services. Client shall, at its own expense, as necessary for
the performance and completions of the Services, provide any additional
services necessary for the Project that are outside the scope of the Services
provided by Engineer under this Agreement. Engineer shall be entitled to rely
upon, as applicable, the completeness and accuracy of such additional services.

4.10    Deviation from Design. Client
shall indemnify and hold harmless Engineer, its employees, its agents, its
affiliates, and any other persons or entities within its control or for whom
Engineer would otherwise be responsible (“Engineer Responsible Parties”)
against claims arising out of Engineer’s design, if there has been, in the
completion of the Phase I and Phase II Site work required of Client prior to
the issuance of a Notice to Proceed pursuant to the Design-

 6
 

Build Agreement, a failure to follow Engineer’s recommendation
and such deviation or failure caused the claims.

4.11    Developments Affecting Scope or Timing of
Services. Client shall promptly notify Engineer, in writing,
when Client learns of contractor error or any development that affects the
scope or timing of Engineer’s Services.

Article 5

Compensation and Payment

5.1      Compensation. In
consideration of its performance of the Services, Client shall pay Engineer for
Engineer’s time in the performance of the Services at a fixed fee of $92,500 (“Fixed
Fee”) as compensation. Engineer’s compensation under this Section 5.1 shall be
pursuant to the Fee schedule attached hereto as Exhibit A, as such schedule may
be modified from time to time. The full amount of compensation paid by Client
under this Section 5.1 shall be included in and credited to the Design-Build
Agreement’s contract price if entered into upon payment in full by Client.

5.2      Reimbursement of Engineer Expenses.
In addition to the fixed fee in 5.1, Client
shall reimburse Engineer for its expenses related to the performance of the
Services in accordance with Engineer’s current reimbursable expense schedule
attached hereto as Exhibit B.

5.3      Reimbursement of Subcontractor Expenses.

5.3.1   Subcontractor charges
related to time spent in the performance of the Services shall not be marked-up
by Engineer. Client shall reimburse Engineer for costs related to
Subcontractors’ time in accordance with the Subcontractors’ invoices for the
work.

5.3.2   Subcontractor reimbursable
expenses will be marked up in accordance with the current reimbursable expense
schedule attached hereto as Exhibit B.

5.4      Fees for Work Outside Scope of Services.
Fees for all work outside the scope of Engineer’s responsibilities described in
Article 3, including change order work, shall be computed in accordance with
Engineer’s current fee schedules, attached hereto as Exhibits A and B, as such
schedules may be revised from time to time, unless otherwise agreed to in
writing.

5.5      Collection of Unpaid Amounts.
If any amount due is not paid in accordance with this Agreement and Engineer
must collect that amount, Engineer shall be entitled to recover, in addition to
the amount due, the cost of collection, including reasonable attorney’s fees in
connection with those collection efforts.

5.6      Reimbursement Schedules Subject to Change.
Engineer’s reimbursement schedule and reimbursable expense
schedule attached hereto as Exhibits A and B are subject to change on January 1
of each year.

 7
 

5.7      Invoices. Engineer shall
submit a monthly invoice (“Monthly Invoice”) for Services provided and
for reimbursable expenses incurred by Engineer and any Subcontractors.

5.8      Payment. Within thirty
(30) days after Client’s receipt of each Monthly Invoice, Client shall pay
Engineer all amounts due.

5.9      Late Payment and Interest.
If Client fails to make payment within thirty (30) days after receipt of
Monthly Invoice, interest at the maximum legal rate or at an annual rate of
18%, whichever is less, shall accrue

5.10    Suspension for Failure to Pay.
If Client fails to make payment within thirty (30) days after receipt of
Monthly Invoice, Engineer may, at its option, after giving seven (7) days’
written notice, suspend Services until all amounts due to Engineer by Client
have been paid in full.

5.11    Payments from Lawful Sources.
Client shall provide for payment from one or more lawful source of all sums to
be paid Engineer.

5.12    Withholding Payments.
Engineer’s compensation shall not be reduced on account of any amounts withheld
from payment to Subcontractors.

5.13    Purchase Orders. If Client
issues a purchase order or other document to initiate the commencement of
Services hereunder, it is expressly agreed that any terms and conditions
appearing thereon shall have no application and only the provisions of this
Agreement shall apply.

5.14    Changes in Project. If
Client requests changes in the Project which affect the Services, compensation
for and time of performance of Engineer’s services shall be adjusted
appropriately.

Article 6

Construction Cost and
Cost Estimates

6.1      Cost Estimates. Client
and Engineer acknowledge that Engineer has no control over cost of labor,
materials, equipment of services furnished by others, over contractors’ methods
of determining prices, or other competitive bidding or market conditions and
that Engineer’s estimates of Project construction cost will be made on the
basis of its employees’ experience and qualifications and will represent
Engineer’s employees’ best judgment as experienced and qualified professionals,
familiar with the construction industry. Engineer does not guarantee that
proposal, bids, or actual construction cost will not vary from its estimates of
Project cost and Client acknowledges the same.

 8
 

Article 7

Termination

7.1      Termination Upon Default.
Either party may terminate this Agreement upon twenty (20) days’ written notice
if the non-terminating party has defaulted through no fault of the terminating
party.

7.2      Termination Upon Abandonment of Plant. Client
may terminate Engineer’s obligation to provide further services upon twenty
(20) days’ written notice if Client abandons development of the Plant. In such
event, all past due amounts for services rendered (including Subcontractor’s
fees, if any) and any unpaid reimbursable expenses shall be immediately due and
payable by Client.

Article 8

Ownership of Work Product

8.1      Work Product. All
tangible items prepared by Engineer, including but not limited to all drawings,
specifications, calculations, data, notes and other materials and documents,
including electronic data furnished by Engineer to Client and to Subcontractors
under this Agreement (“Work Product”) shall be instruments of service,
and Engineer shall retain the ownership and property interests therein,
including the copyrights thereto.

8.2      Copies Provided to Client.
Client may retain copies of Work Product for reference; provided, however, that
Client may not make copies of the Work Product available without Engineer’s
written permission, and, granted such permission, may only do so to the extent
the use of such copies of the Work Product directly pertains to the Services,
the Plant, or the construction thereof. Pursuant to Section 8.1 of this
Agreement, Engineer retains ownership of and property interests in any Work
Product made available and/or copied.

8.3      Prohibited Use of Work Product. Reuse
of the Work Product on any another Project without Engineer’s written consent
is prohibited. Client shall indemnify and hold harmless Engineer Responsible
Parties against claims resulting from such prohibited reuse. Said items are not
intended to be suitable for completion of this Project by others.

8.4      Derogation of Engineer’s Rights to Work
Product. Submittal or distribution of Work Product in
connection with the performance and completion of the Services and the
construction of the Project does not constitute publication in derogation of
Engineer’s rights and does not in any way diminish Engineer’s Work Product
rights established herein.

 9
 

Article 9

Successors and Assigns

9.1      Successors. The Parties
intend that the provisions of this Agreement are binding upon the Parties,
their employees, agents, heirs, successors and assigns.

9.2      Written Consent Required.
Neither Party shall assign, sublet, or transfer any interest in this Agreement
without written consent of the other; provided, however, that Engineer may
employ such Subcontractors as it may deem appropriate and may transfer or
assign any interest in this Agreement or the Work Product to Design-Builder
without consent of Client.

9.3      No Third-Party Beneficiaries.
None of the provisions of this Agreement will be for the benefit of or
enforceable by any person other than the Parties hereto, their successors and
permitted assigns and legal representatives

Article 10

Warranty

10.1    No Warranty Extended.
Engineer shall use reasonable care to reflect requirements of all Applicable
Laws, rules, or regulations of which Engineer has knowledge or about which
Client specifically advises in writing, which are in effect on the date of this
Agreement. ENGINEER INTENDS TO RENDER SERVICES IN ACCORDANCE WITH GENERALLY
ACCEPTED PROFESSIONAL STANDARDS, BUT NO OTHER WARRANTY IS EXTENDED, EITHER
EXPRESS OR IMPLIED, IN CONNECTION WITH SUCH SERVICES. Client’s rights and
remedies in this Agreement are exclusive.

10.2    No Responsibility for Construction.
Engineer shall not be responsible for construction of the Plant, contractors’
construction means, methods, techniques, sequences, or procedures, or for
contractors’ safety precautions and programs, or for contractors’ failure
according to contract documents.

Article 11

Indemnification

11.1    Engineer’s Indemnification.
To the fullest extent permitted by law, Engineer shall indemnify and hold
harmless Client, Client’s officers, directors, partners,  employees, and agents from and against
any and all claims for bodily injury and for damage to tangible property caused
solely by the negligent acts or omissions of Engineer or Engineer Responsible
Parties and Engineer’s Engineers in the performance and furnishing of Engineer’s
Services under this Agreement. Any indemnification shall be limited to the
terms and amounts of coverage of the Engineer’s insurance policies.

 10
 

11.2    Client’s
Indemnification. To the
fullest extent permitted by law, Client shall indemnify and hold harmless Engineer, Engineer’s officers, directors,
partners, employees, and agents
and Engineer’s  Engineers from and against any and all claims for  bodily injury and for damage to tangible
property caused solely by the negligent
acts of omission of Client or
Client’s officers, directors, partners, employees, agents, and Client’s
Engineers with respect to this
Agreement or the Project.

11.3    Hazardous
Materials Indemnification. In addition to the indemnity provided under this section, and to the fullest extent permitted by law, Client shall
indemnify and hold harmless Engineer
and its officers, directors, partners,
employees, and agents and Engineer’s Engineers from and against all claims,
costs, losses, and damages (including
but not limited to all fees and charges of engineers, architects, attorneys,
and other professionals and
all court or arbitration or other dispute resolution costs) caused by, arising out
of, or relating to the presence, discharge, release, or escape of asbestos, PCBs, petroleum,
hazardous waste, or radioactive
materials at, on, under, or from
the Site.

Article 12

Dispute Resolution

12.1    Arbitration. In an effort to resolve any
conflicts that arise out of or relate to this Agreement, the Client and the Engineer agree that all
disputes shall be submitted first
to nonbinding mediation. If mediation does not resolve the conflicts, the controversy shall be decided by final and
binding arbitration conducted in
Minneapolis, Minnesota in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then in effect, unless the Parties mutually agree
otherwise.

The award of the
arbitrator(s) shall be final and binding upon the Parties without the
right of appeal to the courts.
Judgment may be entered upon it in
accordance with Applicable Law by any court having jurisdiction thereof.

Engineer and Client expressly agree that any arbitration pursuant to this Section 12.1 may be joined or consolidated with any arbitration involving any other person or entity (i) necessary
to resolve the claim, dispute or controversy, or (ii) substantially involved in or affected by such claim, dispute or controversy. Both Engineer and Client will include appropriate provisions
in all contracts they execute with
other parties in connection with the Services to require such joinder or consolidation.

The prevailing Party in any arbitration, or any other final, binding dispute proceeding upon which the Parties may agree, shall be entitled
to recover from the other Party reasonable
attorneys’ fees and expenses incurred
by the prevailing Party.

 11

Article 13

Confidentiality

13.1    Non-Disclosure Obligation.
Except as required by court order, subpoena, or Applicable Law, neither Party
shall disclose to third parties any confidential or proprietary information
regarding the other Party’s business affairs, finances, technology, processes,
plans or installations, product information, know-how, or other information
that is received from the other Party pursuant to this Agreement or the Parties’
relationship prior thereto or is developed pursuant to this Agreement, without
the express written consent of the other Party, which consent shall not be
unreasonably withheld. The Parties shall at all times use their respective
reasonable efforts to keep all information regarding the terms and conditions
of this Agreement confidential and shall disclose such information to third
Persons only as reasonably required for the permitting of the Project;
financing the development, construction, ownership, operation and maintenance
of the Plant; or as reasonably required by either Party for performing its
obligations hereunder and if prior to such disclosure, the disclosing Party
informs such third Persons of the existence of this confidentiality obligation
and only if such third Persons agree to maintain the confidentiality of any
information received. This Article 13 shall not apply to information that was
already in the possession of one Party prior to receipt from the other, that is
now or hereafter becomes a part of the public domain through no fault of the
Party wishing to disclose, or that corresponds in substance to information
heretofore or hereafter furnished by third parties without restriction on
disclosure.

13.2    Publicity and Advertising.
Neither Client nor Engineer shall make or permit any of their subcontractors,
agents, or vendors to make any external announcement or publication, release
any photographs or information concerning the Project or any part thereof, or
make any other type of communication to any member of the public, press,
business entity, or any official body which names the other Party unless prior
written consent is obtained from the other Party, which consent shall not be
unreasonably withheld.

13.3    Term of Obligation. The
confidentiality obligations of the Parties pursuant to this Article 13 shall
survive the expiration or other termination of this Agreement.

Article 14

Miscellaneous

14.1    Governing Law. This
Agreement shall be governed by and construed and enforced in accordance with,
the substantive laws of the state of Minnesota, without regard to the conflict
of laws provisions thereof.

14.2    Severability. If any
provision or any part of a provision of the Agreement shall be finally
determined to be superseded, invalid, illegal, or otherwise unenforceable
pursuant to any applicable Legal Requirements, such determination shall not
impair or otherwise affect the validity, legality, or enforceability of the
remaining provision or parts of the provision of the

 12
 

Agreement, which shall remain in full force and effect as if the
unenforceable provision or part were deleted.

14.3    No Waiver. The failure of
either Engineer or Client to insist, in any one or more instances, on the
performance of any of the obligations required by the other under this
Agreement shall not be construed as a waiver or relinquishment of such
obligation or right with respect to future performance.

14.4    Captions and Headings. The
table of contents and the headings used in this Agreement are for ease of
reference only and shall not in any way be construed to limit, define, extend,
describe, alter, or otherwise affect the scope or the meaning of any provision
of this Agreement.

14.5    Engineer’s Accounting Records.
Records of Engineer’s personnel time, reimbursable expenses, and accounts
between parties shall be maintained on a generally recognized accounting basis.

14.6    Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which together shall be deemed one and the same
Agreement, and may be executed and delivered by facsimile signature, which
shall be considered an original.

14.7    Survival. Notwithstanding
any provisions herein to the contrary, the Work Product provisions set forth in
Article 8 and the indemnity obligations set forth herein shall survive (in full
force) the expiration or termination of this Agreement, and shall continue to
apply to the Parties to this Agreement even after termination of this Agreement
or the transfer of such Party’s interest in this Agreement.

14.8    No Privity with Client’s Contractors.
Nothing in this Agreement is intended or deemed to create any legal or
contractual relationship between Engineer and any Client contractor or
subcontractor retained to perform the Phase I and Phase II Site work required
of Client prior to the issuance of a Notice to Proceed pursuant to the
Design-Build Agreement.

14.9    Amendments. This Agreement
may not be changed, altered, or amended in any way except in writing signed by
a duly authorized representative of each Party.

14.10 Entire Agreement. This
Agreement consists of the terms and conditions set forth herein, as well as the
Exhibits hereto, which are incorporated by reference herein and made a part
hereof. This Agreement sets forth the full and complete understanding of the
Parties as of the Effective Date with respect to the subject matter hereof.

14.11 Notice. Whenever the
Agreement requires that notice be provided to a Party, notice shall be
delivered in writing to such party at the address listed below. Notice will be
deemed to have been validly given if delivered (i) in person to the individual
intended to receive such notice, (ii) by registered or by certified mail,
postage prepaid to the address indicated in the Agreement within four (4) days
after being sent, or (iii) by facsimile, by the time stated in a

 13
 

machine-generated confirmation that notice was received at the
facsimile number of the intended recipient.

If to Engineer, to:

Fagen Engineering LLC 

501 W. Highway 2l2 

P. O. Box 159 

Granite Falls, MN 56241 

Attention: John Austgen 

Fax: (320) 564-4861

with a copy to:

Fagen, Inc. 

501  W. Highway 212 

P. O. Box 159 

Granite Falls, MN 56241  

Attention: Bruce Langseth 

Fax: (320) 564-3278

If to Client, to:

Millennium Ethanol, LLC 

Mr. Steve Domm 

General Manager 

PO Box 357 

Marion, SD 57043

14.12 Extent of Agreement. This
Agreement and the Exhibits incorporated therein represent the entire agreement
between the Parties and may be amended only by written instrument signed by
both Parties.

14.13 Subrogation
Waiver. The Parties waive all rights against each other, and
against the contractors, Engineers, agents, and employees of the other for
damages covered by any property insurance during construction, and each shall
require similar waivers from their contractors, Engineers, and agents.

 14
 

IN WITNESS WHEREOF, the Parties
hereto have caused their names to be hereunto subscribed by their officers
thereunto duly authorized, intending thereby that this Agreement shall be
effective as of this December 1, 2005.

	
  MILLENNIUM ETHANOL, LLC

  	
   

  	
  FAGEN ENGINEERING, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steven Domm

  	
   

  	
  By:

  	
  /s/ John R.
  Austgen

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address for
  giving notices:

  	
   

  	
   

  	
  Address for giving notices:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PO Box 357 

  Marion, SD 57043

  	
   

  	
   

  	
  501 West Highway 212

  PO Box 159 

  Granite Falls, MN 56241

  	
   

  
									

 

 15
 

EXHIBIT A

FAGEN ENGINEERING LLC

Fee Schedule FY 2005

CONFIDENTIAL

	
  TYPICAL ASSIGNMENT

  	
   

  	
  BILLING CLASS

  	
   

  	
  BILLING RATE

  	
   

  
	
  Clerical / CADD
  Operator

  	
   

  	
  1

  	
   

  	
  $

  	
  31.00

  	
   

  
	
  Clerical / CADD
  Operator

  	
   

  	
  2

  	
   

  	
  $

  	
  47.85

  	
   

  
	
  CADD Operator /
  Designer

  	
   

  	
  3

  	
   

  	
  $

  	
  61.97

  	
   

  
	
  CADD Operator /
  Designer / Engineer

  	
   

  	
  4

  	
   

  	
  $

  	
  77.45

  	
   

  
	
  Designer /
  Engineer / PM

  	
   

  	
  5

  	
   

  	
  $

  	
  93.29

  	
   

  
	
  Engineer /
  Senior Engineer / PM

  	
   

  	
  6

  	
   

  	
  $

  	
  108.93

  	
   

  
	
  Senior Engineer
  / PM

  	
   

  	
  7

  	
   

  	
  $

  	
  124.76

  	
   

  
	
  Senior Engineer
  / PM

  	
   

  	
  8

  	
   

  	
  $

  	
  140.25

  	
   

  
	
  Senior Engineer
  / PM / Principal

  	
   

  	
  9

  	
   

  	
  $

  	
  156.08

  	
   

  
	
  PM / Principal

  	
   

  	
  10

  	
   

  	
  $

  	
  171.72

  	
   

  
	
  Principal

  	
   

  	
  11

  	
   

  	
  $

  	
  187.36

  	
   

  
	
  Principal

  	
   

  	
  12

  	
   

  	
  $

  	
  203.04

  	
   

  
	
  Principal

  	
   

  	
  13

  	
   

  	
  $

  	
  218.68

  	
   

  

 

Subject to  Revision January 1, 2006

 16
 

EXHIBIT B

Fagen
Engineering LLC

Reimbursable Expense Schedule

Effective January 1, 2005

CONFIDENTIAL

	
  Expense Code

  	
   

  	
  Expense Description

  	
   

  	
  Billing Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BCA

  	
   

  	
  Blackline
  Print Copy - A

  	
   

  	
  $

  	
  .95

  	
   

  
	
  BCB

  	
   

  	
  Blackline
  Print Copy - B

  	
   

  	
  $

  	
  .95

  	
   

  
	
  BCC

  	
   

  	
  Blackline
  Print Copy - C

  	
   

  	
  $

  	
  1.20

  	
   

  
	
  BCD

  	
   

  	
  Blackline
  Print Copy - D

  	
   

  	
  $

  	
  1.80

  	
   

  
	
  BCE

  	
   

  	
  Blackline
  Print Copy - E

  	
   

  	
  $

  	
  3.55

  	
   

  
	
  BOA

  	
   

  	
  Paper
  Print Original - A

  	
   

  	
  $

  	
  1.20

  	
   

  
	
  BOB

  	
   

  	
  Paper
  Print Original - B

  	
   

  	
  $

  	
  1.50

  	
   

  
	
  BOC

  	
   

  	
  Paper
  Print Original - C

  	
   

  	
  $

  	
  1.80

  	
   

  
	
  BOD

  	
   

  	
  Paper
  Print Original - D

  	
   

  	
  $

  	
  2.10

  	
   

  
	
  BOE

  	
   

  	
  Paper
  Print Original - E

  	
   

  	
  $

  	
  4.20

  	
   

  
	
  DISK

  	
   

  	
  Floppy
  Disk 31/2”/ea

  	
   

  	
  $

  	
  2.40

  	
   

  
	
  FAX

  	
   

  	
  Fax
  Machine Usage/Page

  	
   

  	
  $

  	
  1.15

  	
   

  
	
  LD

  	
   

  	
  Long
  Distance Phone Calls

  	
   

  	
  cost plus 10% markup

  	
   

  
	
  LODGING

  	
   

  	
  Lodging

  	
   

  	
  cost plus 10% markup

  	
   

  
	
  MEALS

  	
   

  	
  Meal
  Expense

  	
   

  	
  cost plus 10% markup

  	
   

  
	
  MILEAGE

  	
   

  	
  Mileage/Mile

  	
   

  	
  $

  	
  .405

  	
   

  
	
  PC1

  	
   

  	
  Photocopies
  81/2x11 (<100)/ea

  	
   

  	
  $

  	
  .23

  	
   

  
	
  PC2

  	
   

  	
  Photocopies
  11x17/ea

  	
   

  	
  $

  	
  .49

  	
   

  
	
  PC3

  	
   

  	
  Photocopies
  (>100)/ea

  	
   

  	
  $

  	
  .16

  	
   

  
	
  PO

  	
   

  	
  Postage

  	
   

  	
  cost plus 10% markup

  	
   

  
	
  PROSVC

  	
   

  	
  Outside
  Professional Services

  	
   

  	
  Cost

  	
   

  
	
  PROSVCEXP

  	
   

  	
  Outside
  Professional Services Expenses

  	
   

  	
  cost plus 10% markup

  	
   

  
	
  FLM

  	
   

  	
  Film
  & Developing

  	
   

  	
  cost plus 10% markup

  	
   

  
	
  SPECCOV

  	
   

  	
  Specification
  Book - Cover & Binder/ea

  	
   

  	
  $

  	
  3.00

  	
   

  
	
  TRANS

  	
   

  	
  Transportation

  	
   

  	
  cost plus 10% markup

  	
   

  
	
  UPS

  	
   

  	
  Delivery
  Service Charges

  	
   

  	
  cost plus 10% markup

  	
   

  
	
  VELLUM

  	
   

  	
  Original Print/square
  foot

  	
   

  	
  $

  	
  3.00

  	
   

  

 

Subject to Revision
January 1, 2006

 17
 

EXHIBIT C

Client’s
Deliverable Site Obligations

Phase I Deliverables

Prior
to Engineer’s commencement of the Phase I Design Package work, the Client shall
provide Engineer with the following Phase I Deliverables:

1.                         A
legal description of the Site

2.                         Temporary
and permanent easements, zoning, and other requirements and encumbrances
affecting land use or necessary to permit the proper design and construction of
the Project and enable Design-Builder to perform the Work

3.                         To
the extent available, as-built and record drawings of any existing structures
at the Site

4.                         Environmental
studies, reports and impact statements describing the environmental conditions,
including Hazardous Conditions, in existence at the Site

5.                         Preliminary
approval from Client’s Rail service provider of rail design as prepared by
Client’s Rail Designer.

6.                         Client’s
written approval of final site layout including rail design and environmental
permitting emission points.

7.                         Review,
comment, and written approval of Client’s air permit application.

8.                         Topographic
Survey to one (1) foot contours including property boundaries and at least two
(2) benchmarks including existing service and utility lines.

9.                         Soil
borings logs for all soil borings complete at Engineer’s specified locations.

10.                   Geotechnical
Report regarding subsurface conditions with Client’s Geotechnical Engineer’s
recommendations from Engineer approved Geotechnical Engineer (Terracon is
preferred) including soil borings, and any other surveys or information
available describing other latent or concealed physical conditions at the Site.

11.                   On-site
location for Storm Water discharge.

12.                   Preliminary
NPDES discharge location for water discharges from utility discharges
including, but not limited to the water pre-treatment system, water softeners,
and cooling tower blowdown.

13.                   Preliminary
indication of source, analysis, and location of Client’s water supply.

14.                   Client’s
risk insurance provider’s specific requirements for fire protection or approval
to design fire protection to Liberty Insurance standards.

15.                   Any
special sizing or other requirements for ethanol storage tank farm.

16.                   Preliminary
location and design of administration building.

 18
 

Phase II Deliverables

Prior
to Engineer’s commencement of the Phase II Design Package work, the Client
shall provide Engineer with the following Phase II Deliverables:

1.                         Final
location, source and quality of Client’s water supply.

2.                         Off-site
utility tie-in locations at or near the property lines (this includes, but is
not limited to, gas supply, electrical supply, water supply if no on-site
wells, on-site or off-site sanitary sewer)

3.                         Final
NPDES discharge location for Utility Water Blowdown.

4.                         An
insurance provider to allow the proper positioning and number of required
hydrants and hydrants with monitors.

5.                         Written
approval of final rail design from the Client’s rail service provider.

6.                         Final
location and design (general arrangement) of the Client’s administration
building.

7.                         Final
water pre-treatment design and operating parameters.

8.                         Design
and location of sanitary sewer discharge point of septic system.

 19Exhibit 10.4

ETHANOL SALE AND PURCHASE
AGREEMENT

THIS
ETHANOL SALE AND PURCHASE MARKETING AGREEMENT the (“Agreement”)
is entered into this 31st day of May, 2006, with an effective date as
stipulated in Section l(a) below, by and between Archer-Daniels-Midland
Company, a Delaware corporation, with its principal place of business in
Decatur, Illinois (“ADM”), and Millennium Ethanol, LLC, a South Dakota limited
liability company, with its principal place of business in Marion, South Dakota
(“Millennium”).

BACKGROUND

WHEREAS,
ADM and Millennium are both in the business of processing corn to produce
ethanol for commercial sale; and

WHEREAS,
ADM has knowledge of the ethanol industry in the United
States, and has experience related to ethanol marketing, sales, and distribution;
and

WHEREAS,
Millennium and ADM believe that it would be in their mutual
best interests for ADM to purchase ethanol produced by Millennium at the
planned ethanol production facility to be located in Marion, South Dakota (the “Millennium
Production Facilities”), for purposes of jointly marketing, selling, and
distributing that ethanol, along with the ethanol produced by ADM; and

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

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

1.                                       TERMS
OF THIS AGREEMENT.

(a)                              The Initial Term. The initial term of this
Agreement will be for three (3) years with the effective date being the first
day of the month of which production of ethanol begins at the Millennium
Production Facilities. For example, if production begins on October 15, 2007,
then October 1, 2007 will be the effective date of this Agreement. The
three-year period referred to herein will hereafter be referred to as the “Initial
Term.”

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

 1
 

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

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

(b)                             Termination
for Uncured Breach. If one of the parties breaches the terms of this
Agreement, the other party may give the breaching party a notice in writing
which specifically sets out the nature and extent of the breach, and the steps
that must be taken to cure the breach. After receiving the written notice, the
breaching party will then have thirty (30) days to cure the breach, if the
breach does not involve a failure to make any payments which are required by
this Agreement. If the breach does involve a failure to make any payments which
are required by this Agreement, then the breaching party will have five (5)
days after receiving the written notice to cure the breach. If the breaching
party does not cure any breach within the applicable cure period, then the
non-breaching party will have the right to terminate this Agreement
immediately.

(c)                              Termination at the End of the Initial Term or Any
Renewal Term. Either party may terminate this Agreement at the end
of the Initial Term, or at the end of any Renewal Term, by providing the other
party with a written notice of intent to terminate. Such a written notice of
intent to terminate must specify the proposed termination date, and must be
received by the non-terminating party at least six (6) months before the
proposed termination date.

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

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

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

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

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

 2
 

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

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

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

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

(h)                             Production Capacity. The amount of ethanol
that Millennium is capable of producing each year, based on the nameplate
design capacity of the Millennium Production Facilities, will hereafter be
referred to as Millennium’s “Annual Production Capacity.” The nameplate design
capacity of the Millennium Production Facilities is one hundred million
(100,000,000) gallons of ethanol per year. Millennium has the plant capacity
and the technical capability to produce the quality of ethanol required under
this Agreement, in the quantities required under this Agreement.

(i)                                 Product Quality. All of the ethanol sold to
ADM by Millennium under this Agreement will be of merchantable quality, and
will be fit for fuel grade ethanol. All such ethanol must meet all applicable
ASTM Standards and must meet the ethanol standards established by the Williams
Pipeline test, and must meet the ethanol standards established by all other
standard ethanol industry tests.

 3
 

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

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

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

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

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

(d)                             Compliance with Laws. As it relates to this
Agreement, ADM is now in compliance, and during the entire term of this
Agreement will remain in compliance, with all applicable Laws, other than Laws
where neither the costs or potential costs of failing to comply, nor the costs
or potential costs of causing compliance, would be material to ADM or its
business or assets.

(e)                              Licenses and Permits. ADM now has, and will
have at all times during the term of this Agreement, all of the licenses and
permits necessary to operate the ADM Production Facilities (as defined in
Section 18(a)).

(f)                                Product Quality. All of the ethanol
produced by ADM and sold to its customers under this Agreement will be of
merchantable quality, and will be fit for fuel grade ethanol. All such ethanol
must meet all applicable ASTM Standards, must meet the ethanol standards
established by the Williams Pipeline test, and must meet the ethanol standards
established by all other standard ethanol industry tests.

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

5.                                       QUANTITY. During the entire term of this
Agreement, Millennium agrees to sell to ADM, and ADM agrees to purchase from
Millennium, all of the ethanol produced by Millennium at the Millennium
Production Facilities, subject to the right of ADM to not purchase

 4
 

excess ethanol produced by Millennium, as described in
Section 9 below. The terms and conditions of these purchases and sales will be
set out in this Agreement.

6.                                       PRODUCTION ESTIMATES. Within 90 days of the
date of commercial ethanol production, Millennium will provide ADM with
Millennium’s best estimate of Millennium’s anticipated monthly ethanol
production for the first twelve (12) months of commercial production, to assist
ADM in developing appropriate marketing strategies for the ethanol to be
produced by Millennium.

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

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

Once either party has
sent a written notice of intent to terminate this Agreement under Section 2(b)
above, Millennium’s monthly ethanol production estimates must continue to cover
the time period through the proposed termination date, but need not extend to
any months after the proposed termination date.

7.                                       MONTHLY ETHANOL VOLUME REQUIREMENTS

(a)                              Development of the Final Ethanol Volume Requirement. On
or before the first day of each month, ADM and Millennium will each provide the
other party with a written notice which sets out the number of gallons of
ethanol that they are each willing to produce and to make available for sale
under this Agreement during the next month (the “Final Ethanol Volume
Requirement”). Without ADM’s written consent, Millennium’s Final Ethanol Volume
Requirement shall not exceed 120% of one-twelfth of Millennium’s Annual
Production Capacity.

For example, on or before
April 1, the parties will provide each other with their Final Ethanol Volume
Requirements for the next month, which would be May.

(b)                             The Intent of the Parties to Operate at or Near Full
Capacity. Both parties acknowledge and agree that if market
conditions and other conditions are favorable, it is their intent to operate
their respective production facilities at or near full capacity during the
entire term of this Agreement.

8.                                       SHORTFALLS IN THE MONTHLY ETHANOL VOLUME REQUIREMENTS.

(a)                              Shortfalls Involving Millennium. Starting
ninety (90) days after the start of commercial production, to the extent that
Millennium fails to produce enough ethanol to meet

 5
 

Millennium’s Final Ethanol Volume Requirement in any
month, ADM will have the right, but not the obligation, to purchase ethanol
elsewhere, in a commercially reasonable manner, in order to cover the
shortfall. All costs and expenses related to such purchases which are in excess
of the costs and expenses that ADM would have incurred in the absence of such a
shortfall will be charged to Millennium.

(b)                             Shortfalls Involving ADM. To the extent
that ADM fails to produce enough ethanol to meet ADM’s Final Ethanol Volume
Requirement in any month, ADM will have the right, but not the obligation, to
purchase ethanol elsewhere, in a commercially reasonable manner, in order to
cover the shortfall. All costs and expenses related to such purchases which are
in excess of the costs and expenses that ADM would have incurred in the absence
of such a shortfall will be charged to ADM.

9.                                       EXCESS ETHANOL PRODUCTION.

(a)                              No Obligation to Sell All Ethanol Produced. ADM
will be obligated to purchase the full amount of Millennium’s Final Ethanol
Volume Requirement for each month. However, ADM will not be obligated to sell
the entire Final Ethanol Volume Requirement for Millennium and ADM each month,
if ADM does not believe in good faith that it is in the best interests of the
parties, based on market conditions, unavailability of customers, or other
factors.

This means that ADM will
have the discretion to both build and decrease stored inventories of the
ethanol produced under this Agreement, during the entire term of this
Agreement. ADM agrees to attempt to do so efficiently, effectively, and in a
manner that is in the best interests of the parties.

(b)                             ADM’s Right to Buy and Sell Millennium’s Excess
Ethanol Production. If Millennium
produces ethanol in any month in excess of Millennium’s Final Ethanol Volume
Requirement, ADM will have the right, but not the obligation, to purchase the
excess ethanol from Millennium, and sell it under this Agreement. This will
also be the case in the event of excess ethanol production by ADM.

(c)                              Restrictions on Millennium’s Right to Sell Excess
Ethanol Production. Because ADM is entitled to purchase all of the
ethanol produced by Millennium under Section 5 above, Millennium may not sell
to any other parties any of the excess ethanol that it produces, over and above
Millennium’s Final Ethanol Volume Requirement. Millennium understands that any
excess ethanol that it produces is at its own risk, should ADM choose not to
purchase that excess ethanol. Millennium may carry the excess of any month to
be included in Millenniums Final Ethanol Volume Requirement of the next month
subject to the cap in Section 7(a).

(d)                             Millennium’s Right to Utilize Excess Ethanol
Production in Future Months. The parties agree that Millennium may
store excess ethanol that it produced in any month, at Millennium’s own
expense, if that excess ethanol is not purchased by ADM under Section 9(b)
above. Millennium may then use that excess ethanol in the future, to satisfy
Millennium’s obligations to make ethanol available for sale under this
Agreement. For example, Millennium may use that excess ethanol to meet its
Final Volume Requirement for any month,

 6
 

under Section 7 above, or to meet its Minimum Annual
Volume Requirement for any year, under Section 10 below.

10.                                 MILLENNIUM’S MINIMUM ANNUAL VOLUME REQUIREMENTS. During
the Initial Term and each Renewal Term of this Agreement, Millennium agrees to
make available for sale to ADM quantities of ethanol in an amount that equals
or exceeds 80% of Millennium’s “Annual Production Capacity (Millennium’s “Minimum
Annual Volume Requirement”).

11.                                 SERVICES TO BE PROVIDED BY ADM. ADM will
provide, in good faith, the marketing, sales, storage, and transportation
services for the ethanol produced and purchased by ADM under this Agreement in
a manner at ADM’s discretion.

12.                                 QUALITY ASSURANCE AND QUALITY CONTROL.

(a)                              Initial and Ongoing QA and QC Support. ADM
agrees to provide initial quality assurance (“QA”) and quality control (“QC”)
support to Millennium, to assist Millennium in consistently producing ethanol
at the Millennium Production Facilities, which meets the standards for product
quality which are set out in Section 3(i) of this Agreement. After this initial
support, ADM will continue to assist Millennium with QA and QC matters
throughout the duration of this Agreement on an “as needed” basis, at the
request of either party.

(b)                             Millennium’s Responsibility and Liability for the
Ethanol that it Produces. Notwithstanding ADM’s agreement to provide
Millennium with QA and QC support in the manner described in this Section 12,
the parties agree that Millennium will ultimately be responsible for the
quality of the ethanol produced at the Millennium Production Facilities.
Further, the parties agree that Millennium, and not ADM, will be responsible
and liable for all claims related to the quality of the ethanol produced by
Millennium at the Millennium Production Facilities.

(c)                              Millennium’s Release of ADM from Liability Related to
QA and QC Support. ADM’s agreement to provide QA and QC support to
Millennium under this Agreement is a good faith attempt by ADM to help
Millennium meet the ethanol quality standards set out in this Agreement, for
the mutual benefit of ADM and Millennium. However, ADM’s agreement to provide
QA and QC support to Millennium does not constitute a warranty or a guarantee
of any type with respect to the quality of the ethanol produced by Millennium.
Thus, Millennium and all of its related persons and organizations hereby
release ADM and all of its related persons and organizations from all
liability, in the absence of gross negligence and/or willful misconduct,
related to the QA and QC support provided to Millennium by ADM under this
Agreement.

13.                                 SALES TO ADM’S ETHANOL CUSTOMERS. When ADM
sells the ethanol produced under this Agreement to its customers, the parties
understand and agree that the ethanol sales prices, and all other terms and conditions
of ethanol sales to customers under this

 7
 

Agreement, will be established by ADM. These decisions
may be made by ADM, without the need for obtaining consent from Millennium.

14.                                 PAYMENTS TO ADM FOR SERVICES PROVIDED. In
exchange for the marketing, sales, storage, and transportation services
provided by ADM under Section 11 above during the Initial Term, Millennium will
pay ADM the sum of 1.25% (one and one-quarter percent) of the Average Net
Ethanol Selling Price paid to Millennium by ADM.

During any time period
after the Initial Term when the parties have not agreed upon the amount that
Millennium will pay ADM for these services, the fee paid to ADM by Millennium
for these services will be 1.25% (one and one-quarter percent) of the Average
Net Ethanol Selling Price, payable by the tenth day of each month for the
ethanol sold by ADM under this Agreement during the previous month.

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

Any of the employees of
ADM which are providing services on behalf of Millennium under this Agreement
will remain employees of ADM. These employees will continue to be paid by ADM
and to enjoy the benefits to which they are entitled as employees of ADM,
unless otherwise provided in any separate agreement covering the services of
such employees.

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

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

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

 8
 

18.                                 PRODUCT DISTRIBUTION.

(a)                              The ADM Production Facilities. ADM
presently produces ethanol at its plant in Columbus, Nebraska (the “Columbus
Plant”), and at its plant in Marshall, Minnesota (the “Marshall Plant”). The
Columbus Plant and the Marshall Plant may be collectively referred to hereafter
as the “ADM Production Facilities.”

(b)                             Product Substitution. The parties agree
that the ethanol produced at the ADM Production Facilities and the ethanol
produced at the Millennium Production Facilities will be considered fungible
and interchangeable for purposes of product distribution under this Agreement.
ADM will not brand, label, or otherwise identify any ethanol sold under this
Agreement differently because that ethanol was produced at the Millennium
Production Facilities, as opposed to being produced at the ADM Production
Facilities.

(c)                              Efficient Product Distribution. When
customers purchase ethanol from ADM that has been produced under this
Agreement, ADM may fill the orders of those customers with ethanol produced at
the Millennium Production Facilities, ethanol produced at the ADM Production
Facilities, or ethanol produced at both the Millennium Production Facilities
and the ADM Production Facilities. ADM will attempt to manage factors such as
customer and delivery locations, order sizes, freight availability, and product
delivery logistics in a manner that will result in efficient product distribution,
for the mutual benefit of both Millennium and ADM.

19.                                 PRODUCT TESTING. At least twice each week
during the term of this Agreement, and more often at the request of ADM,
Millennium agrees to provide ADM with samples of the ethanol produced at the
Millennium Production Facilities, so that ADM can test Millennium’s product
quality on a regular basis. ADM agrees to provide Millennium with the
information Millennium will need in order to collect, pack, and ship these
ethanol samples to ADM in a manner satisfactory to ADM.

20.                                 COLLECTION AND RETENTION OF PRODUCT SAMPLES.

(a)                              Collection of Product Samples. During the
entire term of this Agreement, Millennium agrees to collect samples of not less
than 250 milliliters each from each shipment of ethanol that leaves the
Millennium Production Facilities under this Agreement. Each such product sample
will be labeled to include the production date, the plant at which the product
sample was produced, and any other applicable information.

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

21.                                 THE ACTUAL PRICE FOR ETHANOL SOLD TO ADM BY
MILLENNIUM. ADM agrees to pay Millennium a price for all ethanol
sold to ADM by            
under this Agreement that is equal to the “Average Net Ethanol Selling Price,”
as

 9
 

defined in this Section 21. For purposes of this
Agreement, the Average Net Ethanol Selling Price will be calculated as follows:

(a)                              The Average Gross Ethanol Selling Price. Each
month, ADM will calculate the average gross selling price per gallon of all of
the ethanol that ADM sells to its customers under this Agreement, including all
of the ethanol produced by both Millennium and ADM, FOB the Millennium
Production Facilities and the ADM Production Facilities. This amount will
hereinafter be referred to as the “Average Gross Ethanol Selling Price.”

(b)                             The Deduction for Direct Ethanol Distribution
Expenses. Each month, ADM will subtract from that Average Gross
Ethanol Selling Price, on a per gallon basis, all of its distribution expenses
directly incurred in connection with distributing the ethanol sold under this
Agreement (the “Direct Ethanol Distribution Expenses”). ADM’s Direct Ethanol
Distribution Expenses will include, but not necessarily be limited to, all of
its transportation costs, rail car costs, throughput costs, storage costs,
inventory costs, and other distribution costs. Each month, ADM will also add or
subtract from that Average Gross Ethanol Selling Price, on a per gallon basis,
any gains or losses due to gasoline index hedges with respect to ethanol
produced by both Millennium and ADM (the “Hedging Gains or Losses”).

(c)                              The Average Net Ethanol Selling Price. The
Average Net Selling Price is calculated as follows: the per gallon Average
Gross Ethanol Selling Price minus the per gallon Direct Ethanol Distribution
Expenses, plus or minus the per gallon Hedging Gains or Losses. The Average Net
Ethanol Selling Price will be paid to Millennium by ADM for the applicable
month in the manner set forth in Section 22.

22.                                 THE ESTIMATED PRICE FOR ETHANOL SOLD TO ADM BY
MILLENNIUM.

(a)                              The Estimated Average Net Ethanol Selling Price. The
actual Average Net Ethanol Selling Price cannot be determined before Millennium
sells to ADM under this Agreement, because the Average Net Ethanol Selling
Price is based on Direct Ethanol Distribution Expenses that will be incurred by
ADM after ADM has purchased ethanol from Millennium. Because of that, the
parties will work together before each month during the term of this Agreement,
in order to establish an estimated price for the ethanol to be sold to ADM by
Millennium during the upcoming month. That estimated price will hereafter be
referred to as the “Estimated Average Net Ethanol Selling Price.”

(b)                             Establishing the Estimated Average Net Ethanol Selling
Price. Millennium may provide information, input, and opinions in
connection with the establishment of the Estimated Average Net Ethanol Selling
Price, and the parties will attempt to arrive at the Estimated Average Net
Ethanol Selling Price for each month by consensus. However, if the parties are
unable to reach a consensus, then ADM will have the right, in good faith, to
establish the Estimated Average Net Ethanol Selling Price for the upcoming
month, based on ADM’s experience in the ethanol industry.

 10
 

(c)                              Invoices and Payments Between Millennium and ADM. Millennium
will invoice ADM, upon shipment, at the applicable Estimated Average Net
Ethanol Selling Price for all ethanol sold to ADM by Millennium under this
Agreement. ADM will pay Millennium for all such ethanol within seven (7)
business days of receipt of invoice; less a daily interest charge equal to ADM’s
internal annual rate (currently 7.35%) times the difference between 7 days and
the quarterly paid history of ethanol invoices being paid to ADM from its
customer base (currently 15 days). This rate will be reviewed and adjusted on a
quarterly basis.

(d)                             Calculation of Actual Selling Prices After Each Month.
At the end of each month, promptly after the information necessary to
calculate the Average Net Ethanol Selling Price becomes available, ADM will
calculate the actual Average Net Ethanol Selling Price for the preceding month.
ADM will provide that Average Net Ethanol Selling Price to Millennium, along
with a summary of the calculations used by ADM to arrive at the Average Net
Ethanol Selling Price.

(e)                              Reconciliation of Estimated Selling Prices and Actual
Selling Prices After Each Month. Within fourteen (14) days after ADM
provides Millennium with the actual Average Net Ethanol Selling Price for the
preceding month, the parties will reconcile the difference between the
Estimated Average Net Ethanol Selling Price and the actual Average Net Ethanol
Selling Price for the preceding month. If the Estimated Average Net Ethanol Selling
Price exceeded the Average Net Ethanol Selling Price, then Millennium will
refund to ADM the overpayments that it previously received from ADM, within
fourteen (14) days after the completion of this actual and estimated selling
price reconciliation.

On the other hand,
if the Estimated Average Net Ethanol Selling Price was less than the actual
Average Net Ethanol Selling Price, then ADM will pay Millennium the additional
amounts owed to Millennium, within fourteen (14) days after the completion of
this actual and estimated selling price reconciliation.

23.                                 MONTHLY MEETINGS. Representatives of
Millennium and ADM will meet telephonically on a monthly basis to discuss
issues related to this Agreement. It is the intent of both Millennium and ADM
that these monthly meetings be conducted in a manner that complies with all
applicable state and federal laws.

24.                                 MONTHLY RECONCILIATION OF SHIPMENT VOLUMES. On
a monthly basis, Millennium and ADM will compare and reconcile their
information related to the volumes of ethanol shipped from the Millennium
Production Facilities and the ADM Production Facilities, in order to minimize
disputes and disagreements between them under this Agreement, and in order to
provide more accurate information for calculating the Average Net Ethanol
Selling Price under Section 21 of this Agreement.

In the event that the
parties are unable to agree on which party’s numbers are correct for any month,
the numbers proposed by ADM will be used, subject to Millennium’s right to
challenge ADM’s books and records through its independent public accounting
firm, as described below in Section 25.

 11
 

25.                                 AUDITING OF ADM’S BOOKS AND RECORDS.

(a)                              Purposes of the Audits. Each month during
this Agreement, Millennium will have the right, at its own expense, to have
qualified representatives from an independent public accounting firm audit
those portions of ADM’s books and records which are directly related to the
ethanol bought and sold under this Agreement. The purposes of such audits will
include confirming the information provided to Millennium by ADM regarding the
Average Net Ethanol Selling Price, confirming ADM’s production and shipment
volumes for ethanol bought and sold under this Agreement and verifying any
other information which is directly related to this Agreement.

(b)                             Confidentiality Obligations. Any such
independent public accountants hired by Millennium will be subject to the same
confidentiality obligations that Millennium is subject to under Section 27 of
this Agreement. Millennium agrees to inform its accountants of those
confidentiality obligations.

(c)                              Challenges. Millennium may challenge ADM’s
books and records for any month during this Agreement, based on an audit by
Millennium’s independent public accounting firm. Millennium must provide written
notice of such a challenge to ADM within two (2) years of the end of the month
that is the subject of the challenge.

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

27.                                 HANDLING OF CONFIDENTIAL INFORMATION. The
parties acknowledge that they will be exchanging information about their
businesses under this Agreement which is confidential and proprietary, and the
parties agree to handle that confidential and proprietary information in the
manner described in this Section 27.

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

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

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

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

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

(v)                                Written
information must be clearly designated in writing as “CONFIDENTIAL INFORMATION”
by the party claiming it is confidential before it is disclosed to the other
party, except that all information about costs and prices will always be
considered Confidential Information under this Agreement, without the need for
specifically designating it as such.

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

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

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

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

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

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

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28.                                 RIGHT OF OFFSET. ADM will have the right to
withhold payments for the ethanol that it purchases from Millennium, as an
offset against any payments that Millennium fails to make to ADM under Sections
14 and 22 above.

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

29.                                 INSURANCE.

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

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

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

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

On or before the
effective date of this Agreement, Millennium will provide ADM with a
Certificate of Insurance Coverage verifying that insurance coverage complying
with the requirements of this Section 29 is in place. Millennium will not
change its insurance coverage during the term of this Agreement, except to
increase it or enhance it, without the prior written consent of ADM.

(b)                             ADM’S Insurance. ADM now has, and will
maintain during the entire term of this Agreement, comprehensive general
liability insurance with liability limits of at least five million dollars
($5,000,000) in the aggregate.

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

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The indemnification
obligations of the parties under this Agreement will be mutual, and ADM
therefore makes the same commitment to indemnify Millennium and its related
persons or organizations that Millennium has made to ADM in the proceeding
paragraph.

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

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

32.                                 COSTS AND ATTORNEYS’ FEES IN DISPUTE RESOLUTION
PROCEEDINGS, AND FOLLOWING UNCURED BREACHES. The parties agree that
the prevailing party in any dispute resolution proceedings related to this
Agreement shall be entitled to collect all of its costs, expenses, and
reasonable attorneys’ fees from the other party.

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

33.                                 TITLE AND RISK OF LOSS. With regard to the
ethanol sold to ADM by Millennium under this Agreement, title to and risk of
loss for such ethanol will pass from Millennium to ADM when the ethanol leaves
the premises (not the Production Facilities) of Millennium. In the event ADM
has a claim against a carrier related to the damage or destruction of the
ethanol sold to ADM by Millennium hereunder, and Millennium has either paid to
ADM or directly borne all the expense and cost related to such claim, ADM shall
assign its claim against such carrier to Millennium, and Millennium shall
accordingly be subrogated to the rights of ADM against such carrier.

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

35.                                 NOTICES. All notices related to this
Agreement which relate to breaches of this Agreement, indemnification claims or
other claims being made under this Agreement, challenges to the books and
records of the parties, or the termination of this Agreement (the “Significant

 15
 

Notices”) must be in writing, and must be delivered
personally or sent by certified or registered mail, return receipt requested.
All Significant Notices will be effective, and will be deemed to have been
received, upon the actual receipt of the Significant Notice by its intended
recipient, meaning either Millennium or ADM.

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

Millennium Ethanol, LLC

300 North Broadway

Marion, South Dakota 57043-0357

Attention: Steve Domm, CEO

with a copy to:

Mark J. Hanson

Lindquist & Vennum, PLLP

Suite 4200

80 South Eighth Street

Minneapolis, MN 55402

and notices to ADM will be addressed as follows:

with a copy to:

Archer-Daniels-Midland Company

4666 Faries Parkway

Decatur, Illinois 62526

Attn: General Counsel

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

36.                                 ASSIGNMENT; SUCCESSORS AND ASSIGNS. Because
of ADM’s concerns about product quality, and because of Millennium’s concerns
about the proper performance of the services to be provided by ADM, neither
party may assign its rights or obligations under this Agreement without the
written consent of the other party, which consent will not be unreasonably
withheld. This Agreement will be binding on the successors of the parties, and
their assigns.

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

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

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

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

41.                                 INTERPRETATION. This Agreement and any
other documents related to it will be interpreted in a fair and neutral manner,
without favoring one party over the other. No provision of this Agreement or
any other document related to it will be interpreted for or against either
party because the provision was drafted by that party, or its legal
representative.

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

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

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

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

	
  ARCHER DANIELS MIDLAND COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kyle James

  	
   

  
	
   

  	
   

  
	
  Name: Kyle James

  	
   

  
	
   

  	
   

  
	
  Its: Vice
  President – Fuel Ethanol Sales

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MILLENNIUM
  ETHANOL, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Steven Domm

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Steven Domm

  	
   

  
	
   

  	
   

  
	
  Its:

  	
  C.E.O

  	
   

  
					

 

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