Document:

Exhibit
10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (“Agreement”), made
and entered into as of the 22nd day of June,
2006, by and between MILLENNIUM ETHANOL, LLC, a South Dakota limited liability
company (“Borrower”), whose address is 300 North Broadway, Marion, South Dakota
57043, and DOUGHERTY FUNDING LLC, a Delaware limited liability company (“Lender”),
whose address is Suite 4300, 90 South Seventh Street, Minneapolis, Minnesota
55402.

PRELIMINARY
RECITALS:

A.             Borrower
owns or is acquiring certain real property located in the County of Turner,
State of South Dakota, all as more fully defined herein as the “Premises”.

B.             Borrower proposes to construct and
operate on the Premises a plant and other facilities that are ancillary,
incidental, necessary or related to the marketing, management, servicing,
ownership or operation of the foregoing as a 100 MGY anhydrous fuel grade
ethanol refinery and production facility all as more fully defined herein as
the “Project”.

C.             Fagen,
Inc., a Minnesota corporation, will design and build the Project pursuant to a
Lump Sum Design-Build Contract between Fagen, Inc. and Borrower.

D.             ICM,
Inc. a Kansas corporation, is licensing technology and providing certain design
and process engineering services to Borrower pursuant to a License Agreement,
dated May 5, 2006, by and between ICM, Inc. and Borrower.

E.              Archer
Daniels Midland Company, a Delaware corporation, will provide ethanol and DDGS
marketing services to Borrower.

F.              Fremar,
LLC, a Minnesota limited liability company, will provide grain origination
services to Borrower.

G.             Fremar Cooperative, Inc., will
provide management services to Borrower.

H.            Borrower
desires that the Lender make available to Borrower (i) a construction loan to
finance a portion of the cost of ownership, development, engineering,
construction, testing and operation of the Project and (ii) after Final
Completion (as later defined) occurs a term loan to finance the Project on a
term basis.

I.              In
furtherance thereof the Borrower has made application to and the Lender has
agreed to loan to the Borrower the sum of up to Ninety Million and no/100
Dollars ($90,000,000.00) and Borrower and Lender are entering into this certain
Agreement for the purpose of setting forth the terms and conditions under which
Lender will make the Loan (as later defined herein) to Borrower.

NOW, THEREFORE, in consideration of the making of the
Loan and other good and valuable consideration, the receipt of which is hereby
acknowledged by the parties hereto, the parties hereto agree as follows:

1. 

DEFINITIONS

1.1           Definitions.
As used herein, the following terms shall have the meanings herein specified
unless the context otherwise requires. Defined terms in this Agreement shall
include in the singular number the plural and in the plural number the
singular.

“Accounts” shall mean all
of the Borrower’s accounts, as such term is defined in the UCC, including each
and every right of the Borrower to the payment of money, whether such right to
payment now exists or hereafter arises, whether such right to payment arises
out of a sale, lease or other disposition of goods or other property, out of a
rendering of services, out of a loan, out of the overpayment of taxes or other
liabilities, or otherwise arises under any contract or agreement, whether such
right to payment is created, generated or earned by the Borrower or by some
other person who subsequently transfers such person’s interest to the Borrower,
whether such right to payment is or is not already earned by performance, and
howsoever such right to payment may be evidenced, together with all other
rights and interests (including all Liens) that the Borrower may at any time
have by law or agreement against any account debtor or other obligor obligated
to make any such payment or against any property of such account debtor or
other obligor; all including but not limited to all present and future
accounts, contract rights, loans and obligations receivable, chattel papers,
bonds, notes and other debt instruments, tax refunds and rights to payment in
the nature of general intangibles.

“ADM” shall mean Archer
Daniels Midland Company, a Delaware corporation.

“Adjustment Date” shall
mean the first day of each calendar quarter in a year, i.e., January 1, April
l, July 1 and October 1.

“Advance” shall mean any
advance of loan funds by Lender.

“Appeal” shall mean an
appeal commenced under the Rules of Civil Procedure for the State of South
Dakota appealing the decision in the Turner County Litigation.

“Appeal Extension Rights”
shall mean the right of the Borrower to extend the Substantial Completion Date
for six (6) months upon the filing of the Appeal with a further right to extend
the Substantial Completion Date for an additional four (4) months upon the
payment of applicable Extension Fees.

“Applicable Laws” shall
mean all laws, treaties, ordinances, judgments, decrees, injunctions, writs and
orders of any court or governmental agency or authority, and all rules,
regulations, orders, interpretations and Permits of any federal, state, county,
municipal, regional, environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over the Project or
any activity conducted at or in connection with the Project or the Premises, as
may be applicable from time to time.

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“Applicable Permits”
shall mean all Permits including Regulatory Approvals required to be obtained
or maintained under Applicable Laws in connection with the Project or any
activity conducted at or in connection with the Project or the Plant Site,
including, without limitation, construction of the Project at the Plant Site,
transportation of all Materials and Equipment and other items necessary for the
Project to and from the Plant Site, performance of the Work or Start-Up, testing
or operation of the Plant, as may be in effect from time to time.

“Application For Payment”
shall mean the Contractor’s Request for Advance with AIA Document G702 with AIA
Document G703 Continuation Sheet signed by the Contractor requesting an advance
of Contract Sums and in the case of the Design Builder the form of Application
For Payment as attached to the Design Build Agreement.

“Appraisal” shall mean
the Appraisal prepared by Natwick Associates dated May 1, 2006, addressed to
Lender.

“Approvals” shall mean
those approvals required of the Project, the Plan Documents and all other
Governmental Requirements by Governmental Authorities as a condition to
constructing the Project.

“Approved Plans” shall
mean the Plan Documents as approved by the County and its agencies.

“Archeological Conditions”
shall mean all significant structures, artifacts or features resulting from
historic or prehistoric occupation or use of a location to the extent that such
structures, artifacts or features may reasonably be protected as valued
cultural resources pursuant to an applicable federal law, including the
National Historic Preservation Act of 1966 (16 U.S.C. § 470), the Preservation
of Historical and Archeological Data Act of 1974 (16 U.S.C. § 469 et seq.) and
the General Regulatory Policies of the U.S. Army Corps of Engineers (33 C.F.R.
Part 320), or pursuant to an applicable state law.

“Assignment of Contract
Rights and Intangibles” shall mean an assignment and pledge by the Borrower to
the Lender of all Contract Documents and other documents and intangibles
benefiting the Project.

“ATF” shall mean the
United States Alcohol, Tobacco and Firearms Agency of the Department of the
Treasury.”

“Bankruptcy Code” shall
mean the Bankruptcy Reform Act of 1978 as heretofore and hereafter amended, and
codified as 11 U.S.C. §101 et seq.

“Basis Points” shall mean
an arithmetic expression of a percentage measured in hundredths of a percent
(i.e. 50 Basis Points equals one half of one percent).

“Bonds” shall mean a
Performance Bond and Payment Bond each in the full Contract Price of the Design
Build Agreement fully paid for and in form and content acceptable to Lender and
written by a Surety acceptable to Lender and naming the Lender as a dual

 3
 

oblige under an
acceptable dual obligee rider with evidence of payment in full of the premium
for the Bond furnished to Lender.

“Borrower Equity” shall
mean the sum of $55,645,000.00 cash to be available to fund Project Costs
consisting of the following the full amount of which is to be deposited into
the Construction Escrow Account prior to the First Advance and thereafter made
available pursuant to the provisions of the Disbursing Agreement to pay Project
Costs prior to the making of any advances on the Loan:

	
  Form of Equity

  	
   

  	
  Dollar Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Paid in Member
  Capital

  	
   

  	
  $

  	
  38,045,000.00

  	
   

  
	
  Unsecured Debt

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  
	
  Subordinate Loan

  	
   

  	
  $

  	
  14,000,000.00

  	
  *

  
	
  Net TIF Proceeds

  	
   

  	
  $

  	
  1,600,000.00

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  55,645,000.00

  	
   

  

 

*At the current time the
Subordinate Loan is in the form of a Letter of Credit issued to the Borrower
with expiration date of September 18, 2006 which Letter of Credit is to be
drawn upon by the Borrower if the Subordinate Lender does not document, close
and fund the Subordinate Loan by the earlier of the First Advance or September
18, 2006. A portion of the Paid In Member Capital is represented by cash
expenditures paid into the Project by the Borrower to be demonstrated by paid
invoices.

“Broker” shall mean any
person or entity who for a fee or commission has been engaged by the Borrower
to obtain financing for the Project or to procure leases for the Project.

“Budget” or “Project
Budget” shall mean the budget prepared by Borrower attached as Exhibit “A”
itemizing and setting forth the estimated cost of constructing and financing
the Improvements and all Project Costs.

“Business Day” shall mean
any day that national banks are open for business in Minneapolis, Minnesota.

“Capital Expenditures”
shall mean for a period, any expenditure of money during such period for the
purchase or construction of assets, or for improvements or additions thereto,
which are capitalized on the Borrower’s balance sheet.

“Capitalized Lease
Obligations” shall mean any obligation to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real and/or personal
property, which obligation is, or in accordance with GAAP (including Statement
of Financial Accounting Standards No. 13 of the Financial Accounting Standards
Board) is required to be, classified and accounted for as a capital lease (a “Capital
Lease”) on a balance sheet at the time incurred; and for purposes of this
Agreement the amount of each Capitalized Lease Obligation shall be the balance
sheet amount thereof determined in accordance with GAAP.

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“Cash CAPEX” shall mean
shall mean, for any fiscal period, the aggregate of all expenditures during
such period for any assets, or for improvements, replacements, substitutions or
additions therefor or thereto, which are capitalized on the balance sheet of the
Borrower and which, in conformity with GAAP, are required to be included in or
reflected by the property, plant or equipment or similar fixed asset account
reflected in such balance sheet, and shall include the balance sheet amount of
Capitalized Lease Obligations incurred during such period.

“Certificate of
Substantial Completion” shall mean a certificate issued by the Design Builder
that will set forth (i) the date of Substantial Completion, (ii) the remaining
items of Work that have to be completed before Final Payment (“Punch List”),
(iii) provisions (to the extent not already provided in the Design Build
Agreement) establishing Borrower’s and Design-Builder’s responsibility for the
Project’s security, maintenance, utilities and insurance pending Final Payment,
and (iv) an acknowledgment that warranties with respect to the Work commence on
the date of Substantial Completion, except as may otherwise be noted in the
Certificate of Substantial Completion.

“Change Order” shall mean
a written instrument issued after execution of this Agreement signed by
Borrower and a Contractor, stating their agreement upon all of the following:

·              the scope of the
change in the Work;

·              the amount of the
adjustment to the Contract Price; and

·              the extent of the
adjustment to the Contract Time(s).

“Chattel Paper” shall
mean all “Chattel Paper” (as that term is defined in the UCC) now owned or
hereafter acquired.

“City” shall mean the
City of Marion, South Dakota.

“C02” shall mean the carbon dioxide
co-product of the Ethanol production process cleaned of residual alcohol and
compressed for storage, if produced at the Plant.

“Code” shall mean the
United States Internal Revenue Code of 1986, as amended.

“Collateral” shall mean
those items listed in Section 4.1 including but not limited to all of the
Plant, the Premises, Accounts, Chattel Paper, Deposit Accounts, Documents,
Equipment, General Intangibles, Goods, Instruments, Inventory, Investment
Property, Intellectual Property, Intellectual Property Rights, Letter-of-Credit
Rights, any Letters of Credit, the Plant Logo, the Water Rights, all sums on
deposit in any collateral account, any items in any lockbox, all monies whether
or not in the possession or control of Lender including any cash collateral,
all real property pledged pursuant to mortgages and deeds of trust granted
pursuant hereto or granted hereafter; together with (i) all substitutions and
replacements for and products of any of the foregoing; (ii) all accessions,
substitutions for, replacements, accessories, attachments, parts, equipment and
repairs, and products with respect to the foregoing; (iii) all warehouse
receipts, bills of lading and other documents of title now or hereafter
covering the foregoing; (iv) all

 5
 

collateral subject to the
lien of any Loan Document; (v) any money, or other assets of the Borrower that
now or hereafter come into the possession, custody, or control of the Lender;
(vi) all cash and non-cash proceeds of any and all of the foregoing; and (vii)
all books and records (including customer lists, files, correspondence, tapes,
computer programs, printouts, and computer records) with respect to the
foregoing.

“Collateral Assignment of
Incentive Payments” shall mean the Collateral Assignment of Incentive Payments
executed and delivered by the Borrower to the Lender assigning the Incentive
Payments to the Lender and directing payment to be made directly to the Lender.
The Collateral Assignment of Incentive Payments may also include any federally
mandated forms required by the Commodity Credit Corporation.

“Commercial Operation”
shall mean commercial operation of the Project in accordance with the
Performance Guarantee Criteria and all Legal Requirements, Laws and
Governmental Approvals and in accordance with prudent ethanol industry
practices.

“Commissioning” shall
mean the commissioning of the Plant to produce Ethanol including the checking
and preparation of the plant for operation, functional control loop checking,
interlock testing, system purging and utility system startups.

“Commitment” shall mean
the Lender’s Loan Commitment dated May 12, 2006 as accepted by the Borrower.

“Conditional Lien Waiver”
shall mean a Lien Waiver conforming to the Conditional Waiver of Lien to Date
as attached to the Design Build Agreement.

“Construction Contracts”
shall mean any contract entered into between a Contractor and the Borrower for
the design, construction, equipping or Start-Up of any portion of the Project,
including but not limited to the Design Build Agreement and Standalone
Contracts.

“Construction Escrow Account”
shall mean the account to be established with Title, as disbursing agent,
wherein Title will hold all Loan Funds and Owner Equity received and make
disbursements therefrom.

“Construction Management
Services Agreement” shall mean an agreement between the Borrower and Fremar
Cooperative wherein Fremar Cooperative provides construction management
services to Borrower in connection with the construction of the Project under
terms and conditions reasonably acceptable to Lender.

“Construction Phase” shall
mean a period of time measured from the Loan Closing Date to the end of the 23rd month following the Loan Closing Date, subject
to extension if the Appeal is exercised.

“Construction Reporting
Schedule” shall mean a monthly report to be forwarded to the Lender by the
Borrower under the form of the Construction Reporting Schedule attached as
Exhibit “D”.

 6
 

“Contract Documents”
shall mean in the case of each Construction Contract, the construction
contract, all Addenda (which pertain to the Contract Documents), any Notice to
Proceed, the General Conditions, any Supplementary Conditions, if any, the Plan
Documents, together with all written amendments, change orders, work change
directives, field orders, and any Design Professional’s written interpretations
and clarifications issued.

“Contract Price” shall
mean the Stipulated Sum set forth in any Construction Contract for the Cost of
the Work to be done therefor subject to adjustments made in accordance with the
Construction Contract.

“Contract Time(s)” shall
mean the scheduled dates provided for in the Contract Documents including
Scheduled Substantial Completion Date and Final Completion Date.

“Contractor” shall mean
Design Builder and any other Contractors, any Subcontractor, and any other
person or entity under contract with the Borrower to perform Work at the
Project.

“Contractor’s Consent”
shall mean a document in form and content as attached as Exhibit “G”.

“Contractor’s Fee” shall
mean the fee payable any Contractor under a Construction Contract for the construction
of the Work.

“Contractor’s Proprietary
Data” shall mean that proprietary and confidential technical information,
including drawings, documents, specifications and other data relating to
certain processes or any plant, system or equipment employed in the use thereof
or relating to construction, operation or maintenance of any such plant, system
or equipment, which constitutes trade secrets or proprietary know-how and
proprietary and technical information of a Contractor or its Subcontractors or
Vendors and which has been or shall be furnished by the Contractor to Borrower,
directly or indirectly, including an inspection of plants or equipment, in
connection with the performance of the Contract.

“Contracts, Files and
Records” shall mean all contracts, franchises, licenses, permits, management
records, files, consents, governmental approvals and intangibles used, useful
or required in the ownership and management of the Project.

“Corn Procurement
Agreement” shall mean the Corn Procurement Agreement dated June 5, 2006 between
Millennium Ethanol, LLC and Fremar, LLC, providing for the supply to the
Borrower of grain sufficient to achieve 100 MGY output of Ethanol.

“County” shall mean the
County of Turner, South Dakota.

“Critical Path Schedule”
shall mean the time schedule for performance of the Work delivered by each
Contractor to Owner.

 7
 

“DDGS Sales and Purchase
Agreement” shall mean the DDGS Sale and Purchase Agreement dated June 15, 2006,
by and between Archer Daniels Midland Company and Millennium Ethanol, LLC,
wherein ADM agrees to purchase 120% of the dry DDGS produced from the Project.

“DDGS” shall mean
distillers grains, wet or dry, and with or without solubles.

“DDGS Receivables” shall
mean those Accounts payable to the Borrower for the sale of dry DDGS arising
from investment grade account debtors in connection with the purchase of dry
DDGS by such account debtors.

“Debt” shall mean all
items of indebtedness or liability that in accordance with GAAP would be
included in determining total liabilities as shown on the liabilities side of
the balance sheet for Borrower and shall also include the aggregate payments
required to be made by Borrower at any time under any lease that is considered
a capitalized lease under GAAP, the indebtedness due the Lender under the Loan,
including (i) principal and interest on the Subordinated Loan, (ii) any
indebtedness due under the Unsecured Debt and (iii) principal and interest due
under the LOC.

“Debt Service” shall mean
as to any applicable period cash interest payments, principal payments,
premiums and charges with respect to all Debt required to be paid during such
period.

“Debt Service Coverage
Ratio” shall mean EBITDA divided by Fixed Charges.

“Debt Service Reserve
Account” shall mean the interest bearing reserve account created pursuant to
Section 3.2 of this Agreement.

“Debt Service Reserve
Payments” shall mean reserve payments to be made pursuant to Section 3.2.

“Design Build Agreement”
shall mean the Lump Sum Design Build Agreement dated May 5, 2006 between the
Design Builder and the Borrower wherein the Design Builder agrees to provide
design, engineering, fabrication, materials procurement, construction,
commissioning, startup, training and testing for the Project on a “turn key”
basis and for a lump sum.

“Design Builder” shall
mean Fagen, Inc., a Minnesota corporation.

“Design Builder’s Consent
and Acknowledgment” shall mean a document in the form and content attached as
Exhibit “I”.

“Design Professionals”
shall mean, collectively, the architects/engineers retained by the Design
Builder, ICM, and the other engineers, consultants and professionals that
perform services related to the design of the Project or portions thereof, or
otherwise involved on the Project to review and test performance of various Project
elements or confirm compliance thereof with the Plan Documents, or otherwise to
provide recommendations or advice relating to the design of the Project.

 8
 

“Development Costs” shall
mean those out of pocket costs incurred by the Borrower in the development of
the Project.

“Direct Costs” shall mean
those Project Costs identified in the Budget as “Direct Costs”.

“Disbursing Agreement”
shall mean the Agreement entered into among the Borrower, Lender and Title
governing the disbursement of Loan Funds.

“Distributions” shall
mean any payment of monies paid by the Borrower to a Member by reason of its
membership interest, whether profits, return of capital, interest on capital,
or any preference payments or any distribution in respect thereof, either
directly or indirectly.

“Documents” shall mean
all “Documents” (as that item is defined in the UCC) now or hereafter acquired.

“Drawings” shall mean the
drawings, diagrams, schedules and other information specially prepared for the
construction of the Project and the Work to be done.

“EBITDA” shall mean for
any period an amount equal to Net Income for such period plus (a) the
following to the extent deducted in calculating such Net Income: (i) Fixed
Charges for such period, (ii) the provision for Federal, state, local and
foreign income taxes payable for such period, (iii) depreciation and
amortization expense and (iv) other non-recurring expenses reducing such Net
Income which do not represent a cash item in such period or any future period
and minus (b) the following to the extent included in calculating such
Net Income: (i) Federal, state, local and foreign income tax credits for such
period and (ii) all non-cash items increasing Net Income for such period.

“Effective Date” shall
mean May 5, 2006, the date on which the Design Build Agreement was executed and
delivered.

“Electrical Facilities”
shall mean all mains, substations, service laterals, piping, manholes and
appurtenances for the furnishing, transmission, storage and disposal of
electricity to the Project.

“Electrical Supply
Agreements” shall mean those agreements with Utility Providers to provide the
Electrical Supply System to the Plant under the following agreements:

·                  Proposal for
Electrical Service submitted by Southeastern Electric Cooperative, Inc. dated
June 9, 2006.

·                  Definitive
agreement not yet negotiated and to be executed and delivered pursuant to the
above Proposal.

“Electrical Supply
Provider” shall mean Southeastern Electric Cooperative, Inc., or such other
acceptable Utility Provider, providing the electricity to the Project.

“Electrical Supply System”
shall mean the Electrical Facilities pursuant to which electrical energy is
transferred from the Utility Providers’ main lines and down converted

 9
 

for use in the Plant and
which Borrower shall purchase under the Electrical Supply Agreements.

“Engineering Studies”
shall mean any engineering studies, environmental studies and reports,
subsurface condition studies, development plans, and surveys made for Borrower
or Lender in connection with the Project.

“Environmental Audit”
shall mean the Phase I Environmental Site Assessment prepared by Gem Star Inc.
dated May 23, 2006.

“Environmental Indemnity”
shall mean an agreement executed by the Borrower indemnifying and holding the
Lender harmless from any Hazardous Substances and the violation of any
Environmental Laws.

“Environmental Laws”
shall mean any federal, state or local statute, law, regulation, order,
consent, decree, judgment, permit, license, code, covenant, deed restriction,
common law, convention, ordinance or other requirement relating to public
health, safety or the environment, including, without limitation, those
relating to releases, discharges or emissions to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use and handling
of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage
or management of hazardous or solid waste, or Hazardous Substances or crude
oil, or any fraction thereof, or to exposure to toxic or hazardous materials to
the handling, transportation, discharge or release of gaseous or liquid
Hazardous Substances and any regulation, order, notice or demand issued
pursuant to such law, statute or ordinance, including without limitation the
following: the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the
Hazardous Materials Transportation Act, as amended, the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1976, the Safe Drinking Water
Act, the Clean Air Act, as amended, the Toxic Substances Control Act of 1976, the
Occupational Safety and Health Act of 1977, as amended, the Emergency Planning
and Community Right-to-Know Act of 1986, the National Environmental Policy Act
of 1975, the Oil Pollution Act of 1990, and any similar or implementing state
law, and any state statute and any further amendments to these laws providing
for financial responsibility for cleanup or other actions with respect to the
release or threatened release of Hazardous Substances or crude oil, or any
fraction thereof and all rules and regulations promulgated thereunder.

“Equipment” shall mean
all of Borrower’s equipment, as defined in the UCC, including all machinery,
apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other
tangible personal property (other than Inventory), and all parts, accessories
and special tools therefor, and accessions thereto and, in any event, including
all machinery and equipment, including processing equipment, conveyors, machine
tools, data processing and computer equipment including embedded software and
peripheral equipment and all engineering, processing and manufacturing
equipment, office machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks, forklifts,
molds, dies, stamps, motor vehicles, rolling stock and other

 10
 

equipment of every kind
and nature, trade fixtures and fixtures not forming a part of real property,
together with all additions and accessions thereto, replacements therefor, all
parts therefor, all substitutes for any of the foregoing, fuel therefor, and
all manuals, drawings, instructions, warranties and rights with respect
thereto, and all products and proceeds thereof and condemnation awards and
insurance proceeds with respect thereto.

“ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” shall
mean each person (as defined in section 3(9) of ERISA) that together with the
Borrower would be deemed to be a “single employer” within the meaning of
section 414(b),(c), (m) or (o) of the Code.

“Escrow and Reserves”
shall mean all monies deposited with Lender pursuant to any reserve, escrow,
deposit or cash collateral agreements executed by Borrower in favor of Lender
together with any Deposit Accounts or Investment Property, if any, in which the
aforesaid are deposited.

“Ethanol” shall mean
anhydrous denatured fuel grade ethanol alcohol meeting all applicable ASTM
Standards and the ethanol standards established by the Williams Pipeline Test
and ethanol standards established by all other standards ethanol industry
tests.

“Ethanol Receivables”
shall mean those Accounts payable to the Borrower for the sale of Ethanol.

“Ethanol Sales and
Purchase Agreement” shall mean the Ethanol Sale and Purchase Agreement dated
May 31, 2006 by and between Archer Daniels Midland Company, a Delaware
corporation, and Millennium Ethanol, LLC, wherein ADM agrees to purchase up to
120% of the nameplate capacity of the Ethanol produced from the Project.

“Event of Default” shall
mean any of those events specified as an event of default herein.

“Extension Fees” shall
mean (i) an extension fee in the sum of $225,000.00 payable on the later of (a)
the Loan Closing Date or (b) the date the Appeal is filed if an Appeal is filed
and (ii) an additional extension fee in the sum of $112,500.00 payable not
later than thirty (30) days prior to the First Extended Date, if the Appeal is
filed.

“FF&E Reserve” shall
mean the reserve account established pursuant to Section 3.3.

“Final Application for
Payment” shall mean a final application for payment when Final Completion has
been achieved in accordance with (a) Section 6.5 of the Design Build Agreement
and (b) in accordance with any other Construction Contracts.

“Final Completion” shall
mean (a) in the case of the Design Build Agreement the occurrence of all of the
following:

·                     Substantial
Completion has been achieved;

 11
 

·                  any outstanding
amounts owed by Design-Builder to Owner have been paid in full;

·                  the items
identified on the Punch List have been completed by Design-Builder;

·                  clean-up of the
Site has been completed;

·                  all permits
required to have been obtained by Design-Builder have been obtained;

·                  certificates of
insurance confirming that required coverages will remain in effect consistent
with the requirements of the Contract Documents have been obtained;

·                  release and
waiver of all claims and liens from Design-Builder and Subcontractors have been
provided;

·                  the Performance
Tests have been successfully completed; and

·                  the following
has been provided to Borrower:

aa)                                an
affidavit that there are no claims, obligations or liens outstanding or
unsatisfied for labor, services, material, equipment, taxes or other items
performed, furnished or incurred for or in connection with the Work which will
in any way affect Owner’s interests;

bb)                              a
general release executed by Design-Builder waiving, upon receipt of final
payment by Design-Builder, all claims for payment, additional compensation, or
damages for delay, except those previously made to Owner in writing and
remaining unsettled at the time of Final Payment provided such general release
shall not waive defenses to claims that may be asserted by Owner after payment
or claims arising after payment;

cc)                                consent
of Design-Builder’s surety, if any, to Final Payment; and

dd)                              a
hard copy of the As Built Plans;

and (b) in the case of any other Construction
Contract:

·                  Substantial
Completion has previously occurred.

·                  All Work
pursuant to the Contract Documents has been fully completed in full compliance
with the Contract Documents and applicable Governmental Requirements.

·                  Final Inspection
has been completed by all required Governmental Authorities and final Approvals
for use and occupancy have been delivered.

·                  Final
Documentation has been delivered.

“Final Completion Date”
shall mean the date on which Final Completion occurs which date shall be
achieved within ninety (90) days after the date of Substantial Completion.

“Final Documentation”
shall mean the delivery to the Borrower (with copies to Lender) of the
following and approval by the Borrower (and if required by the Lender):

1.                                       Final
Application For Payment signed by the Contractor.

 12
 

2.                                       Final
Lien Waivers from the Contractor and all Suppliers and Sub-Contractors, or if
any Supplier or Sub-Contractor refuses to furnish a Final Lien Waiver, a bond
satisfactory to Borrower, Lender and Title Company indemnifying against any
such Lien.

3.                                       Contractor’s
affidavit that all payrolls, bills for materials and equipment, and other
indebtedness connected with the Work for which Borrower may be responsible have
been paid or otherwise satisfied.

4.                                       Contractor
has delivered complete as-built drawings for the Work to Borrower.

5.                                       Contractor
has assigned and/or delivered to Borrower all bonds, warranties and guarantees
required by the Contract Documents.

6.                                       All
other pertinent provisions of the Contract Documents have been satisfied with
respect to Final Payment.

7.                                       All
operating manuals, inspection reports and permits required by the Contract
Documents have been delivered.

“Final Lien Waiver” shall
mean a Lien Waiver fully waiving and extinguishing the right to assert a
Mechanic Lien against the Premises.

“Final Payment” shall
mean the final payment of all sums due a Contractor under the its Construction
Contract or in the case of a Supplier or Sub-Contractor the final payment of
all sums due under the respective Suppliers contracts or Subcontract, as the
case may be.

“Financial Institution”
shall mean a money center national bank or European Community bank doing
business in the United States and whose assets and business are subject to
regulation by either the Comptroller of the Currency or the Federal Deposit
Insurance Corporation and whose long term unsecured debt obligations are rated
at least “A-” by Standard & Poors or “A3” by Moody’s Investors Services,
Inc.

“Financing Statements”
shall mean one or more financing statements given or authorized by the Borrower
under the provisions of the UCC to Lender perfecting a security interest in the
Collateral.

“First Advance” shall
mean the First Advance of Loan funds.

“First Extended Date”
shall mean the extension of the Substantial Completion Date for an additional 6
months if the Appeal is filed.

“Fixed Charges” shall mean
for any described fiscal period, the sum of: (a) interest expense for such
period; (b) payments under Capitalized Lease Obligations not otherwise included
in interest expense for such period; plus (c) any scheduled principal
payments for borrowed money made during such period.

“Fixtures” shall mean all
“Fixtures” (as that item is defined in the UCC) now owned or hereafter acquired
with respect to the Premises.

 13
 

“Force Majeure” shall
mean a cause or event beyond the reasonable control of, and without the fault
or negligence of a Party claiming Force Majeure, including, without limitation,
an emergency, floods, earthquakes, hurricanes, tornadoes, adverse weather
conditions not reasonably anticipated or acts of God; sabotage; vandalism
beyond that which could reasonably be prevented by a Party claiming Force
Majeure; terrorism; war; riots; fire; explosion; blockades; insurrection;
strike; slow down or labor disruptions (even if such difficulties could be
resolved by conceding to the demands of a labor group); delay in the delivery
of materials or equipment that is beyond the control of a Party claiming Force
Majeure, and action or failure to take action by any Governmental Authority
(including the adoption or change in any rule or regulation or environmental constraints
lawfully imposed by such Governmental Authority), but only if such
requirements, actions, or failures to act prevent or delay performance; and
inability, despite due diligence, to obtain any licenses, permits, or approvals
required by any Governmental Authority (any such event, a “Force Majeure Event”).
Economic hardship, (except to the extent caused by a Force Majeure Event) is
explicitly excluded as a Force Majeure Event and is solely the responsibility
of the affected Party.

“Fremar Cooperative”
shall mean Fremar Farmers Cooperative, Inc., a South Dakota cooperative.

“Fremar, LLC” shall mean
Fremar, LLC, a Minnesota limited liability company, and where the context
requires any subsidiary or wholly owned affiliate.

“GAAP” shall mean
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of any date of determination.

“General Intangibles”
shall mean all “general intangibles,” as that term is defined in the UCC, now
or hereafter owned by Borrower, including without limitation equipment leases,
partnership interests, limited liability company interests, member interests,
joint venture interests, all patent rights, trademarks, copyrights, trade
names, goodwill, registrations, license rights, rights in intellectual
property, licenses, permits, business records, customer and subscriber lists,
computer programs, tapes, disks and related data processing software owned by
or in which such Person has an interest, rights to refunds or indemnification,
the right to receive any insurance proceeds and all other intangible personal
property of every kind and nature.

“Good Engineering and
Construction Practice” shall mean those practices, methods, acts, techniques
and standards as may be followed or employed at the time of performance of the
Work, which (i) are generally accepted for use in dry mill ethanol facilities
of the same or similar size and type as the Plant, (ii) are commonly used in
prudent agri-products, engineering, construction, project management and
operations and (iii) are consistent with Applicable Laws, Applicable Permits,
safe operation and environmental protection.

 14
 

“Goods” shall mean all “Goods”
(as that item is defined in the UCC) now owned or hereafter acquired.

“Governmental Authority”
shall mean any governmental body or regulatory authority exercising
jurisdiction over the Premises or the construction of the Project, including
any department or subdivision of the County/City.

“Governmental
Requirements” shall mean all laws, ordinances, statutes, codes, rules,
regulations, orders and decrees of any Governmental Authority or any other
political subdivision in which the Project is located and of any other
political subdivision, agency, quasi-governmental authority or instrumentality
exercising jurisdiction over the Project and including all wetlands
restrictions/regulations, Regulatory Approvals and Historical Requirements
adopted or enacted by a Governmental Authority applicable to the Project, its
construction and its use and occupancy.

“Guaranteed Performance”
shall mean the demonstrated levels of performance by the Plant in accordance
with the Performance Guarantee.

“Hazardous Substance”
shall mean any hazardous or toxic material, substance or waste, pollutant or
contaminant which is defined, prohibited, limited or regulated under any
statute, law, ordinance, rule or regulation of any local, state, regional or
Federal authority having jurisdiction over the property of the Borrower, or its
use, including but not limited to any material, substance or waste which is (a)
defined, listed or otherwise classified as a hazardous substance, hazardous
material, hazardous waste or other words of similar meaning under any
Environmental Laws; (b) petroleum, petroleum hydrocarbons, and all petroleum
products; (c) polychlorinated biphenols; (d) lead; (e) urea formaldehyde; (f)
asbestos and asbestos containing materials; (g) flammables and explosives; (h)
infectious materials; (i) atmospheric radon at levels over 4 picocuries per
cubic liter, (j) radio active materials; or (k) defined, prohibited, limited or
regulated as a hazardous substance or hazardous waste under any rules or
regulations promulgated under any of the foregoing Environmental Laws.

“Historical Requirements”
shall mean any statutes, rules and regulations enacted by a Governmental
Authority declaring the Project or any part thereof to be of historical
significance.

“ICM” shall mean ICM,
Inc., a Kansas corporation, specializing in process consulting, engineering,
equipment fabrication, field installation, plant startup and, through related
companies, commodity trading.

“ICM License Agreement”
shall mean the ICM License Agreement dated May 5, 2006, by and between
Millennium Ethanol, LLC, and ICM, Inc.

“Impositions” shall mean
all real estate, ad valorem and personal property taxes, general and special
assessments imposed by Governmental Authorities, water, sewer and other
municipal utility charges and any and all other fees and charges that may be
assessed or imposed by Governmental Authorities on the Project and the
underlying Premises.

 15

“Improvements”
shall mean the Plant, all buildings, structures, Equipment, improvements,
betterments and Personalty to be constructed and/or installed on or in the
Premises in accordance with the Contract Documents, together with related on
site and off site improvements and including the Rail Spur.

“Incentive
Payments shall mean all incentive payments, tax credits and subsidies payable
to the Borrower to produce and market Ethanol including:

·                  Eligibility with
the USDA Commodity Credit Corporation, 7 CFR Part 1424, Federal Register,
Volume 68, No. 88, May 2, 2003, page 24596-24603 (the “Commodity Credit
Corporation Payments”).

·                  Eligibility for
the South Dakota Department of Revenue, Ethanol Production Incentive Payment
Program. (the “State of South Dakota Producer Incentive Payments”).

“Indirect Costs”
shall mean those Project Costs identified in the Budget as “Indirect Costs”.

“Initial Payment”
shall mean the required down payment of $8,000,000.00 of the Contract Price
required to be paid to the Design Builder under the Design Build Agreement.

“Inspecting
Engineer” shall mean HDR Engineering, Minneapolis, Minnesota.

“Instruments”
shall mean all “Instruments” (as that item is defined in the UCC) now or
hereafter acquired.

“Insurance
Proceeds” shall mean all awards, payments, proceeds now or hereafter payable
under any policy of insurance insuring the Project including but not limited to
the proceeds of casualty insurance, title insurance, business
interruption/rents insurance or other insurance maintained with respect to the
Project.

“Intellectual
Property” shall mean all “Intellectual Property” (as that term is defined in
the UCC) now owned or hereafter acquired, including, but not limited to all
proprietary information made available to the Borrower under the Design Build
Agreement and License Agreement and all Copyrights, Trademarks, Patents, trade
secrets, customer lists, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
recipes, experience, processes, models, drawings, materials and records, or any
interest therein, now owned or licensed to or hereafter acquired by Borrower.

“Intellectual
Property Rights” shall mean all actual or prospective rights arising in
connection with any intellectual property or other proprietary rights,
including all rights arising in connection with copyrights, patents, service
marks, trade dress, trade secrets, trademarks, trade names or mask works.

 16
 

“Intercreditor
Agreement” shall mean an Intercreditor and Collateral Priority Agreement
between the LOC Lender and the Lender acceptable to the Lender providing for
the respective priorities of the LOC Lender and Lender in the Collateral.

“Interest Rate”
shall mean the interest rate charged on the Loan from time to time as set forth
in Section 2.2 hereof.

“Inventory” shall
mean “inventory,” as that term is defined in the UCC, now or hereafter owned by
Borrower, including without limitation (a) all products, goods, materials and
supplies produced, purchased or acquired by Borrower for the purpose of sale in
the ordinary course of its business including corn and grain supplies, ethanol,
distillers grains and carbon dioxide byproduct, (b) maintenance materials
inventory and (c) goods in which Borrower has an interest in mass or a joint or
other interest or right of any kind.

“Inspecting
Engineer” shall mean the engineer/architect engaged by Lender to report on the
progress of construction.

“Investment
Property” shall mean all of the Borrower’s investment property, as such term is
defined in the UCC, whether now owned or hereafter acquired, including but not
limited to all securities, security entitlements, securities accounts,
commodity contracts, commodity accounts, stocks, bonds, mutual fund shares,
money market shares and United States government securities.

“Judgments and
Awards” shall mean all awards, compensation and settlements in lieu thereof
made as a result of the taking by power of eminent domain of the whole or any
part of the Project, including any awards for damages sustained to the Project,
for a temporary taking, change of grade of streets or taking of access.

“Labor” shall mean
the furnishing of any work or labor to the construction of the Project.

“Land Use
Restrictions” shall mean all zoning, building, land use, subdivision,
development and environmental laws which do or may regulate the construction,
occupancy, development, use, operating, sale, lease, encumbering or management
of the Premises, all requirements of Governmental Authorities pursuant to such
laws and all development and building permits issued by Governmental
Authorities for the Premises.

“Legal
Requirements” shall mean all laws, ordinances, rules, regulations and
requirements of all Governmental Authorities including but not limited
Environmental Laws applicable to all or part of the Premises or the Project or
the construction, development, improvement, repair, renovation, lease, sale,
encumbering or transfer of all any part of the Premises.

“LIBOR” shall mean
the daily rate of interest as published in the Money Rates section of
The Wall Street Journal as London Interbank Offered Rates (Libor) with a
term of three (3) months. If The Wall Street Journal ceases to publish the London
Interbank Offered Rates (Libor), Lender may select a substitute publication
or service that publishes the London Interbank Offered Rates (Libor), or
its equivalent, and if such London Interbank Offered Rates (Libor) is no
longer published, then the LIBOR Rate will be determined by

 17
 

Lender computing
the arithmetic mean rates of interest per annum notified to the Lender by at
least two (2) major banks in the London interbank market as the rate of
interest at which U.S. dollar deposits in the approximate amount of the Loan
would be offered to major banks in the London interbank market at their request
on the second Libor Business Day prior to the Adjustment Date. If the LIBOR
Rate is not published or announced on the Adjustment Date, then the LIBOR Rate
published or announced on the immediate last day prior to the Adjustment Date
shall be substituted.

“Libor Business
Day” shall mean any day on which banks in London, England and New York, New
York are open for conducting transactions in foreign currency and exchange.

“Lien” shall mean
any lien that may be imposed by law or by contract against the Premises for the
payment of labor, materials, or services rendered by a person or entity in
connection with the Work.

“Lien Rights”
shall mean any rights available at law for a contractor, laborer, materialman,
supplier or worker providing labor, services or materials to an improvement on
real estate to claim a lien for the payment of its labor, services or materials
provided in the construction of such improvement including without limitation
all rights under applicable law, and any so-called “mechanic lien laws” whether
available by constitution, statute, code or case law, or any rules or
regulations promulgated thereunder.

“Lien Waiver”
shall mean a waiver of lien in format and content sufficient under controlling
law to waive and relinquish any right to assert a Lien against the Premises.

“Line Item” shall
mean those individual Project Costs items as itemized by line in the Sworn
Construction Statement and Budget.

“Loan” shall mean
the loan to be made pursuant to Article 2 of this Agreement.

“Loan Closing Date”
shall mean the later of the date of this Agreement is executed and delivered by
both Borrower and Lender.

“Loan Documents”
shall mean this Agreement and the following: 

(ii)                                  Note

(iii)                               Mortgage

(iv)                              Assignment
of Rents and Leases 

(v)                                 Financing
Statement(s)

(vi)                              Assignment
of Contract Documents, Intangibles and Intellectual Property Rights

(vii)                           Collateral Assignment of
Operating Agreements, Permits and Regulatory Approvals

 18
 

(viii)                        Collateral Assignment of
License Agreement 

(ix)                                Collateral
Assignment of Incentive Payments 

(x)                                   Environmental
Indemnity 

(xi)                                Disbursing
Agreement 

and such other
documents as Lender may require to evidence and secure the Loan.

“Loan Fee” shall
mean the fee payable by Borrower to Lender for making the Loan in the sum of
$1,800,000.00.

“Loan Funds” shall
mean the sums of money disbursed under this Agreement.

“LOC” shall mean a
revolving line of credit to be furnished to the Borrower by the LOC Lender
pursuant to the LOC Agreement in the revolving amount of not less than
$7,000,000.00 the proceeds of which will be available to the Borrower for
working capital needs including financing the acquisition of corn input for processing
into Ethanol.

“LOC Collateral”
shall mean all Inventory (including all raw, unprocessed inventory, work in
process, and finished inventory products, bi-products and co-products), DDGS
Receivables and Ethanol Receivables.

“LOC Documents”
shall mean the documents required by the LOC Agreement consummating the LOC
including the Intercreditor Agreement.

“LOC Lender” shall
mean the lender providing the LOC, which may be the Lender in its separate
capacity as LOC Lender.

“LOC Agreement”
shall mean the Revolving Credit and Loan Agreement of even date between the
Borrower and LOC Lender providing for the borrowing of the LOC.

“Logo” shall mean
all right and interest in and to any and all trademarks, tradenames, corporate
names, franchised names, business names, fictitious names, trade styles, logos,
service marks, business identifiers used in the operation of the Project.

“Lump Sum Amount”
shall mean in the case of the Design Build Agreement the Lump Sum Amount
payable to Design Builder for the Cost of the Work.

“Major Contract(s)”
shall mean all Contracts written in excess of $100,000.00.

“Major Project
Documents” shall mean the Design Build Agreement, the Ethanol Sales and
Purchase Agreement, the DDG Sales and Purchase Agreement, the Management
Agreement, the ICM License Agreement, the Risk Management Agreement, the
Standalone Construction Contracts, the Corn Procurement Agreement, the Water
Supply Agreements, the Electrical Supply Agreements, the Natural Gas Supply
Agreements, the Rail Agreements and the initial Operating Plan and Budget.

 19
 

“Management
Agreement” shall mean the Management Agreement dated September 6, 2005, between
Millennium Ethanol, LLC and Fremar Farmers Cooperative, Inc., providing for the
management of the Project and its operations.

“Margin Stock”
shall have the meaning provided in Regulation U of the Board of Governors of
the Federal Reserve System.

“Material Adverse
Effect” shall mean a material adverse effect on the business, operations,
property, assets, liabilities or financial condition taken as a whole, or a
material adverse effect on the ability of any Person to perform its
obligations.

“Materials” shall
mean all materials and goods furnished to the Premises and to be included in
the Work.

“Maturity Date”
shall mean March 31, 2013.

“Mechanic” shall
mean any architect, engineer, surveyor, contractor, subcontractor, supplier or
Person or Persons performing Work on the Premises and/or installing, delivering
or supplying Materials in or to the Premises.

“Member” shall
mean in the context of the Borrower any member of the Borrower or constituent
members of a Member of the Borrower.

“Minor Changes”
shall mean Change Orders (as defined in Design Build Agreement) that do not (a)
change the Scope of the Work, (b) change the Contract Price together with all
other previous changes by more than one (1%) percent, (c) change any individual
Line Item together with all previous changes by five (5%) percent, or (d)
require approval by a Governmental Authority.

“Mortgage” shall
mean the Mortgage and Security Agreement and Fixture Financing Statement given
by the Borrower creating a lien on and security interest in the Premises.

“Natural Gas
Distribution Delivery Agreement” shall mean the Natural Gas Distribution
Delivery Agreement dated May 30, 2006 between North Western Services
Corporation and Millennium Ethanol, LLC

“Natural Gas
Facilities” shall mean all mains, service laterals, storage tanks, piping,
valves, manholes and appurtenances for the furnishing, transmission, storage
and disposal of natural gas to the Project including those facilities to be
constructed pursuant to the Natural Gas Supply Agreement.

“Natural Gas
Pipeline Agreements” shall mean those agreements to provide natural gas from
the mainlines of the Natural Gas Supply Provider to the distribution point of
the Natural Gas Supply Distributor under the following agreements:

·                Firm Throughput
Service Agreement dated June 9, 2006 between Northern Natural Gas Company and
Millennium Ethanol, LLC

·                Northern
Lights-Phase 2 Precedent Agreement between Northern Natural Gas Company and
Millennium Ethanol, LLC dated May 18, 2006

 20
 

“Natural Gas Supply
Agreements” shall mean those agreements with Utility Providers to provide
natural gas to the Plant under the following agreements:

·          Natural Gas Distribution
Delivery Agreement

·          Firm Throughput Service
Agreement

·          Northern Lights-Phase 2
Precedent Agreement

“Natural Gas
Supply Distributor” shall mean North Western Services Corporation, the entity
directly providing the natural gas to the Plant from a point outside of the
Plant.

“Natural Gas
Supply Provider” shall mean Northern Natural Gas Company, the entity providing
the natural gas to North Western Services Corporation at a point outside of the
Plant for further distribution by North Western Services Corporation to
Borrower at the Plant.

“Natural Gas
Supply System” shall mean the pipelines pursuant to which natural gas is
transferred from the Utility Providers’ main pipe lines and ultimately piped to
the Plant for use in the Plant and which Borrower shall purchase under the
Natural Gas Distribution Delivery Agreement.

“Net Income” shall
mean with respect to the Borrower for any period, the net income (or loss) of
the Borrower for such period as determined in accordance with GAAP, excluding
gains or losses on the sale of assets other than Inventory.

“Net TIF Proceeds”
shall mean the net proceeds remaining from the TIF Proceeds after the costs of
issuance and at the minimum in the amount of $1,600,000.00.

“Note” shall mean
the Promissory Note of the Borrower payable to the Lender in the Loan Amount.

“Notice to Proceed”
shall mean Borrower’s written valid notice to proceed (“Notice to Proceed”)
unless the Parties mutually agree otherwise in writing. The Parties agree that
a valid Borrower’s Notice to Proceed cannot be given until: (1) Borrower has
title to the real estate on which the Project will be constructed; (2) the
Phase I and Phase II Site work required of Borrower, as described in Exhibit L
to the Design Build Agreement is completed along with redline drawings and such
Phase I and Phase II Site work and redline drawings have been reviewed and
deemed adequate by Design-Builder; (3) the air permit(s) and/or other
applicable local, state or federal permits necessary so that construction can
begin, as listed on Exhibit G to the Design Build Agreement, have been
obtained; (4) Borrower has obtained Financial Closing pursuant to Section 4.3
of the Design Build Agreement; (5) if applicable, Borrower has executed a sales
tax exemption certificate and provided the same to Design-Builder; (6) Borrower
has provided the name of its property/all-risk insurance carrier and the
specific requirements for fire protection; (7) Borrower has provided an
insurance certificate or copy of insurance policy demonstrating that Borrower
has obtained builder’s risk insurance pursuant to Section 17.4.3 of the Design
Build Agreement, and (8) if Notice to Proceed is given prior to October 1,
2006, Design-Builder provides Borrower written notification of its acceptance

 21
 

of the Notice to
Proceed. Borrower and Design-Builder mutually agree that time is of the essence
with respect to the dates and times set forth in the Contract Documents.

“Off Site
Improvements” shall mean those improvements off the Premises required by any
Governmental Authority to be completed by the Borrower as a condition to its
Approval of the Project.

“Obligations”
shall mean any and all of the obligations of the Borrower under this Agreement
including but not limited to payment of the Loan and performance of the terms and
conditions of this Agreement.

“Operating
Agreements” shall mean the following agreements entered into by the Borrower
for the operation of the Project:

Corn Procurement Agreement

Ethanol Sales and Purchase Agreement

DDG Sales and Purchase Agreement

Rail Agreements

Electrical Supply Agreements

Natural Gas Supply Agreements

Water Supply Agreements

ICM License Agreement

Management Agreement

Risk Management Agreement

“Operating Lease”
shall mean any lease of any property (whether real, personal or mixed) that, in
accordance with GAAP, would be required to be classified and accounted for as
an expense item on a balance sheet.

“Operating Plan
and Budget” shall mean, for any period, an operating plan and budget for the
Project with respect to such period prepared by Borrower in good faith and with
due care that sets forth in reasonable detail (i) the projected levels of
operation of the Project on a monthly basis, (ii) the projected revenues and
expenses (including all scheduled payments of principal and interest on all
Debt) of the Project on a monthly basis, (iii) the overhaul, maintenance and
repair schedule for the Project, (iv) the amount and timing of expected capital
expenditures, (v) cash flow projections and working capital needs and (vi) such
other information as the Lender may reasonably request prior to the adoption
thereof.

 22
 

“Organizational
Documents” shall mean, with respect to any Person (other than an individual),
such Person’s articles of incorporation, articles of organization, certificate
of limited partnership, trust agreement, or other equivalent formation
documents, and regulations, bylaws, limited partnership agreement, operating
agreement, limited liability company member control agreement or equivalent
governing documents, and any amendments to any of the foregoing permitted
hereunder.

“Owner” shall mean
the Borrower.

“Owner Equity”
shall mean the total Project Costs, less the amount of the Loan.

“Owner Milestones”
shall mean those schedule owner obligations set forth in Table 3 of Exhibit C to
the Design Build Agreement.

“Paid In Equity”
shall mean Borrower Equity that has been deposited into the Construction Escrow
for payment to Project Costs less previous payments already made by the
Borrower to Project Costs.

“Patriot Act”
shall mean the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56,
115 Stat. 272 (2001).

“Payment in Full”
or “Paid in Full” or any similar term(s) with respect to the Loan shall mean
the satisfaction and final payment in full of the Loan in cash or cash
equivalents reasonably acceptable to the Lender and the termination of any
obligation on the part of the Lender to make any further Advances or to afford
any financial accommodation to Borrower with respect to the Loan and the full
and timely performance of all other obligations to Lender arising out of this
Agreement and the Loan Documents for a period of time of one hundred and twenty
(120) days.

“Pay Period” shall
mean, with respect to a given Application for Payment, the one (1) month period
following the last day of the previous Pay Period to which the immediately
prior Application for Payment is applied; provided that the initial Pay Period
shall commence on the date of delivery of the Notice to Proceed and end on the
twenty-fourth (24th)
day of the calendar month during which the Notice to Proceed is issued.

“Performance
Guarantee Criteria” shall mean the criteria listed in Exhibit A to the Design
Build Agreement.

“Performance Tests”
shall mean those tests conducted by the Design-Builder and, if necessary, the
retests of the Plant using Design-Builder’s supervisory personnel (and an
acceptable air emissions tester who shall conduct the air emissions test), in
each case, in accordance with the testing procedures set forth in Exhibit A to
the Design Build Agreement.

“Performance
Guaranty” shall mean the obligation of the Design Builder to achieve the
Performance Guaranty Criteria in accordance with the Design Build Agreement.

“Permit” shall
mean any valid waiver, exemption, variance, franchise, permit, authorization,
approval, acknowledgement, confirmation, license or similar order of or

 23
 

from any federal,
commonwealth, state, county, municipal, regional, environmental or other governmental
body, instrumentality, agency, authority, court or other body having
jurisdiction over the Project or the performance of the Work.

“Permitted
Exceptions” shall mean the exceptions to insured coverage set forth in Schedule
B to the Title Policy.

“Permitted Liens”
shall mean those (i) liens and security interests in favor of Lender, (ii)
those liens and security interests in inventory, accounts and products in favor
of the LOC Lender providing the LOC and (iii) those liens and security
interests in favor of the Subordinate Lender which are expressly subordinate to
the liens and security interests of both the Lender and the lender providing
the LOC.

“Person” shall
mean any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, institution public
benefit corporation, entity or government (whether federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).

“Plan” shall mean
an employee pension benefit plan that is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and that is either (a) maintained by Borrower for employees or (b)
maintained pursuant to a collective bargaining agreement, or other arrangement
under which more than one employer makes contributions and to which Borrower is
making or accruing an obligation to make contributions or has within the
preceding five years made or accrued such contributions.

“Plan Documents”
shall mean all final Drawings and Specifications specially prepared by the
Design Professionals for the construction and development of the Project
including mechanical and electrical, plumbing and heating and ventilation
Drawings and Specifications specially prepared by Subcontractors and their
retained Design Professionals for particular segments of the Project and such
further drawings and specifications as are from time to time prepared to
further expand in detail the Scope of the Work and final definitive working
drawings and specifications and shall also include any submittals filed or
required to be filed with Governmental Authorities to comply with Land Use
Restrictions and requirements for issuance of all Permits.

“Plant” shall mean
a to-be-built dry mill grain processing plant capable of grinding approximately
36,000,000 bushels of corn per year to produce a name-plate capacity of
100,000,000 gallons of fuel grade Ethanol per year and with approximately
321,000 tons of dried distillers grains with solubles per year located on
approximately 225 acres of existing raw land in Turner County, near the City of
Marion, South Dakota.

“Plant Disruption”
shall mean a disruption or cessation of the ongoing operation of the Plant
occasioned by (i) Force Majeure or (ii) availability and delivery of essential
materials or equipment to operate the Plant or (iii) shut downs for the purpose
of performing required maintenance and upkeep.

 24
 

“Post Construction Permit”
shall mean any valid waiver, exemption, variance, franchise, permit,
authorization, approval, acknowledgment, confirmation, license or similar order
of or from any federal, commonwealth, state, City, municipal, regional,
environmental or other governmental body, instrumentality, agency, authority,
court or other body having jurisdiction over the Project and operation and
including the following:

FERC Certificate of Public Convenience and Necessity

South Dakota Storm Water Discharge Permit

South Dakota Risk
Management Plan (Denaturant/Ammonia Products)

ATF Ethanol Producer License

NPDES Permit

South Dakota Spill
Prevention Control and Countermeasure Plan

South Dakota
Conditionally Exempt Small Quantity Generator Permit

South Dakota Alcohol Producers License

South Dakota Storage Tank Permit

Turner County Highway Access Permits

South Dakota
Department of Environment and Natural Resources Title V Air Quality Operating
Permit

“Preconstruction Permit”
shall mean any valid waiver, exemption, variance, franchise, permit, authorization,
approval, acknowledgment, confirmation, license or similar order of or from any
federal, commonwealth, state, City, municipal, regional, environmental or other
governmental body, instrumentality, agency, authority, court or other body having
jurisdiction over the Project or its construction and operation and including
the following:

South Dakota
Department of Environment and Natural Resources Title V Construction Air
Quality Permit

South Dakota
Notice of lntent and Storm Water Pollution Plan

South Dakota DENR Approval

 25
 

“Pre-Development
Costs” shall mean those Development Costs incurred by the Borrower preliminary
to the development of the Project.

“Premises” shall
mean the Real Property, Improvements, Utilities, Equipment, Fixtures, Plant and
Rail Spur together with all buildings, structures, improvements, fixtures and
annexations constructed on or added to the Real Property.

“Principal” shall
mean the from time to time sums of money disbursed by the Lender pursuant to
this Agreement.

“Principal Balance”
shall mean the from time to time amount of Principal remaining unpaid.

“Producer Payments”
shall mean any producer payments made by the State of South Dakota to ethanol
producers.

“Products” shall
mean Ethanol, WDGS, DDGS, CO2, if produced, and any other co-product or by-product
produced in connection with the production of Ethanol at the Project and all
whole and processed grains handled by Borrower (or by any third party grain
operator on behalf of Borrower).

“Project” shall
mean the real property located in Section 31, Township 100N Range 54W in the
County of Turner, State of South Dakota consisting of approximately 225 acres
of raw land on which the Project is to be built, when constructed the Project,
the Water Rights, plant facilities, infrastructure, intellectual property and
patent rights, machinery, equipment, inventory, vehicles, goods, intangibles,
accounts, instruments, revenues, documents, management contracts, ethanol and
distillers marketing contracts, grains marketing contracts, grain origination
contracts, risk management contracts, transportation contracts, spur line and
railroad access agreements, energy contracts, operating permits and licenses
located at, originating from or used by the Project in the production of fuel
grade Ethanol.

“Project Costs”
shall mean those costs incurred in development and construction of the Project
as set forth in the Budget, as such Budget may from time to time be amended
with the consent of the Lender.

“Project Documents”
shall mean the agreements and documents to which Borrower is or becomes a party
during the term of the Loans, relating to the development, engineering, design,
ownership, construction and operation of the Project, including Major Project
Documents, all agreements relating to the Site, all agreements relating to the
supply of water, natural gas, corn and electricity to the Project, all other
agreements relating to the operations and maintenance of the Project.

“Project Free Cash
Flow” shall mean EBITDA minus (i) Incentive Payments, (ii) debt service on (aa)
the Loan, (bb) the Subordinate Loan, (cc) the Unsecured Loan and (dd) the LOC,
(iii) cash in the amount of the Tax Distributions to Borrower’s members, (iv)
deposits into the FF&E Reserve and (v) Cash CAPEX in excess of amounts drawn
from the FF&E Reserve.

 26
 

“Punch List” shall
mean the list developed by Borrower in consultation with each respective
Contractor which sets forth certain items of Work that remain to be performed
following Substantial Completion under its Construction Contract so that the
Project fully complies with all of the standards and requirements of the
Construction Contract. The Punch List shall not include any items of Work,
alone or in the aggregate, the non-completion of which prevents the Plant from
(i) being used for the purposes described in the Construction Contract in
accordance with Applicable Laws or (ii) being safely and continuously operated.

“Punch List Items”
shall mean those items of Work which are detailed in the Punch List.

“Quarterly
Reporting Schedule” shall mean a quarterly report to be forwarded to the Lender
by the Borrower under the form of the Quarterly Reporting Schedule attached as
Exhibit “E”.

“Rail Access
Agreement” shall mean the Industry Track Agreement between the BNSF Railway
Company providing for access of unit trains from the Project to the Class I
Mainline tracks of the BNSF Railway Company.

“Rail Agreements”
shall mean the following agreements between the BNSF Railway Company and
Borrower and agreements ancillary thereto:

·                Rail Access
Agreement

·                Rail Lease

“Rail Contractor”
shall mean Railworks, Inc., or such other contractor acceptable to Lender
engaged by the Borrower to supply the labor, equipment, material and
supervision to construct the Spur Track.

“Rail Lease” shall
mean the Lease of Land For Construction/Rehabilitation of Track between BNSF
Railway Company and Borrower permitting the Borrower to occupy the leased
premises for the construction of the Rail Spur and the performance of certain
activities related to the Rail Spur.

“Rail Spur” shall
mean the connection between the Industry Track to be constructed pursuant to
the Rail Spur Contract and the Class I Mainline Tracks of the BNSF Railway
Company.

“Rail Spur Agreements”
shall mean the

·                  Rail
Spur Contract

·                  Rail
Spur Proposal

“Rail Spur
Contract” shall mean the Construction Contract to be entered into between the
Borrower, as owner, and the Rail Contractor pursuant to the Rail Spur Proposal
for the construction of the Rail Spur.

“Rail Spur
Proposal” shall mean the proposal dated June 9, 2006, addressed to the Borrower
from the Rail Contractor proposing to construct the Rail Spur.

 27
 

“Risk Management
Agreement” shall mean the Risk Management Agreement For Grain Procurement And
Byproduct Marketing dated April 4, 2006, between Millennium Ethanol, LLC and
John Stewart & Associates providing for the furnishing of hedging and risk
management services to the Borrower.

“Real Property”
shall mean all the tracts or parcels of real property lying and being in the
County of Turner, State of South Dakota, all as more fully described in Exhibit
“B” attached hereto and made a part hereof, together with all the estates and
rights in and to the real property and in and to lands lying in streets, alleys
and roads adjoining the real property and all buildings, structures,
improvements, fixtures and annexations, access rights, easements, rights of way
or use, servitudes, licenses, tenements, hereditaments and appurtenances now or
hereafter belonging or pertaining to the real property; together with all Water
Rights (whether riparian, appropriative or otherwise whether or not
appurtenant) now or hereafter relating to or used in connection with the real
property.

“Receivables”
shall mean all present and future rights to payment for goods sold or leased or
for services rendered, with respect to the Project and its operations and all
receivables of whatever nature whatsoever which are not evidenced by Chattel
Paper, Documents or Instruments.

“Reimbursement
Obligations” shall mean any obligation of the Borrower to repay advances made
under the Supporting Letters of Credit which obligations must either (i) be
nonrecourse to the Borrower or (ii) be fully subordinated and stood still to
the Loan, LOC, Subordinate Loan, Unsecured Debt and any replacements and refinances
thereof and any security given for the repayment thereof under the terms and
conditions of a subordination and standstill agreement satisfactory to the
Lender in all respects.

“Reportable Event”
shall mean a reportable event (as defined in Section 4043 of ERISA), other than
an event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the Pension Benefit Guaranty Corporation.

“Request for
Advance” shall mean a written application signed by the Borrower requesting an
Advance of Loan Funds together with accompanying Payment Schedule and
Application and Certificate for Payment signed by the Contractor requesting
payment and conforming to the form attached as Exhibit “C”.

“Required
Financial Reports” or “Financial Reports” shall mean those financial reports
required pursuant to the Section entitled Required Financial Reports.

“Required
Insurance” or “Insurance” shall mean those policies of insurance required
pursuant to the Article entitled Required Insurance.

“Reserves” shall
mean those reserves required pursuant to the Article entitled Required
Reserves to be held by the Lender in reserve and to be applied by the
Lender to the category for which the Reserve is established.

“Retainage” shall
mean a percentage amount to be deducted from each Advance equal to ten percent
(10%) of Direct Costs and to be retained by the Lender until Final Completion
except in the case of the Design Build Agreement where no Retainage shall be
required after the Retainage collected is in excess of $5,299,850.00.

 28
 

“Rolling Stock”
shall mean those vehicles, rail cars, yard vehicles and self-propelled
equipment owned by Borrower and used in the operations of the Plant.

“Schedule” shall
mean the time schedule for performance of the Work measured from the Effective
Date and attached as an Exhibit to the Design Build Agreement, as amended from
time to time in accordance with Design Build Agreement.

“Schedule of
Values” shall mean a line item breakdown prepared by each Contractor itemizing
each item of Work by line, subcontractor/supplier and value under its
Construction Contract.

“Scope of the Work”
shall mean all work and material necessary to complete the Project as
contemplated by the Contract Documents. The terms “Work”, “Scope of Work” and “Project
Work” are synonymous and are used interchangeably to mean the furnishing of all
accessories, administration, appliances, as-built drawings, construction plant,
documentation, equipment, fuel, labor, machines management, manuals, materials,
planning, tools, training, shop drawings and samples, services, supervision
supplies, and transportation, warranties/guarantees, and all other facilities
and incidentals (including the pulling of all required permits) necessary as
and when required for or in connection with completion of the Project in
accordance with the Contract Documents and the carrying out by the respective
Contractor of all the duties and obligations for the Work imposed by the
Contract Documents as well as all administration, documentation, drawings,
plans and specifications, labor, management, materials, services, supplies,
supervision and incidentals necessary as and when required for or in connection
with any design/build component, all in a good, expeditious and workmanlike
manner. The Work shall also include such incidental terms which may not be
expressly indicated in the Contract Documents but which are considered a
Contractor’s obligation to provide under normal standard construction industry
customs and practices within the area in which the Project is located. In the
case of the Design Build Agreement the Scope of the Work is defined in Exhibit
A to the Design Build Agreement.

“SDENR” shall mean
the South Dakota Department of Environment and Natural Resources.

“Second Extended
Date” shall mean the extension of the Substantial Completion Date for an
additional 4 months beyond the First Extended Date if the Appeal is filed.

“Service
Agreements” shall mean all rights and interests of Borrower in and under any
and all service contracts and other agreements relating to the servicing,
operation, maintenance, and repair of the Project or the buildings and
improvements thereon (the “Service Agreements”).

“Service Provider’s
Consent” shall mean a document in the form and content attached as Exhibit “J”.

“Solvent” shall
mean as to any Person, such Person (a) owns Property whose Fair Salable Value
is greater than the amount required to pay all of its debts (including
contingent, subordinated, unmatured and unliquidated liabilities); (b) owns
Property whose present Fair Salable Value (as defined below) is greater than
the probable total liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities) of such

 29
 

Person as they
become absolute and matured; (c) is able to pay all of its debts as they
mature; (d) has capital that is not unreasonably small for its business and is
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage; (e) is not “insolvent” within the
meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by
way of assumption or otherwise) any obligations or liabilities (contingent or
otherwise) under any Loan Documents, or made any conveyance in connection
therewith, with actual intent to hinder, delay or defraud either present or
future creditors of such Person or any of its Affiliates. “Fair Salable
Value” means the amount that could be obtained for assets within a
reasonable time, either through collection or through sale under ordinary
selling conditions by a capable and diligent seller to an interested buyer who
is willing (but under no compulsion) to purchase.

“Specifications”
shall mean the written technical descriptions of materials, equipment, system,
standards, and workmanship specially prepared for the construction of the
Project and the Work and certain administrative details applicable thereto.

“Spur Track
Materials” shall mean those Materials to be provided by the Borrower at its
expense to the Rail Contractor for installation into the Rail Spur pursuant to
the Rail Spur Contract.

“Standalone
Construction Contracts” shall mean those contracts entered into between the
Borrower and reputable general contractors authorized to construct commercial
buildings in the State of South Dakota to construct the following improvements:

·                  Spur Track

·                  Site Improvement
and Grading

·                  Administrative
Building

“Start-Up” shall
mean the initial feed of raw material to the plant, filling of equipment with
operating material, utility system startups, start-up and operation of
individual process stages, adjustment and optimization of operating conditions,
optimization of control loops, verification of start-up, shut down and partial
load operations.

“Subcontractor”
shall mean a person, firm or corporation and all of his or its employees who
has a Construction Contract or engagement with a Contractor to perform any of
the Work, including a Supplier, and anyone supplying equipment or any other
item required in connection with the Work as well as anyone involved with the
Work at the instance or request of the Subcontractor (sub-tiers).

“Sub-Contracts”
shall mean the contracts between a Contractor and Subcontractors for the
furnishing of labor or materials for the Project.

“Subordinate Loan”
shall mean a subordinated loan to be made to the Borrower in the amount of
$14,000,000.00 by the Subordinate Lender and which contains the following basic
terms and conditions pursuant to the Note Purchase and Purchase Rights
Agreement between Borrower and Subordinate Lender dated as of March 17, 2006 –

·                  bears interest
at 15.60% per annum

 30
 

·                  is to be secured
by a security interest and lien in the assets of Borrower which security
interest is expressly subordinate to the Loan

·                  has a maturity
date of at least seven (7) years after the Project has commenced operation and
met its nameplate capacity (“Certification Date”)

·                  accrues interest
during the Construction Phase and adds to principal

·                  commences
amortization upon the Certification Date based on an amortization of ten (10)
years

·                  retains a right
on the part of the Subordinate Lender to purchase up to 20,000,000 Class C
units in Borrower at $.90 per unit (which will represent 32.65% equity in
Borrower) or 21,176,470 Class C Units in Borrower at $.85 per unit (which will
represent 33.92% equity in Borrower)

·                  Each Class C
unit is convertible into one Class A unit of Borrower and the Class C units
shall include the same membership voting rights and financial rights, including
distribution rights and rights in the profits, losses and capital of Borrower,
as the Class A units and/or Class B units of Borrower

·                  provides
Subordinate Lender with certain rights to (i) participate in future offerings
of Borrower, (ii) restrict distributions, (iii) restrict sales of assets not in
the ordinary course of business, mergers and other business combinations, (iv)
board representation in Borrower, and (v) tag along rights

·                  is subject to
the Subordination and Standstill Agreement.

“Subordinate
Lender” shall mean Rex Radio and Television, Inc., an Ohio corporation, or its
designee (as described in the above referenced Note Purchase and Purchase
Rights Agreement).

“Subordinate Loan
Document” shall mean the Subordinated Loan Agreement, Subordinated Mortgage,
Subordinated Note, Subordinated Security Agreement, Subordination and
Standstill Agreement and any other debt or security instrument given by the
Borrower to the Subordinate Lender in connection with the Subordinated Loan.

“Subordinated
Mortgage” shall mean the Mortgage and Security Agreement and Fixture Financing
Statement executed and delivered by the Borrower to the Subordinate Lender to
secure the Subordinated Note and which is subordinate to the Loan Documents.

“Subordinated Note”
shall mean the promissory note made by Borrower in favor of Subordinate Lender
in the principal sum of Fourteen Million and no/l00 Dollars ($14,000,000.00)
delivered by Borrower to the Subordinated Lender pursuant to the Design Build
Agreement evidencing the Subordinated Loan and which is subordinate to the Loan
Documents.

“Subordinated
Security Agreement” shall mean the Security Agreement and accompanying
Financing Statements executed and delivered by the Borrower to Fagen to secure
the Subordinated Note and which are subordinate to the Loan Documents.

 31

“Subordination and
Standstill Agreement” shall mean in each case an agreement between Lender and
any party whose debt is to be subordinate to the Loan, including the
Subordinate Lender, pursuant to which the parties agree to the Subordination
Requirements.

“Subordination
Requirements” shall mean those requirements of Lender separately negotiated
between Lender and Subordinate Lender (or other subordinate lenders, as
applicable) and providing for the following:

i)                                         full
subordination and standstill to the Loan

ii)                                      permits
in each month cash only payments but only after payment to required Debt
Service on the Loan for the same month

iii)                                   prohibits
payments of bonus interest

iv)                                  prohibits
any prepayment prior to maturity and Payment in Full of the Loan excepting (a)
a prepayment paid out of additional owner equity paid into the Borrower in cash
in an amount sufficient to prepay the Subordinate Loan in full or (b) a
prepayment paid out of replacement Subordinate Loan with terms and conditions
at least as favorable to the Borrower as the Subordinate Loan and where the
replacement lender executes and delivers a Subordination and Standstill
Agreement containing the same terms and conditions as the Subordination and
Standstill Agreement negotiated between the Lender and Subordinate Lender or
(c) where the Subordinate Loan is satisfied in full by a dollar for dollar
exchange of the Subordinate Loan with member shares in the Borrower with no
cash payment to the Subordinate Lender

v)                                     prohibits
the exercise of any of the remedies to enforce its security until the Loan is
paid in full

vi)                                  relinquishes
to Lender while the Loan remains unpaid any rights to file a petition in
involuntary bankruptcy against the Borrower

vii)                               assigns
to Lender all of its voting rights as a creditor in any bankruptcy proceeding
affecting the Borrower

viii)                            agrees
that all payments that are made to subordinate holder at a time when the
Subordination and Standstill Agreement prevents such payments will be held in
trust for Lender and paid over to Lender as Lender direct

ix)                                    fully
subordinates any permitted mortgage and security interests in the Project and
any Borrower assets to the mortgage and security interests of the Lender and
the lender providing the Working Capital Line, including any successor or
replacement lenders, and

x)                                       such
other matters as Lender may reasonably request.

The Subordination
Requirements shall not prohibit the conversion of any Subordinate Loan to
membership units in the Borrower.

“Subsequent Advance” or “Subsequent
Advances” shall mean any advance of Loan Funds subsequent to the First Advance.

 32
 

“Substantial Completion”
shall mean (a) in the case of the Design Build Agreement the date on which the
Work is sufficiently complete so that Borrower can occupy and use the Plant for
its intended purposes and the Plant is ready to grind the first batch of corn
and begin operation for its intended use, and (b) in any other Construction
Contract the stage in the progress of the Work where all of the following have
occurred:

·                  All
Work pursuant to the Contract Documents has been sufficiently completed in
accordance with the Contract Documents and all applicable laws, codes,
ordinances, rules and regulations, so that Borrower can utilize the Work for
its specified use.

·                  Contractor
has turned over all areas of the substantially completed Work in a logical,
sequential manner to Borrower.

·                  All
mechanical, electrical, fire protection, life safety and similar building
systems are fully functional and have been tested, started, approved and commissioned
for permanent use.

·                  Inspection
and approval by all applicable governmental agencies has occurred (other than
approval by the relevant air pollution control regulatory agency, which
approval shall occur in accordance with the requirements of Article 21.5(b) of
the Design Build Agreement).

“Substantial Completion
Date” shall be the date on which Substantial Completion occurs but no later
than five hundred forty-five (545) Days after the date of the Notice to
Proceed, subject to (i) adjustment in accordance with the Design Build
Agreement, (ii) extension for an additional six (6) months if the Appeal is
filed and the First Extension Fee is paid and (iii) extension for a further
four (4) months if the Appeal is filed and the Second Extension Fee is paid.

“Suppliers” shall mean
those persons or entities supplying Materials to the Project.

“Supporting Letters of
Credit” shall mean “clean”, irrevocable, “evergreening” standby letters of
credit issued pursuant to the (i) Electrical Supply Agreement and (ii) Natural
Gas Supply Agreements to assure the payment of the Borrower’s obligations
thereunder.

“Sworn Construction
Statement” shall mean a sworn construction statement of each Contractor listing
by line each item of Work or Materials to be performed or furnished, itemized
by category, the Contractor or Supplier performing or furnishing such Work or
furnishing Materials, and the estimate of the cost of the Work to be done and
in the case of the Design Builder the statement agreed to between the Design
Builder and Title.

“Tax Escrows” shall mean
amounts to be deposited on a monthly basis into an escrow account maintained
with the Lender in an amount equal to the estimated annual Impositions.

“Tax Distribution” or “Tax
Distributions” shall mean quarterly Distributions to Members for the purpose of
paying the quarterly estimated federal and state income tax payments required
to be made by each Member of Borrower based upon the operations of the

 33
 

Borrower and the
resulting federal and state tax liability of such Member attributable to
Borrower’s operations in the assumed amount of 42%.

“Term Phase” shall mean a
period of time measured from the first day following the end of the
Construction Phase and running thereafter to the Maturity Date.

“TIF Funding” shall mean the
funding of the Net TIF Proceeds into the Construction Escrow with instructions
for disbursement to payment of Project Costs.

“TIF Loan” shall mean a
loan made by Turner County to Borrower pursuant to a Property Tax Increment
Agreement between Turner County and the Borrower in an amount sufficient to
result, after the costs of issuance, in Net TIF Proceeds of $1,600,000.00.

“TIF Proceeds” shall mean
the gross proceeds loaned to the Borrower by Turner County under the TIF Loan.

“Title” shall mean
Chicago Title Insurance Company, the title insurer issuing the mortgagee’s
title insurance policy.

“Title Policy” shall mean
an extended coverage ALTA Mortgagee’s Policy of Title Insurance issued by Title
(Form 1970 or Form 1992 Revised 10-23-92 with the exclusion for creditors
rights and arbitration requirements deleted) and containing such endorsements
as Lender may require and setting forth as exceptions to title those exceptions
as may be approved by Lender.

“Transfer” shall mean any
sale, grant, pledge, assignment, mortgage, encumbrance, security interest,
consensual lien, hypothecation, lease, transfer or divesture or otherwise of an
interest in the Premises.

“Turner County” means
Turner County, South Dakota.

“Turner County Litigation”
shall mean the Petition for Writ of Certiorari and Review of a Decision of the
Turner County Board of Adjustment dated March 14, 2006, filed by Great Plains
Ethanol, LLC against the Turner County Board of Adjustment, a summary of which
has been previously provided to Lender.

“UCC” shall mean the
Uniform Commercial Code as the same may, from time to time, be in effect in the
State of South Dakota, provided, however, in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of the Secured Party’s security interest in any collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of South Dakota, the term shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.

“UCC Policy” shall mean a
fully paid UCC Insurance Policy written in the full Loan amount in form and
substance satisfactory to Lender and written by Title (or First American Title
Insurance Company) insuring title to the Collateral is vested in Borrower,

 34
 

free from all Liens,
naming Lender as the insured and insuring that the security interest of the
Lender in the Collateral is a valid, perfected first security interest.

“Unsecured Debt” shall
mean any unsecured subordinated loan or loans in the aggregate amount of
$2,000,000.00 made to the Borrower which shall be fully subordinate to the Loan
under the same Subordination Requirements required for the Subordinate Loan and
may not be secured in any manner but which may be converted to membership units
in the Borrower.

“Unsecured Debt Documents”
shall mean those loan documents evidencing the Unsecured Debt including the
Unsecured Subordination and Standstill Agreement.

“Unsecured Debt Lender”
shall mean the lender of the Unsecured Debt.

“Unsecured Subordination
and Standstill Agreement” shall mean a Subordination and Standstill Agreement
between the Lender and Unsecured Debt Lender acceptable to Lender fully
subordinating payment of the Unsecured Debt to the Payment In Full of the Loan
and agreeing to standstill on collecting the same until Payment In Full of the
Loan.

“USEPA” means the United
States Environmental Protection Agency.

“Utility Agreements”
shall mean one or more of the Electrical Supply Agreement, Natural Gas Supply
Agreements or Water Supply Agreements as the case may be.

“Utility Preconditions”
shall mean that (i) Utility Provider has secured all Approvals to provide the
Utility, (ii) has secured all necessary rights of way, (iii) has obtained the
necessary financing to construct the physical improvements to provide the
services, (iv) has entered into binding construction contracts with reputable
conditions to construct the physical improvements and (v) has satisfied all
conditions it requires to construct the physical plant and provide the services
(including waiving any right to cease construction and/or cancel its obligation
to provide the services.

“Utility Providers” shall
mean those regulated providers of specific utility services to the Project,
i.e. natural gas, water, electricity and other power and energy suppliers.

“Utilities” shall mean
and include private and public utility lines of any type or nature, including
wires, pipes, conduits, cables, fiber optics, and ducts for utility systems
used for domestic cold and hot water, sanitary sewer, storm sewer, chilled
water, condenser water, heating hot water, steam, steam condensate, natural
gas, control compressed air, conditioned and non-conditioned air, ventilation
and exhaust air, electricity, security, fire alarm, emergency communications,
systems control and automation, video monitoring, telephone, television, other
telecommunications systems, and other mechanical, electrical, and related life
safety systems.

“Waste Disposal and Sewer
Facilities” shall mean all of the waste disposal, sanitary and storm sewer
rights and systems including all mains, service laterals, ponding areas,
piping, valves, manholes and catch basins and appurtenances servicing the
Project.

“Water Facilities” shall
mean all mains, service laterals, storage tanks, piping, valves, manholes,
wells and appurtenances for the furnishing, transmission, storage and disposal
of potable water to the Project.

 35
 

“Water Rights” shall mean
all water rights, contract rights for the supply of potable and process water,
irrigation rights, ditch and ditch rights, reservoir and reservoir rights,
stock or interest in water, irrigation or ditch companies owned by the Borrower
or accruing to the Project.

“Water Supply Agreements”
shall mean those agreements with Utility Providers to provide the Water Supply
System to the Plant including but not limited to the following agreements:

·                  Water
User Agreement between TM Rural Water District and Millennium Ethanol dated as
of June 14, 2006

·                  Water
Treatment Plant Financing Agreement between TM Rural Water District and
Millennium Ethanol, L.L.C. dated June 14, 2006

“Water Supply Provider”
shall mean TM Rural Water District, the entity providing the water to the
Project.

“Water Supply System”
shall mean the pumping stations and pipelines pursuant to which water is
transferred from the Utility Providers’ main pipe lines and piped to the Plant
for use in the Plant and which Borrower shall purchase under the Water Supply
Agreements.

“WDGS” means wet
distiller’s grain solubles, which may or may not be a product of the Project.

“Work” shall mean and
include all design, engineering, labor, supervision, materials, Start-Up,
fixtures, special facilities, built-ins, equipment, tools, supplies, and
related inspections, and other property and services necessary to timely and
properly produce all work and completed construction required or reasonably
inferable from the Construction Contracts and all work, services and materials
necessary to produce fully connected, complete, operational and functional
systems and Plant meeting all Performance Guarantee Criteria.

“Working Capital” shall
mean funds that are used in the day-to-day operation of the business of the
Project, including, without limitation, amounts sufficient for the maintenance
of change and petty cash funds, amounts deposited in operating bank accounts,
receivables, amounts deposited in payroll accounts, prepaid expenses and funds
required to maintain inventories, less accounts payable and accrued current
liabilities.

1.2                                 Accounting
Terms. Any accounting terms used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with
GAAP consistently applied. That certain terms or computations are explicitly
modified by the phrase “in accordance with GAAP” shall in no way be construed
to limit the foregoing.

1.3                                 Common
Words. The words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented and not to any particular section, subsection or clause contained
in this Agreement.

 36
 

1.4                                 Context.
Wherever from the context it appears appropriate, each term stated in either
the singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
the feminine and the neuter.

2. 

THE LOAN

2.1                                 Loan.
Upon and subject to the terms and conditions hereof and provided the Conditions
Precedent to an Advance are satisfied the Lender agrees until the
expiration of the Construction Phase to make available to the Borrower, from
time to time, for payment of Project Costs Advances of the Loan which shall not
exceed in the aggregate $90,000,000.00. Each Advance shall be made on notice
given no more frequently than once a Pay Period delivered to Lender in
accordance with the Methods of Disbursement of Loan Proceeds as set
forth in this Agreement.

2.2                                 Interest
Rate. The Loan will bear interest during its term at the following rates of
interest:

(a)                      Pay Rate.
During the term of the Loan at a fluctuating per annum interest rate equal to
400 Basis Points plus LIBOR as it adjusts on each Adjustment Date.

(b)                     Default
Rate. If an Event of Default occurs, then, at the option of the Lender,
during the entire period during which such Event of Default shall occur and be
continuing interest shall be payable on the Principal Balance at a per annum
rate of interest equal to the lesser of (i) the maximum lawful rate of interest
permitted to be paid on the Loan or (ii) 800 Basis Points plus LIBOR as it
adjusts from time to time (“Default Rate”) whether or not the Lender has
exercised its option to accelerate the maturity of the Loan and declare the
entire Principal Balance due and payable.

2.3                                 Calculation
of Interest. During the Construction Phase interest shall be calculated on
the actual number of days elapsed in a 360 day year. Commencing the with the
Term Phase interest shall be calculated on the basis of a 360 day year and will
be payable on a 30/360 day basis.

2.4                                 Late
Charge. In the event that any payment required under the Note is not paid
when due, the Borrower agrees to pay a late charge of $.04 per $1.00 of unpaid
payment to defray the costs of the Lender incident to collecting such late
payment. This late charge shall apply individually to all payments past due and
there will be no daily pro rata adjustment. This provision shall not be deemed
to excuse a late payment or be deemed a waiver of any other rights the Lender
may have including the right to declare the entire unpaid principal and
interest immediately due and payable.

2.5                                 Payment.
The Loan shall be payable as follows:

 37
 

(a)                      Construction
Phase. During the Construction Phase on the first day of each month in the
amount of accrued interest.

(b)                     Term Phase.
During the Term Phase on the first day of each month in consecutive monthly
amortized payments of principal and interest sufficient to amortize the
remaining unpaid principal balance at the Pay Rate as it may adjust from time
to time based on an amortization schedule of ten (10) years.

(c)                      Maturity
Date. On the Maturity Date the entire unpaid balance plus accrued interest
shall be due and payable in full.

2.6                                 Voluntary
Prepayment. The Loan may not be prepaid during the Construction Phase.
Thereafter, the Loan may be prepaid on sixty (60) days notice in multiples of
not less than $500,000.00 accompanied by accrued interest.

2.7                                 Involuntary
Prepayment. At the option of the Lender the entire unpaid principal balance
together with accrued interest shall be due and payable in the event of an
insured casualty or condemnation by public authority of the Project.

2.8                                 Mandatory
Prepayments. The following mandatory prepayments of principal are required:

(a)                      100% of
Commodity Credit Corporation Incentive Payments shall be applied to prepay the
Loan.

(b)                     100% of State
of South Dakota Producer Payments shall be applied to prepay the Loan.

2.9                                 Application
of Payments. Any payments received by the Lender shall be applied (i) to
any costs of collection, (ii) to Late Charges, (iii) to Interest, (iv) to
Principal Balance and (v) if any advance has been made by the Lender under the
terms of this Agreement or any Loan Documents to repay such advances plus
interest thereon, all in such order and priority as the Lender shall determine.
Upon an Event of Default any monies received shall, at the option and direction
of the Lender, be applied to any sums due hereunder and any Loan Documents in such
order and priority as the Lender shall determine.

2.10                           Time
of Essence. Time is of the essence. No delay or omission on the part of the
Lender in exercising any right hereunder shall operate as a waiver of such
right or of any other remedy under this Agreement or any Loan Documents. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
such right or remedy on a future occasion.

2.11                           Costs
of Collection. The Borrower agrees to pay the costs of collection including
reasonable attorney’s fees and costs incurred, all other costs and fees
incurred in litigation, mediation, bankruptcy and administrative proceedings
and all appeals therefrom and all other costs and expenses incurred in the
collection of the amounts due under this Agreement.

2.12                           Waiver
of Presentment, Etc. Presentment for payment, protest and notice of
non-payment are waived. Consent is given to any extension or alteration of the
time or terms of

 38
 

payment
hereof, any renewal, any release of any part or all of the security given for
the payment hereof, any acceptance of additional security of any kind, and any
release of, or resort to any party liable for payment hereof. To the extent
permitted by law all rights and benefits of any statute of limitations, and any
moratorium, reinstatement, marshalling, forbearance, valuation, stay,
extension, redemption, appraisement, exemption and homestead laws are waived.

2.13                           Savings
Clause. It is expressly stipulated and agreed to be the intent of Borrower
and Lender at all times to comply with applicable state law or applicable
United States federal law (to the extent that it permits Lender to contract
for, charge, take, reserve, or receive a greater amount of interest than
permitted under state law) and that this section shall control every other
covenant and agreement in this Agreement and any other Loan Documents delivered
in connection herewith. If the applicable law is ever judicially interpreted so
as to render usurious any amount called for under this Agreement or under any other
Loan Documents, or contracted for, charged, taken, reserved, or received with
respect to the indebtedness evidenced by this Agreement (“Indebtedness”), or if
Lender’s exercise of the option to accelerate the maturity of this Agreement,
or if any prepayment by Borrower results in Borrower having paid any interest
in excess of that permitted by applicable law, then it is Borrower’s and Lender’s
express intent that all excess amounts theretofore collected by Lender shall be
credited on the Principal Balance (or, if the Principal Balance has been or
would thereby be paid in full, refunded to Borrower), and the provisions of
this Agreement and the other Loan Documents shall immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new documents, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder or thereunder. All sums paid or agreed to
be paid to Lender for the use, forbearance, or detention of the Indebtedness
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Indebtedness until
payment in full so that the rate or amount of interest on account of the
Indebtedness does not exceed the maximum lawful rate from time to time in
effect and applicable to the Indebtedness for so long as the Indebtedness is
outstanding. Notwithstanding anything to the contrary contained herein or in
any of the other Loan Documents, it is not the intention of Lender to
accelerate the maturity of any interest that has not accrued at the time of
such acceleration or to collect unearned interest at the time of such
acceleration.

2.14                           All
Advances to Constitute Single Obligation. The Advances shall constitute one
general obligation of the Borrower, and shall be secured by Lender’s priority
security interest in and Lien upon all of the Collateral and by all other
security interests, Liens, claims and encumbrances heretofore, now or at any
time or times hereafter granted by the Borrower to Lender.

2.15                           Note.
The Advances shall be evidenced by the Note. At the time of the First Advance
and at each time a Subsequent Advance shall be requested hereunder a notation
thereof shall be made on the books and records of the Lender. All amounts
recorded shall be, absent manifest error, conclusive and binding evidence of
(i) the Principal amount of the Advances hereunder, (ii) any accrued and unpaid
interest owing on the Advances, and (iii) all amounts repaid on the Advances.
The failure to record any such amount or any error in recording such amounts
shall not, however, limit or otherwise affect the obligations of the Borrower
under the Note to repay the Principal amount of the Advances, together with all
interest accruing thereon.

 39
 

2.16                           Amount
of Advances. In no event shall the Lender be obligated to advance more than
the lesser of (i) the Loan Amount or (ii) total Project Costs actually incurred
by the Borrower less Borrower Equity (and in the case of Working
Capital/Inventory as shown on the Budget less the unfunded balance of the LOC).

3. 

RESERVES

3.1                                 Construction
Phase Reserves. The Lender shall hold back from disbursement from the Loan
the following reserves to be held as unfunded amounts under this Agreement
until disbursed as follows:

·                  Construction
Contingency Reserve. $4,200,000.00 as a reserve to defray unforeseen
construction contingencies arising out of the Project (“Construction
Contingency Reserve”).

·                  Interest
Reserve. $6,900,000.00 as a reserve to pay the interest as it accrues on
the Loan (“Interest Reserve”).

No
interest shall accrue or be payable to Lender by Borrower on any such Reserve
prior to its disbursement. If a Reserve shall be entirely disbursed, but the
costs or expenses for which that Reserve have been established shall not have
been fully paid and provided for, Lender shall have the right to hold back from
any further disbursement of Loan proceeds funds sufficient to re­establish those
Reserves in amounts sufficient in Lender’s reasonable judgment to provide for
those costs and expenses thereafter. If in doing so the total of remaining
Project Costs will exceed the Loan proceeds remaining to be disbursed, Borrower
shall upon notice from Lender deposit with Lender within ten (10) days
thereafter additional Owner Equity in an amount sufficient to fund the Reserves
in the amount of the resulting deficiency as determined by Lender. Lender shall
have no obligation to disburse a Reserve (i) if an Event of Default has
occurred and is continuing hereunder, or (ii) to disburse a Reserve for any
other purpose or to any Person other than for which the Reserve was
established; provided if an Event of Default has occurred, the Lender may
disburse any Reserve in its discretion to the payment of the Loan or to any
Project Cost as it may decide. Borrower hereby grants to Lender a first
security interest in the Reserves. Upon exhaustion of a Reserve, and if further
costs are foreseeable Borrower shall deposit with the Lender as additional
Owner Equity sums sufficient to replenish the Reserves. It is not the intent to
disburse the Reserves at the opening of the Loan but rather amounts held in
reserve shall be disbursed from time to time as required in increments as
needed to satisfy the item for which the Reserve has been established. At
Lender’s option disbursements from any Interest Reserve or Debt Service Reserve
Account will be disbursed directly to Lender on a monthly basis as interest or
Debt Service on the Loan becomes due and payable and Lender is automatically
authorized to draw upon the reserve each month in the amount of Debt Service on
the Loan then due and payable without the requirement of a Request for Advance
or other draw certification by the Borrower.

3.2                                 Debt
Service Reserve Account. Beginning with the first month of the Term Phase
and monthly thereafter, seventy-five percent (75%) of Project Free Cash Flow up
to an aggregate amount of $7,000,000.00 shall be deposited into a Debt Service
Reserve Account to be maintained with Lender. Thereafter, at any time as the
amount on deposit in the Debt Service

 40
 

Reserve
Account is less than $7,000,000.00 one hundred percent (100%) of Project Free
Cash Flow shall be deposited into the Debt Service Reserve Account until the
reserve is restored to the aforesaid $7,000,000.00. As and when a Debt Service
payment is due on the Loan and EBITDA from the Premises is insufficient in the
judgment of Lender to pay the then required Debt Service payment in accordance
with the terms of the Note the Lender shall withdraw from the Debt Service
Reserve Account for credit to its account the difference between EBITDA and the
amount of the then due Debt Service payment on the Note. Lender shall have no
obligation to disburse any portion of the Debt Service Reserve Account (i) if
an Event of Default has occurred and is continuing under the Loan Documents, or
(ii) to disburse any of the Debt Service Reserve Account for any other purpose
or to any other person other than for which the Debt Service Reserve Account
was established, provided if an Event of Default has occurred, the Lender may
disburse any of the Debt Service Reserve Account in its discretion to the
payment of the Loan in such order and selection as Lender may elect. Such
application by the Lender may be made without the requirement of any consent by
or notice to the Borrower. Lender shall provide to Borrower within ten (10)
days after each such payment its advice that it has so made such payment and
the amount of such payment. Notwithstanding the foregoing, Borrower recognizes
and acknowledges that its obligation to pay the required Debt Service is
absolute and unconditional and is not dependent upon sufficient deposits being
available to make payment and nothing herein shall be construed to negate or
modify the Borrower’s absolute and unconditional obligation to pay the Loan in
accordance with the terms and conditions of the Note.

3.3                                 FF&E
Reserve. Beginning with the first month of the second year of the Term
Phase and monthly thereafter the monthly sum of $50,000.00 shall be funded into
an interest-bearing reserve account (said interest to be for the account of
Borrower) the proceeds of which are to be available for capital expenditures in
the replacement of machinery and equipment in the Project.

3.4                                 Disbursement
of Excess Reserves. Any unexpended Construction Contingency and Interest
Reserves that are not disbursed by Final Completion shall (i) first be
disbursed in order of priority (a) to reimburse the Borrower for increased
Project Costs above the Project Costs itemized in the Budget and incurred by
the Borrower in the construction of the Project and paid in cash by the
Borrower and (b) any excess remaining shall be disbursed and paid into the Debt
Service Reserve Account.

3.5                                 Tax
Escrows. Beginning with the first month of the Term Phase and monthly
thereafter, Borrower shall deposit with the Lender, or at Lender’s request,
with its servicing agent, on the first day of each and every month as a deposit
to pay Impositions accruing against the Project:

(a)                      Initially a
sum such that the amounts to be deposited pursuant to (b) next and such initial
sum shall equal the estimated Impositions for the next due payment; and

(b)                     Thereafter,
monthly an amount equal to one-twelfth (l/12th) of the estimated annual Taxes
due on the Premises.

Lender
will, upon the presentation to the Lender by the Borrower of the bills
therefor, pay the Taxes from such deposits or will upon presentation of
receipted bills therefor, reimburse the Borrower for such payments made by the
Borrower. In the event the deposits on hand shall not

 41
 

be
sufficient to pay all of the estimated Impositions when the same shall become
due from time to time, or the prior deposits shall be less than the currently
estimated monthly amounts, then the Borrower shall pay to the Lender on demand
any amount necessary to make up the deficiency. The excess of any such deposits
shall be credited to subsequent payments to be made for such items. If an Event
of Default shall occur, the Lender may, at its option, without being required
so to do, apply any deposits on hand to the prepayment of the Principal Balance
of the Loan, in such order and manner as the Lender may elect. When the Loan
has been fully paid any remaining deposits shall be returned to the Borrower as
its interest may appear. All deposits are hereby pledged as additional security
for the Loan, shall be held for the purposes for which made as herein provided,
may be held by Lender or its servicing agent and may be commingled with other
funds of the Lender, or its servicing agent, shall be held in an interest
bearing account of Lender’s choice and shall not be subject to the decision or
control of the Borrower. Neither Lender nor its servicing agent shall be liable
for any act or omission made or taken in good faith. In making any payments,
Lender or its servicing agent may rely on any statement, bill or estimate
procured from or issued by the payee without inquiry into the validity or
accuracy of the same. If the taxes shown in the tax statement shall be levied
on property more extensive than the Premises, then the amounts escrowed shall
be based on the entire tax bill and Borrower shall have no right to require an
apportionment and Lender or its servicing agent may pay the entire tax bill
notwithstanding that such taxes pertain in part to other property and the
Lender shall be under no duty to seek a tax division or apportionment of the
tax bill.

4. 

SECURITY INTEREST

4.1                                 Grant
of Security Interest. To secure the prompt payment and performance of the
Loan and the Obligations of the Borrower hereunder the Borrower hereby grants a
continuing security interest in and Lien upon all assets of Borrower, including
all of the following Collateral, whether now owned or hereafter acquired, and
wherever located:

(i)                                     all
Accounts;

(ii)                                  all
Chattel Paper;

(iii)                               all
Commercial Tort Claims;

(iv)                              all
Deposit Accounts;

(v)                                 all
Documents;

(vi)                              all
Equipment

(vii)                           all
General Intangibles;

(viii)                        all Goods;

(ix)                                all
Instruments;

(x)                                   all
Intellectual Property;

 42
 

(xi)                                all
Intellectual Property Rights;

(xii)                             all
Inventory;

(xiii)                          all
Investment Property;

(xiv)                         all
Letter-of-Credit Rights;

(xv)                            all
Supporting Obligations;

(xvi)                         all
monies, whether or not in the possession or under the control of Lender, or a
bailee of Lender, including any Cash Collateral;

(xvii)                      all
accessions to, substitutions for, and all replacements, products, and cash and
non-cash proceeds of the foregoing, including proceeds of and unearned premiums
with respect to insurance policies, and claims against any Person for loss,
damage or destruction of any Collateral; and

(xviii)                   all books and
records (including customer lists, files, correspondence, tapes, computer
programs, print-outs and computer records) pertaining to the foregoing.

4.2                                Lien
on Deposit Accounts; Cash Collateral.

(a)                                  Deposit
Accounts. To further secure the prompt payment of the Loan and performance
of all obligations hereunder, Borrower hereby grants to Lender a continuing
security interest in and Lien upon all of such Borrower’s right, title and
interest in and to each Deposit Account of Borrower and any deposits or other
sums at any time credited to any such Deposit Account, including any sums in
any blocked accounts or in any accounts into which such sums are swept. Prior
to the occurrence of an Event of Default, Borrower shall direct each bank or
other depository to deliver to the account of Borrower, on a daily basis, all
balances in each Deposit Account maintained by Borrower with such depository.
At all times after the occurrence of an Event of Default, the Lender may direct
each bank or other depository to deliver to Lender, on a daily basis, for
application to the Obligations then outstanding, all available balances in each
Deposit Account maintained by Borrower with such depository. Borrower
irrevocably appoints, at all times after the occurrence of an Event of Default,
Lender as Borrower’s attorney in fact to collect such balances to the extent
any such delivery is not so made. Borrower waives the right at all times after
the occurrence of an Event of Default to direct the application of any payments
or Collateral proceeds, and agrees that Lender shall have the continuing,
exclusive right to apply and reapply same against the Obligations, in such
manner as Lender deems advisable.

(b)                                 Certain
After-Acquired Collateral. Borrower shall promptly notify Lender in writing
if, after the Loan Closing Date, Borrower obtains any interest in any
Collateral consisting of Deposit Accounts, Chattel Paper, Documents, Instruments,
Intellectual Property, Investment Property or Letter-of-Credit Rights

 43
 

and, upon Lender’s
request, shall promptly execute such documents and take such actions as Lender
deems appropriate to effect Lender’s duly perfected, first priority Lien upon such
Collateral, including obtaining any appropriate possession, control agreement
or lien waivers. If any Collateral is in the possession of a third party, at
Lender’s request, Borrower shall obtain an acknowledgment that such third party
holds the Collateral for the benefit of Lender.

4.3                                Administration
of Inventory.

(a)                                 Records
and Reports of Inventory. Borrower shall keep accurate and complete records
of its Inventory, including costs and daily withdrawals and additions, and
shall submit to Lender inventory reports in form reasonably satisfactory to
Lender, on such periodic basis as Lender may request. Borrower shall conduct a
physical inventory at least once per calendar year (and on a more frequent
basis if requested by Lender when an Event of Default exists) and periodic
cycle counts consistent with historical practices, and shall provide to Lender
a report based on each such inventory and count promptly upon completion
thereof, together with such supporting information as Lender may request.
Lender may participate in and observe each inventory or physical count.

(b)                                Records
and Schedules of Equipment. Borrower shall keep accurate and complete
records of its Equipment, including kind, quality, quantity, cost, acquisitions
and dispositions thereof, and shall submit to Lender, on such periodic basis as
Lender may request, a current schedule thereof, in form satisfactory to Lender.
Promptly upon request, Borrower shall deliver to Lender evidence of its
ownership or interests in any Equipment.

(c)                                 Dispositions
of Equipment. Borrower shall not sell, lease or otherwise dispose of any
Equipment, without the prior written consent of Lender, other than replacement
of Equipment that is worn, damaged or obsolete with Equipment of like function
and value, if the replacement Equipment is acquired substantially
contemporaneously with such disposition and is free of Liens.

4.4                                 Business
Purpose. Any Collateral installed in or used in the Premises are to be used
by the Borrower solely for Borrower’s business purposes and such Collateral
will be kept on the Premises and will not be removed therefrom without the
consent of the Lender and may be affixed to such buildings but will not be
affixed to any other real estate excepting in the case of Inventory those Goods
which are securely stored off site with a bailee or supplier with appropriate
collateral access agreements/warehouse receipts issued in the Borrower’s name
with scheduled insurance against loss, theft or damage and for which title
rests in Borrower free of liens and claims.

4.5                                 Remedies
Not Cumulative. The exercise of any one or more of the remedies provided
for under the UCC shall not be construed as a waiver of any of the other rights
of the Lender including having any Collateral deemed part of the realty upon
any foreclosure thereof. If notice to any party of the intended disposition of
the Collateral is required by law in a particular instance, such notice shall
be deemed commercially reasonable if given at least ten

 44
 

(10)
days prior to such intended disposition and may be given by advertisement in a
newspaper accepted for legal publications either separately or as part of a
notice given to foreclose the real property or may be given by private notice
if such parties are known to Lender. Neither the grant of a security interest
pursuant to this Agreement nor the filing of a financing statement pursuant to
the UCC shall ever impair the stated intention of this Agreement that all
Collateral at all times and for all purposes and in all proceedings both legal
or equitable shall be regarded as part of the real property mortgaged under the
Mortgage irrespective of whether such item is physically attached to the real
property or any such item is referred to or reflected in a financing statement.
Borrower will on demand deliver all financing statements that may from time to
time be required by Lender to establish, perfect and continue the priority of
Lender’s security interest in the Collateral and shall pay all expenses
incurred by Lender in connection with the renewal, continuation or extensions
of any financing statements executed in connection with the Premises; and shall
give advance written notice of any proposed change in Borrower’s name, identity
or structure and will execute and deliver to Lender prior to or concurrently
with such change all additional financing statements that Lender may require to
establish and perfect the priority of Lender’s security interest.

4.6                                 Notification
of Account Debtors and Other Obligors. Upon an Event of Default the Lender
may at any time notify any account debtor or other person obligated to pay the
amount due that such right to payment has been assigned or transferred to the
Lender for security and shall be paid directly to the Lender. The Borrower will
join in giving such notice if the Lender so requests. At any time after the
Borrower or the Lender gives such notice to an account debtor or other obligor,
the Lender may, but need not, in the Lender’s name or in the Borrower’s name,
demand, sue for, collect or receive any money or property at any time payable
or receivable on account of, or securing, any such right to payment, or grant
any extension to, make any compromise or settlement with or otherwise agree to
waive, modify, amend or change the obligations (including collateral obligations)
of any such account debtor or other obligor.

4.7                                 Assignment
of Insurance. As additional security for the payment and performance of the
Loan, the Borrower hereby assigns to the Lender any and all monies (including
proceeds of insurance and refunds of unearned premiums) due or to become due
under, and all other rights of the Borrower with respect to, any and all
policies of insurance now or at any time hereafter covering the Collateral or
any evidence thereof or any business records or valuable papers pertaining
thereto, and the Borrower hereby directs the issuer of any such policy to pay
all such monies directly to the Lender. At any time the Lender may (but need
not), in the Lender’s name or in the Borrower’s name, execute and deliver proof
of claim, receive all such monies, endorse checks and other instruments
representing payment of such monies, and adjust, litigate, compromise or
release any claim against the issuer of any such policy.

4.8                                 License.
Without limiting the generality of any other Loan Document, the Borrower hereby
grants to the Lender a non-exclusive, worldwide and royalty-free license to use
or otherwise exploit all Intellectual Property Rights of the Borrower for the
purpose of: (a) producing Ethanol, DDGS and CO2 from the Plant and (b) selling, leasing or
otherwise disposing of any or all Collateral.

4.9                                 Financing
Statements. The Borrower authorizes the Lender to file from time to time
where permitted by law, such financing statements against collateral described
as “all assets” or describing specific items of collateral including commercial
tort claims as the Lender

 45
 

deems
necessary or useful to perfect the Security Interest. A carbon, photographic,
or other reproduction of this Agreement or of any financing statements signed
by the Borrower is sufficient as a financing statement and may be filed as a
financing statement in any state to perfect the security interests granted
hereby. For this purpose, the following information is set forth:

Name and address of
Debtor:

Millennium Ethanol, LLC 

300 North Broadway 

Marion, South Dakota 57043

Name and address of
Secured Party:

Dougherty Funding LLC 

Suite 4300

90 South Seventh Street

Minneapolis, MN 55402

4.10                           Collateral.
This Agreement does not contemplate a sale of Accounts, Contract Rights or
Chattel Paper, and, as provided by law, the Borrower is entitled to any surplus
and shall remain liable for any deficiency. The Lender’s duty of care with
respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled if it exercises reasonable care in physically keeping such
Collateral, or in the case of Collateral in the custody or possession of a
bailee or other third person, exercises reasonable care in the selection of the
bailee or other third person, and the Lender need not otherwise preserve,
protect, insure or care for any Collateral. The Lender shall not be obligated
to preserve any rights the Borrower may have against prior parties, to realize
on the Collateral at all or in any particular manner or order or to apply any cash
proceeds of the Collateral in any particular order of application. The Lender
has no obligation to clean-up or otherwise prepare the Collateral for sale. The
Borrower waives any right it may have to require the Lender to pursue any third
person for any of the Obligations.

5. 

INSURANCE AND BONDS

5.1                                 Insurance.
Borrower shall obtain and shall continuously maintain thereafter, the following
Required Insurance in forms of coverage and with insurers/sureties acceptable
to Lender:

(a)                                  During
the Period of any Construction Activity:

(i)                                     Builder’s
Risk Insurance - Builder’s Risk Insurance covering all risk of direct
physical loss or damage including but not limited to flood and earth movement
written on a completed value basis, non-reporting form, to cover the loss of or
damage to property incident to the Work, naming Borrower, each Contractor and
Subcontractors of all tiers as co-insureds. Such Builder’s Risk Insurance shall
insure Lender, Borrower, Borrower’s Engineer, the Lender, the Lender’s
Independent Engineer, each Contractor

 46
 

and Subcontractors of all
tiers, against physical loss of or damage to the Work and to all Equipment and
other tangible materials and property incorporated or to be incorporated into
the Plant on an all-risk/replacement value basis. The Builder’s Risk Insurance
shall also cover on an all-risk basis at not less than replacement value all
Equipment not at the Plant Site and in transit. Prior to the First Advance,
Borrower shall provide Lender with a copy of the Builder’s Risk Insurance policy
with a mortgagee loss payee waiving subrogation and providing that such Builder’s
Risk Insurance shall not be cancelled or materially changed without thirty (30)
days’ written notice to Lender.

(ii)                                  Contractor’s
Liability. Contractor’s Commercial General Liability Insurance including
blanket contractual liability, employees as additional insured, completed
operations – products liability, contingent liability operations, operations of
subcontractors, property damage liability including broad form property damage,
personal injury liability, comprehensive automobile liability insurance
applicable to any owned, non-owned or hired vehicle and with the deletion of
any exclusion pertaining to explosion, collapse and underground property damage
hazards, and with the following limits of coverage:

aa.                                 $2,000,000.00
general aggregate - Bodily Injury and/or Property Damage for each
occurrence.

ba.                                  $2,000,000.00
general aggregate - Products and Completed Operations Aggregate for each
occurrence.

ca.                                   $1,000,000.00
combined single limit - Automobile Liability for each occurrence.

da.                                $1,000,000.00
but not less than statutory minimums - Worker’s Compensation Coverage.

(iii)                               Excess
Liability in Umbrella Form. Excess Liability/Umbrella Coverage with respect
to the CGL Coverage and Automobile Liability Coverage with the following limits
of coverage:

(iv)                              $5,000,000.00
General Aggregate

(v)                                 $5,000,000.00
Products/Completed Operations Aggregate

(vi)                              $5,000,000.00
Each Occurrence

(b)                                 Upon
Final Completion and thereafter:

(i)                                     Property/Casualty.
Insurance providing the following coverages:

aa.                                 All
risk/open perils special form property insurance with extended coverages
including any building contents, sprinkler coverage, Contingent Operations of
Building Laws/Ordinance or Law Endorsement (including demolition cost, loss to
undamaged

 47
 

portions of any buildings
and increased cost of construction) with limits of 100% replacement cost;

bb.                               Insurance
against loss or damage from i) leakage of sprinkler systems and ii) explosion
of steam boilers, ethanol production equipment, high pressure piping, machinery
and equipment, pressure vessels or similar apparatus now or hereafter installed
in any improvements on the Premises and including broad form boiler and
machinery insurance (without exclusion for explosion) covering all boilers or
other pressure vessels, machinery and equipment (including electrical
equipment, sprinkler systems, heating and air conditioning equipment,
refrigeration equipment and piping) located in, on or about the Premises and
any improvements thereon in an amount at least equal to the full replacement
cost of such equipment and the building or buildings housing the same;

cc.                                 Flood
insurance if any part of the Premises now (or subsequently determined to be) is
located in an area identified by the Federal Emergency Management Agency as an
area having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968 (and amendment or
successor act thereto);

dd.                               Blanket
Business Income insurance written on an Agreed Amount Valuation equal to (i)
the greater of 12 months loss of income or (ii) $25,000,000.00; and

ee.                                 “All
Risks” coverage for personal property of Borrower, including coverage for raw
material and Inventory including loss to stored Ethanol, DDGS and WDDGS and
other raw material at replacement cost valuation. In addition, coverage is to
be provided for the property of others for which Borrower is responsible for
full replacement cost valuation without depreciation.

(ii)                                  Owner’s
GCL Liability. Owner’s Commercial General Liability Insurance including
blanket contractual liability, employees as additional insured, completed
operations – products liability, contingent liability operations, operations of
subcontractors, property damage liability including broad form property damage,
personal injury liability, comprehensive automobile liability insurance
applicable to any owned, non-owned or hired vehicle and with the deletion of
any exclusion pertaining to explosion, collapse and underground property damage
hazards, and with the following limits of coverage:

aa.                                 $1,000,000.00
Bodily Injury and/or Property Damage for each occurrence and $2,000,000.00
general aggregate.

 48
 

bb.                               $1,000,000.00
combined single limit Automobile Liability for each occurrence.

cc.                                 $500,000.00
but not less than statutory minimums Worker’s Compensation Coverage.

(iii)                            Employee
Benefit Liability. Employee Benefit Liability Coverage with the following
limits of coverage:

aa.                                 $500,000.00
Employee’s Benefit Liability - each claim.

bb.                               $500,000.00
Employee’s Benefit Liability - Aggregate.

(iv)                              Combination
Crime. Combination Crime coverage for employee dishonesty.

aa.                                   $500,000.00
Loss of Money, Securities and Other Property.

bb.                               $500,000.00
Forgery, Alteration of Checks, Drafts, Notes.

cc.                                 $500,000.00
Computer Fraud resulting in loss of money.

(v)                                 Excess
Liability in Umbrella Form. Excess Liability/Umbrella Coverage with respect
to the CGL Coverage and Automobile Liability Coverage with the following limits
of coverage:

aa.                                 $5,000,000.00
for Bodily Injury and Property Damage – Each Occurrence.

bb.                               $5,000,000.00
for Bodily Injury and Property Damage – Aggregate.

(vi)                              Other
Coverages. Such other or additional insurance (as to risks covered, policy
amounts, policy provisions or otherwise) as, under prudent ethanol production
practices, are from time to time insured against for property and facilities
similar in nature, use and location to the Project which the Lender may
reasonably require and which is obtainable at commercially reasonable rates.

Such
policies shall include pollution and contamination coverage for bodily injury
and property damage arising from the ownership, operation, transportation,
handling, storage, disposal, dumping, processing and treatment of waste and
will provide for control, monitoring, remediation and clean up costs due to
seepage, pollution, contamination of environmental liabilities of any kind
whether on land or water. Time Element Pollution Coverage is also to be
provided.

5.2                                 Performance
and Payment Bonds. Prior to the First Advance of Loan Funds Borrower shall
provide a Performance Bond and Payment Bond each in the full Contract Price,
fully paid for and in form and content acceptable to Lender and written by a
Surety acceptable to Lender and naming the Lender as a dual oblige under an
acceptable dual obligee rider with evidence of payment in full of the premium
for the Bond furnished to Lender.

 49

5.3           Insurance
Policy Requirements. Maximum deductible on all coverages and policies shall
be no greater than $100,000.00. The insurance carrier must be rated A, Class X,
or better, by Best’s Rating Service. Such insurance policies shall be written
on forms and with insurance companies satisfactory to Lender, with the
exception of Professional Liability Coverage, shall be written on an “occurrence
basis,” shall be in amounts sufficient to prevent the Borrower from becoming a
co-insurer of any loss thereunder, shall insure the Lender as a first mortgagee
under a standard mortgagee clause and shall name Lender as an “additional
insured” on all required liability coverages and policies. The Borrower shall,
within thirty (30) days prior to the expiration of any such policy, deliver
other original policies of the insurer evidencing the renewal of such insurance
together with evidence of the payment of current premiums therefor. Any
vacancy, change of title, tenant occupancy or use, physical damage, additional
improvements or other factors affecting any insurance contract must be reported
to the Lender immediately. An original or certified copy of each policy is
required upon renewal. If no such copy is available, Lender will accept a
binder for a period not to exceed ninety (90) days. All binders, certificates
of insurance, and original or certified copies of policies must name Borrower
as a named insured, or as an additional insured, must include the complete and
accurate property address and must bear the original signature of the issuing
insurance agent.

5.4           Waiver
of Subrogation. All Required Insurance will provide for waivers of
subrogation in favor of Borrower and the Lender, will not be cancelable without
at least sixty (60) days’ prior written notice to Lender (except for 10 days’
notice for non-payment of premium), and all third party liability policies will
name Borrower and the Lender as additional insureds (except in the case of
worker’s compensation insurance). Insurance protecting Project assets and revenues
(property, equipment, business interruption, etc.) will name the Lender as the
first loss payee/mortgagee. All liability insurance maintained by any
Contractor will provide a severability of interest or cross-liability clause
and will be primary and not excess to or contributing with any insurance or
self-insurance maintained by Borrower or the Lender.

5.5           Annual
Certificates. On each anniversary of the Loan Closing Date, Borrower will
furnish to Lender evidence of insurance, in the form of binders, cover notes or
certificates of insurance evidencing all coverages in place and certify (A)
that all premiums are paid or current to date and (B) that Borrower is in
compliance with all provisions in this Agreement relating to Required
Insurance. Borrower will provide the Lender with copies of all insurance
policies and certificates and other information that the Lender may reasonably
request in writing with respect to the Required Insurance or the providers
thereof and, without any requirement of request by the Lender, will provide the
Lender with copies of all replacement policies within 15 days of receipt of
such policies by Borrower.

5.6           Collection
of Proceeds. Borrower shall give the Lender prompt notice of any damage to
or destruction of the Premises and in case of any covered loss, the Lender is
hereby authorized at its option to settle and adjust any claim arising out of
such coverage and collect and receipt for the proceeds payable therefrom (“Proceeds”),
provided, that the Borrower may itself adjust and collect for any losses
payable under an insurance policy and arising out of a single occurrence
aggregating not in excess of Five Hundred Thousand and no/l00 Dollars
($500,000.00). Any expense incurred by the Lender in the adjustment and
collection of Proceeds (including the cost of any independent appraisal of the
loss or damage on behalf of Lender) shall be reimbursed to the Lender first out
of any Proceeds. Borrower shall cooperate with Lender in

 50
 

obtaining for Lender the
benefits of any coverage or other Proceeds payable to it and shall pay all
reasonable expenses of Lender in participating in any loss adjustments
(including the payment by Borrower of the expense of an independent appraisal
on behalf of Lender, if reasonably necessary to facilitate adjustment of a
loss).

5.7           Self-Help.
In the event the Borrower fails to provide the Lender with evidence of the
insurance coverage required by this Section or at any time hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to
pay any premium in whole or in part relating thereto, then the Lender, without
waiving or releasing any obligation or default by the Borrower hereunder, may
at any time (but shall be under no obligation to so act), obtain and maintain
such policies of insurance and pay such premiums and take any other action with
respect thereto, which the Lender deems advisable. This insurance coverage (a)
may, but need not, protect the Borrower’s interests in such property,
including, but not limited to, the Collateral, and (b) may not pay any claim
made by, or against, the Borrower in connection with such property, including,
but not limited to, the Collateral. The Borrower may later cancel any such
insurance purchased by the Lender, but only after providing the Lender with
evidence that the Borrower has obtained the insurance coverage required by this
Section. If the Lender purchases insurance for the Collateral, the Borrower
will be responsible for the costs of that insurance, including interest and any
other charges that may be imposed with the placement of the insurance, until
the effective date of the cancellation or expiration of the insurance. The
costs of the insurance may be added to the principal amount of the Loans owing
hereunder. The costs of the insurance may be more than the cost of the
insurance the Borrower may be able to obtain on its own.

5.8           Lender
to Make Proceeds Available Under Certain Circumstances. In the event of an
insured casualty to the Project which results in a destruction of not more than
twenty-five percent (25%) of the Project (“Casualty”) and provided no Event of
Default shall have occurred which has not been cured to Lender’s satisfaction,
the Lender agrees to make the insurance proceeds payable from such event, as
the case may be (“Proceeds”), available to the reconstruction and restoration
of the Project (“Restoration”) under the following conditions:

(a)                                  The
Project can be restored to a fuctioning ethanol production Project capable of
producing to the Minimum Performance Criteria and the same value after
Restoration (as determined by an appraisal acceptable to Lender) as that prior
to the Casualty.

(b)                                 The
ratio of Debt Service to Net Income after Restoration is at least equal to that
which existed immediately prior to the Casualty.

(c)                                  The
Proceeds are sufficient to complete such Restoration or the Borrower deposits
with Lender in cash prior to commencing Restoration the difference between the
approved cost of Restoration and the Proceeds.

(d)                                 Lender
shall be provided with (i) complete Plan Documents for the Restoration prepared
by a licensed architect in the jurisdiction where the Project is situate which
shall be acceptable to Lender in the exercise of its reasonable business
judgment; (ii) a project budget itemizing the total cost to be incurred in
completing the Restoration; (iii) a fixed cost contract at an agreed stipulated
sum

 51
 

with an acceptable contractor agreeing to furnish all
labor and materials necessary to complete the Restoration; (iv) a sworn
construction statement of contractor with schedule of values attached itemizing
the work to be done by line item, subcontractor or materialman and dollar value
of the line item on AIA Form G701 or equivalent; and (v) assignments of the
architect’s and contractor’s contracts to Lender together with their consent to
assignment to the Lender.

(e)                                  Requests
for disbursement of Proceeds shall be made not more frequently than once a
month pursuant to AIA Form G702/703 for Restoration work completed and in place
and in accordance with prudent construction lending requirements including (i)
a retainage by Lender from each disbursement of ten (10%) percent of the
disbursement requested, (ii) itemized draw requests approved by the Design
Professional and an inspector acceptable to Lender and (iii) Unconditional Lien
Waivers for the work done. At Lender’s election the Proceeds shall be disbursed
through the title insurer having issued the Lender’s Title Policy who shall act
as disbursing agent under an acceptable disbursing arrangement which among
other things shall require a downdate endorsement through each disbursement
downdating coverage on the Lender’s Title Policy to date of disbursement with
no additional exceptions including so-called mechanic and materialman’s liens.

(f)                                    The
Proceeds shall be held by Lender in an interest bearing account of its choice.

(g)                                 No
Event of Default shall exist at the time of each disbursement. If such Event of
Default exists, then at the election of the Lender the Proceeds may be applied
to the prepayment of the Loan.

(h)                                 The
Borrower shall pay any actual expenses Lender incurs including attorney’s fees,
fees of any other professionals retained including its inspecting
architect/engineer, any escrow expenses and any costs and expenses for title
insurance and Title’s disbursement charges.

(i)                                     The
Business Interruption insurance policy remains in full force and effect and the
insurer is making payments sufficient to pay (aa) all Debt Service, (bb) Taxes,
(cc) payroll expenses, and (dd) extra expenses incurred.

(j)                                     Any
Restoration must in the opinion of Lender’s retained Inspecting Engineer be
susceptible of being completed within six (6) months prior to the Maturity Date
and Lender is presented with a construction contract with completion date of
not later than said date.

Any surplus which may
remain after payment of all costs of Restoration or repair may at the option of
the Lender be applied on account of the Principal Balance of the Loan then most
remotely to be paid, whether due or not, without application of any prepayment
premium or shall be returned to Borrower as its interest may appear, the choice
of application to be solely at the discretion of Lender.

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6.

CONDEMNATION

6.1           Condemnation.
Borrower shall give the Lender prompt notice of any actual or threatened
condemnation or eminent domain proceedings affecting the Premises and hereby
assigns, transfers, and sets over to the Lender the entire proceeds of any
award or claim for damages or settlement in lieu thereof for all or any part of
the Premises taken or damaged under such eminent domain or condemnation
proceedings, the Lender being hereby authorized to intervene in any such action
and to collect and receive from the condemning authorities and give proper
receipts and acquittances for such proceeds. Borrower will not enter into any
agreements with the condemning authority permitting or consenting to the taking
of the Premises or agreeing to a settlement unless prior written consent of
Lender is obtained. Any expenses incurred by the Lender in intervening in such
action or collecting such proceeds, including reasonable attorney’s fees, shall
be reimbursed to the Lender first out of the proceeds. The proceeds or any part
thereof shall be applied upon or in reduction of the Loan then most remotely to
be paid, whether due or not, without the application of any prepayment premium,
or to the restoration or repair of the Premises, the choice of application to
be solely at the discretion of Lender.

6.2           Disbursement
of Condemnation Proceeds. Any restoration or repair shall be done under the
supervision of an architect acceptable to Lender and pursuant to plans and
specifications approved by the Lender. In any case where Lender may elect to
apply the proceeds to repair or restoration or permit the Borrower to so apply
the proceeds they shall be held by Lender in an interest bearing account of its
choice for such purposes and will from time to time be disbursed by Lender to
defray the costs of such restoration or repair under the same procedures as use
of casualty insurance provides for Restoration. Borrower shall on demand
deposit with Lender any sums necessary to make up any deficits between the
actual cost of the work and the proceeds and provide such lien waivers and
completion bonds as Lender may reasonably require. Any surplus which may remain
after payment of all costs of restoration or repair may at the option of the
Lender be applied on account of the Loan then most remotely to be paid, whether
due or not, without application of any prepayment premium or shall be returned
to Borrower as its interest may appear, the choice of application to be solely
at the discretion of Lender.

7. 

REPRESENTATIONS AND WARRNTIES OF THE BORROWER

7.1           Validity
of Loan Documents. The Loan Documents grant to Lender a valid and enforceable
first lien and security interest in the Project.

7.2           Priority
of Lien on Equipment. No chattel mortgage, bill of sale, security
agreement, financing statement, or other title retention agreement (except
those executed in favor of Lender) has or will be executed with respect to any
Equipment used in conjunction with the construction, operation or maintenance
of the improvements.

7.3           Conflicting
Transactions of Borrower. The consummation of the transactions hereby
contemplated and the performance of the obligations of Borrower under and by
virtue of the Loan Documents will not result in any breach of, or constitute a
default under the

 53
 

Organizational Documents,
any mortgage, lease, bank loan or credit agreement, or other instrument to
which Borrower is a party or by which it may be bound or affected.

7.4           Legal
Status of Borrower. Borrower is a duly organized limited liability company
validly existing and in good standing under the laws of the State of South
Dakota and has all power, authority, permits, consents, authorizations and
licenses necessary to carry on its business, to construct, equip, own and
operate the Project and to execute, deliver and perform this Agreement and the
other Loan Documents to which Borrower is a party; all consents required of the
ownership of Borrower necessary to authorize the execution, delivery and
performance of this Agreement and of the other Loan Documents which have been
or are to be executed by and on behalf of Borrower have been duly adopted and
are in full force and effect; and this Agreement and such other Loan Documents
have been duly authorized, executed and delivered by and on behalf of Borrower
and are the valid and binding obligations of Borrower, enforceable in
accordance with their respective terms.

7.5           Pending
Litigation. Excepting an Appeal from the judgment in the Turner County
Litigation there are no actions, suits or proceedings pending, or to the
knowledge of Borrower threatened, against or affecting it, or the Premises, or
involving the validity or enforceability of any of the Loan Documents or the
priority of the lien thereof, at law or in equity, or before or by any
Governmental Authority, except actions, suits and proceedings which are fully
covered by insurance or which, if adversely determined would not substantially
impair the ability of Borrower to perform each and every one of its obligations
under and by virtue of the Loan Documents; and to the Borrower’s knowledge the
Borrower is not in default with respect to any order, writ, injunction, decree
or demand of any court or any governmental authority.

7.6           Violations
of Governmental Law, Ordinances or Regulations. Borrower has no knowledge
of any violations or notices of violations of any federal or state law or
municipal ordinance or order or requirement of the State in which the Premises
are located or any municipal department or other governmental authority having
jurisdiction affecting the Premises, which violations in any way relate to or
affect the Premises.

7.7           Compliance
with Zoning Ordinances, Regulatory Approvals, Governmental Requirements.
The Plan Documents, the Work and construction pursuant thereto and the use of
the Premises contemplated thereby comply and will comply with all Governmental
Requirements, Regulatory Approvals, Archeological Conditions, Environmental
Laws, equal employment regulations, any private covenants affecting the
Project, and appropriate supervising boards of fire underwriters and similar
agencies and all Approvals to the construction of the Project have been
obtained or will be obtained prior to the First Advance.

7.8           Availability
of Utilities. All utility services necessary for the operation of the Plant
and necessary to meet the Performance Guarantee Criteria including natural gas,
electricity, water supply, waste water discharge, energy and communications
facilities are available at the Premises or will be made available to the
Premises prior to completion of construction of the Improvements at standard
utility rates and hook-up charges.

7.9           Permits.
All applicable Preconstruction Permits required for the construction of the
Project have been or will be issued prior to the First Advance and upon
issuance will be in full force and effect and all Post Construction Permits
required for the maintenance and

 54
 

operation of the Project
are available from the Governmental Authorities and will be issued and paid for
prior to the Start-Up.

7.10         Operating Agreements. All Operating
Agreements have been executed and are in full force and effect.

7.11         Condition of Premises. The Premises are
not now damaged or injured as a result of any fire, explosion, accident, flood
or other casualty, or subject to any condemnation action or exercise of eminent
domain by a Governmental Authority.

7.12         Final Plan Documents. Final Plan
Documents have not yet been fully prepared or finalized. However, the Scope of
the Work is sufficiently detailed to provide a firm Contract Price and has met
all Approvals to date. Final and expanded Plan Documents will be developed and
Approvals met prior to the first Advance of Loan Funds. As and when such Plan
Documents are made available, copies of the same shall be provided to the
Lender and its Inspecting Engineer for its review and approval. The Work to be
done pursuant to such final and expanded Plan Documents will not allow the
Design Builder to claim a change in the Contract Price. Excepting for Minor
Changes, no changes are to be made in the Plan Documents as so approved without
required Approvals; provided the Design Builder shall have the right, upon
prior notice to Borrower and Lender, at any time during the performance period
of Design Build Agreement to carry out, free of charge to Borrower, such
modifications to the Work which Fagen deems in its reasonable judgment
necessary for technical reasons, in order to meet the Performance Guarantee
Criteria or to otherwise comply with its obligations under Design Build
Agreement; provided that any Work or Materials or Equipment to be modified will
not be replaced by Work or Materials or Equipment of inferior quality than
called for in the original design.

7.13         Construction Contract(s). Borrower will
permit no default to exist under each Construction Contract when issued and the
Borrower will perform its obligations under each Construction Contract when
issued and cause the Contractor to perform its obligations thereunder. Borrower
will cause each Contractor to promptly furnish Lender with the complete list of
all Sub-contractors or entities which the Contractor proposes to engage to
furnish labor and/or materials in constructing the Project and will from time
to time furnish Lender with true copies of all Major Contract(s).

7.14         Brokerage Commissions. Borrower has
independently engaged the services of Scofield & Associates, Inc., (“Financial
Advisor”) to obtain the Loan. Borrower agrees to pay the fees and expenses of
the Financial Advisor and shall indemnify Lender from any liability, claims or
losses arising by reason of the Financial Advisor or any other broker claiming
a fee or commission due in connection with the Loan. This provision shall
survive the repayment of the Loan and shall continue in full force and effect
so long as the possibility of such liability, claims or losses exists. The
Budget accurately sets forth all amounts due such engaged Brokers and Borrower
represents and warrants to the Lender that no other brokerage commissions are
due in connection with the transaction contemplated hereby.

7.15         Prior Work. No Work has been commenced
or will be commenced prior to the Loan Closing Date and recording of the Loan
Documents unless approved by Title under a “prior start agreement” under which
the first lien status of the Mortgage is specifically insured over liens for
all Work and Materials furnished or to be furnished to the Project. Except for
Work

 55
 

commenced under such “prior
start agreement”, no work or construction has been commenced or will be
commenced by or on behalf of Borrower on the Premises, nor has Borrower entered
into any contracts or agreements for such work or construction which could
result in the imposition of a mechanic’s or materialmen’s lien on the Premises
or the Project or constitute a “first item of work” to which any subsequent
work on the Project may “tack” or which may result in the assertion or
perfection of a Lien prior to or on parity with the lien of the Mortgage.

7.16         Environmental Impact Statement. All
required environmental impact statements as required by any Governmental
Authority have been duly field and approved.

7.17         Access. The Premises directly front on a
publicly maintained road or street and have legal access to the same through
governmentally approved curb cut permits. No access permits are required.

7.18         Hazardous Representations. The Borrower
represents that, to the best of its knowledge following due inquiry as a duly
diligent property owner, (i) the Premises has been, now is and will in the
future be free from contamination by Hazardous Substances excepting (A)
immaterial quantities of Hazardous Substances leaked or spilled inadvertently
from the operation of the Plant and which are reported in accordance with all
Environmental Laws and remediated in accordance with Environmental Laws and (B)
immaterial quantities of substances customarily and prudently used in the
operation, cleaning and maintenance of the Premises in accordance with any
applicable law), (ii) no release of any such Hazardous Substance has occurred
on or about the Premises or into adjoining lands or the environment, (iii) that
the Premises currently complies, and will comply based on its current and
anticipated use, with all current Environmental Laws, (iv) that, in connection
with the ownership, operation, and use of the Premises, all necessary notices
have been filed and all required permits, licenses and other authorizations have
been obtained, including those relating to the generation, treatment, storage,
disposal or use of Hazardous Substances, (v) that there is not presently at
this time any non-remediated past or threatened investigation, inquiry or
proceeding relating to the environmental condition of, or to the discharge of
Hazardous Substances or violation of Environmental Laws on from or about the
Premises, and (vi) there are not to the best of Borrower’s knowledge any
underground storage tanks currently existing or to the extent such underground
storage tanks are existing they are registered under the required Environmental
Laws and do not contain any leakages, and (vii) Borrower has not received nor
does it have any knowledge of any summons, citation, directive, letter or other
communication, written or oral, from any local, state or federal governmental
agency concerning (A) the existence of Hazardous Substances on the Premises or
in the immediate vicinity, (B) the transportation, releasing, spilling,
leaking, pumping, pouring, emitting, emptying, or dumping of Hazardous
Substances onto the Premises or from the Premises into the environment, waters
or adjacent lands or (C) violation of Environmental Laws.

7.19         Flood Plain. The Premises are not
located in a 100 Year Flood Plain as depicted on any FIRM Maps or as determined
by the Federal Emergency Management Agency (“FEMA”).

7.20         Status of Borrower. Neither Borrower nor
any controlling interest in Borrower (if an entity) is insolvent (as such term
is defined in Section 101(32) of the Bankruptcy Code, as amended) and will not
be rendered insolvent (as such term is defined in Section 101(32) of the

 56
 

Bankruptcy Code, as
amended) by execution of this Agreement, the Note or any other Loan Documents
or consummation of the transactions contemplated thereby.

7.21         Licensing. To the best knowledge of
Borrower, Design Builder, the Other Contractors, and all Design Professionals
hold valid professional licenses as contractor and architect/engineer,
respectively, where required as a condition to performing their duties.

7.22         Purchase of Materials Under Conditional
Sales Contract. No Materials, Equipment, or any other part of the
Improvements, or articles of Materials or Equipment to be placed in the
Project, have been or will be purchased or installed under any security
agreement, title retention agreement or other arrangements wherein the seller
reserves or purports to reserve the right to remove or to repossess any such
items or to consider them personal property after their incorporation in the
Work unless authorized by Lender in writing.

7.23         Office of Foreign Asset Control.
Borrower represents and warrants that neither Borrower or any of its respective
Affiliates is a Prohibited Person and Borrower and all of its respective
Affiliates are in full compliance with all applicable orders, rules,
regulations and recommendations of The Office of Foreign Assets Control of the
U.S. Department of the Treasury. At all times throughout the term of the Loan,
Borrower and all of its respective Affiliates shall: (i) not be a Prohibited
Person (defined below); and (ii) be in full compliance with all applicable
orders, rules, regulations and recommendations of The Office of Foreign Assets
Control (“OFAC”) of the U.S. Department of the Treasury.

The
term “Prohibited Person” shall mean any person or entity:

(i)                                     listed
in the Annex to, or otherwise subject to the provisions of, the Executive Order
No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to
Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (the “Executive Order”);

(ii)                                  that
is owned or controlled by, or acting for or on behalf of, any person or entity
that is listed to the Annex to, or is otherwise subject to the provisions of,
the Executive Order;

(iii)                               with
whom Lender is prohibited from dealing or otherwise engaging in any transaction
by any terrorism or money laundering law, including the Executive Order;

(iv)                              who
commits, threatens or conspires to commit or supports “terrorism” as defined in
the Executive Order;

(v)                                 that
is named as a “specially designated national and blocked person” on the most
current list published by the U.S. Treasury Department Office of Foreign Assets
Control at its official website, www.ustreas.gov/offices/enforcement/ofac, or
at any replacement website or other replacement official publication of such
list; or

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(vi)                              who
is an Affiliate of or affiliated with a person or entity listed above; or

(vii)                           who is
a “disregarded entity” as defined in IRS Regulation 1.1445-2(b)(2)(iii).

The
term “Affiliate,” as used herein, shall mean as to any person or entity, any
other person or entity that, directly or indirectly, is in control of, is
controlled by or is under common control with such person or entity or is a
director or officer of such person or entity or of an Affiliate of such person
or entity. As used herein, the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of management, policies
or activities of a person or entity, whether through ownership of voting
securities, by contract or otherwise.

7.24         Intellectual Property
Rights.

(a)                                  Owned
Intellectual Property. Attached as Exhibit “F” is a complete list of all
patents, applications for patents, trademarks, applications for trademarks,
service marks, applications for service marks, mask works, trade dress and
copyrights for which the Borrower is the registered owner (the “Owned
Intellectual Property”). Except as disclosed on Exhibit “F”, (i) the Borrower
owns the Owned Intellectual Property free and clear of all restrictions
(including covenants not to sue a third party), court orders, injunctions,
decrees, writs or Liens, whether by written agreement or otherwise, (ii) no
Person other than the Borrower owns or has been granted any right in the Owned
Intellectual Property, (iii) all Owned Intellectual Property is valid,
subsisting and enforceable and (iv) the Borrower has taken all commercially
reasonable action necessary to maintain and protect the Owned Intellectual
Property.

(b)                                 Intellectual
Property Rights Licensed from Others. Exhibit “E” also contains a complete
list of all agreements under which the Borrower has licensed Intellectual
Property Rights from another Person (“Licensed Intellectual Property”) other
than readily available, non-negotiated licenses of computer software and other
intellectual property used solely for performing accounting, word processing
and similar administrative tasks (“Off-the-shelf Software”) and a summary of
any ongoing payments the Borrower is obligated to make with respect thereto.
Except as disclosed on Exhibit “F” and in written agreements copies of which
have been given to the Lender, the Borrower’s licenses to use the Licensed
Intellectual Property are free and clear of all restrictions, Liens, court
orders, injunctions, decrees, or writs, whether by written agreement or
otherwise. Except as disclosed on Exhibit “F”, the Borrower is not obligated or
under any liability whatsoever to make any payments of a material nature by way
of royalties, fees or otherwise to any owner of, licensor of, or other claimant
to, any Intellectual Property Rights.

(c)                                  Other
Intellectual Property Needed for Business. Except as disclosed on Exhibit “F”,
the Owned Intellectual Property and the Licensed Intellectual Property
constitute all Intellectual Property Rights used or necessary to conduct the
Borrower’s business as it is presently conducted or as the Borrower reasonably
foresees conducting it.

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(d)                                 Infringement.
The Borrower has no knowledge of, and has not received any written claim or
notice alleging, any infringement of another Person’s Intellectual Property
Rights (including any written claim that the Borrower must license or refrain
from using the Intellectual Property Rights of any third party) nor, to the
Borrower’s knowledge, is there any threatened claim or any reasonable basis for
any such claim.

7.25
        Electrical
Supply Agreements. The Electrical Supply Agreements as currently delivered
are in negotiated form and subject to the Borrower substituting an alternative
Utility Provider acceptable to Lender the Borrower will cause the same to be
executed and delivered prior to the First Advance and upon execution will cause
the Utility Provider to perform its obligations thereunder all to the end that
the Electrical Supply Utility Provider will perform all obligations on the part
of the Utility Provider under the Electrical Supply Agreement and the Utility
Provider will have no defenses, setoffs, or counterclaims against its
obligation to construct the Electrical Supply System.

7.26
        Water
Supply Agreements. The Water Supply Agreements currently delivered are in
full force and effect and no default exists thereunder and the Borrower will
perform its obligations thereunder and cause the Utility Provider to perform
its obligations thereunder. Excepting the obligation to construct the Water
Supply System all obligations on the part of the Utility Provider under the
Water Supply Agreement have been or will be fully complied with and the Utility
Provider has no defenses, setoffs, or counterclaims against its obligation to
construct the Water Supply System. The Borrower shall cause to be paid to the
Utility Provider “Millennium’s Capital Contribution” as required pursuant to
the Water Treatment Plant Financing Agreement and to pay the Contractors
utilized in the construction of the Project.

7.27
        Natural
Gas Supply Agreements. The Natural Gas Supply Agreements are in full force
and effect and no default exists thereunder and the Borrower will perform its
obligations thereunder and cause the Utility Provider to perform its
obligations thereunder. Excepting the obligation to construct the Natural Gas
Supply System all obligations on the part of the Utility Provider under the Natural
Gas Supply System have been or will be fully complied with and the Utility
Provider has no defenses, setoffs, or counterclaims against its obligation to
construct the Natural Gas Supply System.

7.28
        Project
Documents. The Project Documents executed by Borrower on or prior to the
Loan Closing Date or to which Borrower is otherwise a party include all
agreements required for the development, construction, ownership and operation
of the Project, other than those agreements that the Lender does not require to
be in place on the Loan Closing Date and that the Lender is satisfied, on the
basis of evidence provided by Borrower, will be obtainable and entered into in
the ordinary course of business prior to the time required, and such Project
Documents conform in all material respects with the requirements necessary to
construct, maintain and operate the Project and are sufficient to permit the
Project to operate in a manner that will not violate the Approvals or the
Project’s normal operating parameters.

7.29
        Approvals.
All Approvals necessary for the construction and operation of the Project and
the performance by Borrower and the Project Parties of all of their obligations
under the Project Documents in effect on the Loan Closing Date have been
obtained except for those that are obtainable only at a later stage and which
the Lender is satisfied, on the basis of evidence

 59
 

provided by Borrower,
will be obtainable in the ordinary course of business prior to the time
required, and all obtained Approvals are in full force and effect, not subject
to any onerous or unusual condition and are satisfactory to the Lender in its
sole discretion.

7.30
        Major
Project Documents. As of the First Advance the Major Project Documents will
have been duly and validly executed and delivered by the parties thereto, are
in full force and effect and have not been amended, modified, supplemented or
terminated. The copies of all Major Project Documents provided to the Lender by
Borrower are true, correct and complete. Borrower has or will have other
enforceable agreements or other satisfactory arrangements that ensure the
availability, on commercially reasonable terms, of all feedstock, utilities,
transportation, facilities, infrastructure, interconnections, materials and
services necessary for the design, construction, ownership, operation and
maintenance of the Project as contemplated by the Documents.

7.31
        Project
Budget. As of the Loan Closing Date, the Project Budget (i) has been
prepared with due care, (ii) is complete in all material respects and fairly
presents Borrower’s good faith expectations as at the date of such document as
to the matters covered thereby and (iii) is based on reasonable assumptions as
to the factual and legal matters material to the estimates therein. The Project
Budget accurately specifies and describes all material Project expenses.

7.32
        Not a
Regulated Entity. Borrower is not (a) an “investment company” or a “person
directly or indirectly controlled by or acting on behalf of an investment
company” within the meaning of the Investment Company Act of 1940; (b) a “holding
company,” a “subsidiary company” of a “holding company,” or an “affiliate” of
either, within the meaning of the Public Utility Holding Company Act of 1935;
or (c) subject to regulation under the Federal Power Act, the Interstate
Commerce Act, any public utilities code or any other Applicable Law regarding
its authority to incur Debt.

7.33
        Margin
Stock. Borrower is not engaged, principally or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying any Margin Stock. No Loan proceeds or Letters of Credit will be
used by Obligors to purchase or carry, or to reduce or refinance any Debt
incurred to purchase or carry, any Margin Stock or for any related purpose
governed by Regulations T, U or X of the Board of Governors.

7.34
        Plan
Assets. Borrower is not an entity deemed to hold “plan assets” within the
meaning of 29 C.F.R. §2510.3-101 of any “employee benefit plan” (as defined in
Section 3(3) of ERISA) that is subject to Title I of ERISA or any “plan”
(within the meaning of Section 4975 of the Internal Revenue Code), and neither
the execution of this Agreement nor the funding of the Loan gives rise to a
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Internal Revenue Code.

8. 

COVENANTS OF BORROWER

8.1           Site. Borrower
holds marketable fee simple title to the Premises subject only to the Permitted
Exceptions and shall execute and deliver or cause to be executed and delivered

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such instruments as may
be required by the Lender and Title to provide Lender with a valid first lien
on and security interest in the Premises subject only to the Permitted
Exceptions.

8.2           Start of Work.
Construction of the site grading shall be commenced within thirty (30) days of
the date of this Agreement. A Notice to Proceed will be delivered to Design
Builder not later than the time and in the manner required by the Design Build
Agreement but not later than thirty (30) days after (i) issuance of a final
judgment on the Appeal or (b) expiration of any Appeal Rights. Borrower shall
diligently pursue construction of the Project to completion, and supply such
moneys and perform such duties as may be necessary to complete the construction
of the Project pursuant to the Contract Documents and in full compliance with
all terms and conditions of this Agreement all of which shall be accomplished
on or before the Substantial Completion Date (subject to extensions to the
First Extended Date and the Second Extended Date if the Appeal is filed and the
respective First Extension Fee and Second Extension Fee are paid) and without
Liens, claims or assessments (actual or contingent) asserted against the
Premises for any material, labor or other items furnished in connection
therewith, and all in full compliance with all Governmental Requirements,
evidence of satisfactory compliance with all of which Borrower will provide to
Lender upon request therefor by Lender. Borrower agrees to hold harmless and
indemnify the Lender from any claimed or threatened Lien against the Premises.

8.3           Plan Documents.
As Plan Documents are developed, Borrower shall cause copies to be furnished to
Lender and its Inspecting Engineer, for their review and approval. It is
understood that such review and approval is solely for the purpose of Lender’s
underwriting requirements and such review shall not be construed as a review of
suitability, merchantability, fitness, compliance with Governmental
Requirements or otherwise and may not be relied upon by Borrower or any other
person or entity.

8.4           Contest of
Impositions, Liens and Levies. Borrower shall keep the Premises free from
any Lien and upon the assertion of a claim of Lien or the filing of a Lien
against the Premises, the Borrower shall cause the same to be immediately
discharged and removed, provided Borrower shall not be required to pay,
discharge or remove any Lien so long as the Borrower shall in good faith
contest the same or the validity thereof by appropriate legal proceedings which
shall operate to prevent the collection of the Lien so contested and the sale
of the Premises, or any part thereof, to satisfy the same and the existence of
such Lien shall not delay or hinder the construction of the Improvements and provided
that the Borrower shall have given such reasonable security as may be demanded
by the Lender and Title to protect the Premises, and the Lender’s interest
therein, if any such Lien is determined adverse to such interests. The Borrower
shall promptly after final determination of the validity of any such Lien, pay
the amount adjudicated due together with all interest and penalties which may
be payable in connection therewith. Notwithstanding these provisions Borrower
shall (and if Borrower shall fail so to do, Lender, may but shall not be
required to) pay any such Lien notwithstanding such contest if in the
reasonable opinion of the Lender, the Premises shall be in jeopardy or in
danger of being forfeited or foreclosed or construction of the Project is delayed
or hindered.

8.5           Surveys. Prior to
the Loan Closing Date, Borrower shall furnish to Lender three copies of a
current “Spotted” land survey of the Premises prepared by a reputable,
registered land surveyor, certified and prepared in form and substance
satisfactory to Lender and Title and other interested parties and otherwise
complying with the “Minimum Standard Detail Requirements

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for ALTA/ACSM Land Title
Surveys” as adopted in 1999 by the American Land Title Association, American
Congress on Surveying & Mapping and National Society of Professional
Surveyors, including the following items 1, 2, 3, 4, 6, 7(a), 7(b)(1), 8, 9,
10, 11, and 13 of Table A and certifying the description of the Premises
(including the appurtenant easements), showing all encroachments onto or from
the Premises, spotting the proposed Improvements, showing access rights,
easements, or utilities, rights of way affecting the Premises, showing all
setback requirements upon the Premises, showing any existing improvements,
showing matters affecting title, and such other items as Lender may reasonably
request. After the Improvements are completed, the Borrower shall promptly
furnish the Lender with three copies of the survey revised to show the location
of the Improvements and certifying that the Improvements are within the
boundary lines of the Premises and the building restriction lines, if any, and
that the Improvements do not encroach upon any set back easement, utility or
right of way. Upon completion of construction, the Borrower shall provide three
copies of the Survey recertified “as built”.

8.6           Title Insurance.
On the Loan Closing Date, Borrower shall furnish Lender with a fully paid Title
Policy written in the full Loan amount in form and substance satisfactory to
Lender and written by Title insuring the Premises are marketable, insuring fee
simple title to the Premises vested in Borrower, free from exceptions for
mechanic’s and materialmen’s liens, naming Lender as an insured and insuring
that the Mortgage is a valid first lien in the full amount of the Loan subject
only to the Permitted Exceptions. The policy may not contain a so-called “Pending
Disbursement” Endorsement.

8.7           UCC Insurance. On
the Loan Closing Date, Borrower shall furnish Lender with a fully paid UCC
Policy written in the full Loan amount in form and substance satisfactory to
Lender and written by Title (or First American Title Insurance Company)
insuring title to the Collateral is vested in Borrower, free from all Liens,
naming Lender as the insured and insuring that the security interest of the
Lender in the Collateral is a valid, perfected first security interest.

8.8           Loan Documents.
On the Loan Closing Date the Borrower shall cause the Loan Documents to be
executed and delivered to Lender.

8.9           Other Documents.
Prior to any request for an Advance Borrower shall furnish the Lender with
copies of such other documents, instruments or materials as may be reasonably
required by Lender, if any.

8.10
        Restrictions
on Transfer. Borrower may not effect or permit a Transfer.

8.11
        Application
of Loan Proceeds. Borrower shall use the proceeds of the Loan solely for
the purpose of paying for Project Costs and such incidental costs relative to
the construction of the Project as may be approved from time to time in writing
by Lender, and in no event may use any of the Loan proceeds for personal or
other purposes.

8.12
        Expenses.
Borrower shall pay all costs of closing the Loan and all reasonable expenses of
Lender with respect thereto, including, but not limited to, fees and expenses
of Lender’s counsel and all other attorney’s fees (including fees and costs
incurred in connection with disbursement, administration, collection, or
closing of the Loan, fees and costs of Lender’s Inspecting Engineer, costs of
title insurance, transfer taxes, license and permit fees, recording

 62
 

expenses, surveys,
intangible taxes, appraisal fees, expenses of collection and foreclosure,
including reasonable attorney’s fees incurred in a bankruptcy proceeding) and
similar items. The Borrower agrees to pay any and all documentary stamps and/or
intangible taxes and all interest and penalties associated therewith which may
be assessed on account of the Loan.

8.13
        Governmental
Requirements. Borrower shall comply promptly with any Governmental Requirements,
including Regulatory Approvals and appropriate supervising boards of fire
underwriters and similar agencies and the requirements of any insurer issuing
coverage on the Project.

8.14
        Right of
Lender to Inspect Premises. Borrower shall permit Lender and Title and
their representatives and agents to enter upon the Premises and to inspect the
Work and all Materials to be used in construction thereof and to cooperate and
cause the Contractor(s) to cooperate with Lender, Title, and their
representatives and agents during such inspections; provided, however, that
this provision shall not be deemed to impose upon Lender or Title any duty or
obligation whatsoever to undertake such inspections, to correct any defects in
the Work or to notify any person with respect thereto. Notwithstanding the
foregoing, Borrower shall be responsible for making inspections as to the Work
during the course of construction and shall determine to its own satisfaction
that the work done or materials supplied by the Contractor(s) and all
Subcontractors has been properly supplied or done in accordance with the
applicable contracts. Borrower will hold Lender and Title harmless from and
Lender and Title shall have no liability or obligation of any kind to Borrower,
any third parties or creditors of Borrower in connection with any defective,
improper or inadequate workmanship or materials brought in or related to the
Work or the Premises, or any Liens arising as a result of such workmanship or
materials. Such inspections are solely for the purpose of Lender’s underwriting
requirements and such review shall not be construed as a review of suitability,
merchantability, fitness, compliance with Governmental Requirements or
otherwise and may not be relied upon by Borrower or any other person or entity.

8.15
        Books and
Records. Borrower shall set up and maintain accurate and complete books,
accounts and records pertaining to the Project including working drawings in a
manner reasonably acceptable to Lender. The Lender, Title and Inspecting Engineer
shall have the right at all reasonable times to inspect, examine and copy all
books and records of Borrower relating to the Project. Any such inspection is
solely for the purpose of Lender’s underwriting requirements and such review
shall not be construed as a review of suitability, merchantability, fitness,
compliance with Governmental Requirements or otherwise and may not be relied
upon by Borrower or any other person or entity.

8.16
        Correction
of Defects. Borrower shall from time to time promptly correct or cause the
Contractor(s) to correct any defects in the Work or any departure from the Plan
Documents not previously approved by Lender. An Advance of any Loan Funds shall
not constitute a waiver of Lender’s right to require compliance with this covenant.

8.17
        Sign
Regarding Construction Financing. Borrower shall allow Lender to erect and
maintain on the Premises in a place reasonably approved by Borrower a sign
indicating that construction financing is being provided by Lender and to
publicize Lender’s financing role.

 63

8.18         Additional Documents.
Borrower shall furnish to Lender all instruments, documents, initial surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, financial statements, title and other insurance reports and agreements
and each and every other document and instrument required to be furnished by
the Borrower, hereunder, all at Borrower’s expense; shall assign and deliver to
Lender such documents, instruments, assignments and other writings, and to do
such other acts necessary or desirable to preserve and protect the Collateral
at any time securing or intended to secure the Note, as Lender may reasonably
require; and shall do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the carrying out of the intents and
purposes of this Agreement, as Lender shall reasonably require from time to
time. Prior to the start of any Equipment installation, Borrower shall provide
to Lender at its request copies of all plans and specifications for such
Equipment installation.

8.19         Assignment of Construction Contracts.
Prior to the request for the First Advance Borrower shall furnish Lender with
copies of all Major Contracts and assign to Lender the Construction Contracts.
Borrower shall permit no default under the Construction Contracts; shall not
waive any of the obligations of the parties thereunder; and shall do no act
which would relieve such parties from their obligations thereunder. The
Borrower shall make no amendments to such contracts, without the prior written
consent of Lender and excepting Minor Changes shall not enter into Change
Orders or extras without Lender’s consent nor permit any changes to the Scope
of the Work. Borrower shall allow all Major Contracts to be subject to the
approval of Lender for its underwriting purposes; shall allow Lender to take
advantage of all the rights and benefits of the contracts upon any Event of
Default by Borrower; and shall submit evidence to Lender that the Contractor(s)
will permit Lender to acquire Borrower’s interest in such contracts without
additional charge or fee beyond payment of the Contract Price should an Event
of Default occur hereunder. Borrower shall, at its own cost and expense,
perform, comply with and discharge all of the obligations of Borrower under the
Construction Contracts, including providing all Materials that are required to
be provided by the Borrower, and use all efforts to enforce or secure the
performance of each obligation and undertaking of the Contractor under the
Construction Contracts. Borrower shall permit no surrender nor assignment of
the Borrower’s interest under the Construction Contracts nor execute any
mortgage or create or permit a lien which may be or become superior to the
Mortgage and Loan Documents, nor permit a subordination of the Construction
Contracts to any mortgage or lien. Borrower will not modify or amend the terms
of the Construction Contracts nor excuse or waive any default of the Contractor
thereunder without the prior written consent of Lender.

8.20         Compliance with Governmental Requirements.
Borrower shall comply with and shall require the Contractor(s) to comply with
all Governmental Requirements, Regulatory Agreements, and all rules,
regulations, ordinances and laws bearing on the conduct of the Work and the
Improvements, including the requirements of any insurer issuing coverage on the
Project and the requirements of any supervising boards of fire underwriters or
similar agencies.

8.21         Opinions of Counsel. Prior to the Loan
Closing, Borrower shall furnish such opinions of counsel as Lender may require
in connection with the matters contemplated by this Agreement.

8.22         Geotechnical Reports. Prior to the Loan
Closing Borrower shall provide the Lender with a soil report prepared by an
acceptable engineer certifying as to the status of the soil

 64
 

conditions on the
Premises, the need or lack of need for special pilings and foundations and that
either any pilings and foundation necessary to support the Improvements have
been placed in a manner and quantity sufficient to provide the required support
or that no such pilings and foundations are necessary for the support and
construction of the Improvements and evidence that the same have been
incorporated in the Plan Documents.

8.23         Loan Fee. Not later than the Loan
Closing Date the Borrower shall pay to Lender the unpaid balance of the Loan
Fee in the remaining amount of $800,000.00.

8.24         First Appeal Extension Fee. If the
Appeal is field the Borrower shall pay to the Lender as an extension fee the
sum of $225,000.00 on the later of (i) the Loan Closing Date or (ii) the date
the Appeal is filed.

8.25         Second Appeal Extension Fee. If thirty
(30) days prior to the expiration of the First Extended Date the Appeal is
still undecided the Borrower shall pay to the Lender not later than thirty (30)
days prior to the First Extended Date as an additional extension fee the sum of
$112,500.00.

8.26         Material Adverse Effect. Borrower will
transmit to Lender, immediately upon receipt thereof, any communication which
could have a material adverse affect on Lender’s security for the Loan or have
a Material Adverse Effect on the Project, the financial condition of Borrower
and will promptly respond fully to any inquiry of Lender made with respect
thereto.

8.27         Environmental Covenants. Borrower hereby
covenants to Lender that Borrower shall (a) operate the Project in full and
complete compliance with all federal, state and local laws, rules, regulations
and orders with respect to the discharge, generation, removal, transportation,
storage and handling of Hazardous Substances, (b) remediate any Hazardous
Substances that are released, spilled, leaked, poured, emptied or otherwise
released into the Premises, environment, waters or adjacent lands immediately
upon discovery of same, in accordance with applicable laws, ordinances and
orders of governmental authorities having jurisdiction thereof, (c) pay or
cause to be paid all costs associated with such remediation; (d) prevent the
migration of Hazardous Substances from or through the Premises into the
environment, waters or adjacent lands; (e) keep the Premises free of any lien
imposed pursuant to any state or federal law, rule, regulation or order in
connection with the existence of Hazardous Substances on the Premises; (f) not install
or permit to be incorporated into any improvements in the Premises or to exist
in or on the Premises any asbestos, asbestos-containing materials, urea
formaldehyde insulation or any other chemical or substance which has been
determined to be a hazard to health and environment; (g) not cause or permit to
exist, as a result of an intentional or unintentional act or omission on the
part of Borrower or any occupant of the Premises, a releasing, spilling,
leaking, pumping, emitting, pouring, emptying or dumping of any Hazardous
Substances onto the Premises or into the environment or waters or other lands;
and (h) give all notifications and prepare all reports required by
Environmental Laws or any other law with respect to Hazardous Substances
existing on, released from or emitted from the Premises.

8.28         Environmental Indemnification. The
Borrower indemnifies and holds harmless the Lender, its officers, directors,
employees, agents, contractors, subcontractors, licensees, invitees, successors
and assigns (“Indemnified Parties”) from and against any and all claims,
losses, liabilities (including without limitation strict liability), suits,
obligations, fines, damages,

 65
 

judgments, injuries, administrative orders, consent
agreements and orders, penalties, actions, causes of action, charges, costs and
expenses, including without limitation attorneys’ fees and consultants’ fees
(i) arising out of the inclusion in the Premises of Hazardous Substances or the
presence on, the release from, the generation, manufacture, refining,
treatment, storage, handling or disposal on, in or from the Premises of any
Hazardous Substances, or any underground or above ground storage tanks
containing Hazardous Substances and the cost of removal and remediation of the
foregoing, or (ii) arising out of the transportation, discharge or removal from
the Premises of any Hazardous Substance, or (iii) arising out of the inclusion
in any product manufactured on the Premises of a Hazardous Substance; or (iv)
arising out of the failure to perform the removal or abatement of or to
institute a safe, effective and environmentally approved control plan for any
Hazardous Substance or the replacement or removal of any soil, water, surface
water, or ground water containing Hazardous Substance in accordance with
Environmental Laws; or (v) arising out of the existence of any environmental
lien against the Premises pursuant to any Environmental Laws; or (vi) arising
out of any violation or claim of violation of Environmental Laws with respect
to the Premises; or (vii) arising out of any administrative proceedings and
negotiations of any description with any and all persons, political
subdivisions, or governmental agencies in connection with an alleged or actual
violation of an Environmental Law or presence of Hazardous Substances on the
Premises; or (viii) arising out of any breach of any of the representations and
covenants contained herein relating to Hazardous Substances and Environmental
Laws (collectively the “Indemnified Loss”). Borrower shall bear, pay and
discharge such Indemnified Loss as and when the same becomes due and payable.

8.29         Updated Appraisals. Borrower agrees that
the Lender shall have the right to obtain, at Borrower’s expense, an updated
Appraisal of the Project from an appraiser approved by Lender at any time (a)
that an Event of Default shall have occurred hereunder, or (b) Lender
determines that the security for the Loan has been physically or financially
impaired in any material manner, or (c) or Final Completion of the Project. In
the event that Lender shall elect to obtain such an Appraisal, Lender may
immediately commission an appraiser acceptable to Lender to prepare the
Appraisal and Borrower shall fully cooperate with Lender and the appraiser in
obtaining the necessary information to prepare such Appraisal. In the event
that Borrower fails to cooperate with Lender in obtaining such an Appraisal or
in the event that Borrower shall fail to pay for the cost of such Appraisal
immediately upon demand, such event shall constitute an Event of Default
hereunder and Lender shall be entitled to exercise all remedies available to it
hereunder.

8.30         Electrical Supply Agreements. On or
before 90 days prior to the First Advance, Borrower shall execute and shall
deliver to Lender copies of the executed Electrical Supply Agreements and shall
provide to the Lender evidence that all Utility Preconditions have been met.
The Borrower will perform its obligations under the Electrical Supply
Agreements and cause the Utility Provider to perform its obligations
thereunder. In particular the Borrower shall cause the Utility Provider to
construct the Electrical Supply System with no defenses, setoffs, or
counterclaims pursuant to a fixed price general contract with a licensed
general contractor of known reputation and skill sufficient to timely construct
the Electrical Supply System in order to meet the requirements of the Design
Build Agreement and Start-Up which general contract and general contractor
shall meet with Lender’s prior written approval. Borrower will, at its own cost
and expense, perform, comply with and discharge all of the obligations of
Borrower under the Electrical Supply Agreements and use all efforts to enforce
or secure the performance of each

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obligation and
undertaking of the Utility Provider under the Electrical Supply Agreements.
Borrower shall permit no surrender nor assignment of the Borrower’s interest
under the Electrical Supply Agreements nor execute any mortgage or create or
permit a lien which may be or become superior to the Mortgage and Loan
Documents, nor permit a subordination of the Electrical Supply Agreements to
any mortgage or lien. Borrower will not modify or amend the terms of the
Electrical Supply Agreements nor excuse or waive any default of the Utility
Provider thereunder without the prior written consent of Lender.

8.31         Natural Gas Supply Agreements. On or
before 90 days prior to the First Advance Borrower shall provide the Lender
evidence that all Utility Preconditions have been met. The Borrower will
perform its obligations under the Natural Gas Supply Agreements and cause the
Utility Providers to perform their obligations thereunder. In particular the
Borrower shall cause the Natural Gas Supply Provider and Natural Gas Supply
Distributor to construct the respective Natural Gas Supply System with no
defenses, setoffs, or counterclaims pursuant to a fixed price general contract
with licensed general contractors of known reputation and skill sufficient to
timely construct the Natural Gas Supply System in order to meet the
requirements of the Design Build Agreement and Start-Up which general contracts
and general contractors shall meet with Lender’s prior written approval.
Borrower will, at its own cost and expense, perform, comply with and discharge
all of the obligations of Borrower under the Natural Gas Supply Agreements and
use all efforts to enforce or secure the performance of each obligation and
undertaking of the Utility Providers under the Natural Gas Supply Agreements.
Borrower shall permit no surrender nor assignment of the Borrower’s interest
under the Natural Gas Supply Agreements nor execute any mortgage or create or
permit a lien which may be or become superior to the Mortgage and Loan
Documents, nor permit a subordination of the Natural Gas Supply Agreements to
any mortgage or lien. Borrower will not modify or amend the terms of the
Natural Gas Supply Agreements nor excuse or waive any default of the Utility
Providers thereunder without the prior written consent of Lender.

8.32         Water Supply Agreements. On or before 90
days prior to the First Advance Borrower shall provide evidence that all
Utility Preconditions have been met. The Borrower will perform its obligations
under the Water Supply Agreements and cause the Utility Provider to perform its
obligations thereunder. In particular the Borrower shall cause the Utility
Provider to construct the Water Supply System with no defenses, setoffs, or
counterclaims pursuant to a fixed price general contract with a licensed
general contractor of known reputation and skill sufficient to timely construct
the Water Supply System in order to meet the requirements of the Design Build
Agreement and Start-Up which general contract and general contractor shall meet
with Lender’s prior written approval. Borrower will, at its own cost and
expense, perform, comply with and discharge all of the obligations of Borrower
under the Water Supply Agreements and use all efforts to enforce or secure the
performance of each obligation and undertaking of the Utility Provider under
the Water Supply Agreements. Borrower shall permit no surrender nor assignment
of the Borrower’s interest under the Water Supply Agreements nor execute any
mortgage or create or permit a lien which may be or become superior to the
Mortgage and Loan Documents, nor permit a subordination of the Water Supply
Agreements to any mortgage or lien. Borrower will not modify or amend the terms
of the Water Supply Agreements nor excuse or waive any default of the Utility
Provider thereunder without the prior written consent of Lender.

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8.33         Subordinate Loan. Prior to the First
Advance Borrower and Subordinate Lender shall have executed and delivered the
Subordinate Loan Documents and Subordinate Lender shall have advanced the
Subordinate Loan to Borrower. Prior to the Loan Closing Date the Borrower,
Subordinate Lender and Lender shall have executed and delivered the
Subordination and Standstill Agreement.

8.34         Unsecured Debt. Prior to the First
Advance Borrower and Unsecured Lender shall have executed and delivered the
Unsecured Debt Documents and Unsecured Lender shall have advanced the Unsecured
Debt to Borrower and the Borrower, Unsecured Lender and Lender shall have
executed and delivered the Subordination and Standstill Agreement.

8.35         LOC. Prior to July 31, 2006 the Borrower
and the LOC Lender shall have executed and delivered the LOC Documents and the
LOC Lender shall be obligated to disburse the LOC proceeds in accordance with
the LOC Documents and the LOC Lender and Lender shall have executed and
delivered the Intercreditor Agreement.

8.36         Rail Spur Contract. On or before 90 days
prior to the First Advance Borrower shall have executed and delivered to Lender
a fully executed copy of the Rail Agreements. The Borrower will perform its
obligations under each Rail Agreement and cause the Rail Contractor to perform
its obligations thereunder. In particular the Borrower shall cause the Rail
Contractor to construct the Rail Spur with no defenses, setoffs, or
counterclaims against its obligations at the cost set forth in the Rail Spur
Contract. Borrower will, at its own cost and expense, perform, comply with and
discharge all of the obligations of Borrower under the Rail Spur Contract and
use all efforts to enforce or secure the performance of each obligation and
undertaking of the Rail Contractor under the Rail Spur Contract. Borrower shall
permit no surrender nor assignment of the Borrower’s interest under the Rail
Spur Contract and Borrower will not modify or amend the terms of the Rail Spur
Contract nor excuse or waive any default of the Rail Contractor thereunder
without the prior written consent of Lender.

8.37         Rail Agreements. On or before 90 days
prior to the First Advance Borrower shall have executed and delivered to Lender
a fully executed copy of the Rail Agreements. The Borrower will perform its
obligations under each Rail Agreement and cause the BNSF Railway Company to
perform their respective obligations thereunder. Borrower will, at its own cost
and expense, perform, comply with and discharge all of the obligations of
Borrower under the Rail Agreements and use all efforts to enforce or secure the
performance of each obligation and undertaking of the BNSF Railway Company
under the Rail Agreements. Borrower shall permit no surrender nor assignment of
the Borrower’s interest under the Rail Agreements and Borrower will not modify
or amend the terms of the Rail Agreements nor excuse or waive any default of
the BNSF Railway Company thereunder without the prior written consent of
Lender.

8.38         Intellectual Property. Borrower will
obtain and maintain in full force and effect all patents, trademarks, service
marks, licenses, franchises, trade names, tradestyles, copyrights, technology,
formulas, know-how and processes to be used in or necessary for the
construction, ownership and operation of the Project and for the current and
proposed conduct of its business other than that intellectual property for
which the failure to so obtain and maintain could not reasonably be expected to
have a Material Adverse Effect, and in its use thereof it will obtain all
required licenses and consents and not injure or infringe upon the property or
rights of any Person in any material respect.

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9.

FINANCIAL COVENANTS

9.1           Financial
Information. During the term of the Loan the Borrower shall provide to
Lender the following financial reports (“Required Financial Reports”):

(a)                                  Annual
Financial Statements. As soon as available, and in any event within 150
days after the end of each calendar year of the Borrower, the Borrower will
deliver, or cause to be delivered, to the Lender, the Borrower’s audited
financial statements with the unqualified opinion of independent certified
public accountants selected by the Borrower and reasonably acceptable to the
Lender, which annual financial statements shall include the Borrower’s balance
sheet as at the end of such calendar year and the related statements of the
Borrower’s income, retained earnings and cash flows for the calendar year then
ended, all in reasonable detail and prepared in accordance with GAAP, together
with (i) copies of all management letters prepared by such accountants; (ii) a
report signed by such accountants stating that in making the investigations
necessary for said opinion they obtained no knowledge, except as specifically
stated, of any Default or Event of Default and all relevant facts in reasonable
detail to evidence, and the computations as to, whether or not the Borrower is
in compliance with the Financial Covenants; and (iii) a certificate of one of
the Borrower’s Authorized Officers stating that such financial statements have
been prepared in accordance with GAAP, fairly represent the Borrower’s
financial position and the results of its operations, and whether or not such
officer has knowledge of the occurrence of any Default or Event of Default and,
if so, stating in reasonable detail the facts with respect thereto.

(b)                                 Quarterly
Financial Statements. As soon as available and in any event within 30 days
after the end of each calendar quarter, the Borrower will deliver to the Lender
an unaudited/internal balance sheet and statements of income and retained Cash
Flow of the Borrower as at the end of and for such calendar quarter and for the
year to date period then ended, including in reasonable detail and stating in
comparative form the figures for the corresponding date and periods in the
previous year, all prepared in accordance with GAAP (excluding footnotes),
subject to year-end audit adjustments and fairly representing the Borrower’s
financial position and the results of its operations; and accompanied by a
certificate of one of the Borrower’s Authorized Officers stating (i) that such
financial statements have been prepared in accordance with GAAP (excluding
footnotes), subject to year-end audit adjustments, (ii) whether or not such
officer has knowledge of the occurrence of any Default or Event of Default not
theretofore reported and remedied and, if so, stating in reasonable detail the
facts with respect thereto, and (iii) all relevant facts in reasonable detail
to evidence, and the computations as to, whether or not the Borrower is in
compliance with the Financial Covenants.

(c)                                  Collateral
Reports. On request within 30 days after the end of each calendar month or
more frequently if the Lender so requires, the Borrower will deliver to the
Lender agings of the Borrower’s accounts receivable and its accounts payable,

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an inventory certification report, and a calculation
of the Borrower’s Accounts and Inventory as at the end of such month or shorter
time period.

(d)                                 Monthly
Construction Report. Within 10 days after the end of each calendar month
the Borrower will deliver to Lender a completed Monthly Construction Report in
the form and content set forth in Exhibit “D” attached.

(e)                                  Quarterly
Reporting Schedule. Within 10 days after the end of each calendar quarter
the Borrower will deliver to Lender a completed Quarterly Reporting Schedule in
the form and content set forth in Exhibit “E” attached.

(f)                                    Operating
Plan and Budget. Not later than each November 30 Borrower will submit to
the Lender for approval a proposed Operating Plan and Budget for the next
calendar year.

(g)                                 Litigation.
Immediately after the commencement thereof, the Borrower will deliver to the
Lender notice in writing of all litigation and of all proceedings before any
governmental or regulatory agency affecting the Borrower that seek a monetary
recovery against the Borrower in excess of $250,000.

(h)                                 Defaults.
As promptly as practicable (but in any event not later than five business days)
after an Officer of the Borrower obtains knowledge of the occurrence of any
Event of Default, the Borrower will deliver to the Lender notice of such
occurrence, together with a detailed statement by a responsible Officer of the
Borrower of the steps being taken by the Borrower to cure the effect thereof.

(i)                                     Disputes.
Promptly upon knowledge thereof, the Borrower will deliver to the Lender notice
of (i) any disputes or claims by the Borrower’s customers exceeding $250,000
individually or $500,000 in the aggregate during any calendar year; (ii) credit
memos; (iii) any goods returned to or recovered by the Borrower to the extent
any such good exceeds $250,000.

(j)                                     Collateral.
Promptly upon knowledge thereof, the Borrower will deliver to the Lender notice
of any material loss of or material damage to any Collateral or of any
substantial adverse change in any Collateral or the prospect of payment
thereof.

(k)                                  Intellectual
Property.

(i)                                     The
Borrower will give the Lender 30 days prior written notice of its intent to
acquire material Intellectual Property Rights; the Borrower will give the
Lender 30 days prior written notice of its intent to dispose of material
Intellectual Property Rights; and upon request, shall provide the Lender with
copies of all applicable documents and agreements.

(ii)                                  Promptly
upon knowledge thereof, the Borrower will deliver to the Lender notice of (A)
any infringement of its Intellectual Property Rights by others, (B) claims that
the Borrower is infringing another Person’s

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Intellectual Property Rights and (C) any threatened
cancellation, termination or material limitation of its Intellectual Property
Rights.

(iii)                               Promptly
upon receipt, the Borrower will give the Lender copies of all registrations and
filings with respect to its Intellectual Property Rights.

(l)                                     Reports
to Members. Promptly upon their distribution, the Borrower will deliver to
the Lender copies of all financial statements, reports and proxy statements
that the Borrower shall have sent to all of its Members.

(m)                               Tax
Returns. If requested by Lender, Borrower will deliver to Lender copies of
the state and federal tax returns and all schedules thereto for the Borrower
when filed.

(n)                                 Violations
of Law. Promptly upon knowledge thereof, the Borrower will deliver to the
Lender notice of the Borrower’s violation of any law, rule, or regulation, the
non-compliance with which could materially and adversely affect the Borrower’s
business or its financial condition.

(o)                                 Other
Reports. From time to time, with reasonable promptness, the Borrower will
deliver to the Lender any and all receivables schedules, collection reports,
deposit records, equipment schedules, copies of invoices to account debtors,
shipment documents and delivery receipts for goods sold, and such other
material, reports, records or information as the Lender may reasonably request.

In the event Borrower
fails to furnish any such Required Financial Reports within fifteen (15) days
after written request to Borrower, the same shall be an Event of Default and in
addition to any other remedies available to Lender, the Lender may cause an
audit to be made of the respective books and records at the sole cost and
expense of the Borrower. Lender also shall have the right to examine at their
place of safekeeping at reasonable times all books, accounts and records
relating to the operation of the Premises.

9.2                                 Permitted
Liens; Financing Statements.

(a)                                  The
Borrower will not create, incur or suffer to exist any Lien upon or of any of
its assets, now owned or hereafter acquired, to secure any indebtedness; excluding,
however, from the operation of the foregoing, the following
(collectively, “Permitted Liens”):

(i)                                     in
the case of any of the Borrower’s property that is not Collateral, covenants,
restrictions, rights, easements and minor irregularities in title that do not
materially interfere with the Borrower’s business or operations as presently
conducted;

(ii)                                  a
first priority security interest and Lien in the LOC Collateral in favor of the
LOC Lender securing the LOC;

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(iii)                               a
subordinate security interest and Lien in all other assets of the Borrower in
favor of the LOC Lender securing the LOC and which shall be subject to the
provisions of the Intercreditor Agreement;

(iv)                              the
security interest and Liens created by the Loan Documents;

(v)                                 the
Subordinate Loan Documents in favor of the Subordinate Lender but subject,
however, to the Subordination and Standstill Agreement; and

(vi)                              provided
that there is not an Event of Default, Mechanic’s Liens subject to a bona fide
dispute for which the Borrower has caused a bond to be posted satisfactory to
Lender.

(b)                                 The
Borrower will not amend any Financing Statements in favor of the Lender. Any
authorization by the Lender to any Person to amend financing statements in
favor of the Lender shall be in writing.

(c)                                  Notwithstanding
anything contained in this Agreement to the contrary, the Borrower will not
create, incur or suffer to exist any Lien upon any of its titled vehicles and
any Rolling Stock.

9.3           Indebtedness.
The Borrower will not incur, create, assume or permit to exist any indebtedness
or liability on account of deposits or advances or any indebtedness for
borrowed money or letters of credit issued on the Borrower’s behalf, or
obligations under any Operating Lease or Capital Lease (except as permitted by
Sections 9.18 and 9.27 hereafter) or any other indebtedness or liability
evidenced by notes, bonds, debentures, leases or similar obligations, except:

(a)           the Reimbursement
Obligations for the Supporting Letters of Credit;

(b)           the indebtedness
arising hereunder;

(c)           the LOC of the Borrower
to the LOC Lender;

(d)           the Unsecured Debt.

(e)                                  the
Subordinate Loan or any replacement indebtedness fully replacing the
Subordinate Loan in the full principal amount of $14,000,000.00; and

(f)            the Impositions due
any Governmental Authority.

9.4           Guaranties.
The Borrower will not assume, guarantee, endorse or otherwise become directly
or contingently liable in connection with any obligations of any other Person,
except the endorsement of negotiable instruments by the Borrower for deposit or
collection or similar transactions in the ordinary course of business.

9.5           Financial
Covenants. The Borrower covenants that during the term of the Loan and any
extensions:

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(a)                                  Retained
Earnings. Twenty-Five percent (25%) of pre-tax Net Income available for
Distributions are to be retained with Borrower.

(b)                                 Incentive
Payments. One Hundred percent (100%) of all Incentive Payments shall be
applied to the prepayment of the Loan.

9.6           Member Loans and
Distributions. Borrower:

(a)                                  Subordinates
all loans, advances, and indebtedness owing from Borrower to Members of
Borrower from time to time, whether or not evidenced by promissory notes.

(b)                                 Shall
not make any Distributions (other than Tax Distributions) to its Members if
total Debt Service Coverage Ratio is less than 1.25x.

(c)                                  Shall
not pay any dividend or distribution, excluding Tax Distributions, whether in
cash or otherwise, to any of its Members (i) unless and until the Debt Service
Reserve Account is fully funded, all Fixed Charges are paid current and the
FF&E Reserve is currently funded and (ii) then only in aggregate amounts
not to exceed 50% of Net Income, which dividend or distribution (other than Tax
Distribution) shall be made not more frequently than once annually under a
request made by Borrower to Lender accompanied by Borrower’s accountant’s
calculations of the distributions subject to Lender’s approval of the same not
to be unreasonably withheld. After the Principal Balance is less than
$50,000,000.00 distributions may be made quarterly.

9.7           Subordinate
Loan. The Borrower shall cause the Subordinate Lender to advance to
Borrower the proceeds of the Subordinate Loan prior to the First Advance.

9.8           Unsecured
Debt. The Borrower shall cause the Unsecured Debt Lender to advance to
Borrower the proceeds of the Unsecured Debt prior to the First Advance.

9.9           Books
and Records; Inspection and Examination. The Borrower will keep accurate
books of record and account for itself pertaining to the Collateral and
pertaining to the Borrower’s business and financial condition and such other
matters as the Lender may from time to time request in which true and complete
entries will be made in accordance with GAAP and, upon the Lender’s request,
will permit any officer, employee, attorney or accountant for the Lender to
audit, review, make extracts from or copy any and all company and financial
books and records of the Borrower at all times during ordinary business hours,
to send and discuss with account debtors and other obligors requests for
verification of amounts owed to the Borrower, and to discuss the Borrower’s
affairs with any of its Directors, Officers, employees or agents. The Borrower
hereby irrevocably authorizes all accountants and third parties to disclose and
deliver to Lender, at the Borrower’s expense, all financial information, books
and records, work papers, management reports and other information in their
possession regarding the Borrower provided however that the authorization
granted herein shall not be deemed to authorize any attorney to disclose information
subject to the attorney client privilege. The Borrower will permit the Lender,
or its employees, accountants, attorneys, or agents, to examine and inspect any
Collateral or any other property of the Borrower at any time during ordinary
business hours.

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9.10         Account Verification. The Lender may at
any time and from time to time send or require the Borrower to send requests
for verification of accounts and after an Event of Default notices of
assignment to account debtors and other obligors. The Lender may also at any
time and from time to time telephone account debtors and other obligors to
verify accounts.

9.11         Payment of Impositions and Other Claims.
The Borrower will pay or discharge, when due, (a) all Impositions, taxes and
governmental charges levied or imposed upon it or upon its income or profits,
upon any properties belonging to it (including the Collateral) or upon or
against the creation, perfection or continuance of the security interests in
favor of the Lender, prior to the date on which penalties attach thereto, (b)
all federal, state and local taxes required to be withheld by it, and (c) all
lawful claims for labor, materials and supplies that, if unpaid, might by law
become a Lien upon any properties of the Borrower; provided, that the Borrower
shall not be required to pay any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which proper reserves have been made.

9.12         Maintenance of Properties. The Borrower
will keep and maintain the Plant and other Collateral and all of its other
properties necessary or useful in its business in good condition, repair and
working order (normal wear and tear excepted) and will from time to time
replace or repair any worn, defective or broken parts. The Borrower will defend
the Plant and other Collateral against all Liens, claims, or demands of all
Persons (other than the Lender) claiming the Collateral or any interest
therein. The Borrower will keep all the same free and clear of all Liens except
Permitted Liens. The Borrower will take all commercially reasonable steps
necessary to prosecute any Person Infringing its Intellectual Property Rights
and to defend itself against any Person accusing it of Infringing any Person’s
Intellectual Property Rights.

9.13         Preservation of Existence. The Borrower
will preserve and maintain its existence and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its business and
shall conduct its business in an orderly, efficient and regular manner.

9.14         Delivery of Instruments, etc. Upon
request by the Lender, the Borrower will promptly deliver to the Lender in
pledge all Instruments, Documents and Chattel Paper constituting Collateral,
duly endorsed or assigned by the Borrower.

9.15         Sale or Transfer of Assets; Suspension of
Business Operations. The Borrower will not sell, lease, assign, transfer or
otherwise dispose of (i) the Project, (ii) all or a substantial part of its
assets, or (iii) any Collateral or any interest therein (whether in one
transaction or in a series of transactions) to any other Person other than the
sale of Inventory in the ordinary course of business and will not liquidate,
dissolve or suspend business operations, provided, however, that Borrower may
in the ordinary course of business sell or dispose of Equipment constituting
Collateral that is obsolete or otherwise being replaced in the ordinary course
of business up to $500,000 in the aggregate per year. The Borrower will not
transfer any part of its ownership interest in any Intellectual Property Rights
and will not permit any agreement under which it has licensed Intellectual
Property to lapse, except that the Borrower may transfer such rights or permit
such agreements to lapse if it shall have reasonably determined that the
applicable Intellectual Property Rights are no longer useful in its business.
If the Borrower transfers any Intellectual Property Rights for value, the
Borrower will pay over the proceeds to the Lender for application to the
Obligations. The Borrower will not license any other Person to use any of the

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Borrower’s Intellectual Property Rights, except that
the Borrower may grant licenses in the ordinary course of its business in
connection with sales of Inventory or provision of services to its customers.

9.16         Consolidation and Merger; Asset Acquisitions.
The Borrower will not consolidate with or merge into any Person, or permit any
other Person to merge into it, or acquire (in a transaction analogous in
purpose or effect to a consolidation or merger) all or substantially all the
assets of any other Person.

9.17         Sale and Leaseback. The Borrower will
not enter into any arrangement, directly or indirectly, with any other Person
whereby the Borrower shall sell or transfer any real or personal property,
whether now owned or hereafter acquired, and then or thereafter rent or lease
as lessee such property or any part thereof or any other property that the
Borrower intends to use for substantially the same purpose or purposes as the
property being sold or transferred.

9.18         Capital Leases. Borrower will not enter
into any Capital Leases in excess of $250,000.00 in the aggregate without the
prior written consent of Lender.

9.19         Restrictions on Nature of Business. The
Borrower will not engage in any line of business materially different from that
presently engaged in by the Borrower and will not purchase, lease or otherwise
acquire assets not related to its business.

9.20         Accounting. The Borrower will not adopt
any material change in accounting principles other than as required by GAAP.
The Borrower will not adopt, permit or consent to any change in its fiscal
year.

9.21         Discounts, etc. The Borrower will not at
any time discount, modify, amend, subordinate, cancel or terminate the
obligation of any account debtor or other obligor of the Borrower except in the
ordinary course of business.

9.22         Place of Business; Name. The Borrower
will not transfer its chief executive office or principal place of business, or
move, relocate, close or sell any business location. The Borrower will not
permit any tangible Collateral or any records pertaining to the Collateral to
be located in any state or area in which, in the event of such location, a
financing statement covering such Collateral would be required to be, but has
not in fact been, filed in order to perfect the Security Interest. The Borrower
will not change its name or jurisdiction of organization.

9.23         No Purchase of Perishable Agricultural
Commodities. The Borrower will not purchase perishable agricultural
products that are subject to the Perishable Agricultural Commodities Act.

9.24         Operating Margin Protection. Borrower
will employ long-term hedging and price-management strategies customary and
usual in the ethanol production industry for (i) the procurement of feedstocks,
energy and fuel for the Project and (ii) the sale of the Products produced by
the Project. Such hedging and price management strategies will be employed to
minimize any reductions in (i) the Project’s operating margin and (ii) the
Project’s ability to repay the Loans in accordance with this Agreement.

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9.25         Changes In Control. Borrower will not
effect or permit any change of control of Borrower.

9.26         Transactions with Affiliates and Third
Parties. Borrower will not enter into, or cause, suffer or permit to exist,
any arrangement or contract with any of its Affiliates (other than the Project
Documents in effect on the Construction Loan Closing Date or the Term Loan
Conversion Date, as applicable) EXCEPT (i) any arrangement or contract that
contains provisions that are fair and reasonable to Borrower and no less
favorable than those which would be included in an arm’s-length transaction
entered into by a prudent Person in the position of Borrower with a Person
which is not one of its Affiliates, (ii) any employment, non-competition,
management or confidentiality agreement entered into by Borrower with any of
its employees, officers or directors in the ordinary course of business that
contains fair and reasonable terms no less favorable to Borrower than those
which would be included in an arm’s-length transaction entered into by a
prudent Person in the position of Borrower with a non-affiliated third party
and (iii) as otherwise expressly permitted by the Loan Documents or approved in
advance by the Lender.

9.27         Operating Leases. Borrower shall not
enter into any Operating Leases with annual rental in excess of $100,000.00 in
the aggregate without the prior written consent of the Lender.

10. 

OPERATING COVENANTS

10.1         Operating Covenants.

(a)                                  The
Premises shall be used as a production Project for the production of fuel
grade, denatured, anhydrous ethanol alcohol, DDGS and CO2 byproducts and for no other use without the
prior written consent of Lender, which consent may be withheld in Lender’s sole
and absolute discretion.

(b)                                 Borrower
shall obtain, pay for and continuously keep in full force and effect all
Regulatory Approvals, Operating Agreements and other Licenses, Permits and
authorizations as are required to construct, maintain and operate the Plant and
shall not permit any default, breach or violation to exist thereunder by any
party thereto and no event has occurred (other than payments due but not yet
delinquent) that, with the passage of time or the giving of notice, or both,
would constitute a default, breach or violation by any party thereunder.

(c)                                  Subject
to Plant Disruption Borrower shall continuously operate and maintain the
Project as a Project for the production of fuel grade, denatured, anhydrous
Ethanol and shall continuously meet the Performance Guarantee Criteria as
reviewed and certified by HDR Engineering of Minneapolis, Minnesota.

(d)                                 Keep
a full set of the Plans on site pursuant to the Design Build Agreement.

(e)                                  Borrower
further covenants and agrees to:

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(i)                                     cause
the Project to be operated pursuant to the Operating Agreements and Major
Project Documents.

(ii)                                  promptly
perform and/or observe all of the covenants and agreements required to be
performed and observed by it under the Major Project Documents and do all
things necessary to preserve and to keep unimpaired its material rights
thereunder;

(iii)                               promptly
notify Lender of any default under the Major Project Documents of which it is
aware;

(iv)                              promptly
deliver to Lender a copy of each financial statement, business plan, capital
expenditures plan, notice, report and estimate, received by it under the Major
Project Documents, as applicable; and

(v)                                 promptly
enforce the performance and observance of all of the covenants and agreements
required to be performed and/or observed by the parties under the Major Project
Documents.

(f)                                    Borrower
consents and agrees that it shall not, without Lender’s prior written consent
which consent will not be unreasonably withheld, conditioned or delayed:

(i)                                     surrender,
terminate or cancel the Major Project Documents other than pursuant to the
express terms thereof;

(ii)                                  reduce
or consent to the reduction of the term of the Major Project Documents other
than pursuant to the express terms thereof;

(iii)                               increase
or consent to the increase of the amount of any charges under the Major Project
Documents other than pursuant to the express terms thereof; or

(iv)                              otherwise
modify, change, supplement, alter or amend, or waive or release any of its
rights and remedies under, the Major Project Documents in any material respect.

(g)                                 Borrower
shall maintain the Major Project Documents for the operation of the Project in
full force and effect and timely perform all of Borrower’s obligations
thereunder and enforce performance of all obligations of the manager
thereunder, and not permit the termination or amendment of such Major Project
Documents other than pursuant to the express terms thereof unless the prior
written consent of Lender is first obtained which consent will not be
unreasonably withheld, conditioned or delayed. Upon an Event of Default,
Borrower shall at Lender’s request made at any time while such Event of Default
continues, terminate the Major Project Documents and replace the other party
with a party selected by Lender.

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(h)                                 Borrower
shall, operate and maintain the Project in accordance with all laws, ordinances
and regulations of all applicable governmental agencies or entities and in
accordance with all requirements of all applicable licenses and permits with
respect to the Project, including, but not limited to the conditions and
requirements relating to the Project’s status as a Conditionally Exempt Small
Quantity Generator of Hazardous Waste under RCRA (Resource Conservation and
Recovery Act) and the requirements and conditions of the Air Quality Operating
Permit issued by SDENR and any supplements or replacements thereof.

10.2         Compliance With Americans With Disabilities
Act. Borrower covenants and agrees that it will comply with the
requirements of the Americans with Disabilities Act, as the same may be amended
from time to time, during the entire term of the Loan and that it will comply
with any requirements established by any federal, state or local governmental
authorities having jurisdiction over such matters. All future maintenance,
renovation, repair and construction conducted on the Project shall all be
completed in accordance with the Americans with Disabilities Act. Failure to
comply with the provisions of the Americans with Disabilities Act shall
constitute an Event of Default and shall entitle the Lender to exercise all
remedies available to it hereunder.

10.3         Compliance With OSHA. Borrower covenants
and agrees that it will comply with the requirements of the Occupational Safety
and Health Act (“OSHA”), as the same may be amended from time to time, during
the entire term of the Loan and that it will comply with any requirements
established by any federal, state or local governmental authorities having
jurisdiction over such matters. All operations, maintenance, renovation, repair
and construction conducted on the Project shall all be completed in accordance
with OSHA. Failure to comply with the provisions of OSHA shall constitute an
Event of Default and shall entitle the Lender to exercise all remedies
available to it hereunder.

10.4         Intellectual Property, etc. The Borrower
shall maintain its right to use all material patents, trademarks, service
marks, trade names, copyrights, licenses and other rights with respect to the
foregoing necessary for the present and planned future conduct of its business,
without any known conflict with the rights of others, except for such patents,
trademarks, service marks, trade names, copyrights, licenses and rights the
loss of which, and such conflicts, that in any such case individually or in the
aggregate could not reasonably be expected to have a material adverse effect on
Borrower and the operations of the Project.

11. 

ERISA

11.1         ERISA Plans. Neither the Borrower nor
any ERISA Affiliate (i) maintains or has maintained any Plan, (ii) contributes
or has contributed to any Multiemployer Plan or (iii) provides or has provided
post-retirement medical or insurance benefits with respect to employees or
former employees (other than benefits required under Section 601 of ERISA,
Section 4980B of the IRC or applicable state law). Neither the Borrower nor any
ERISA Affiliate will (i) adopt, create, assume or become a party to any Plan,
(ii) incur any obligation to contribute to any Multiemployer Plan, (iii) incur
any obligation to provide post-retirement medical or insurance benefits with
respect to employees or former employees (other than benefits required by law)
or

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(iv) amend any Plan in a
manner that would materially increase its funding obligations without giving
prior written notice thereof to the Lender.

11.2         ERISA Representation. The Borrower
represents, warrants and covenants that it is acting on its own behalf and that
as of the date hereof it is not an employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
which is subject to Title I of ERISA, nor a plan as defined in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended, each of the
foregoing hereinafter referred to collectively as a “Plan”, and the assets of
the Borrower do not constitute “plan assets” of one or more such Plans within
the meaning of Department of Labor Regulation Section 2510.3-101. The Borrower
also represents, warrants and covenants that it will not be reconstituted as a
Plan or as an entity whose assets constitute “plan assets”.

12. 

CONDITIONS PRECEDENT TO AN ADVANCE

12.1         Conditions Precedent to First Advance.
It shall be a condition precedent to the First Advance:

(a)                                  Title.
Marketable fee simple title to the Premises shall be vested in Borrower subject
only to Permitted Exceptions.

(b)                                 Recording.
The Mortgage and other Loan Documents shall have been duly recorded in such
offices as required to create a valid and binding, enforceable first lien
against the Premises.

(c)                                  Title
Policies. Both the Title Policy and the UCC Policy shall have been issued
to Lender as insured.

(d)                                 Loan
Documents. The Loan Documents shall have been duly executed and delivered
to Lender and shall be in full force and effect with no default thereunder.

(e)                                  Borrower
Equity. The Borrower Equity shall have been paid into the Construction
Escrow and applied to Project Costs.

(f)                                    Loan
Balance. The total amount of the Loan Funds available for Project Costs
plus Borrower Equity deposited in the Construction Escrow Account shall be
sufficient, in the Lender’s reasonable business judgment to complete and pay
for all Work in its entirety. To the extent the total shall be insufficient at
any time, in Lender’s opinion to complete the Work and pay for the same in full
or be less than the Project Costs, the Borrower shall as soon as practicable
but not later than the earlier of (i) the time required by the Design Build
Agreement to prevent the exercise by the Design Builder of any of its rights or
remedies for failure to timely pay an Application For Payment or (ii) 30 days
after receipt of written notice from Lender, deposit in the Construction Escrow
Account additional Borrower Equity funds in an amount equal to such deficiency.

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(g)                                 Representations
and Warranties. The representations and warranties in this Agreement shall
be true and correct on and as of the date of the Advance.

(h)                                 Covenants.
Borrower shall have complied with all of the covenants made by it in this
Agreement.

(i)                                     Construction
Contracts. All Construction Contracts including the Standalone Contracts
shall have been executed and delivered and assigned to Lender and each
Contractor shall have executed and delivered to Lender a Contractor’s Consent
consenting to and acknowledging the assignment of the Contractor’s Consent to
Lender as collateral for the Loan.

(j)                                     Design
Build Agreement. The Design Build Agreement shall have been executed and
delivered and assigned to Lender and the Design Builder shall have delivered to
Lender the Design Builder’s Consent and Acknowledgment.

(k)                                  Contractor’s
Sworn Construction Statements. Each Contractor shall have submitted to
Lender and Title its Sworn Construction Statement. From time to time if the
Project Cost changes or the Scope of the Work changes, the Borrower shall cause
the Contractors to furnish to the Lender any amendments or additions to the
original statement as so submitted.

(l)                                     Project
Budget. The Budget shall have been approved and a timetable with a schedule
of anticipated advances shall have been furnished to and approved by Lender.
From time to time if the Project Cost changes or the Scope of the Work changes,
the Borrower shall furnish to the Lender any amendments or additions to the
original statement as so submitted.

(m)                               Loan/Extension
Fee. Lender shall have been paid the Loan Fee and, if applicable, the
respective Appeal Extension Fee.

(n)                                 Approvals.
All Approvals shall have been satisfied.

(o)                                 No
Event of Default. No Event of Default has occurred and is continuing under
this Agreement.

(p)                                 Disbursing
Agreement. The Disbursing Agreement shall have been executed and delivered
by all parties.

(q)                                 Permits.
All Preconstruction Permits shall have been issued without conditions (other
than as may be satisfied by the Work).

(r)                                    Regulatory
Approvals. All Regulatory Approvals required for the construction of the
Project shall have been issued without conditions (other than as may be
satisfied by the Work) and copies thereof provided to Lender.

(s)                                  Operating
Agreements. All Operating Agreements shall have been executed and delivered
with copy provided to Lender.

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(t)                                    TIF.
The TIF Funding shall have occurred and the issuer shall have deposited the Net
TIF Proceeds into the Construction Escrow with instructions for disbursement to
payment of Project Costs.

(u)                                 Supporting
Letters of Credit. The Supporting Letters of Credit shall have issued and
delivered to the respective Utility Providers.

(v)                                 LOC.
The LOC Documents shall have been executed and delivered in form and content
satisfactory to Lender and shall have met the approval of Lender’s
Participant(s) and the obligation of the LOC Lender to fund LOC shall be in
full force and effect without any setoff, objection or defense to funding the
LOC and the LOC Lender and Lender shall have executed and delivered the
Intercreditor Agreement.

(w)                               Unsecured
Debt. The Unsecured Debt Documents shall have been executed and delivered
and Unsecured Debt Lender shall have funded to Borrower the Unsecured Debt and
the Borrower, Unsecured Debt Lender and Lender shall have executed and
delivered an Unsecured Subordination and Standstill Agreement acceptable to
Lender.

(x)                                   Subordinate
Loan. The Subordinate Loan Documents shall have been executed and delivered
and the Subordinate Lender shall have funded to Borrower the Subordinate Loan
and the Borrower, Subordinate Lender and Lender shall have executed and
delivered the entire Subordination and Standstill Agreement.

(y)                                 Notice
to Proceed. The Notice to Proceed has been issued to the Design Builder not
later than November 1, 2006, subject to the Appeal Extension Rights.

(z)                                   Natural
Gas Supply Agreements. The Natural Gas Supply Agreements shall have been
executed and delivered in form and content satisfactory to Lender, the Utility
Preconditions shall have been satisfied and the obligations of the Utility
Providers to perform thereunder shall be in full force and effect without any
setoff, objection or defense to perform thereunder and the Utility Providers
shall have each executed and delivered to Lender a Service Provider’s Consent
consenting to and acknowledging the assignment of the Natural Gas Supply
Agreements to Lender as collateral for the Loan.

(aa)                            Electrical
Supply Agreement. The Electrical Supply Agreement shall have been executed
and delivered in form and content satisfactory to Lender, the Utility
Preconditions shall have been satisfied and the obligation of the Utility
Provider to perform thereunder shall be in full force and effect without any
setoff, objection or defense to perform thereunder and the Utility Provider
shall have executed and delivered to Lender a Service Provider’s Consent
consenting to and acknowledging the assignment of the Electrical Supply
Agreement to Lender as collateral for the Loan.

(bb)                          Water
Supply Agreements. The Water Supply Agreements shall have been executed and
delivered in form and content satisfactory to Lender, the Utility

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Preconditions shall have been satisfied and the
obligation of the Utility Provider shall be in full force and effect without
any setoff, objection or defense to perform thereunder and the Utility Provider
shall have executed and delivered to Lender a Service Provider’s Consent
consenting to and acknowledging the assignment of the Water Supply Agreements
to Lender as collateral for the Loan.

(cc)                            Rail
Agreements. The Rail Agreements shall have been executed and delivered in
form and content satisfactory to Lender, all preconditions to the performance
by BNSF Railway Company thereunder shall have been satisfied and the
obligations of the BNSF Railway Company to perform thereunder shall be in full
force and effect without any setoff, objection or defense to perform thereunder
and the BNSF Railway Company shall have executed and delivered to Lender a
Service Provider’s Consent consenting to and acknowledging the assignment of
the Rail Agreements to Lender as collateral for the Loan.

(dd)                          Rail
Spur Contract. The Rail Spur Contract shall have been executed and
delivered in form and content satisfactory to Lender, all preconditions to the
performance by Railway Contractor thereunder shall have been satisfied and the
obligations of the Railway Contractor to perform thereunder shall be in full
force and effect without any setoff, objection or defense to perform thereunder
and the Railway Contractor shall have executed and delivered to Lender a
Contractor’s Consent consenting to and acknowledging the assignment of the Rail
Spur Contract to Lender as collateral for the Loan.

(ee)                            Design
Build Add Ons. The Design Builder has issued Change Orders acceptable to
Lender adding the water pre-treatment system and fire protection system to the
Work under the Design Build Agreement and amending the Contract Price to
incorporate the cost for such Work into the Contract Price.

(ff)                                Bonds.
The Bonds with required dual obligee riders in favor of Lender shall have been
issued with all premiums paid and the originals delivered to Lender.

12.2         Conditions Precedent
to Future Advance. It shall be a condition precedent to all Subsequent
Advances subsequent to the First Advance that all Conditions Precedent to First
Advance set forth in Section 8.1 have been satisfied.

13.

METHODS OF DISBURSEMENTS OF LOAN PROCEEDS

13.1         Procedure.
Provided that the Conditions Precedent to an Advance are satisfied, not more
often than monthly Borrower may submit a Request for Advance requesting an
Advance of Loan Funds to pay approved Project Costs shown on the Budget and
actually incurred in the construction of the Project as incurred to date less
the amount of all previous Advances for the same. Borrower may request an
Advance only for i) Direct Costs for Work and Material incorporated in the
Project or if approved by Lender, cost of Materials to be incorporated in the
Project and which are securely stored on site, with scheduled insurance against
loss, theft or damage and for which title rests in Borrower free of liens and
claims and ii) Indirect Costs. Each Advance shall be reduced by the Retainage.
Any Retainage shall be paid at

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such time as the conditions of this Agreement for
Disbursement of Final Loan Balance is satisfied. No Advance may be made for (i)
Development Costs or Pre-Development Costs or (ii) without the prior consent of
Lender a Line Item in excess of the aggregate amount of the Line Item as shown
in the Line Item breakdown in the Sworn Construction Statement and Budget. All
Borrower Equity shall be disbursed prior to the Advance of Loan Funds. Each
Request for Advance shall be submitted to Lender and to Title Company at least
ten (10) business days prior to the date on which an Advance is requested. Each
Request for Advance shall clearly set forth the amounts due to Borrower and to
each Contractor out of the Advance and shall be accompanied by:

(a)                                  As
to each Direct Cost:

(i)                                     If
requested by Title or Lender a current Contractor’s Sworn Statement showing all
Subcontractors, Materialmen and Suppliers with whom the Contractor has entered
into contracts for the Work with the amount of each contract, the amount
requested for any Subcontractor, Materialmen or Supplier and the amount to be paid
to Contractor from each progress payment.

(ii)                                  Application
for Payment divided in detail to reflect (i) description of Work (listing labor
and material separately), (ii) total value, (iii) percent of the Work completed
to date, (iv) value of Work completed to date, (v) percent of previous amount
billed, (vi) previous amount billed, (vii) current percent completed, and
(viii) value of Work completed to date.

(iii)                               To
the extent requested by Title or Lender, Contractor’s computerized summary of
all costs, disbursements and activities for the most recent billing cycle and,
such other information, documentation and materials including payrolls,
receipted invoices or invoices with check vouchers attached, subcontracts, and
any other evidence required by Title or Lender to demonstrate that cash
disbursements already made by Contractor on account of the Cost of the Work
equal or exceed (1) progress payments already received; less (2) that portion
of those payments attributable to Contractor’s Fee; plus (3) payrolls for the
period covered by the present Request for Advance; plus; (4) Retainage
applicable to prior progress payments.

(iv)                              Certification
by the Contractor that the Work for which payment is being sought has been
substantially completed in accordance with the Contract Documents.

(v)                                 A
Conditional Lien Waiver for each Contractor, Subcontractor, Materialman and
Supplier for which payment is being sought in the total amount of all Work
previously billed through the prior Request for Advance.

(vi)                              A
detailed written description and copies of all Change Orders and other
modifications issued though the date of the Request for Advance.

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(vii)                           A
report from Lender’s Inspecting Engineer approving the Work done to date and
confirming the progress of the Work done to date and agreeing with the
percentage of completion stated in the Application and Certificate for Payment.

(b)                                 As
to Materials delivered to, stored on and not yet incorporated in the
Improvements:

(i)                                     the
Contractor’s or Borrower’s certification that it holds good, marketable title
to the Materials and which title shall pass to Borrower on payment to the
Contractor of the Advance;

(ii)                                  Delivery
to the Project in undamaged condition conforming to the approved Plan Documents
and in a condition which is ready for immediate installation or adequate
storage at the Project;

(iii)                               evidence
of appropriate insurance coverage insuring the Materials while in storage and
naming Lender as loss payee;

(iv)                              Final
Waivers of Lien for all Materials included in the previous Request for Advance;
and

(v)                                 Warehouse
Receipts for each item of Material stored in a warehouse naming the Borrower as
bailor.

(c)                                  As
to each Indirect Cost:

(i)                                     A
statement or invoice for the cost or service rendered and such other supporting
evidence as Lender may require to substantiate the payment requested.

Provided the conditions of the Agreement are met on
the date of an Advance and upon advice from the Title Company that it is
satisfied that the requirements of the Disbursing Agreement are met, Lender
shall advance to Title Company the reimbursable Project Costs set forth in the
Request for Advance but excluding the Retainage hereinbefore specified. The
Proceeds of the Loan shall bear interest from and after the date of an Advance
provided that in the event Title Company shall fail to disburse any Advances
within ten (10) business days after an Advance, either the Borrower or Lender
may request Title Company to return said Advance to Lender and interest on such
Advance shall abate from and after the date of such return.

13.2         Disbursing Agreement.
All Advances shall be disbursed pursuant to the Disbursing Agreement and shall
be secured by the Loan Documents.

13.3         Disbursement for
Approved Project Costs Only. No disbursement will be made for other than Project
Costs set forth in the approved Budget and then not to exceed without the
consent of the Lender the Line Items set forth therein.

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14.

DISBURSEMENT OF RETAINAGE AND FINAL LOAN BALANCE

14.1         Disbursement of
Retainage. Lender shall disburse the Retainage under each Construction
Contract at such time as:

(a)                                  Final
Completion under the respective Construction Contract has occurred;

(b)                                 A
final Application for Payment has been issued by the respective Contractor; the
respective Contractor has delivered to Borrower Unconditional Lien Releases
with respect to all Work executed by each Subcontractor (or respective
Contractor has delivered to Borrower a bond satisfactory to Borrower, Title and
Lender to indemnify Borrower, Title and Lender against any lien by a
Subcontractor not providing such release and waiver); respective Contractor has
delivered to Borrower its Unconditional Lien Release signed by respective
Contractor and covering all of the Work (other than nonconforming work to be
corrected as provided in Design Build Agreement); respective Contractor has
delivered complete as-built drawings for the Work to Borrower; respective
Contractor has delivered to Borrower written warranties provided by each
Subcontractor, each sub-subcontractor and other third parties for the Work; and
the provisions of Design Build Agreement and the General Conditions of Design
Build Agreement and all other pertinent provisions of the Contract Documents
have been satisfied with respect to final payment;

(c)                                  150%
of the Lender approved cost of all Punch List Items (100% in the case of the
Design Build Contract) is deposited with Lender and such Punch List Items shall
not prevent the opening of the Project or issuance of an unconditional
Certificate of Occupancy;

(d)                                 The
respective Contractor has delivered to Borrower all information reasonably
requested by Borrower for its final fixed asset records with respect to the
Project;

(e)                                  As
to the Design Build Agreement, Performance Tests have been successfully
completed demonstrating the Performance Guarantee Criteria has been achieved;
and

(f)                                    No
Event of Default has occurred and is continuing.

14.2         Disbursement of Final
Loan Balance. The remaining balance of the Loan after disbursement of all
Retainages shall be disbursed upon:

(a)                                  All
Project Costs have been paid in full or will be paid in full out of the Final
Disbursement.

(b)                                 Lender
shall have received an “as built” update to the original Survey depicting the
Improvements as fully completed.

(c)                                  All
Permits required to operate the Project have been obtained.

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(d)                                 No
Event of Default has occurred and is continuing.

(e)                                  Lender’s
Inspecting Engineer shall have advised Lender that the Project has been fully
completed and a Final Request For Advance has been approved by Lender’s
Inspecting Engineer.

15. 

EVENTS OF DEFAULT

It shall be an “Event of
Default” under this Agreement on the happening of any of the following:

15.1         Default Under Loan
Documents. An Event of Default (as defined thereunder) occurs under any of
the Loan Documents; or

15.2         Failure to Commence
Construction. Any Contractor shall fail to commence construction of the
Work within the time limits required by its Construction Contract; or

15.3         Termination of Utility
Agreements. Any Utility Agreement is terminated or the Utility Provider
repudiates its obligations under its Utility Agreement or ceases to cause the
respective Utility Provider to be completed in accordance with and at the times
required under the Utility Agreement and the Borrower does not provide a
replacement Utility Provider under a replacement Utility Agreement acceptable
to Lender within thirty (30) days thereafter; or

15.4         Design Builder or
Other Contractor Ceases Work. Design Builder or any other Contractor ceases
to perform the Work for thirty (30) or more consecutive days, unless
performance is otherwise excused under the terms of this Agreement; or

15.5         Breach of Covenants.
Borrower breaches or fails to perform, observe or meet any covenant or
condition of this Agreement and such breach or failure is not cured within a
period of fifteen (15) days after notice thereof to Borrower; or

15.6         Breach of
Representation or Warranty. Any representations or warranties made or
agreed to be made in any of the Loan Documents or this Agreement shall be
breached by Borrower or shall prove to be false or misleading in any material
respect; or

15.7         Filing of Liens
Against the Premises. Any Lien shall be asserted or filed against the
Premises and such Lien shall not be released or bonded over and stayed to
Lender’s satisfaction within fifteen (15) days after the assertion or filing
thereof; or

15.8         Litigation Against
Borrower. Any suit shall be filed against Borrower which (i) creates a
stoppage of the Work or enjoins the ongoing construction or (ii) if adversely
determined, would substantially impair the ability of the Borrower to perform
its obligations under the Loan Documents or complete the Work by the end of the
Construction Phase; or

15.9         Judgment, Writ,
Attachment or Levy Upon the Premises. A judgment, writ or warrant of attachment
or execution or similar process, levy or seizure be made under any process

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against the Premises and such action shall not be
released or bonded over to Lender’s satisfaction within fifteen (15) days after
the assertion or filing thereof; or

15.10       Acceleration of Other
Debts. Borrower does, or omits to do, any act, or any event occurs, as a
result of which any material obligation of Borrower, not arising hereunder, may
be declared due and payable by the holder thereof and which continues uncured
for fifteen (15) days thereafter and which materially affects Borrower’s
ability to perform its obligations hereunder; or

15.11       Abandonment Prior to
Final Completion. Prior to Final Completion the Project is abandoned or
Work thereon ceases or is substantially delayed for a period of thirty (30)
days unless excused under the terms of the applicable Construction Contract, so
that Completion of Construction cannot be accomplished in the judgment of
Lender, reasonably exercised, on or before the date required under the
applicable Construction Contract, if any; or

15.12       Abandonment After Final
Completion. After Final Completion the Borrower shall abandon the Project
or cease operations for three (3) consecutive months; or

15.13       Bankruptcy of Borrower.
The Borrower shall fail to pay its debts as they become due, or shall make an
assignment for the benefit of its creditors, or shall admit in writing its
inability to pay its debts as they become due, or shall file a petition under
any chapter of the Federal Bankruptcy Code or any similar law, state or
federal, now or hereafter existing, or shall become “insolvent” as that term is
generally defined under the Federal Bankruptcy Code, or shall in any
involuntary bankruptcy case commenced against it file an answer admitting
insolvency or inability to pay its debts as they become due, or shall fail to
obtain a dismissal of such case within one hundred twenty (120) days after its
commencement or convert the case from one chapter of the Federal Bankruptcy
Code to another chapter, or be the subject of an order for relief in such
bankruptcy case, or be adjudged a bankrupt or insolvent, or shall have a
custodian, trustee or receiver appointed for, or have any court take
jurisdiction of its property, or any part thereof, in any voluntary proceeding
for the purpose of reorganization, arrangement, dissolution or liquidation and
such custodian, trustee or receiver shall not be discharged, or such
jurisdiction shall not be relinquished, vacated or stayed within one hundred
twenty (120) days of the appointment; or

15.14       Bankruptcy of Design
Builder. If Design Builder shall fail to pay its debts as they become due,
or shall make an assignment for the benefit of its creditors, or shall admit in
writing its inability to pay its debts as they become due, or shall file a
petition under any chapter of the Federal Bankruptcy Code or any similar law,
state or federal, now or hereafter existing, or shall become “insolvent” as
that term is generally defined under the Federal Bankruptcy Code, or shall in
any involuntary bankruptcy case commenced against it file an answer admitting
insolvency or inability to pay its debts as they become due, or shall fail to
obtain a dismissal of such case within one hundred twenty (120) days after its
commencement or convert the case from one chapter of the Federal Bankruptcy
Code to another chapter, or be the subject of an order for relief in such
bankruptcy case, or be adjudged a bankrupt or insolvent, or shall have a
custodian, trustee or receiver appointed for, or have any court take
jurisdiction of its property, or any part thereof, in any voluntary proceeding
for the purpose of reorganization, arrangement, dissolution or liquidation and
such custodian, trustee or receiver shall not be discharged, or such jurisdiction

 87
 

shall not be relinquished, vacated or stayed within
one hundred twenty (120) days of the appointment; or

15.15       Attachment. Any part
of the Lender’s commitment to make the advances hereunder shall at any time be
subject or liable to attachment, seizure, garnishment or levy at the suit of
any creditor of the Borrower or at the suit of any Contractor or creditor of
the Contractor; or

15.16       Destruction. Any
part of the Project is materially damaged or destroyed by fire or other
casualty and within ten (10) days thereafter (a) the loss shall prove not to be
adequately covered by (i) insurance available for collection and (ii)
additional Owner Equity funds deposited with Lender and (b) construction does
not or cannot continue in a timely manner after such loss such that the Project
shall be completed by the expiration of the Construction Phase; or

15.17       Eminent Domain. The
Premises shall be the subject of condemnation by a Governmental Authority in an
eminent domain proceeding or a temporary taking adverse to Borrower that delays
the construction of the Project beyond the Construction Phase or prevents the
construction of the Project in accordance with the Contract Documents; or

15.18       First Lien Insurance.
Any refusal by Title to insure any Advance as being secured by the Mortgage as
a valid first lien and security interest on the Project and continuance of such
refusal for a period of thirty (30) days after notice thereof by the Lender to
the Borrower; or

15.19       Change in Borrower
Status. If the Borrower shall be dissolved, liquidated or wound up or shall
fail to maintain its existence as a going concern in good condition be adjudged
incompetent or a conservator, custodian or guardian be appointed to handle
his/her affairs or shall die; or

15.20       Change in Design Builder
Status. If Design Builder shall be dissolved, liquidated or wound up or
shall fail to maintain its existence as a going concern in good condition; or

15.21       Default under
Construction Contract(s). If the Borrower shall fail to meet or perform any
condition of any Construction Contract(s) to which it is a party prior to the
expiration of any applicable grace period or such Construction Contract(s)
shall be terminated by the Contractor(s); or

15.22       Supporting Letter(s) of
Credit. If any Supporting Letter of Credit expires or is cancelled before
the time it is to expire in accordance with its terms and is not timely
replaced with an equivalent Letter of Credit; or

15.23       Performance Guarantee
Criteria. If the Performance Guarantee Criteria is not met or otherwise
satisfied as provided in the Design Build Agreement within the time limits
specified therein; or

15.24       Default under Operating
Agreements. If the Borrower shall fail to meet or perform any condition of
any Operating Agreement to which it is a party prior to the expiration of any
applicable grace period or such Operating Agreement shall be terminated; or

 88
 

15.25       Default Under Regulatory
Approvals. If the Borrower shall fail to meet or perform any condition of
any Regulatory Approvals to which it is a party prior to the expiration of any
applicable grace period or any of such Regulatory Approvals shall be
terminated; or

15.26       LOC. If an event of
default shall occur under the LOC Documents which is not cured to the
satisfaction of the LOC Lender and/or the LOC is terminated or cancelled or the
obligation of the LOC Lender to advance the LOC proceeds is terminated or
rescinded; or

15.27       Subordinate Loan. If
an event of default shall occur under the Subordinate Loan Documents which is
not cured to the satisfaction of the Subordinate Lender and/or the Subordinate
Loan is terminated or cancelled or the obligation of the Subordinate Lender to
advance the Subordinate Loan proceeds is terminated or rescinded; or

15.28       TIF. If the TIF Loan
is note funded or the obligation of the issuer of the TIF to advance the TIF
Proceeds is terminated or rescinded; or

15.29       Unsecured Debt. If
an event of default shall occur under the Unsecured Debt Documents which is not
cured to the satisfaction of the Unsecured Lender and/or the Unsecured Debt is
terminated or cancelled or the obligation of the Unsecured Lender to advance
the Unsecured Debt proceeds is terminated or rescinded; or

15.30       Major Project Documents.
Any party fails to perform or observe any term, covenant or agreement contained
in any Major Project Document (other than any term, covenant or agreement that
is the basis of another Event of Default) to be performed or observed by it and
such failure is not remedied within any applicable grace period specifically
provided for in such Major Project Document and could reasonably be expected to
have a Material Adverse Effect; provided, that, if such party has diligently
attempted to cure such default throughout the initial grace period provided for
in the Major Project Document but such default has not been cured at the
expiration of such initial grace period, and if (1) the applicable Major
Project Document provides for one or more subsequent grace periods and (2) such
default is likely to be cured during the next subsequent grace period provided
for in the Major Project Document, then Borrower may request in writing that
the Lender grant one additional grace period of the same length as the party
has received pursuant to the Major Project Document [but not to exceed thirty (30)
days] within which the party may cure such default (such request to contain all
relevant facts and circumstances necessary for the Lender to make an informed
decision as to whether to grant an additional grace period) and the Lender, in
its sole discretion, may grant one additional grace period of up to thirty (30)
days within which the Project Party must cure the default under the Major
Project Document; provided, further, that Borrower may also cure this Event of
Default by entering into, within thirty (30) days after the initial occurrence
of such Event of Default, a replacement agreement with a new counterparty
reasonably acceptable to the Lender, which replacement agreement will be on
terms and conditions at least as favorable to Borrower as the original Major
Project Document being replaced.

15.31       Lack of Progress.
The Inspecting Engineer reports that construction of the Project lags more than
thirty (30) days behind the schedule detailed in the Schedule and thereafter,
within sixty (60) days of the date of the Inspecting Engineer’s report,
construction of the Project has not been restored to conform with the Schedule.

 89
 

16.

REMEDIES OF LENDER

16.1         Exercise of Rights.
Upon the Event of Default the Lender may at its option exercise one or more of
the following:

(a)                                  Acceleration.
Accelerate the repayment of the Loan.

(b)                                 Foreclosure.
Exercise any of the various remedies provided in any of the Loan Documents,
including the foreclosure of the Mortgage;

(c)                                  Cumulative
Rights. Cumulatively exercise all other rights, options and privileges
provided by law;

(d)                                 Cease
Making Advances. Cease making Advances and may instruct Title to refrain
from making any Advances under the Disbursing Agreement but Lender may instruct
Title to make Advances after the happening of any such event without thereby
waiving the right to refrain from making other further Advances or to exercise
any of the other rights Lender may have.

(e)                                  Assignment
of Construction Contracts. Enforce the assignment of any Construction
Contracts and exercise the Borrower’s rights thereunder;

(f)                                    Receiver.
Seek the appointment of a receiver to take possession of the Project and to
operate the Project and to complete the Project.

(g)                                 Cure
Contract Defaults. Comply with, effect a cure under and/or prevent a failure
or default under any Construction Contract or other agreement relating to the
Project;

(h)                                 Protect
Interest. Do all things necessary to protect its interest in the Project
and the security afforded the Loan by a completed Project;

(i)                                     Perform
Work. Perform or cause to be performed any and all Work and labor necessary
to complete the Project;

(j)                                     Provide
Security. Employ security watchmen to protect the Premises;

(k)                                  Prevent
Waste. Take such action as necessary to prevent waste;

(l)                                     Regulatory
Approvals. Comply with, effect a cure under and/or prevent a failure or
default under any Regulatory Approvals;

(m)                               Operating
Agreements. Comply with, effect a cure under and/or prevent a failure or
default under any Operating Agreement;

(n)                                 Enter
and Complete. Require Borrower to vacate the Premises and Lender may, at
its election, (whether prior to any sale pursuant to a foreclosure of the
Mortgage

 90
 

or during any period of redemption) either through
itself, its agents or a receiver appointed by a court of competent
jurisdiction:

(i)                                     Do
all things necessary to protect its interest in the Project and the security
afforded the Loan by a completed Project;

(ii)                                  to
enter the Site, the Project and other property owned or leased by Borrower and
complete the construction of the Project at the risk, cost and expense of
Borrower;

(iii)                               at
any and all times to discontinue any work commenced in respect of the Project
or to change any course of action undertaken in connection with the
construction of the Project; and

(iv)                              take
over and use all or any part of the labor, materials, supplies and equipment
contracted for by or on behalf of Borrower, whether or not previously
incorporated into the Project.

(o)                                 LOC.
Comply with, effect a cure under and/or prevent a failure or default under the
LOC;

(p)                                 TIF.
Comply with, effect a cure under and/or prevent a failure or default under the
TIF;

(q)                                 Subordinate
Loan. Comply with, effect a cure under and/or prevent a failure or default
under the Subordinate Loan;

(r)                                    Utility
Agreements. Comply with, effect a cure under and/or prevent a failure or
default under the Utility Agreements;

(s)                                  Major
Project Documents. Comply with, effect a cure under and/or prevent a
failure or default under any Major Project Document;

(t)                                    Unsecured
Debt. Comply with, effect a cure under and/or prevent a failure or default
under the Unsecured Debt;

(u)                                 Cumulative
Rights. Singularly or cumulatively exercise all other rights, options and
privileges provided by law;

and in furtherance thereof the Borrower irrevocably, absolutely
and unconditionally agrees that Lender may disburse that portion of the Loan
not previously disbursed (including any Retainage) and such amounts as Lender
may deem necessary or appropriate to complete the Project and to protect the
Project and the lien of the Loan Documents and to do all of the things in
connection with the Project which Borrower may do in its own behalf and hereby
appoints the Lender as its attorney in fact to perform the foregoing. It is
understood and agreed that this power of attorney shall be deemed to be a power
coupled with an interest which cannot be revoked by death or otherwise. Said
attorney-in-fact shall also have power to prosecute and defend all actions and
proceedings in connection with the construction of the Project and to take such
action and require such performance as it deems necessary. In accordance
therewith, Borrower hereby

 91
 

assigns and quitclaims unto Lender all sums to be
advanced hereunder including Retainage. Any funds so disbursed or fees or
charges so incurred shall be included in any amount necessary for Borrower to
pay to redeem the Premises after any foreclosure sale over and above and
notwithstanding the bid price at any foreclosure sale. BORROWER EXPRESSLY
ACKNOWLEDGES AND AGREES THAT THE FAILURE TO COMPLETE THE PROJECT WILL SUBJECT
THE LENDER TO IRREPARABLE HARM AND LOSS INCLUDING THE LOSS OF THE COMPLETED
PROJECT AS SECURITY FOR THE LOAN AND EXPRESSLY COVENANTS AND AGREES THAT IT
WILL COOPERATE WITH THE LENDER IN THE LENDER’S EXERCISE OF ITS REMEDIES
HEREUNDER, WILL NOT OBJECT OR CONTEST THE EXERCISE OF LENDER’S REMEDIES
HEREUNDER AND EXPRESSLY WAIVES AND RELINQUISHES ANY RIGHT NOW OR HEREAFTER
EXISTING AT LAW, IN EQUITY OR BY STATUTE TO OBJECT TO THE EXERCISE BY LENDER OF
ALL OR ANY OF THE AFORESAID REMEDIES. BORROWER ACKNOWLEDGES THAT IT IS
REPRESENTED BY COUNSEL AND THE REMEDIES HEREIN AND THE CONTENT AND EFFECT OF
THIS WAIVER HAVE BEEN FULLY DISCUSSED WITH AND EXPLAINED BY COUNSEL AND
EXECUTES AND DELIVERS THIS WAIVER ONLY UPON A FULL UNDERSTANDING OF THE SAME
AND THE RIGHTS WAIVED HEREUNDER. BORROWER FURTHER UNDERSTANDS THAT LENDER HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT IN RELIANCE UPON THIS WAIVER AND THE
RIGHT TO EXERCISE SUCH REMEDIES AND BUT FOR SUCH WAIVER WOULD NOT MAKE THE
LOAN.

In no event will the actions of the Lender while
exercising its rights pursuant to this Section constitute the Lender a
mortgagee-in-possession, and Borrower hereby indemnifies the Lender from and
against any and all costs and liabilities resulting from any such
characterization or from their actions or omissions to act pursuant to this
Section; provided, that Borrower has no obligation to indemnify the Lender for
costs and liabilities resulting from the gross negligence or willful misconduct
of the Lender. In connection with any construction of the Project undertaken by
the Lender pursuant to this Section, the Lender may:

(i)                                    engage
builders, contractors, architects, engineers, security services and others for
the purpose of furnishing labor, material, equipment and security in connection
with any construction of the Project;

(ii)                                 pay,
settle or compromise, or cause to be paid, settled or compromised, all claims
or bills that may become Liens against Borrower’s interest in the Site or the
Project, or that have been or may be incurred in any manner in connection with
the construction of the Project or for the discharge of Liens or defects in the
title of Borrower’s interest in the Site or the Project; and

(iii)                              take
such other action or refrain from acting under this Agreement as the Lender may
in its sole and absolute discretion from time to time determine.

Borrower will be liable to the Lender for all sums
paid or incurred for the construction of the Project and all payments made or
liabilities incurred by the Lender under this Agreement of any kind whatsoever
(other than liabilities incurred due to the gross negligence or willful
misconduct of the Lender) will be paid by Borrower to the Lender upon demand
with interest to the date of payment to the Lender at the Default Rate. For the
purpose of carrying out the provisions and exercising the rights, powers and
privileges granted by this Section, Borrower irrevocably

 92
 

constitutes and appoints the Lender, with full power
of substitution, as its true and lawful attorney-in-fact, in its name and on
its behalf, and at its expense, at any time after the occurrence and during the
continuance of an Event of Default, to execute, acknowledge and deliver any
document and instrument and to do and perform any act such as those referred to
in this Section, without notice to or the consent of Borrower. This power of
attorney is coupled with an interest and is not revocable.

16.2         Rights Non-Cumulative.
No right or remedy by this Agreement or by any Loan Document or instrument delivered
by the Borrower pursuant hereto, conferred upon or reserved to the Lender shall
be or is intended to be exclusive of any other right or remedy and each and
every right and remedy shall be cumulative and in addition to any other right
or remedy or now or hereafter arising at a law or in equity or by statute.
Except as Lender may hereafter otherwise agree in writing, no waiver by Lender
or any breach by or default of Borrower of any of its obligations, agreements,
or covenants under this Agreement shall be deemed to be a waiver of any
subsequent breach of the same or any other obligation, agreement or covenant,
nor shall any forbearance by Lender to seek a remedy for such breach be deemed
a waiver of its rights and remedies with respect to such a breach, nor shall
Lender be deemed to have waived any of its rights and remedies unless it be in
writing and executed with the same formality as this Agreement.

17. 

GENERAL CONDITIONS AND MISCELLANEOUS

17.1         Rights of Third
Parties. All conditions of the obligations of Borrower hereunder are
imposed solely and exclusively for the benefit of Lender and no other person
shall have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that Lender will refuse to make
advances in the absence of strict compliance with any or all thereof, and no
other person shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any and all of which may be freely waived in whole or in part
by Lender at any time if in its sole discretion it deems it desirable to do so.
In particular, Lender makes no representations and assumes no duties or
obligations as to third parties concerning the quality of the construction of
the Improvements or the absence therefrom of defects. In this connection,
Borrower agrees to and shall indemnify Lender from any liability, claims or
losses resulting from the disbursement of the Loan proceeds or from the
condition of the Premises whether related to the quality of construction or otherwise
and whether arising during or after the term of the Loan made by Lender to
Borrower in connection therewith. This provision shall survive the repayment of
said Loan and shall continue in full force and effect so long as the
possibility of any such liability, claims or losses exists.

17.2         Evidence of
Satisfaction of Conditions. Any condition of this Agreement which requires
the submission of evidence of the existence or non-existence of a specified
fact or facts implies as a condition the existence or non-existence, as the
case may be, of such fact or facts, and Lender shall, at all times, be free
independently to establish to its satisfaction and in its absolute discretion
such existence or non-existence at its sole cost and expense except as otherwise
expressly provided in the Loan Documents.

 93
 

17.3         Assignment.
Borrower may not assign this Loan Agreement or any of its rights or obligations
hereunder, including the right to an Advance, without the prior written consent
of Lender.

17.4         Successors and Assigns
Including in Parties. Whenever in this Agreement one of the parties hereto
is named or referred to, the heirs, legal representatives, successors and
assigns of such parties shall be included and all covenants and agreements
contained in this Agreement by or on behalf of the Borrower or by or on behalf
of the Lender shall bind and inure to the benefit of their respective heirs,
legal representatives, successors and assigns, whether so expressed or not.

17.5         Headings. The
headings of the sections, paragraphs and subdivisions of this Agreement are for
the convenience of reference only, and are not to be considered a part hereof
and shall not limit or otherwise affect any of the terms hereof.

17.6         Invalid Provisions to
Affect no Others. If fulfillment of any provision hereof, or any
transaction related thereto at the time performance of any such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity; and such clause or provision shall be deemed invalid as
though not herein contained, and the remainder of this Agreement shall remain
operative in full force and effect.

17.7         Number and Gender.
Whenever the singular or plural number, masculine or feminine or neuter gender
is used herein, it shall equally include the other.

17.8         Amendments.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or
termination is sought.

17.9         Notices. Any
notices and other communications permitted or required by the provisions of
this Agreement (except for telephonic notices expressly permitted) shall be in
writing and shall be deemed to have been properly given or served by depositing
the same with the United States Postal Service, or any official successor
thereto, designated as Certified Mail, Return Receipt Requested, bearing
adequate postage, or deposited with reputable private courier or overnight
delivery service, and addressed as hereinafter provided. Each such notice shall
be effective upon being deposited as aforesaid. The time period within which a
response to any such notice must be given, however, shall commence to run from
the date of receipt of the notice by the addressee thereof. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given shall be deemed to be receipt of the notice sent. By
giving to the other party hereto at least ten (10) days’ notice thereof, either
party hereto shall have the right from time to time to change its address and
shall have the right to specify as its address any other address within the United
States of America.

 94
 

Each notice to Lender
shall be addressed as follows:

Dougherty Funding LLC 

Suite 4300

90 South Seventh Street 

Minneapolis, Minnesota 55402 

Attention: Executive Vice President and Chief Operating Officer

Each notice to Borrower
shall be addressed as follows:

Millennium Ethanol, LLC 

300 North Broadway 

Marion, South Dakota 57043 

Attention: Chief Executive Officer

17.10       Governing
Law. Notwithstanding the place of execution of this instrument, the parties
to this instrument have contracted for South Dakota law to govern this
instrument and it is controllingly agreed that this instrument is made pursuant
to and shall be construed and governed by the laws of the State of South Dakota
without regard to the principles of conflicts of law.

17.11       Participation.
Lender may in its sole and exclusive discretion issue participations in the
Loan and/or assign all or a portion of its obligations to make the Loan to
participant(s) in the Loan. The Lender may assign the Loan and its rights and obligations
to another lender or to a Person that the Lender merges with, is merged into,
or who acquires the assets of Lender or whose assets are acquired by Lender.
Subject to the confidentiality restrictions in the participation agreement,
Lender may divulge all information received by it from Borrower or any other
source, including but not limited to information relating to the Loan, to the
Project and to Borrower, to any such participant(s) or other lenders, and
Borrower shall cooperate with Lender, at Lender’s expense, in satisfying the
reasonable requirements of any such participant(s) or other lenders for
consummating such a purchase or participation.

17.12       Consent
to Jurisdiction. The Borrower submits and consents to personal jurisdiction
of the Courts of the State of South Dakota and Courts of the United States of
America sitting in such State for the enforcement of this instrument and waives
any and all personal rights under the laws of any state or the United States of
America to object to jurisdiction in the State of South Dakota. Litigation may
be commenced in any state court of general jurisdiction for the State of South
Dakota or the United States District Court located in that state, at the
election of the Lender. Nothing contained herein shall prevent Lender from
bringing any action against any other party or exercising any rights against
any security given to Lender, or against the Borrower personally, or against
any property of the Borrower, within any other state. Commencement of any such action
or proceeding in any other state shall not constitute a waiver of consent to
jurisdiction or of the submission made by the Borrower to personal jurisdiction
within the State of South Dakota.

17.13       Counterparts.
This instrument may be executed in any number of counterparts with the same
effect as if all parties hereto had signed the same document. All such
counterparts shall be construed together and shall constitute one instrument,
but in making proof hereof it shall only be necessary to produce one such
counterpart. The signatures to this instrument may

 95
 

be executed on separate pages and when attached to this instrument
shall constitute one complete document.

17.14       Waiver. THE
UNDERSIGNED WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH ANY PARTIES
TO THIS INSTRUMENT ARE INVOLVED DIRECTLY OR INDIRECTLY AND ANY MATTER IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS INSTRUMENT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER, AND WHETHER ARISING OR ASSERTED BEFORE OR
AFTER THE DATE OF THIS INSTRUMENT.

IN FURTHERANCE WHEREOF,
Borrower and Lender have hereunto caused these presents to be executed on the
date first above written.

	
  

  	
  MILLENNIUM ETHANOL, LLC,

  a South Dakota limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Steven Domm

  	
   

  
	
   

  	
   

  	
   

  	
  Steven Domm

  
	
   

  	
  Its:

  	
   

  	
  Chief Executive Officer

  

 

	
  STATE OF MINNESOTA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF
  HENNEPIN

  	
  )

  

 

On this the
 22   day of June, 2006,
before me, a notary public, the undersigned officer, personally appeared Steven
Domm, who acknowledged himself to be the Chief Executive Officer of Millennium
Ethanol, LLC, a South Dakota limited liability company, and that such person,
as such Chief Operating Officer being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the limited liability company by himself as Chief Operating Officer.

Millennium Ethanol, LLC,
has no seal.

	
  

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title of officer

  	
   

  	
   

  
				

 

	
  

  	
  DAVID HILLERT

  	
   

  
	
   

  	
  NOTARY PUBLIC-MINNESOTA

  	
   

  
	
   

  	
  MY COMMISSION EXPIRES 1-31-2010

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [SEAL]

  	
   

  

 

 96
 

 

	
  

  	
  DOUGHERTY FUNDING LLC, a

  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory Bolin

  	
   

  
	
   

  	
   

  	
   

  	
  Gregory Bolin

  
	
   

  	
  Its:

  	
   

  	
  Senior Vice President

  
					

 

	
  STATE OF MINNESOTA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF
  HENNEPIN

  	
  )

  

 

On this the
 22  day of June, 2006, before me, a notary public, the undersigned
officer, personally appeared Gregory A. Bolin , who acknowledged himself to be
the Senior Vice President of Dougherty Funding LLC, a Delaware limited
liability company, and that such person, as such Senior Vice President being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing the name of the limited liability company by himself as
Senior Vice President.

Dougherty Funding LLC has
no seal.

	
  

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
				

 

THIS DOCUMENT WAS DRAFTED BY:

	
  OPPENHEIMER WOLFF &
  DONNELLY LLP (DPN)

  Plaza VII, Suite 3400

  45 South Seventh Street

  Minneapolis, MN 55402

  	
  DAVID
  HILLERT

  NOTARY PUBLIC-MINNESOTA

  MY COMMISSION EXPIRES 1-31-2010

  [SEAL]

  

 

TABLE OF EXHIBITS

Exhibit A – Budget 

Exhibit B – Premises 

Exhibit C – Request for Advance 

Exhibit D – Monthly Construction Report 

Exhibit E – Quarterly Reporting Schedule 

Exhibit F – Owned Intellectual Property 

Exhibit G – Contractors Consent 

Exhibit H – Service Provider’s Consent 

Exhibit I – Design Builder Consent

 97

EXHIBIT “A”

Budget

Exhibit

	
  Overall Source and Use of Funds Summary

  	
  5/31/06

  
	
  Millenium Ethanol

  	
   

  
	
  Marion, SD

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  	
  Total

  Project Cost

  	
   

  	
  First

  Mortgage

  Construction

  Loan

  	
   

  	
  Borrower

  Cash

  	
   

  	
  Mezzanine

  Loan

  	
   

  	
  Unsecured

  Debt

  	
   

  	
  Tax

  Increment

  Financing

  	
   

  	
  Line of

  Credit

  	
   

  
	
  HARD COSTS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General Contract

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Plant
  Improvements

  	
   

  	
   

  	
   

  	
  $

  	
  105,997,000

  	
   

  	
  $

  	
  57,665,000

  	
   

  	
  $

  	
  32,332,000

  	
   

  	
  $

  	
  14,000,000

  	
   

  	
  $

  	
  2,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  
	
  General
  Conditions

  	
   

  	
   

  	
   

  	
  Incl.

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Contractor
  Fee

  	
   

  	
   

  	
   

  	
  Incl.

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  General Contract
  Subtotal

  	
   

  	
   

  	
   

  	
  $

  	
  105,997,000

  	
   

  	
  $

  	
  57,665,000

  	
   

  	
  $

  	
  32,332,000

  	
   

  	
  $

  	
  14,000,000

  	
   

  	
  $

  	
  2,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SOFT COSTS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Land / Site

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Land
  Acquisition

  	
   

  	
   

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  
	
  Site
  Improvements

  	
   

  	
  (A)

  	
   

  	
  4,750,000

  	
   

  	
  3,150,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  1,600,000

  	
   

  	
  0

  	
   

  
	
  Rail
  Infrastructure

  	
   

  	
  (A)

  	
   

  	
  5,000,000

  	
   

  	
  5,000,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Administrative
  Building

  	
   

  	
   

  	
   

  	
  500,000

  	
   

  	
  500,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Fire
  Protection / Water Supply

  	
   

  	
  (A)

  	
   

  	
  5,950,000

  	
   

  	
  5,950,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Land / Site Subtotal

  	
   

  	
   

  	
   

  	
  $

  	
  17,200,000

  	
   

  	
  $

  	
  14,600,000

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  1,600,000

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Start-Up Costs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Office
  Equipment

  	
   

  	
   

  	
   

  	
  $

  	
  100,000

  	
   

  	
  $

  	
  100,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  
	
  Computers,
  Software, Network

  	
   

  	
   

  	
   

  	
  180,000

  	
   

  	
  180,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Rolling
  Stock

  	
   

  	
  (A)

  	
   

  	
  460,000

  	
   

  	
  460,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Pre-Production
  Period Costs

  	
   

  	
  (A)

  	
   

  	
  850,000

  	
   

  	
  850,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Working
  Capital / Inventory

  	
   

  	
  (A)

  	
   

  	
  11,000,000

  	
   

  	
  4,000,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  7,000,000

  	
   

  
	
  Land / Site Subtotal

  	
   

  	
   

  	
   

  	
  $

  	
  12,590,000

  	
   

  	
  $

  	
  5,590,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  7,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Soft Costs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Performance
  Bond

  	
   

  	
   

  	
   

  	
  $

  	
  400,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  400,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  
	
  Builder’s
  Risk Insurance

  	
   

  	
   

  	
   

  	
  200,000

  	
   

  	
  0

  	
   

  	
  200,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Operating
  Costs

  	
   

  	
   

  	
   

  	
  895,000

  	
   

  	
  895,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Inspecting
  Architect

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  	
  150,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Contingency

  	
   

  	
  (B)

  	
   

  	
  4,200,000

  	
   

  	
  4,200,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Construction
  Period Interest

  	
   

  	
  (C)

  	
   

  	
  6,900,000

  	
   

  	
  6,900,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Project Soft Costs
  Subtotal

  	
   

  	
   

  	
   

  	
  $

  	
  12,745,000

  	
   

  	
  $

  	
  12,145,000

  	
   

  	
  $

  	
  600,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Closing Costs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title
  Insurance

  	
   

  	
   

  	
   

  	
  $

  	
  130,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  130,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  
	
  Lender
  Origination Fees (2.00%)

  	
   

  	
   

  	
   

  	
  1,940,000

  	
   

  	
  0

  	
   

  	
  1,940,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  FA
  Fees (0.75%)

  	
   

  	
   

  	
   

  	
  832,500

  	
   

  	
  0

  	
   

  	
  832,500

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  LOC
  Fees (1.00%)

  	
   

  	
   

  	
   

  	
  140,000

  	
   

  	
  0

  	
   

  	
  140,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Borrower
  / Lender Legal

  	
   

  	
   

  	
   

  	
  300,000

  	
   

  	
  0

  	
   

  	
  300,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Entity
  Organization

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  	
  0

  	
   

  	
  150,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Capital
  Raise

  	
   

  	
   

  	
   

  	
  550,000

  	
   

  	
  0

  	
   

  	
  550,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Appraisal

  	
   

  	
   

  	
   

  	
  22,000

  	
   

  	
  0

  	
   

  	
  22,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Miscellaneous

  	
   

  	
   

  	
   

  	
  48,500

  	
   

  	
  0

  	
   

  	
  48,500

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Closing Costs Subtotal

  	
   

  	
   

  	
   

  	
  $

  	
  4,113,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  4,113,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTALS

  	
   

  	
   

  	
   

  	
  $

  	
  152,645,000

  	
   

  	
  $

  	
  90,000,000

  	
   

  	
  $

  	
  38,045,000

  	
   

  	
  $

  	
  14,000,000

  	
   

  	
  $

  	
  2,000,000

  	
   

  	
  $

  	
  1,600,000

  	
   

  	
  $

  	
  7,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Percent of Total Project
  Cost

  	
   

  	
   

  	
   

  	
  100

  	
  %

  	
  59.0

  	
  %

  	
  24.9

  	
  %

  	
  9.2

  	
  %

  	
  1.3

  	
  %

  	
  1.0

  	
  %

  	
  4.6

  	
  %

  

 

(A)           Details
on Schedule A-1.

(B)           4.0%
of the general contract.

(C)           See draw schedules.

EXHIBIT “B”

Premises

PARCEL 1:

The Southeast Quarter (SE 1⁄4)  of Section Thirty-one (31), Township One hundred (100)
North, Range Fifty-four (54) West of the 5th P.M., except Tract 1, Engbrecht Addition in
said Southeast Quarter, except the East Five Hundred Eighty Three Feet (E 583’)
of the North Fifteen Hundred Feet (N 1500’) of said Southeast Quarter except
the East Five Hundred Eighty Three Feet (E 583’) of the South Seven Hundred
Eighteen Feet (S 718’) of said Southeast Quarter and except Tract F, Fremar’s
Addition in the Southwest Quarter (SW 1⁄4) of the Southeast (SE 1⁄4)  of said Section 31, except Lot H1 and Lot
H2 in said Southeast 1⁄4  except 100
foot South Dakota Railroad Authority Right-of-way in said Southeast Quarter,
all in Turner County, South Dakota.

PARCEL 2:

The East Half of the Southwest Quarter (E 1⁄2 SW 1⁄4) of Section Thirty-one (31), Township One
Hundred (100) North, Range Fifty-four (54) West of the 5th P.M., except Tract 1 and Tract 2 of Engbrecht
Tracts an Addition in the Southeast Quarter (SE 1⁄4) of the Southwest Quarter (SW 1⁄4)  of said Section 31, and except Lot A in Tract 1 of
Engbrecht Tracts in said Southeast 1⁄4  of
Southwest 1⁄4 of Section 31 and except 100 feet South Dakota Railroad Authority
Right-of-way in said East 1⁄2 Southeast 1⁄4,  all
in Turner County, South Dakota.

PARCEL 3:

Tracts B, C, D and E, Fremar’s Addition in the
Southwest Quarter (SW 1⁄4) and the Southwest Quarter of the Southeast Quarter (SW
1⁄4 SE 1⁄4) of Section 31, Township One Hundred (100) North, Range Fifty-four (54)
West of the 5th P.M., Turner County, South Dakota.

PARCEL 4:

A 110 foot strip of land running parallel to and
immediately adjacent to the South Dakota Railroad Authority northeasterly right-of-way
line in the Southeast Quarter (SE 1⁄4) of Section 36, Township One Hundred (100)
North, Range Fifty-five (55) West of the 5th P.M., Turner County, South Dakota.

PARCEL 5:

A 100 foot strip of land running parallel to and
immediately adjacent to the South Dakota Railroad Authority northeasterly
right-of-way line in the Northeast Quarter (NE 1⁄4) of Section 36, Township One
Hundred (100) North, Range Fifty-five (55) West of the 5th P.M., Turner County, South Dakota.

PARCEL 6:

A 110 foot strip of land running parallel to and
immediately adjacent to the South Dakota Railroad Authority northeasterly
right-of-way line in the Northwest Quarter (NW 1⁄4)  of Section 36, Township One Hundred (100) North, Range
Fifty-five (55) West of the 5th P.M., Turner
County, South Dakota.

EXHIBIT “C”

Request For Advance

	
  TO:

  	
  Dougherty Funding LLC

  
	
  FROM:

  	
  Millennium Ethanol, LLC

  
	
  RE:

  	
  Request for Advance

  
	
  DATE:

  	
                                                     ,
  20          

  

 

Reference is made to the
Loan and Security Agreement, dated July     , 2006 (as
amended, modified or supplemented from time to time, the “Loan Agreement”),
among Millennium Ethanol, LLC (“Borrower”) and you, as lender (the “Lender”).
Capitalized terms used in this Request for Advance and not otherwise defined
herein have the meanings assigned to them in the Loan Agreement.

1.             This Request for
Advance is given pursuant to Article 13 of the Loan Agreement, and in
connection therewith Borrower hereby certifies as follows:

(i)                                     There
exists no Event of Default,

(ii)                                  all
representations and warranties made to the Lender contained in the Loan
Agreement or any other Loan Document or in any writing delivered to the Lender
by Borrower pursuant to the Loan Agreement or other Loan Document are true and
correct in all material respects with the same force and effect as if made on
and as of the date hereof (except to the extent such statements,
representations and warranties made in any such Loan Document or writing
executed prior to the date hereof related to a specific prior date), and

(iii)                               no
Material Adverse Effect exists.

2.             All Conditions
Precedent To An Advance have been satisfied in full and all amounts received in
connection with the Loan made in connection with this Request for Advance will
be used in accordance with the requirements of the Loan Agreement.

3.             All amounts borrowed
pursuant to previous Requests for Advance have been applied in accordance with
the Loan Agreement.

4.             Borrower has no
reason to believe that the aggregate amount of the Loan when taken together
with all other funds available to construct the Project, is insufficient to
complete the Project on or prior to the Substantial Completion Date.

5.             Construction of the
Project is progressing in a satisfactory manner in accordance with the Project
Budget and the Schedule, subject to any Permitted Construction Delay.

6.             Borrower has no
knowledge of, and has not received any notice of, Liens or claims of Lien
(other than Permitted Liens) filed or threatened against the Project or any
Collateral.

7.             Borrower is not aware
of any event, circumstance or condition, or lack thereof, which could
reasonably be expected to cause an Event of Default.

	
  

  	
  MILLENNIUM ETHANOL, LLC, a South

  Dakota limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Steven Domm

  
	
   

  	
  Its:

  	
   

  	
  Chief Executive Officer

  
					

 

Attachment: Application(s) For Payment

EXHIBIT “D”

Form of Monthly Construction Report

The Monthly Construction Report will include:

Detailed description of progress of construction, percent completion of
engineering,

procurement, construction and start-up tasks, with photos

Report of potential problems and resolution of previous issues reported

Milestones completed

Milestones not completed by deadline

Anticipated completion dates for remaining Milestones

Permit status (give details)

Total funds disbursed, broken down monthly by Construction Budget category
(actual

and scheduled)

Current schedule for performance testing (give details)

Current anticipated date of Completion (give details)

Number of days of Force Majeure (give details)

Detailed description of accidents, other unanticipated events

EXHIBIT “E” 

Quarterly Reporting Schedule

Financial Covenants 

Millennium Ethanol, LLC 

Quarterly Reporting Requirements

	
  1)

  	
  25% of pre-tax Net Income available for
  Distributions are to be retained with Borrower

  
	
   

  	
   

  
	
   

  	
  Pre-Tax Income (per Income Statement)

  	
   

  	
   

  
	
   

  	
  25% of pre-tax Net Income 

  	
   

  	
   

  
	
   

  	
  Change in Retained Earnings (per Balance Sheet)

  	
   

  	
   

  
	
   

  	
   

  
	
  2)

  	
  100% of the Federal Commodity Credit Corporation
  and any State of South Dakota production subsidies will be applied to
  prepayment of the Loan.

  
	
   

  	
   

  
	
   

  	
  Federal Subsidy Income (per Income Statement) 

  	
   

  	
   

  
	
   

  	
  State Subsidy Income (per Income Statement)

  	
   

  	
   

  
	
   

  	
   

  
	
  3)

  	
  No Distributions (other than tax payments) to
  the members if total Debt Service on all Debt is less than 1.25x

  
	
   

  	
   

  
	
   

  	
  Net Income (per Income Statement) 

  	
   

  	
   

  
	
   

  	
  plus: Depreciation
  Expense (per Income Statement) 

  	
   

  	
   

  
	
   

  	
  plus: Amortization
  Expense (per Income Statement) 

  	
   

  	
   

  
	
   

  	
  plus: Interest
  Expense (per Income Statement) 

  	
   

  	
   

  
	
   

  	
  EBITDA

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Annual Debt Service of Loan 

  	
   

  	
   

  
	
   

  	
  Annual Debt Service of Subordinate Loan 

  	
   

  	
   

  
	
   

  	
  Annual Debt Service of Unsecured Subordinate Loan 

  	
   

  	
   

  
	
   

  	
  Interest Payments on LOC 

  	
   

  	
   

  
	
   

  	
  Total Annual Debt Service

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Debt Service Coverage

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Amount of Distributions to Members

  
	
   

  	
  ·   for income taxes (per supporting documentation
  provided by Borrower)

  	
   

  	
   

  
	
   

  	
  ·   all other distributions

  	
   

  	
   

  

 

EXHIBIT “F”

Owned Intellectual Property

NONE

EXHIBIT “G”

Contractor’s Consent

CONTRACTORS CONSENT

Dougherty Funding LLC

90 South Seventh Street, Suite 4400

Minneapolis, Minnesota 55402

	
  

  	
  Re:

  	
  Project:

  	
  Millennium Ethanol Plant (“Project”)

  	
   

  
	
   

  	
   

  	
   

  	
  Marion, South Dakota

  	
   

  
	
   

  	
   

  	
  Owner/Borrower:

  	
  Millennium Ethanol, LLC

  
	
   

  	
   

  	
  Construction Agreement Dated: 

  	
   

  	
  , 2006

  
	
   

  	
   

  	
  Contract Sum:

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Work:

  	
   

  	
   

  
									

 

Gentlemen:

We are the Contractor
providing certain design, supply and construction services to the
Owner/Borrower for the above described work under the subject Construction
Agreement (the “Agreement”). We understand that you are making a loan to the
Borrower to finance the Project (“Loan”) and that the Borrower has collaterally
assigned to you all of its right in the Agreement (“Assignment”). We consent to
such Assignment and agree and advise you that:

1.                                       Attached
hereto as Exhibit “A” is the complete Construction Agreement.

2.                                       Upon
the occurrence of a default and subsequent failure to cure by the Borrower
under the Agreement we shall provide you written notice at your address above
of such default and you shall have the right, exercisable for 30 days after
such notice, to elect in writing to us to require us to continue performance
under the Agreement in which case we shall thereafter continue to perform (or
recommence performance) under the Agreement provided we are reimbursed in
accordance with the Agreement for our services, or

3.                                       The
date of Substantial Completion is                                           .

4.                                       The
Contract Sum as set forth above has not been changed as of this date.

5.                                       Attached
hereto is a Schedule of Values which contains a full and complete list and
breakdown of the quantities and costs of work to be done.

	
  Dated:

  	
   

  	
  , 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
							

 

EXHIBIT “H”

Service Provider’s
Consent

SERVICE PROVIDER

CONSENT

Dougherty Funding LLC

90 South Seventh Street, Suite 4400

Minneapolis, Minnesota 55402

	
  

  	
  Re:

  	
  Project:

  	
  Millennium
  Ethanol Plant (“Project”)

  
	
   

  	
   

  	
   

  	
  Marion, South
  Dakota

  
	
   

  	
   

  	
  Owner/Borrower:

  	
  Millennium
  Ethanol, LLC

  
	
   

  	
   

  	
  Identify
  Name of Agreement: 

  	
   

  
	
   

  	
   

  	
  Dated: 

  	
  , 2006

  
	
   

  	
   

  	
  Identify
  Service to be Provided under Agreement (“Service”)

  
						

 

Ladies/Gentlemen:

We are the entity
supplying services (the “Services”) to the Project under the subject Agreement
(“Agreement”). We understand that you are making a loan to the Borrower to
finance the Project (“Loan”). We further understand that the Borrower has
collaterally assigned to you all of its right in the Agreement (“Assignment”).
We consent to such Assignment and advise you that:

1.                                       Attached
hereto as Exhibit “A” is a copy of the complete Agreement.

2.                                       Upon
the occurrence of a default and subsequent failure to cure by the Borrower
under the Agreement we shall notify you in writing at your address above and
you shall have the right, exercisable for 30 days after such notice, to elect
in writing to us to require us to continue performance under the Agreement in
which case we shall thereafter continue to provide the Service under the
Agreement provided we are reimbursed in accordance with the Agreement for our
Services.

3.                                       All
approvals necessary to commence construction of any facilities necessary to
provide the Service in the Agreement have been obtained.

4.                                       All
preconditions necessary to furnish the Services in the Agreement have been
satisfied.

5.                                       All
contracts necessary to complete such facilities have been executed and
delivered.

6.                                       Any
right to terminate the Agreement other than by reason of the failure of the
Borrower to perform its obligations thereunder are expressly waived. In that
connection the Borrower has deposited with us all cash payments and security
required under the Agreement.

7.                                       The
date of substantial completion of the Facilities is                        .

	
  Dated:

  	
   

  	
  , 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
							

 

EXHIBIT “I”

Design Builder’s Consent

(DESIGN BUILDERS CONSENT 

AND ACKNOWLEDGMENT)

Dougherty Funding LLC

90 South Seventh Street, Suite 4400

Minneapolis, Minnesota 55402

Attn: Executive Vice President – Mortgage Loans

	
   

  	
  Re:

  	
  Project:

  	
   

  	
  100 MGY Dry
  Grind Ethanol Facility

  
	
   

  	
   

  	
   

  	
   

  	
  Marion, South
  Dakota

  
	
   

  	
   

  	
  Owner:

  	
   

  	
  Millennium
  Ethanol, LLC

  
	
   

  	
   

  	
  Lump Sum
  Design-Build

  	
   

  	
   

  
	
   

  	
   

  	
  Agreement Dated:

  	
   

  	
  May 5, 2006

  
	
   

  	
   

  	
  Scope Documents:

  	
   

  	
  See Extract
  (attached)

  
	
   

  	
   

  	
  Contract Price:

  	
   

  	
  $105,997,000.00

  

 

Ladies/Gentlemen:

We are the Design Builder
providing engineering, design, procurement, construction startup, testing and
training for the operation and maintenance of the Project and all material,
equipment, tools and labor necessary to complete the Project in accordance with
the terms of the Lump Sum Design-Build Agreement (the “Assigned Agreement”) at
the above Contract Price. We understand that you are making a loan to the Owner
(also sometimes referred to herein as “Borrower”) to finance a portion of the
costs of construction of the Project (“Loan”) and that the Owner has
collaterally assigned to you all of its right in the Agreement (“Assignment”).
We consent to such Assignment and agree with you as follows:

1.             We acknowledge that
through the Assignment you shall acquire all of the rights previously enjoyed
by Borrower as owner under the Assigned Agreement and that you shall be a
secured creditor holding a security interest in the Assigned Agreement.

2.             We shall provide you
any and all notices which we are required to deliver to Lender pursuant to the
Assigned Agreement.

3.             We agree that we will
only perform Work under a Change Order requested by Owner and we will provide
timely Notice to Lender of our acceptance of such Change Order.

4.             We agree that we will
not amend, terminate or modify the Assigned Agreement without first notifying
you of such intended action.

5.             We agree that, if
Lender notifies us that an event of default under the Credit Agreement has
occurred and is continuing and that Lender has exercised its rights (i) to have
itself or its designee substituted for Owner under the Assigned Agreement or
(ii) to sell, assign, transfer or otherwise dispose of the Assigned Agreement
to a third party, then Lender or such third party (each, a “Substitute Owner”)
shall be substituted for Owner under the Assigned Agreement and, in such event,
we will continue to perform our obligations under the Assigned Agreement in
favor of the Substitute Owner; provided that the conditions prerequisite to
such

assignment pursuant to Section 21.1 of the Assigned
Agreement have been met and it being understood that the Substitute Owner will
continue to perform the obligations of Owner under the Assigned Agreement in
favor of us as Design Builder, including the payments of all amounts due to us
in accordance with the terms thereof.

6.             We may terminate the
Assigned Agreement in accordance with its terms subject to the notice
requirements set forth therein.

7.             You have the right to
cure given to Lenders under Section 15.7 of the Assigned Agreement.

8.             Attached hereto is
the full and complete Assigned Agreement.

Dated: June 22, 2006

	
  

  	
  FAGEN, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  CFOExhibit 10.3

LUMP SUM DESIGN-BUILD AGREEMENT

BETWEEN

MILLENNIUM ETHANOL, LLC (“OWNER”)

AND

FAGEN, INC. (“DESIGN-BUILDER”)

May 5, 2006

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
  Page

  
	
  Article 1

  	
  Definitions; Rules of Interpretation

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Rules of Construction

  	
   

  	
  1

  
	
  1.2

  	
  Defined Terms

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 2

  	
  The Project

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
  Services to be Performed

  	
   

  	
  6

  
	
  2.2

  	
  Extent of Agreement

  	
   

  	
  6

  
	
  2.3

  	
  Conflicting Provisions

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 3

  	
  Design-Builder Responsibilities

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
  Design-Builder’s Services in General

  	
   

  	
  7

  
	
  3.2

  	
  Design Development and Services

  	
   

  	
  8

  
	
  3.3

  	
  Standard of Care

  	
   

  	
  8

  
	
  3.4

  	
  Government Approvals and Permits

  	
   

  	
  9

  
	
  3.5

  	
  Subcontractors

  	
   

  	
  9

  
	
  3.6

  	
  Maintenance of Site

  	
   

  	
  9

  
	
  3.7

  	
  Project Safety

  	
   

  	
  10

  
	
  3.8

  	
  Submission of Reports

  	
   

  	
  10

  
	
  3.9

  	
  Training

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 4

  	
  Owner’s Responsibilities

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
  Duty to Cooperate

  	
   

  	
  11

  
	
  4.2

  	
  Furnishing of Services and Information

  	
   

  	
  11

  
	
  4.3

  	
  Financial Information; Cooperation with Lenders;
  Failure to Obtain Financial Closing

  	
   

  	
  12

  
	
  4.4

  	
  Owner’s Representative

  	
   

  	
  12

  
	
  4.5

  	
  Government Approvals and Permits

  	
   

  	
  12

  
	
  4.6

  	
  Owner’s Separate Contractors

  	
   

  	
  13

  
	
  4.7

  	
  Security

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 5

  	
  Ownership of Work Product; Risk of Loss

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
  Work Product

  	
   

  	
  13

  
	
  5.2

  	
  Owner’s Limited License Upon Payment in Full

  	
   

  	
  13

  
	
  5.3

  	
  Owner’s Limited License Upon Owner’s Termination for
  Convenience or Design-Builder’s Election to Terminate

  	
   

  	
  14

  
	
  5.4

  	
  Owner’s Limited License Upon Design-Builder’s Default

  	
   

  	
  14

  
	
  5.5

  	
  Owner’s Indemnification for Use of Work Product

  	
   

  	
  15

  
	
  5.6

  	
  Risk of Loss

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 6

  	
  Commencement and Completion of the Project

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
  Phase I and Phase II Engineering

  	
   

  	
  15

  
	
  6.2

  	
  Notice to Proceed; Commencement

  	
   

  	
  15

  
	
  6.3

  	
  Project Start-Up and Testing

  	
   

  	
  16

  

 

 i
 

 

	
  

  	
   

  	
   

  	
  Page

  
	
  6.4

  	
  Substantial Completion

  	
   

  	
  16

  
	
  6.5

  	
  Final Completion

  	
   

  	
  18

  
	
  6.6

  	
  Post Completion Support

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 7

  	
  Performance Testing and Liquidated Damages

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Performance Guarantee

  	
   

  	
  19

  
	
  7.2

  	
  Performance Testing

  	
   

  	
  19

  
	
  7.3

  	
  Liquidated Damages

  	
   

  	
  20

  
	
  7.4

  	
  Bonds and Other Performance Security

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 8

  	
  Warranties

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
  Design-Builder Warranty

  	
   

  	
  22

  
	
  8.2

  	
  Correction of Defective Work

  	
   

  	
  22

  
	
  8.3

  	
  Warranty Period Not Limitation to Owner’s Rights

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 9

  	
  Contract Price

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
  Contract Price

  	
   

  	
  23

  
	
  9.2

  	
  Effect of Construction Cost Index Increase on
  Contract Price

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 10

  	
  Payment Procedures

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
  Payment at Financial Closing

  	
   

  	
  24

  
	
  10.2

  	
  Progress Payments

  	
   

  	
  24

  
	
  10.3

  	
  Final Payment

  	
   

  	
  25

  
	
  10.4

  	
  Failure to Pay Amounts Due

  	
   

  	
  26

  
	
  10.5

  	
  Design-Builder’s Payment Obligations

  	
   

  	
  26

  
	
  10.6

  	
  Record Keeping and Finance Controls

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 11

  	
  Hazardous Conditions and Differing Site
  Conditions

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
  Hazardous Conditions

  	
   

  	
  26

  
	
  11.2

  	
  Differing Site Conditions; Inspection

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 12

  	
  Force Majeure; Change in Legal Requirements

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
  Force Majeure Event

  	
   

  	
  28

  
	
  12.2

  	
  Effect of Force Majeure Event

  	
   

  	
  28

  
	
  12.3

  	
  Change in Legal Requirements

  	
   

  	
  29

  
	
  12.4

  	
  Time Impact And Availability

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 13

  	
  Changes to the Contract Price and Scheduled
  Completion Dates

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
  Change Orders

  	
   

  	
  30

  
	
  13.2

  	
  Contract Price Adjustments

  	
   

  	
  30

  
	
  13.3

  	
  Emergencies

  	
   

  	
  31

  
	
  13.4

  	
  Failure to Complete Owner’s Milestones

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 14

  	
  Indemnity

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
  Tax Claim Indemnification

  	
   

  	
  31

  
	
  14.2

  	
  Payment Claim Indemnification

  	
   

  	
  31

  
	
  14.3

  	
  Design-Builder’s General Indemnification

  	
   

  	
  31

  

 

 ii
 

 

	
  

  	
   

  	
   

  	
  Page

  
	
  14.4

  	
  Owner’s General Indemnification

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 15

  	
  Stop Work; Termination for Cause

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
  Owner’s Right to Stop Work

  	
   

  	
  33

  
	
  15.2

  	
  Owner’s Right to Perform and Terminate for Cause

  	
   

  	
  33

  
	
  15.3

  	
  Owner’s Right to Terminate for Convenience

  	
   

  	
  34

  
	
  15.4

  	
  Design-Builder’s Right to Stop Work

  	
   

  	
  35

  
	
  15.5

  	
  Design-Builder’s Right to Terminate for Cause

  	
   

  	
  35

  
	
  15.6

  	
  Bankruptcy of Owner or Design-Builder

  	
   

  	
  36

  
	
  15.7

  	
  Lenders’ Right to Cure

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 16

  	
  Representatives of the Parties

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  16.1

  	
  Designation of Owner’s Representatives

  	
   

  	
  36

  
	
  16.2

  	
  Designation of Design-Builder’s Representatives

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 17

  	
  Insurance

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  17.1

  	
  Insurance

  	
   

  	
  38

  
	
  17.2

  	
  Design-Builder’s Insurance Requirements

  	
   

  	
  38

  
	
  17.3

  	
  Owner’s Liability Insurance

  	
   

  	
  39

  
	
  17.4

  	
  Owner’s Property Insurance

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 18

  	
  Representations and Warranties

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  18.1

  	
  Design-Builder and Owner Representations and
  Warranties

  	
   

  	
  41

  
	
  18.2

  	
  Design-Builder Representations and Warranties

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 19

  	
  Dispute Resolution

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  19.1

  	
  Dispute Avoidance and Mediation

  	
   

  	
  42

  
	
  19.2

  	
  Arbitration

  	
   

  	
  42

  
	
  19.3

  	
  Duty to Continue Performance

  	
   

  	
  43

  
	
  19.4

  	
  Consequential Damages

  	
   

  	
  43

  
	
  19.5

  	
  Limitation of Liability

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 20

  	
  Confidentiality of Shared Information

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  20.1

  	
  Non-Disclosure Obligation

  	
   

  	
  44

  
	
  20.2

  	
  Publicity and Advertising

  	
   

  	
  45

  
	
  20.3

  	
  Term of Obligation

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 21

  	
  Miscellaneous

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  21.1

  	
  Assignment

  	
   

  	
  45

  
	
  21.2

  	
  Successors

  	
   

  	
  45

  
	
  21.3

  	
  Governing Law

  	
   

  	
  46

  
	
  21.4

  	
  Severability

  	
   

  	
  46

  
	
  21.5

  	
  No Waiver

  	
   

  	
  46

  
	
  21.6

  	
  Headings

  	
   

  	
  46

  
	
  21.7

  	
  Notice

  	
   

  	
  46

  
	
  21.8

  	
  No Privity with Design Consultant/Subcontractors

  	
   

  	
  47

  
	
  21.9

  	
  Amendments

  	
   

  	
  47

  

 

 iii
 

 

	
  

  	
   

  	
   

  	
  Page

  
	
  21.10

  	
  Entire Agreement

  	
   

  	
  47

  
	
  21.11

  	
  Third-Party Beneficiaries

  	
   

  	
  47

  
	
  21.12

  	
  Counterparts

  	
   

  	
  47

  
	
  21.13

  	
  Survival

  	
   

  	
  48

  
	
   

  	
   

  	
   

  
	
  EXHIBITA 

  	
  Performance Guarantee Criteria

  	
   

  	
  A-1

  
	
  EXHIBITB 

  	
  General Project Scope

  	
   

  	
  B-1

  
	
  EXHIBITC 

  	
  Owner’s Responsibilities

  	
   

  	
  C-1

  
	
  EXHIBITD 

  	
  ICM License Agreement

  	
   

  	
  D-1

  
	
  EXHIBITE

  	
  Schedule of Values

  	
   

  	
  E-1

  
	
  EXHIBITF 

  	
  Form of Informational Report

  	
   

  	
  F-1

  
	
  EXHIBITG 

  	
  Required Permits

  	
   

  	
  G-1

  
	
  EXHIBITH 

  	
  Form of Performance Bond

  	
   

  	
  H-1

  
	
  EXHIBITI 

  	
  Form of Payment Bond

  	
   

  	
  I-1

  
	
  EXHIBITJ

  	
  Draw (Payment) Schedule

  	
   

  	
  J-1

  
	
  EXHIBITK 

  	
  Air Emissions Application or Permit

  	
   

  	
  K-1

  
	
  EXHIBITL 

  	
  Phase I and Phase II Engineering Services
  Agreement

  	
   

  	
  L-1

  
	
  EXHIBITM 

  	
  Form of Application for Payment

  	
   

  	
  M-1

  
	
  EXHIBITN 

  	
  Form of Lien Waiver

  	
   

  	
  N-1

  
					

 

 iv

LUMP SUM
DESIGN-BUILD CONTRACT

This LUMP SUM DESIGN-BUILD CONTRACT (the “Agreement”)
is made as of May 5, 2006, (the “Effective Date”) by and between
Millennium Ethanol, LLC, a South Dakota limited liability company (the “Owner”)
and Fagen, Inc., a Minnesota corporation (the “Design-Builder”) (each a “Party”
and collectively, the “Parties”).

RECITALS

A.           The
Owner desires to develop, construct, own and operate a one hundred (100)  million gallons per year (“MGY”) dry
grind ethanol production facility located at Marion, South Dakota (the “Plant”);
and

B.             Design-Builder
desires to provide design, engineering, procurement and construction services
for the Plant.

NOW, THEREFORE, in consideration of the mutual
covenants and obligations contained herein and for other good and valuable
consideration, Owner and Design-Builder agree as follows.

AGREEMENT

Article 1

Definitions;
Rules of Interpretation

1.1                               Rules
of Construction.

The
capitalized terms listed in this Article 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 standards of the fuel
ethanol industry in the Midwest United States. 
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.

(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.

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

AAA is defined in Section 19.1.

Agreement
is defined in the Preamble.

Air Emissions
Tester means a third party entity engaged by Owner
meeting all required state and federal requirements for such testing entities,
to conduct air emissions testing of the Plant in accordance with Exhibit A.

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, its
partners or their respective representatives, to the extent any such person is
engaged in activities related to the Project; 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
Project or an activity related to the Project.

Application
for Payment is defined in Section 10.2.1.

As Built
Plans is defined in
Section 5.2.

Bankrupt
Party is defined in Section 15.6.1.

Baseline
Index is defined in Section 9.2.1.

Change
Order is defined in Section 13.1.1.

CCI
is defined in Section 9.2.

Certificate
of Substantial Completion is defined in Section 6.4.3.

Confidential
Information is
defined in Section 20.1.

Construction
Documents is defined in Section 3.2.2.

Contract
Documents is
defined in Section 2.2.

 2
 

Contract
Price is defined in Section 9.1.

Contract
Time(s) means scheduled dates provided for in the Contract
Documents including Scheduled Substantial Completion Date and Final Completion
Date.

Damages
is defined in Section 14.3.1.

Day
or Days shall mean calendar days
unless otherwise specifically noted in the Contract Documents.

Design-Builder
is defined in the Preamble.

Design-Builder’s
Representative is defined in Section 16.2.

Design-Builder’s
Senior Representative is defined in Section 16.2.

Design
Consultant is a qualified, licensed design professional that
is not an employee of Design-Builder, but is retained by Design-Builder, or
employed or retained by anyone under contract with Design-Builder or
Subcontractor, to furnish design services required under the Contract
Documents.

Differing
Site Conditions is defined in Section 11.2.1.

Early
Completion Bonus is defined in Section 6.4.4.

Effective
Date is defined in the Preamble.

Fagen
Engineering is
defined in Section 6.1.

Final
Application for Payment is defined in Section 10.3.

Final
Completion is
defined in Section 6.5.2.

Final
Completion Date is
defined in Section 6.5.1.

Final
Payment is defined
in Section 10.3.

Financial
Closing means the execution of the Financing Documents by all
the parties thereto, and the fulfillment of all conditions precedent thereunder
necessary to permit the advance of funds to pay amounts due under this
Agreement.

Financing
Documents means the final loan documents with the Lender or
Lenders providing financing for the construction or term financing of the Plant
and any and all agreements necessary to demonstrate a binding commitment of
Owner or Lenders to fund the construction of the Plant.

Force
Majeure Event is defined in Section 12.1.

 3
 

Governmental
Approvals are any material authorizations or permissions
issued or granted by any Governmental Authority to the Project, its Owner, the
Design-Builder, Subcontractors and their affiliates in connection with any
activity related to the Project.

Governmental
Authority means 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 Owner, the Design-Builder,
the Project, or the Site.

Hazardous
Conditions are any materials, wastes, substances and
chemicals deemed to be hazardous under applicable Legal Requirements, or the
handling, storage, remediation, or disposal of which are regulated by
applicable Legal Requirements.

ICM means ICM, Inc., a Kansas
corporation.

ICM
License Agreement means the license agreement to be executed
between Owner and ICM, Inc., substantially in the form attached hereto as
Exhibit D.

Indemnified
Parties is defined
in Section 5.2.

Independent
Engineer means Owner’s and Lenders’ independent engineer.

Industry-Wide
Disruption is defined in Section 12.4.

Informational
Report  is defined in Section 3.2.1.

Legal
Requirements or Laws are
all applicable federal, state and local statutes, laws, codes, ordinances,
rules, regulations, judicial decisions, orders, decrees, plans, injunctions,
permits, tariffs, governmental agreements and governmental restrictions,
whether now or hereafter in effect, of any government or quasi-government
entity having jurisdiction over the Project or Site, the practices involved in
the Project or Site, or any Work, including any consensus standards for
materials, products, systems, and services established by ASTM International,
any successor organization thereto, or any Governmental Authority.

Lenders
means the lenders that are party to the Financing Documents.

Lenders’
Agent means an agent or agents acting on behalf of the
Lenders.

Manufacturer’s
Warranty shall mean
a warranty provided by the original manufacturer or vendor of equipment used by
Design-Builder in the Plant.

MGY is defined in the Recitals.

Notice
to Proceed is defined in Section 6.2.

 4
 

Operating
Procedures means, without limitation, the process equipment
and specifications manuals, standards of quality, service protocols, data
collection methods, construction specifications, training methods, engineering
standards and any other information prescribed by Design-Builder and ICM from
time to time concerning the ownership, operation, maintenance and repair of the
Plant, subject to the limitations provided in the Agreement and in the ICM
License Agreement.

Owner is defined in the Preamble.

Owner
Indemnified Parties is defined in Section 14.3.1.

Owner
Milestones is defined in Section 13.4.

Owner’s
Operator means
Fremar Farmer’s Cooperative, Inc. or any other entity that Owner chooses to
replace Fremar Farmer’s Cooperative, Inc. as operator of the Project.

Owner’s
Representative is defined in Section 16.1.

Owner’s
Senior Representative is defined in Section 16.1.

Party
or Parties is
defined in the Preamble.

Pass Through Warranties mean any warranties provided to
Design-Builder by a Subcontractor which are assigned to Owner.

Pay
Period means, with respect to a given Application for
Payment, the one (1) month period following the last day of the previous Pay
Period to which the immediately prior Application for Payment is applied;
provided that the initial Pay Period shall commence on the date of delivery of
the Notice to Proceed and end on the twenty-fourth (24th) day of the calendar month during which
the Notice to Proceed is issued.

Payment
Bond is defined in Section 7.4.2.

Performance
Bond is defined in Section 7.4.1.

Performance
Guarantee Criteria means the criteria listed in
Exhibit A.

Performance
Tests is defined in Section 7.2.1.

Phase
I is defined in Exhibit L.

Phase
I and Phase II Engineering Services Agreement is defined in Section 6.1.

Phase
II is defined in Exhibit L.

Plant
is defined in the Recitals.

Project is
defined in Section 2.1.

 5
 

Project
Scope is defined in Exhibit B.

Punch
List is defined in Section 6.4.3.

Qualified
Independent Expert means an expert retained by Owner and
approved by Design-Builder pursuant to Section 11.1.2.

Safety
Representative is defined in Section 3.7.1.

Schedule
of Values is defined in Section 10.2.5.

Scheduled
Substantial Completion Date is defined in Section 6.4.1.

Site
is the land or premises on which the Project is located.

Subcontractor
is any person or entity retained by Design-Builder, or by any person or entity
retained directly or indirectly by Design-Builder, in each case as an
independent contractor to perform a portion of the Work, and shall include
materialmen and suppliers.

Substantial
Completion is defined in Section 6.4.2.

Work
is defined in Section 3.1.

Work
Product is defined in Section 5.1.

Article 2

The Project

2.1                               Services
to be Performed.

  Pursuant to this Agreement, Design-Builder
shall perform all work and services in connection with the engineering, design,
procurement, construction startup, testing and training for the operation and
maintenance of the Plant, and provide all material, equipment, tools and labor
necessary to complete the Plant in accordance with the terms of this
Agreement.   The Plant, together with all
equipment, labor, services and materials furnished hereunder is defined as the “Project.”

2.2                               Extent
of Agreement.  This Agreement
consists of the following documents, and all exhibits, schedules, appendices
and attachments hereto and thereto (collectively, the “Contract Documents”):

2.2.1                     All
written modifications, amendments and change orders to this Agreement.

2.2.2                     This
Agreement, including all exhibits and attachments, executed by Owner and
Design-Builder, including those below:

 6
 

 

	
   

  	
  List of Exhibits

  
	
   

  	
   

  
	
   

  	
  Exhibit A 

  	
  Performance Guarantee Criteria 

  
	
   

  	
  Exhibit B 

  	
  General Project Scope 

  
	
   

  	
  Exhibit C 

  	
  Owner’s Responsibilities

  
	
   

  	
  Exhibit D 

  	
  ICM License Agreement

  
	
   

  	
  Exhibit E 

  	
  Schedule of Values

  
	
   

  	
  Exhibit F 

  	
  Form of Informational Report

  
	
   

  	
  Exhibit G 

  	
  Required Permits

  
	
   

  	
  Exhibit H 

  	
  Form of Performance Bond

  
	
   

  	
  Exhibit I 

  	
  Form of Payment Bond

  
	
   

  	
  Exhibit J 

  	
  Draw (Payment) Schedule

  
	
   

  	
  Exhibit K

  	
  Air Emissions Application or Permit

  
	
   

  	
  Exhibit L

  	
  Phase I and Phase II
  Engineering Services Agreement

  
	
   

  	
  Exhibit M

  	
  Form of Application for Payment

  
	
   

  	
  Exhibit N

  	
  Form of Lien Waiver

  

 

2.2.3                     Construction
Documents to be prepared by Design-Builder pursuant to Section 3.2.1 shall be
incorporated in this Agreement.

2.3                               Conflicting
Provisions.  In the event of any
conflict or inconsistency between the body of this Agreement and any Exhibit or
Schedule hereto, the terms and provisions of this Agreement, as amended from
time to time, shall prevail and be given priority.  Subject to the foregoing, the several
documents and instruments forming part of this Agreement are to be taken as
mutually explanatory of one another and in the case of ambiguities or
discrepancies within or between such parts the same shall be explained and
interpreted, if possible, in a manner which gives effect to each part and which
avoids or minimizes conflicts among such parts. 
No oral representations or other agreements have been made by the
Parties except as specifically stated in the Contract Documents.

Article 3

Design-Builder
Responsibilities

3.1                               Design-Builder’s
Services in General.  Except for
services and information to be provided by Owner and specifically set forth in
Article 4 and Exhibit C, Design-Builder shall perform or cause to be performed
all design, engineering, procurement, construction services, supervision,
labor, inspection, testing, start-up, material, equipment, machinery, temporary
utilities and other temporary facilities to complete construction of the
Project consistent with the Contract Documents (the “Work”).  All design and engineering and construction
services and the Work shall be performed in accordance with (i) the Project
Scope as set forth in Exhibit B, (ii) the Construction Documents, (iii)
all Legal Requirements, and (iv) generally accepted construction and
design-build standards of the fuel ethanol industry in the United States during
the relevant time period.  Any design and
engineering or other professional service to be performed pursuant to this
Agreement, which under Applicable Law must be performed by licensed personnel,
shall be performed by licensed personnel as required by Law.  The enumeration of specific duties and
obligations to be performed by the Design-Builder under the Contract Documents
shall not be construed to limit in any way the general undertakings of the 

 7
 

Design-Builder as set forth herein. 
Design-Builder’s Representative shall be reasonably available to Owner
and shall have the necessary expertise and experience required to supervise the
Work.  Design-Builder’s Representative
shall communicate regularly with Owner and shall be vested with the authority
to act on behalf of Design-Builder.

3.2                               Design
Development and Services.

3.2.1                     Where
required by Law, Design-Builder shall provide through qualified, licensed
design professionals employed by Design-Builder, or procured from qualified,
independent licensed Design Consultants, the necessary design services,
including architectural, engineering and other design professional services,
for the preparation of the required drawings, specifications and other design
submittals required to permit construction of the Work in accordance with this
Agreement (such drawings, specifications and design submittals collectively,
the “Construction Documents”). To the extent not prohibited by Legal
Requirements, Design-Builder may prepare Construction Documents for a portion
of the Work to permit construction to proceed on that portion of the Work prior
to completion of the Construction Documents for the entire Work.

3.2.2               Construction of
the Plant shall be consistent with the Construction Documents.

3.2.3               Design-Builder
shall maintain a current, complete set of drawings and specifications at the
Site.  Owner shall have the right to
review such drawings and specifications. 
Owner and Independent Engineer may not make copies of the available
drawings and specifications without Design-Builder’s written permission, and,
granted such permission, may only do so to the extent such drawings and
specifications directly pertain to the Plant; provided however that, pursuant
to Section 5.1 of this Agreement, Design-Builder retains ownership of and
property interests in any drawing or specifications made available and/or
copied.

3.2.4               Except as
provided elsewhere in this Agreement, it is understood and agreed that review,
comment and/or approval by Owner (or its designees) or Independent Engineer of
any documents or submittals that Design-Builder is required to submit to Owner
(or its designees) or Independent Engineer hereunder for their review, comment
and/or approval (including without limitation the Construction Documents
pursuant to Sections 3.2.1 and 3.2.3 hereof) shall not relieve or release
Design-Builder from any of its duties, obligations or liabilities provided for
under the terms of this Agreement or transfer any design liability from
Design-Builder to Owner.  In the event of
default by Design-Builder in which Owner must complete the Project,
Design-Builder shall provide a copy of all drawings and specifications for the
Plant and Project to Owner for the limited specific purpose of completing the
Plant and Project subject to the terms and conditions set forth in Sections 5.3
and 5.4.

3.3                               Standard
of Care.  All services performed by
the Design-Builder and its Subcontractors pursuant to the Construction
Documents shall be performed in accordance with the  standard of care and skill generally accepted
in the fuel ethanol industry in the Midwest United States during the relevant
time period or in accordance with any of the practices, methods and acts that
in the exercise of reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices, safety and
expedition.  This standard of care is not

 8
 

intended to be limited to the optimum practice, method or act to the
exclusion of all others, but rather to be acceptable practices, methods or acts
generally accepted in the construction and design-build standards of the fuel
ethanol industry in the Midwest United States. 
Design-Builder and its Subcontractors shall perform all construction
activities efficiently and with the requisite expertise, skill, competence,
resources and care to satisfy the requirements of the Contract Documents and
all applicable Legal Requirements. 
Design-Builder shall at all times exercise complete and exclusive
control over the means, methods, sequences and techniques of construction.

3.4                               Government
Approvals and Permits.  Except as
identified in Exhibit C and, with respect to items identified as Owner’s
responsibility, in Exhibit G (which items shall be obtained by Owner pursuant
to Section 4.5), Design-Builder shall obtain and pay for all necessary permits,
approvals, licenses, government charges and inspection fees required for the
prosecution of the Work by any government or quasi-government entity having
jurisdiction over the Project. Design-Builder shall provide reasonable
assistance to Owner in obtaining those permits, approvals and licenses that are
Owner’s responsibility.

3.5                               Subcontractors.

3.5.1                     Design-Builder
may subcontract portions of the Work in accordance with the terms hereof.

3.5.2                     Design-Builder
assumes responsibility to Owner for the proper performance of the Work of
Subcontractors and any acts and omissions in connection with such
performance.  Nothing in the Contract
Documents is intended or deemed to create any legal or contractual relationship
between Owner and any Subcontractor, including but not limited to any
third-party beneficiary rights.

3.5.3                     Design-Builder
shall coordinate the activities of all of Design-Builder’s Subcontractors.  If Owner performs other work on the Project
or at the Site with separate contractors under Owner’s control, Design-Builder
agrees to reasonably cooperate and coordinate its activities with those
separate contractors so that the Project can be completed in an orderly and
coordinated manner without unreasonable disruption.

3.5.4                     Design-Builder
shall ensure that each subcontract with a Subcontractor is assignable to Owner
without consent of the Subcontractor or any other person or entity in the event
that Design-Builder shall be in an uncured default or terminated with cause
under the terms of this Agreement.

3.6                               Maintenance
of Site.  Design-Builder shall keep
the Site reasonably free from debris, trash and construction wastes to permit
Design-Builder to perform its construction services efficiently, safely and
without interfering with the use of adjacent land areas.  Upon Substantial Completion of the Work
Design-Builder shall remove all debris, trash, construction wastes, materials,
equipment, machinery and tools arising from the Work to permit Owner to occupy
the Project for its intended use.

 9
 

3.7                               Project
Safety.

3.7.1                     Design-Builder
recognizes the importance of performing the Work in a safe manner so as to
prevent damage, injury or loss to (i) any individuals at the Site, whether
working or visiting, (ii) the Work, including materials and equipment
incorporated into the Work or stored on-Site or off-Site, and (iii) any other
property at the Site or adjacent thereto. 
Design-Builder assumes responsibility for implementing and monitoring
all safety precautions and programs related to the performance of the
Work.  Design-Builder shall, prior to
commencing construction, designate a representative (the “Safety
Representative”) with the necessary qualifications and experience to
supervise the implementation and monitoring of all safety precautions and
programs related to the Work. Unless otherwise required by the Contract
Documents, Design-Builder’s Safety Representative shall be an individual
stationed at the Site who may have responsibilities on the Project in addition
to safety.  The Safety Representative
shall make routine daily inspections of the Site and shall hold weekly safety
meetings with Design-Builder’s personnel, Subcontractors and others as
applicable.

3.7.2                     Design-Builder
and Subcontractors shall comply with all Legal Requirements relating to safety,
as well as any Owner-specific safety requirements set forth in the Contract
Documents; provided, that such Owner-specific requirements do not violate any applicable
Legal Requirement.  As promptly as
practicable, Design-Builder will report in writing any safety-related injury,
loss, damage or accident arising from the Work to Owner’s Representative and,
to the extent mandated by Legal Requirements, to all government or
quasi-government authorities having jurisdiction over safety-related matters
involving the Project or the Work.

3.7.3                     Design-Builder’s
responsibility for safety under this Section 3.7  is
not intended in any way to relieve Subcontractors of their own contractual and
legal obligations and responsibility for (i) complying with all Legal
Requirements, including those related to health and safety matters, and (ii)
taking all necessary measures to implement and monitor all safety precautions
and programs to guard against injury, losses, damages or accidents resulting
from their performance of the Work.

3.8                               Submission
of Reports.  Design-Builder shall
provide Owner with a monthly informational report substantially in the form of
Exhibit F attached hereto (“Informational Report”).

3.9                               Training.
 At a mutually agreed time prior to
start-up, Design-Builder shall provide two (2) weeks of training at a plant in
Russell, Kansas (or other location) for all of Owner’s employees and Owner
Operator’s employees required for the operation and maintenance of the Plant in
accordance with all design specifications therefor contained in the Contract
Documents and necessary in order to maintain the Performance Guarantee
Criteria, including operators, laboratory personnel, general, plant and
maintenance managers. Other personnel of Owner and Owner Operator may receive
such off-Site training by separate arrangement between Owner and Design-Builder
and as time is available.  All training
personnel and costs associated with such training personnel, including labor
and all training materials will be provided to Owner and Owner Operator within
the Contract Price at no additional cost. Owner and Owner Operator will be
responsible for all travel and expenses of their employees and the Owner and
Owner Operator will pay all wages and all other expenses for their personnel
during the training. The training services will include training on computers,
laboratory procedures, field operating procedures, and overall plant section
performance expectations.  Prior 

 10
 

to the start-up
training, Design-Builder shall provide Owner training manuals and operating
manuals and other documents reasonably necessary for the start-up process.

Article 4

Owner’s
Responsibilities

4.1                               Duty
to Cooperate.

4.1.1                     Owner
shall, throughout the performance of the Work, cooperate with Design-Builder
and perform its responsibilities, obligations and services in a timely manner
to facilitate Design-Builder’s timely and efficient performance of the Work and
so as not to delay or interfere with Design-Builder’s performance of its
obligations under the Contract Documents.

4.1.2                     Owner
shall pay all reasonable costs incurred by Design-Builder for frost removal so
that winter construction can proceed. 
Such costs may include, but are not limited to, equipment costs,
equipment rental costs, sheltering costs, special material costs, fuel costs
and associated labor costs.  Owner
acknowledges and agrees that such costs are in addition to, and not included
in, the Contract Price.

4.2                               Furnishing
of Services and Information.

4.2.1                     Prior to
the issuance of the Notice to Proceed, at its own cost and expense, Owner shall
provide the following items to Design-Builder for Design-Builder’s information
and use and all of which Design-Builder is entitled to rely upon in performing
the Work:

(a)                                  surveys
describing the property, boundaries, topography and reference points for use
during construction, including existing service and utility lines;

(b)                                 geotechnical
studies describing subsurface conditions including soil borings, and other
surveys describing other latent or concealed physical conditions at the Site;

(c)                                  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;

(d)                                 A
legal description of the Site;

(e)                                  to
the extent available, as-built and record drawings of any existing structures
at the Site; and

(f)                                    all
environmental studies, reports and impact statements describing the
environmental conditions, including Hazardous Conditions, in existence at the
Site that have been conducted or performed.

4.2.2                     Owner
shall provide to Design-Builder all Owner’s deliverables under Exhibit C pursuant
to Owner’s Milestones.  Such deliverables
shall be provided, at Owner’s own cost and expense, for Design-Builder’s
information and use. Design-Builder is entitled to rely upon such deliverables
in performing the Work.

 11
 

4.2.3                     Owner is
responsible for securing and executing all necessary agreements with adjacent
land or property owners that are necessary to enable Design-Builder to perform
the Work and that have been identified and notified in writing by
Design-Builder to Owner prior to the Effective Date.  Owner is further responsible for all costs,
including attorneys’ fees, incurred in securing these necessary agreements.

4.3                               Financial
Information; Cooperation with Lenders; Failure to Obtain Financial Closing.  Design-Builder acknowledges that Owner is
seeking financing for the Project. 
Design-Builder agrees to cooperate with Owner in good faith in order to
satisfy the requirements of Owners’ financing arrangements, including, where
appropriate, the execution and delivery of documents or instruments necessary
to accommodate the Financial Closing. 
Owner agrees to pay all documented costs incurred by Design-Builder
incurred prior to and at Financial Closing, and thereafter during the term of
this Agreement, in connection with satisfying the requirements of Owners’
financing arrangements including all documented attorney’s fees and
Design-Builder shall provide written notice to Owner prior to incurring such
costs.  Design-Builder and Owner also
acknowledge that the Lenders, as a condition to providing financing for the
Plant, shall require Owner to provide the Independent Engineer with certain
participation and review rights with respect to Design-Builder’s performance of
the Work.  Design-Builder acknowledges
and agrees that such participation and review rights shall consist of the right
to (i) enter the Site and inspect the Work upon reasonable notice to
Design-Builder; (ii) attend all start-up and testing procedures; and (iii)
review and approve such other items for which Owner is required by Lenders to
obtain the concurrence, opinion or a certificate of the Independent Engineer or
the Lenders pursuant to the Financing Documents which items do not alter the
rights or impose additional obligations on Design-Builder.  Nothing in this Section 4.3 shall be deemed
to require Design-Builder to agree to any amendments to this Agreement that
would adversely affect Design-Builder’s risks, rights or obligations under this
Agreement.  Upon Financial Closing, Owner
shall promptly provide to Design-Builder an officer’s certificate certifying
that Financial Closing has occurred and such Owner’s officer’s certificate
shall constitute evidence satisfactory to Design-Builder that Owner has
adequate funds available and committed to fulfill its obligations under the
Contract Documents for all purposes hereunder. 
Owner must provide such officer’s certificate prior to issuing the
Notice to Proceed.

4.4                               Owner’s
Representative.  Owner’s
Representative, as set forth in Section 16.1 hereof, shall be responsible for
providing Owner-supplied information and approvals in a timely manner to permit
Design-Builder to fulfill its obligations under the Contract Documents.  Owner’s Representative shall also provide
Design-Builder with prompt notice if it observes any failure on the part of
Design-Builder to fulfill its contractual obligations, including any errors,
omissions or defects in the performance of the Work.  Owner’s Representative shall be vested with
the authority to act on behalf of Owner and Design-Builder shall be entitled to
rely on written communication from Owner’s Representative with respect to a
Project matter.  In instances where
Design-Builder is aware of a failure to fulfill its contractual obligations,
including any errors, omissions or defects in the performance of the Work, a
failure by Owner or Owner’s Representative to identify such error, omissions,
or defects shall not serve as a waiver by Owner of Design-Builder’s requirement
to fulfill its contractual obligations.

4.5                               Government
Approvals and Permits.  Owner shall
obtain and pay for all necessary Governmental Approvals required by Law,
including permits, approvals, licenses, government charges and inspection fees
set forth in Exhibit C and, to the extent identified as 

 12
 

Owner’s responsibility, Exhibit G. 
Owner shall provide reasonable assistance to Design-Builder in obtaining
those permits, approvals and licenses that are Design-Builder’s responsibility
pursuant to Exhibit G and Section 3.4.

4.6                               Owner’s
Separate Contractors.  Owner is
responsible for all work, including such work listed on Exhibit C,
performed on the Project or at the Site by separate contractors under Owner’s
control.  Owner shall contractually
require its separate contractors to cooperate with, and coordinate their
activities so as not to interfere with, Design-Builder in order to enable
Design-Builder to timely complete the Work consistent with the Contract
Documents.

4.7                               Security.

4.7.1                     Owner
shall be responsible for Site security (including fencing, alarm systems,
security guarding services and the like) at all times during the term of this
Agreement to prevent vandalism, theft and danger to the Project, the Site, and
personnel.  Owner shall coordinate and
supervise ingress and egress from the Site so as to minimize disruption to the
Work.

4.7.2                     Design-Builder
shall at all times conduct its operations in a manner to minimize the risk of
loss, theft, or damage by vandalism, sabotage, or any other means.  Design-Builder shall continuously inspect all
Work, materials, and equipment to discover and determine any conditions that
might involve such risks and shall be solely responsible for discovery,
determination, and correction of any such conditions.

Article 5

Ownership
of Work Product; Risk of Loss

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

5.2                               Owner’s
Limited License Upon Payment in Full. 
Upon Owner’s payment in full for all Work performed under the Contract
Documents, Design-Builder shall grant Owner a limited license to use the Work
Product in connection with Owner’s occupancy and repair of the Plant.  Design-Builder acknowledges and agrees that
the limited license to use the Work Product granted hereby shall provide Owner
sufficient rights in and to the Work Product as shall be necessary for Owner to
operate and maintain the Plant and shall include any Pass Through Warranties in
connection therewith.  Design-Builder
shall provide Owner with a copy of the plans of the Plant, as built, (the “As
Built Plans”) conditioned on Owner’s express understanding that its use of
the Work Product and its acceptance of the As Built Plans is at Owner’s sole
risk and without liability or legal exposure to Design-Builder or anyone
working by or through Design-Builder, including Design Consultants of any tier
(collectively the “Indemnified Parties”); provided, however, that any
warranties (of equipment or otherwise) shall remain in effect according to the
terms of this Agreement.

 13
 

5.2.1                     Design-Builder
is utilizing certain proprietary property and information of ICM in the design
and construction of the Project and Design-Builder may incorporate proprietary
property and information of ICM into the Work Product.  Owner’s use of the proprietary property and
information of ICM shall be governed by the terms and provisions of the ICM
License Agreement, to be executed by Owner and ICM in connection with the
execution of this Agreement.  Owner shall
be entitled to use the Work Product solely for purposes relating to the Plant,
but shall not be entitled to use the Work Product for any other purposes
whatsoever, including without limitation, expansion of the Plant.  Notwithstanding the foregoing sentence, Owner
shall be entitled to use the Work Product for the operation, maintenance and
repair of the plant including the interconnection of, but not the design of,
any future expansions to the Plant.  The
limited license granted to Owner under Sections 5.2, 5.3 or 5.4 to use the Work
Product shall be limited by and construed according to the same terms contained
in the ICM License Agreement, attached hereto as Exhibit D and
incorporated herein by reference thereto, except (i) references in such ICM
License Agreement to ICM and Proprietary Property shall refer to Design-Builder
and Work Product, respectively, (ii) the Laws of the State of Minnesota shall
govern such limited license, and (iii) the dispute resolution provisions
contained in Article 19 hereof shall apply to any breach or threatened breach
of Owner’s duties or obligations under such limited license, except that Design-Builder
shall have the right to seek injunctive relief in a court of competent
jurisdiction against Owner or its Representatives for any such breach or
threatened breach.  This paragraph also
applies to Sections 5.3 and 5.4 below.

5.3                               Owner’s
Limited License Upon Owner’s Termination for Convenience or Design-Builder’s
Election to Terminate.  If Owner
terminates the Project for its convenience as set forth in Section 15.3
hereof, or if Design-Builder elects to terminate this Agreement in accordance
with Section 15.5, Design-Builder shall, upon Owner’s payment in full of
the amounts due Design-Builder under this Agreement, grant Owner a limited
license to use the Work Product to complete the Plant and subsequently occupy
and repair the Plant, subject to the following:

(a)                                  Use
of the Work Product is at Owner’s sole risk without liability or legal exposure
to any Indemnified Party; provided, however, that any Pass Through Warranties
regarding equipment or express warranties regarding equipment provided by this
Agreement shall remain in effect according to their terms; and

(b)                                 If
the termination for convenience is by Owner in accordance with
Section 15.3 hereof, or if Design-Builder elects to terminate this
Agreement in accordance with Section 15.5, then Owner agrees to pay
Design-Builder the additional sum of Two Million Five Hundred Thousand Dollars
($2,500,000.00) as compensation for the limited right to use the Work Product
completed “as is” on the date of termination in accordance with this Article 5.

5.4                               Owner’s
Limited License Upon Design-Builder’s Default.  If this Agreement is terminated due to
Design-Builder’s default pursuant to Section 15.2 and (i) it is determined
in dispute resolution undertaken pursuant to Article 19 hereof that
Design-Builder was in default, and (ii) Owner has fully satisfied all of its
obligations under the Contract Documents through the time of Design-Builder’s
default, then Design-Builder shall grant Owner a limited license to use the
Work Product in connection with Owner’s completion and occupancy and repair of
the Plant.  This limited license is
conditioned on Owner’s express agreement that its use of the Work 

 14
 

Product is at Owner’s sole risk without liability or legal exposure to
any Indemnified Party; provided, however, that any Pass Through Warranties
regarding equipment or express warranties regarding equipment provided by this
Agreement shall remain in effect according to their terms.  This limited license grants Owner the ability
to repair the Plant at Owner’s discretion.

5.5                               Owner’s
Indemnification for Use of Work Product. 
If Owner uses the Work Product or Plant under any of the circumstances
identified in this Article 5, to the fullest extent allowed by Law, Owner shall
defend, indemnify and hold harmless the Indemnified Parties from and against
any and all claims, damages, liabilities, losses and expenses, including
attorneys’ fees, arising out of or resulting from the use of the Work Product
and Plant; provided, however, that any Pass Through Warranties regarding
equipment or express warranties regarding equipment provided by this Agreement
shall remain in effect according to their terms.

5.6                               Risk
of Loss.  Design-Builder shall have
no liability for a physical loss of or damage to the Work unless such loss or
damage is caused by the willful misconduct or negligence of Design-Builder or
someone acting under its direction or control. Design-Builder shall not be
liable for physical loss of or damage to the Work where such loss or damage is
caused by the willful misconduct or negligence of Owner’s employees or third
parties who are not Subcontractors. 
Design-Builder shall have no liability for a physical loss of or damage
to the Work occurring after Final Completion. 
Design-Builder shall have no liability for losses or damages for which
insurance coverage under this Agreement is available to Owner; in such
circumstances, Design-Builder’s liability for losses and damages as described
in this Section 5.6 shall be limited to losses or damages which exceed
insurance coverage available to the Owner without the application of any
reductions from such coverages due to deductible, retention, or retrospective
premiums.

Article 6

Commencement
and Completion of the Project

6.1                               Phase
I and Phase II Engineering.  Owner
has entered into that certain Phase I and Phase II Engineering Services
Agreement dated December 1, 2005 between Owner and Fagen Engineering, LLC (“Fagen
Engineering”) and attached hereto as Exhibit L (“Phase I and Phase II
Engineering Services Agreement”). The Phase I and Phase II Engineering
Services Agreement provides for Fagen Engineering to commence work on the Phase
I and Phase II engineering for the Project as set forth therein.  Owner has agreed to pay Fagen Engineering
Ninety-two Thousand Five Hundred Dollars ($92,500.00) for such engineering
services pursuant to the terms of that agreement, the full amount of which
shall be included in and credited to the Contract Price.  Notwithstanding the foregoing sentence, if a
Notice to Proceed is not issued pursuant to Section 6.2, or Financial Closing
is not obtained pursuant to Section 4.3, then no amount paid under the Phase I
and Phase II Engineering Services Agreement shall be refunded to Owner.

6.2                               Notice
to Proceed; Commencement.  The Work
shall commence within five (5) Days of Design-Builder’s receipt of Owner’s
written valid notice to proceed (“Notice to Proceed”) unless the Parties
mutually agree otherwise in writing.  The
Parties agree that a valid Owner’s Notice to Proceed cannot be given
until:  (1) Owner has title to the real
estate on which the Project will be constructed; (2) the Phase I and Phase II
Site work required of Owner, as

 15

described in
Exhibit L is completed along with redline drawings and such Phase I and
Phase II Site work and redline drawings have been reviewed and deemed adequate
by Design-Builder; (3) the air permit(s) and/or other applicable local,
state or federal permits necessary so that construction can begin, as listed on
Exhibit G, have been obtained; (4) Owner has obtained Financial Closing
pursuant to Section 4.3; (5) if applicable, Owner has executed a sales tax
exemption certificate and provided the same to Design-Builder; (6) Owner has
provided the name of its property/all-risk insurance carrier and the specific
requirements for fire protection; (7) Owner has provided an insurance
certificate or copy of insurance policy demonstrating that Owner has obtained builder’s
risk insurance pursuant to Section 17.4.3 hereof, and (8) Design-Builder
provides Owner written notification of its acceptance of the Notice to Proceed
which Notice to Proceed shall not be given prior to October 1, 2006. Owner and
Design-Builder mutually agree that time is of the essence with respect to the
dates and times set forth in the Contract Documents.  Design-Builder must receive a valid Owner’s
Notice to Proceed within one hundred and eighty (180) Days of the Effective
Date; otherwise, this Agreement may be terminated, at Design-Builder’s sole
option.  If Design-Builder chooses to
terminate this Agreement pursuant to its right under the immediately preceding
sentence, then Design-Builder shall have no further obligations hereunder.

6.2.1                     Notice to
Proceed shall be delivered by Owner to Design-Builder pursuant to the notice
requirements set forth in Section 21.7 hereof, with a copy to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention: Becky Dahl

Fax:  (320)
564-3278

6.3                               Project
Start-Up and Testing.  Owner shall
provide, at Owner’s cost, equipment, tools, instruments and materials necessary
for Owner to comply with its obligations under Exhibit C, raw materials,
consumables and personnel necessary for start-up and testing of the Plant, and
Design-Builder shall provide supervision, standard and special test
instruments, tools, equipment and materials required to perform component and
equipment checkout and testing, initial start-up, operations supervision and
corrective maintenance of all permanent Plant equipment within the scope of the
Work.  Notwithstanding the foregoing
sentence, Design-Builder shall be responsible for raw materials and consumables
to the extent such amounts provided by Owner are destroyed or damaged (as
opposed to consumed in the ordinary course of start-up and testing) by
Design-Builder or its personnel during start-up and testing. Design-Builder
shall supervise and direct Owner’s employees and Owner Operator’s personnel who
shall participate in the start-up activities with Design-Builder’s personnel to
become familiar with all aspects of the Plant. Owner and the Independent
Engineer may witness start-up and testing activities.  Performance testing will be conducted in
accordance with the provisions of Section 7.2 hereof.

6.4                               Substantial
Completion.

6.4.1                     Substantial
Completion of the entire Work shall be achieved no later than five hundred
forty-five (545) Days after the date of the Notice to Proceed, subject to
adjustment 

 16
 

in accordance
with the Contract Documents hereof (the “Scheduled Substantial Completion
Date”).

6.4.2               “Substantial
Completion” shall be deemed to occur on the date on which the Work is
sufficiently complete so that Owner can occupy and use the Plant for its
intended purposes.  Substantial
Completion shall be attained at the point in time when the Plant is ready to
grind the first batch of corn and begin operation for its intended use.  No production is guaranteed on the date of
Substantial Completion.

6.4.3                     Procedures.  Design-Builder shall notify Owner in writing
when it believes Substantial Completion has been achieved with respect to the
Work.  Within five (5) Days of Owner’s
receipt of Design-Builder’s notice, Owner and Design-Builder will jointly
inspect such Work to verify that it is substantially complete in accordance
with the requirements of the Contract Documents.  If such Work is deemed substantially
complete, Design-Builder shall  prepare
and issue a “Certificate of Substantial Completion” for the Work that
will set forth (i) the date of Substantial Completion, (ii) the remaining items of Work that have to be
completed before Final Payment (“Punch List”), (iii) provisions
(to the extent not already provided in this Agreement) establishing Owner’s and
Design-Builder’s responsibility for the Project’s security, maintenance,
utilities and insurance pending Final Payment, and (iv) an acknowledgment
that warranties with respect to the Work commence on the date of Substantial
Completion, except as may otherwise be noted in the Certificate of Substantial
Completion.  Upon Substantial Completion
of the entire Work and satisfaction of the Performance Guarantee Criteria
listed in Exhibit A, Owner shall release to Design-Builder all retained amounts,
less an amount equal to the reasonable value of all remaining or incomplete
items of Work as noted in the Certificate of Substantial Completion, and less
an amount equal to the value of any Subcontractor lien waivers not yet
obtained.

6.4.4                     Early
Completion Bonus.  If Substantial
Completion is attained within four hundred eighty-five (485) Days after the
date of the Notice to Proceed, Owner shall pay Design-Builder at the time of
Final Payment under Section 10.3 hereof an early completion bonus (“Early
Completion  Bonus”) equal to Twenty Thousand Dollars ($20,000.00) per
Day for each Day that Substantial Completion occurred in advance of said four
hundred eighty-five (485) Days.

6.4.5                     In all
events, payment of said bonus, if applicable, at the time of Final Payment is
subject to release of funds by senior lender. 
If senior lender does not allow release of funds at the time of Final
Payment to pay said early completion bonus in full, any unpaid balance shall be
converted to an unsecured promissory note payable by Owner to Design-Builder,
accruing interest at ten Percent (10%) 
On each anniversary of the note, any unpaid accrued interest shall be
converted to principal and shall accrue interest as principal thereafter.  Owner shall pay said promissory note as soon
as allowed by senior lender; in any event, the note, plus accrued interest,
shall be paid in full before Owner pays or makes any distributions to or for
the benefit of its owners (shareholders, members, partners, etc.).  All payments shall be applied first to
accrued interest and then to principal.

 17
 

6.5                               Final Completion.

6.5.1                     Final
Completion of the Work shall be achieved within ninety (90) Days after the date
of Substantial Completion (the “Final Completion Date”).

6.5.2               “Final
Completion” shall be achieved when the Owner reasonably determines that the
following conditions have been met:

(a)                                  Substantial
Completion has been achieved;

(b)                                 any
outstanding amounts owed by Design-Builder to Owner have been paid in full;

(c)                                  the
items identified on the Punch List have been completed by Design-Builder;

(d)                                 clean-up
of the Site has been completed;

(e)                                  all
permits required to have been obtained by Design-Builder have been obtained;

(f)                                    the
information in Section 6.5.4 has been provided to Owner;

(g)                                 certificates
of insurance confirming that required coverages will remain in effect
consistent with the requirements of the Contract Documents have been obtained;

(h)                                 release
and waiver of all claims and liens from Design-Builder and Subcontractors have
been provided; and

(i)                                     the
Performance Tests have been successfully completed.

6.5.3               After receipt
of a Final Application for Payment from Design-Builder, Owner shall make Final
Payment in accordance with Section 10.3, less an amount equal to the value
of any Subcontractor lien waivers not yet obtained.

6.5.4               At the time of
submission of its Final Application for Payment, Design-Builder shall provide
the following information:

(a)                                  an
affidavit that there are no claims, obligations or liens outstanding or
unsatisfied for labor, services, material, equipment, taxes or other items
performed, furnished or incurred for or in connection with the Work which will
in any way affect Owner’s interests;

(b)                                 a
general release executed by Design-Builder waiving, upon receipt of final
payment by Design-Builder, all claims for payment, additional compensation, or
damages for delay, except those previously made to Owner in writing and
remaining unsettled at the time of Final Payment provided such general release
shall not waive defenses to claims that may be asserted by Owner after payment
or claims arising after payment;

(c)                                  consent
of Design-Builder’s surety, if any, to Final Payment; and

 18
 

(d)                                 a
hard copy of the As Built Plans; provided, however, that such plans will remain
the Work Product of the Design-Builder and subject in all respects to Article
5.

6.5.5                     Upon
making Final Payment, Owner waives all claims against Design-Builder except
claims relating to (i) Design-Builder’s failure to satisfy its payment
obligations, (ii) Design-Builder’s failure to complete the Work consistent with
the Contract Documents, including defects appearing within one (1) year after
Substantial Completion, and (iii) the terms of any warranties required by the
Contract Documents.

6.6                               Post
Completion Support.  Adequate
personnel to complete all Work within the Contract Time(s) will be maintained
on-Site by Design-Builder or a Subcontractor until Final Completion has been
achieved.  In addition to prosecuting the
Work until Final Completion has been achieved, Design-Builder or its
Subcontractor will provide one (1) month of on-Site operational support for
Owner’s and Owner Operator’s personnel after successful completion of the
Performance Tests and, from the date of Substantial Completion, will provide
six (6) months of off-Site technical and operating procedure support by
telephone and other electronic data transmission and communication.

Article 7

Performance
Testing and Liquidated Damages

7.1                               Performance
Guarantee.  The Design-Builder
guarantees that the Plant will meet the performance criteria listed in Exhibit
A (the “Performance Guarantee Criteria”) during a performance test
conducted and concluded pursuant to the terms hereof not later than ninety (90)
Days after the date of Substantial Completion. 
If there is a performance shortfall, Design-Builder will pay all design
and construction costs associated with making the necessary corrections.  Design-Builder retains the right to use its
sole discretion in determining the method (which shall be in accordance with
generally accepted construction and design-build standards of the fuel ethanol
industry in the Midwest United States) to remedy any performance related
issues.

7.1.1                     If Owner
prevents Design-Builder from demonstrating the Performance Guarantee Criteria
within thirty (30) Days of Design-Builder’s notice that the Plant is ready for
Performance Testing, then Design-Builder shall be excused from demonstrating
compliance with the Performance Guarantee Criteria during such period of time
that Design-Builder is prevented from demonstrating compliance with the
Performance Guarantee Criteria; provided however that Design-Builder will be
deemed to have fulfilled all of its obligations to demonstrate that the Plant
meets the Performance Guarantee Criteria should such period of time during
which Design-Builder is prevented from demonstrating the Performance Criteria
exceed thirty (30) Days or extend beyond the Final Completion Date.

7.2                               Performance
Testing.

7.2.1                     The
Design-Builder shall direct and supervise the tests and, if necessary, the
retests of the Plant using Design-Builder’s supervisory personnel and the Air
Emissions Tester shall conduct the air emissions test, in each case, in
accordance with the testing procedures set forth in Exhibit A (the “Performance
Tests”), to demonstrate, at a minimum, 

 19
 

compliance
with the Performance Guarantee Criteria. 
Owner is responsible for obtaining Air Emissions Tester and for ensuring
Air Emissions Tester’s timely performance. 
Design-Builder shall cooperate with the Air Emissions Tester to
facilitate performance of all air emissions tests.  Design-Builder shall not be held responsible
for the actions of Owner’s employees and third parties involved in the
Performance Testing, including but not limited to Air Emissions Tester.

7.2.2               No later than
thirty (30) Days prior to the earlier of the Scheduled Substantial Completion
Date or Substantial Completion, Design-Builder shall provide to Owner for
review a detailed testing plan for the Performance Tests (other than for air
emissions).  Owner and Design-Builder shall
agree upon a testing plan that shall be consistent with the Performance Test
Protocol contained in Exhibit A hereto. 
After such agreement has been reached, Design-Builder shall notify the
Owner five (5) business days prior to the date Design-Builder intends to
commence the Performance Tests and shall notify the Owner upon commencement of
the Performance Tests. Owner and Independent Engineer each have the right to
witness all testing, including the Performance Tests and any equipment testing,
whether at the Site or at the Subcontractor’s or equipment supplier’s premises
during the course of this Agreement. 
Notwithstanding the foregoing sentence, Owner shall bear the costs of
providing a witness to any such testing and all such witnesses shall comply at all
times with Design-Builder’s, Subcontractor’s or equipment supplier’s safety and
security procedures and other reasonable requirements, and otherwise conduct
themselves in a manner that does not interfere with Design-Builder’s,
Subcontractor’s or equipment supplier’s activities or operations.

7.2.3               Design-Builder
shall provide to Owner a Performance Test report (excluding results from air
emissions testing), including all applicable test data, calculations and
certificates indicating the results of the Performance Tests and, within five
(5) business days of Owner’s receipt of such results, Owner, Independent
Engineer and Design-Builder will jointly inspect such Work and review the
results of the Performance Tests to verify that the Performance Guarantee Criteria
have been met.   If Owner or Independent
Engineer reasonably determines that the Performance Guarantee Criteria have not
been met, Owner shall notify Design-Builder the reasons why Owner determined
that the Performance Guarantee Criteria have not been met and Design-Builder
shall promptly take such action or perform such additional work as will achieve
the Performance Guarantee Criteria and shall issue to the Owner another notice
in accordance with Section 7.2.2; provided however that if the notice relates
to a retest, the notice may be provided no less than two (2) business days
prior to the Performance Tests.  Such
procedure shall be repeated as necessary until Owner and Independent Engineer
verifies that the Performance Guarantee Criteria have been met.

7.3                               Liquidated
Damages.

7.3.1                     Design-Builder
understands that if Final Completion is not attained by the Final Completion
Date, Owner will suffer damages which are difficult to determine and accurately
specify.  Design-Builder agrees that if
Final Completion is not attained by the end of the Final Completion Date,
Design-Builder shall pay Owner Twenty Thousand Dollars ($20,000.00) as
liquidated damages, and not as a penalty, for each Day that Final Completion
extends beyond the Final Completion Date. 
Owner, at its discretion, may elect to offset any such liquidated
damages from any retainage.  Liquidated
damages shall be paid by Design-Builder by the fifteenth (15th) Day of the month following the month in
which the liquidated damages were incurred.  The liquidated damages provided herein shall
be in lieu of all liability for any and all 

 20
 

extra costs,
losses, loss of profits, expenses, claims, penalties and any other damages,
whether special or consequential, and of whatsoever nature incurred by Owner
which are occasioned solely by any delay in achieving Final Completion.  Nothing herein shall be construed to limit
the obligations of the Design-Builder under Section 7.1.

7.3.2                     Maximum Liquidated Damages. 
Design-Builder’s liability for liquidated damages under Section 7.3.1
shall be capped at and shall not exceed One Million Dollars ($1,000,000.00).

7.3.3                     The
liquidated damages provided herein shall be in lieu of all liability for any
and all extra costs, losses, loss of profits, expenses, claims, penalties and
any other damages, whether special or consequential, and of whatsoever nature
incurred by Owner which arise solely due to a delay in achieving Final
Completion by the Final Completion Date; provided that such liquidated damages
shall not in any way detract from or limit Owner’s remedies or Design-Builder’s
liabilities (a) in connection with any default by Design-Builder under Section
15.2 hereof or (b) subject to the limitations of Section 19.5, any and all
claims and/or liabilities arising out of or relating in any matter to the Work
or to Design-Builder’s performance or non-performance of its obligations
hereunder, whether based in contract, tort (including negligence), strict
liability, or otherwise.

7.3.4                     Design-Builder
shall not be liable for liquidated damages during any period of time for which
an extension of the Scheduled Substantial Completion Date and/or  Final Completion Date is available pursuant
to Article 12.

7.4                               Bonds and Other Performance Security.

7.4.1                     On
or prior to the date of Financial Closing, if requested by Owner, the
Design-Builder shall deliver to Owner a bond substantially in the form attached
as Exhibit H (the “Performance Bond”) in an initial amount equivalent to
the Contract Price.  Owner shall pay on the date of
Financial Closing all costs of obtaining such bond, plus pay Design-Builder a
fee of seven and one half percent (7.5%) for obtaining such bond, such fee to
be calculated by multiplying seven and one half percent (7.5%) times the cost
of the Performance Bond.  Any amounts
payable to the surety due to Design-Builder’s default under this Agreement or
the Performance Bond shall be for the account of Design-Builder.

(a)                                  Design-Builder
shall post additional bonds or security (which must be in form and substance
satisfactory to Owner and the Lenders) or shall increase the amount of the
Performance Bond by the amount of any increases to the Contract Price;
provided, however, that Owner shall pay all costs of obtaining such bonds or
security, plus pay Design-Builder a fee of seven and one half percent (7.5%)
for obtaining such bonds or security, such fee to be calculated by multiplying
seven and one half percent (7.5%) times the cost of the bonds or security.

(b)                                 The
Performance Bond shall secure the Design-Builder’s obligations to complete the
Work in accordance with this Agreement.

7.4.2                     On
or prior to the date of Financial Closing, if requested by Owner, the
Design-Builder shall deliver to Owner a bond substantially in the form attached
as Exhibit I (the “Payment Bond”) in an initial amount equivalent to the
Contract Price.  Owner
shall pay on the 

 21
 

date of
Financial Closing all costs of obtaining such bond, plus pay Design-Builder a
fee of seven and one half percent (7.5%) for obtaining such bond, such fee to
be calculated by multiplying seven and one half percent (7.5%) times the cost
of the Payment Bond but any amounts payable to the surety due to Design-Builder’s
default under this Agreement or the Payment Bond shall be for the account of
Design-Builder.

(a)                                  Design-Builder
shall post additional bonds or security (which must be in form and substance
reasonably satisfactory to Owner and the Lenders) or shall increase the amount
of the Payment Bond by the amount of any increase to the Contract Price.

(b)                                 The
Payment Bond shall secure the Design-Builder’s obligations to pay its
Subcontractors, vendors and suppliers.

(c)                                  The
Payment Bond shall provide the conditions upon which Subcontractors, vendors
and suppliers may draw upon such Payment Bond following Design-Builder’s failure
to pay amounts due such Subcontractors, vendors and suppliers.

Article 8

Warranties

8.1                               Design-Builder
Warranty.  Design-Builder warrants to
Owner that the construction, including all materials and equipment furnished as
part of the construction, shall be new, of good quality, in conformance with
the Contract Documents and all Legal Requirements, free of defects in materials
and workmanship.  Design-Builder’s
warranty obligation excludes defects caused by abuse, alterations, or failure
to maintain the Work by persons other than Design-Builder or anyone for whose
acts Design-Builder may be liable. Nothing in this warranty is intended to
limit any Manufacturer’s Warranty which provides Owner with greater warranty
rights than set forth in this Section 8.1 or the Contract Documents.  Design-Builder will provide to Owner all
manufacturers’ and Subcontractors’ warranties upon the earlier of Substantial
Completion or termination of this Agreement.  
Owner’s failure to comply with all Operating Procedures shall void those
guarantees, representations and warranties, whether expressed or implied, that
were given by Design-Builder to Owner, concerning the performance of the Plant
that are reasonably determined by Design-Builder to be affected by such
failure.  If Design-Builder reasonably
determines that all damage caused by such failure can be repaired and Owner
makes all repairs needed to correct such damage, as reasonably determined by
Design-Builder, all guarantees, representations and warranties shall be reinstated
for the remaining term thereof, if any, from the date of the repair.

8.2                               Correction
of Defective Work.

8.2.1                     Design-Builder
agrees to correct any Work that is found to not be in conformance with the
Contract Documents, including that part of the Work subject to Section 8.1,
within a period of one (1) year from the date of Substantial Completion of the
Work; provided that Owner must report such non-conformance within seven (7)
days of Owner becoming aware of such failure or non-conformance and that such one
(1)-year period shall be extended one (1) Day for any part of the Work that is
found to be not in conformance with the Contract Documents for each Day that
such part of the Work is not operating in conformity with

 22
 

the Contract
Documents, including any  time during
which any part of the Work is repaired or replaced pursuant to this Article 8.

8.2.2                     Design-Builder
shall, within seven (7) Days of receipt of written notice from Owner that the
Work is not in conformance with the Contract Documents, take meaningful steps
to commence correction of such nonconforming Work, including the correction,
removal or replacement of the nonconforming Work and correction or replacement
of any Work damaged by such nonconforming Work. 
If Design-Builder fails to commence the necessary steps within such
seven (7) Day period or fails to continue to perform such steps through
completion, Owner, in addition to any other remedies provided under the
Contract Documents, may provide Design-Builder with written notice that Owner
will commence or assume correction of such nonconforming Work and repair of
such damaged Work with its own resources. 
If, following such written notice, Owner performs such corrective and
repair Work, Design-Builder shall be responsible for all reasonable costs
incurred by Owner in performing the correction. 
If the nonconforming Work creates an emergency requiring immediate
response, Design-Builder shall remove or replace the nonconforming Work as soon
as practicable under the circumstances.

8.3                               Warranty
Period Not Limitation to Owner’s Rights. 
The one (1)-year period referenced in Section 8.2 above applies
only to Design-Builder’s obligation to correct nonconforming Work and is not
intended to constitute a period of limitations for any other rights or remedies
Owner may have regarding Design-Builder’s other obligations under the Contract
Documents.

Article 9

Contract
Price

9.1                               Contract
Price.  As full consideration to
Design-Builder for full and complete performance of the Work and all costs
incurred in connection therewith, Owner shall pay Design-Builder in accordance
with the terms of Article 10, the sum of One Hundred Five Million Nine Hundred
Ninety-seven Thousand Dollars ($105,997,000.00) (“Contract Price”),
subject to adjustments made in accordance with Article 13.  The Contract Price does not include the water
pre-treatment system and the fire protection system which shall be provided by
Design-Builder pursuant  to a separate contract
executed by Owner and Design-Builder at Design-Builder’s standard time plus
material rates during the relevant time period and at the relevant locale.  Owner acknowledges that it has taken no
action which would impose a union labor or prevailing wage requirement on
Design-Builder, Owner or the Project. 
The Parties acknowledge and agree that if after the date hereof, an
Owner’s action, a change in Applicable Law, or a Governmental Authority acting
pursuant to a change in Applicable Law shall require Design-Builder to employ
union labor or compensate labor at prevailing wages, the Contract Price shall
be adjusted upwards to include any increased costs associated with such labor
or wages.  Such adjustment shall include,
but not be limited to, increased labor, subcontractor, and material and
equipment costs resulting from any union or prevailing wage requirement;
provided, however, that if an option is made available to either employ union
labor, or to compensate labor at prevailing wages, such option shall be at
Design-Builder’s sole discretion and that if such option is executed by Owner
without Design-Builder’s agreement, Design-Builder shall have the right to
terminate this agreement and shall be entitled to compensation pursuant to
Section 15.3.1 hereof.

 23
 

9.2                               Effect
of Construction Cost Index Increase on Contract Price.  If Notice to Proceed is not received by
November 1, 2006, the Contract Price shall be adjusted to reflect any increase
in the Construction Cost Index published by Engineering News-Record Magazine (“CCI”)
over the Baseline Index established in Section 9.2.1.  If Notice to Proceed is not received by
November 1, 2006 and the CCI increases over the Baseline Index, between the
Effective Date and the date on which a Notice to Proceed is given to
Design-Builder, Design-Builder shall notify Owner in writing that it is adjusting
the Contract Price.

9.2.1                     The
Baseline Index for this Agreement shall be 7540.38 (September 2005) (“Baseline
Index”).

9.2.2                     In the
event that Notice to Proceed is not received by November 1, 2006 and the CCI as
of the date on which the Notice to Proceed is given increases over the Baseline
Index, the Contract Price shall be increased by a percentage amount equal
thereto.

Article
10

Payment
Procedures

10.1                        Payment at
Financial Closing.  As part of the
Contract Price, Owner shall pay Design-Builder Eight Million Dollars
($8,000,000.00), as a mobilization fee, as soon as allowed by its
organizational documents and any other agreements or Laws and at the latest, at
the earlier to occur of Financial Closing or the issuance of a Notice to
Proceed. The Eight Million Dollar ($8,000,000.00) mobilization fee payment
shall be subject to retainage as provided by Section 10.2.7.

10.2                        Progress
Payments.

10.2.1              Application for Payment.  On
or before the twenty-fifth (25th)
Day of each month beginning with the first (1st) month following the Notice to Proceed,
Design-Builder shall submit to Owner its request for payment for all Work
performed and not paid for during the previous Pay Period (the “Application
for Payment”).  The Application for
Payment shall be substantially in the form attached hereto as Exhibit M.  Design-Builder shall submit to Owner, along
with each Application for Payment, signed lien waivers, substantially in the
form attached hereto as Exhibit N, received from Subcontractors and suppliers
and a signed lien wavier from the Design-Builder for the Work included in the
Application for Payment submitted for the immediately preceding Pay Period and
for which payment has been received.

10.2.2              The Application
for Payment shall constitute Design-Builder’s representation that the Work has
been performed consistent with the Contract Documents and has progressed to the
point indicated in the Application for Payment. 
The Parties agree that the work completed at the Site and the comparison
of the Application for Payment against the work schedule and the Schedule of
Values shall provide sufficient substantiation of the accuracy of the
Application for Payment and that no additional documentation will be provided
to Owner or Independent Engineer in support of an Application for Payment.  Title to the Work shall pass to Owner free
and clear of all claims, liens, encumbrances, and security interests upon
Design-Builder’s receipt of payment therefor.

 24
 

10.2.3              Within ten (10)
Days after Owner’s receipt of each properly submitted Application for Payment,
Owner shall pay Design-Builder all amounts properly due, but in each case less
the total of payments previously made, and less amounts properly withheld under
this Agreement.

10.2.4              The Application
for Payment may request payment for equipment and materials not yet
incorporated into the Project; provided that (i) Owner is satisfied that the
equipment and materials are suitably stored at either the Site or another
acceptable location, (ii) the equipment and materials are protected by suitable
insurance, and (iii) upon payment, Owner will receive the equipment and
materials free and clear of all liens and encumbrances except for liens of the
Lenders and other liens and encumbrances permitted under the Financing
Documents.

10.2.5              Schedule of Values.  The
schedule of values attached hereto as Exhibit E (the “Schedule of Values”)
(i) subdivides the Work into its respective parts, (ii) includes values for all
items comprising the Work, and (iii) serves as the basis for monthly progress
payments made to Design-Builder throughout the Work.

10.2.6              Withholding of Payments. 
On or before the date set forth in Section 10.2.3, Owner shall pay
Design-Builder all amounts properly due. 
If Owner determines that Design-Builder is not entitled to all or part
of an Application for Payment, it will notify Design-Builder in writing at
least five (5) Days prior to the date payment is due.  The notice shall indicate the specific
amounts Owner intends to withhold, the reasons and contractual basis for the
withholding, and the specific measures Design-Builder must take to rectify
Owner’s concerns.  Design-Builder and
Owner will attempt to resolve Owner’s concerns prior to the date payment is
due.  If the Parties cannot resolve such
concerns, Design-Builder may pursue its rights under the Contract Documents,
including those under Article 19. 
Notwithstanding anything to the
contrary in the Contract Documents, Owner shall pay Design-Builder all
undisputed amounts in an Application for Payment within the times required by
the Agreement.

10.2.7              Retainage on Progress Payments.  Owner
will retain ten percent (10%) of each payment up to a maximum of Five Million
Two Hundred Ninety-nine Thousand Eight Hundred Fifty Dollars ($5,299,850.00).
Once Five Million Two Hundred Ninety-nine Thousand Eight Hundred Fifty Dollars
($5,299,850.00) has been retained, in total, Owner will not retain any
additional amounts from any subsequent payments. Owner will also reasonably
consider reducing retainage for Subcontractors completing their work early in
the Project.  Upon Substantial Completion
of the Work Owner shall release to Design-Builder all retained amounts less an
amount equal to the reasonable value of all remaining or incomplete items of
Work and less an amount equal to the value of any Subcontractor lien waivers
not yet obtained, as noted in the Certificate of Substantial Completion,
provided that such payment shall only be made if Design-Builder has met the
Performance Guarantee Criteria listed in Exhibit A.

10.3                        Final Payment.  Design-Builder shall deliver to Owner a
request for final payment (the “Final Application for Payment”) when
Final Completion has been achieved in accordance with Section 6.5. Owner shall
make final payment within thirty (30) Days after Owner’s receipt of the Final
Application for Payment (“Final Payment”).

 25
 

10.4                        Failure to
Pay Amounts Due.

10.4.1              Interest.  Payments
which are due and unpaid by Owner to Design-Builder or by Design-Builder to
Owner, whether progress payments, Final Payment or liquidated damages payments
required pursuant to the terms hereof, shall bear interest commencing five (5)
Days after payment is due at the rate of eighteen percent (18%) per annum,
or  the maximum rate allowed by Law.

10.4.2              Right to Suspend Work. 
If Owner fails to pay Design-Builder any undisputed amount that becomes
due, Design-Builder, in addition to all other remedies provided in the Contract
Documents, may stop Work pursuant to Section 15.4 hereof.  All payments properly due and unpaid shall
bear interest at the rate set forth in Section 10.4.1.

10.4.3              Failure to Make Final Payment.  Owner’s failure to make Final Payment
pursuant to section 10.3 hereof shall void any and all warranties, whether
express or implied, provided by Design-Builder pursuant to this Agreement
except where the failure to make Final Payment is a result of a valid dispute
pursuant to the terms of this Agreement.

10.5                        Design-Builder’s
Payment Obligations.  Design-Builder
will pay Design Consultants and Subcontractors, in accordance with its
contractual obligations to such parties, all the amounts Design-Builder has
received from Owner on account of their work. 
Design-Builder will impose similar requirements on Design Consultants
and Subcontractors to pay those parties with whom they have contracted.  Design-Builder will indemnify and defend
Owner against any claims for payment and mechanic’s liens as set forth in
Section 14.2 hereof.

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

Article
11

Hazardous
Conditions and Differing Site Conditions

11.1                        Hazardous
Conditions.

11.1.1              Unless otherwise
expressly provided in the Contract Documents to be part of the Work,
Design-Builder is not responsible for any Hazardous Conditions encountered at
the Site.  Upon encountering any
Hazardous Conditions, Design-Builder will stop Work immediately in the affected
area and as promptly as practicable notify Owner and, if Design-Builder is
specifically required to do so by Legal Requirements, all Governmental
Authorities having jurisdiction over the Project or Site.  Design-Builder shall not remove, remediate or

 26
 

handle in any
way (except in case of emergency) any Hazardous Conditions encountered at the
Site without prior written approval of Owner.

11.1.2              Upon receiving
notice of the presence of suspected Hazardous Conditions, Owner shall take the
necessary measures required to ensure that the Hazardous Conditions are remediated
or rendered harmless.  Such necessary
measures shall include Owner retaining Qualified Independent Experts to (i)
ascertain whether Hazardous Conditions have actually been encountered, and, if
they have been encountered, (ii) prescribe the remedial measures that Owner is
required under applicable Legal Requirements to take with respect to such
Hazardous Conditions in order for the Work to proceed.  Owner’s choice of such Qualified Independent
Experts shall be subject to the prior approval of Design-Builder, which
approval shall not be unreasonably withheld or delayed.

11.1.3              Design-Builder
shall be obligated to resume Work at the affected area of the Project only
after Owner’s Qualified Independent Expert provides it with written
certification that (i) the Hazardous Conditions have been removed or rendered
harmless, and (ii) all necessary approvals have been obtained from all
government entities having jurisdiction over the Project or Site and a
remediation plan has been undertaken permitting the Work to proceed.

11.1.4              Design-Builder
will be entitled, in accordance with this Article 11, to an adjustment in its
Contract Price and/or Contract Time(s) to the extent Design-Builder’s cost
and/or time of performance have been adversely impacted by the presence of
Hazardous Conditions, provided that such Hazardous Materials were not
introduced to the Site by Design-Builder, Subcontractors or anyone for whose
acts they may be liable.

11.1.5              To the fullest
extent permitted by Law, Owner shall indemnify, defend and hold harmless
Design-Builder, Design Consultants, Subcontractors, anyone employed directly or
indirectly for any of them, and their officers, directors, employees and
agents, from and against any and all claims, losses, damages, liabilities and
expenses, including attorneys’ fees and expenses, arising out of or resulting
from the presence, removal or remediation of Hazardous Conditions at the Site.

11.1.6              Notwithstanding
the preceding provisions of this Section 11.1, Owner is not responsible
for Hazardous Conditions introduced to the Site by Design-Builder,
Subcontractors or anyone for whose acts they may be liable.  Design-Builder shall indemnify, defend and
hold harmless Owner and Owner’s officers, directors, employees and agents from
and against all claims, losses, damages, liabilities and expenses, including
attorneys’ fees and expenses, arising out of or resulting from those Hazardous
Conditions introduced to the Site by Design-Builder, Subcontractors or anyone
for whose acts they may be liable.

11.2                        Differing
Site Conditions; Inspection.

11.2.1              Concealed or
latent physical conditions or subsurface conditions at the Site that (i) differ
from the conditions indicated in the Contract Documents, or (ii) are of an
unusual nature, differing from the conditions ordinarily encountered and
generally recognized as inherent in the Work are collectively referred to
herein as “Differing Site Conditions.” 
If Design-Builder encounters a Differing Site Condition, Design-Builder
will be entitled to an 

 27
 

adjustment in
the Contract Price and/or Contract Time(s) to the extent Design-Builder’s cost
and/or time of performance are adversely impacted by the Differing Site
Condition.

11.2.2              Upon
encountering a Differing Site Condition, Design-Builder shall provide prompt
written notice to Owner of such condition, which notice shall not be later than
fourteen (14) business days after such condition has been encountered.  Design-Builder shall, to the extent
reasonably possible, provide such notice before the Differing Site Condition
has been substantially disturbed or altered.

Article
12

Force
Majeure; Change in Legal Requirements

12.1                        Force
Majeure Event.  Shall mean a cause or
event beyond the reasonable control of, and without the fault or negligence of
a Party claiming Force Majeure, including, without limitation, an emergency,
floods, earthquakes, hurricanes, tornadoes, adverse weather conditions not
reasonably anticipated or acts of God; sabotage; vandalism beyond that which
could reasonably be prevented by a Party claiming Force Majeure; terrorism;
war; riots; fire; explosion; blockades; insurrection; strike; slow down or
labor disruptions (even if such difficulties could be resolved by conceding to
the demands of a labor group); delay in the delivery of materials or equipment
that is beyond the control of a Party claiming Force Majeure, and action or
failure to take action by any Governmental Authority after the Effective Date
(including the adoption or change in any rule or regulation or environmental
constraints lawfully imposed by such Governmental Authority), but only if such
requirements, actions, or failures to act prevent or delay performance; and
inability, despite due diligence, to obtain any licenses, permits, or approvals
required by any Governmental Authority (any such event, a “Force Majeure
Event”).   Economic hardship, (except
to the extent caused by a Force Majeure Event) is explicitly excluded as a
Force Majeure Event and is solely the responsibility of the affected Party.

12.2                        Effect of
Force Majeure Event.  Neither Party
shall be considered in default in the performance of any of the obligations
contained in the Contract Documents, except for the Owners or the
Design-Builder’s obligations to pay money (including but not limited to,
Progress Payments and payments of liquidated damages which become due and
payable with respect to the period prior to the occurrence of the Force Majeure
Event), when and to the extent the failure of performance shall be caused by a
Force Majeure Event.  If either Party is
rendered wholly or partly unable to perform its obligations under the Contract
Documents because of a Force Majeure Event, such Party will be excused from
performance affected by the Force Majeure Event to the extent and for the
period of time so affected; provided that:

(a)                                  the
nonperforming Party, within forty-eight (48) hours after the nonperforming
Party actually becomes aware of the occurrence and impact of the Force Majeure
Event, gives the other Party written notice describing the event or
circumstance in detail, including an estimation of its expected duration and
probable impact on the performance of the affected Party’s obligations
hereunder and continues to furnish timely regular reports with respect thereto
during the continuation of and upon the termination of the Force Majeure Event;

 28
 

(b)                                 the
suspension of performance is of no greater scope and of no longer duration than
is reasonably required by the Force Majeure Event;

(c)                                  the
obligations of either Party that arose before the occurrence causing the suspension
of performance and the performance that is not prevented by the occurrence,
shall not be excused as a result of such occurrence;

(d)                                 the
nonperforming Party uses its best efforts to remedy its inability to perform
and mitigate the effect of such event and resumes its performance at the
earliest practical time after cessation of such occurrence or until such time
that performance is practicable;

(e)                                  when
the nonperforming Party is able to resume performance of its obligations under
the Contract Documents, that Party shall give the other Party written notice to
that effect; and

(f)                                    Design-Builder
shall be entitled to a Day-for-Day time extension for those events set forth in
Section 12.1 to the extent the occurrence of such event delayed Design-Builder’s
performance of its obligations under this Agreement.

12.3                        Change in
Legal Requirements.  The Contract
Price and/or the Contract Time(s) shall be adjusted to compensate
Design-Builder for the effects of any changes to the Legal Requirements that
occur after the date of this Agreement and as a result of such change, the
performance of the Work is adversely affected. 
Such effects may include, without limitation, revisions Design-Builder
is required to make to the Construction Documents because of changes in Legal
Requirements.

12.4                        Time
Impact And Availability.  If the
Design-Builder is delayed at any time in the commencement or progress of the
Work due to a delay in the delivery of, or unavailability of, essential
materials or labor to the Project as a result of a significant industry-wide
economic fluctuation or disruption beyond the control of and without the fault
of the Design-Builder or its Subcontractors which is experienced or expected to
be experienced by certain markets providing essential materials and equipment
to the Project during the performance of the Work and such economic fluctuation
or disruption adversely impacts the availability and delivery timeframes of
essential materials, equipment, or labor 
(such event an “Industry-Wide Disruption”), the Design-Builder
shall be entitled to an equitable extension of the Contract Time(s) on a
day-for-day basis equal to such delay. 
The Owner and Design-Builder shall undertake reasonable steps to
mitigate the effect of such delays. 
Notwithstanding any other provision to the contrary, the Design-Builder
shall not be liable to the Owner for any expenses, losses or damages arising
from a delay, or unavailability of, essential materials or labor to the Project
as a result of an Industry-Wide Disruption.

 29
 

 

Article
13

Changes
to the Contract Price and Scheduled Completion Dates

13.1                        Change
Orders.

13.1.1              A change order (“Change
Order”) is a written instrument issued after execution of this Agreement
signed by Owner and Design-Builder, stating their agreement upon all of the
following:

(a)                                  the
scope of the change in the Work;

(b)                                 the
amount of the adjustment to the Contract Price; and

(c)                                  the
extent of the adjustment to the Contract Time(s).

13.1.2              All changes in
the Work authorized by an applicable Change Order shall be performed under the
applicable conditions of the Contract Documents.  Owner and Design-Builder shall negotiate in
good faith and as expeditiously as possible the appropriate adjustments for
such changes.  Prior to incurring any
costs with respect to estimating services, design services and any other
services involved in the preparation of the proposed revisions to the Contract
Documents, Design-Builder must obtain the written approval of Owner for such
costs.

13.1.3              If Owner
requests a proposal for a change in the Work from Design-Builder and
subsequently elects not to proceed with the change, a Change Order shall be
issued to reimburse Design-Builder for reasonable costs incurred for estimating
services, design services and any other services involved in the preparation of
proposed revisions to the Contract Documents; provided that such costs were
previously approved by Owner pursuant to Section 13.1.2.

13.2                        Contract
Price Adjustments.

13.2.1              The increase or
decrease in Contract Price resulting from a change in the Work shall be a
mutually accepted lump sum, properly itemized and supported by sufficient
substantiating data to permit evaluation by Owner.

13.2.2              If Owner and
Design-Builder disagree upon whether Design-Builder is entitled to be paid for any
services required by Owner, or if there are any other disagreements over the
scope of Work or proposed changes to the Work, Owner and Design-Builder shall
resolve the disagreement pursuant to Article 19 hereof.  As part of the negotiation process, Design-Builder
shall furnish Owner with a good faith estimate of the costs to perform the
disputed services in accordance with Owner’s interpretations.  If the Parties are unable to agree and Owner
expects Design-Builder to perform the services in accordance with Owner’s
interpretations, Design-Builder shall proceed to perform the disputed services,
conditioned upon Owner issuing a written order to Design-Builder (i) directing
Design-Builder to proceed, and (ii) specifying Owner’s interpretation of the
services that are to be performed.  If
this occurs, Design-Builder shall be entitled to submit in its Applications for
Payment an amount equal to fifty percent (50%) of its reasonable estimated
direct cost to perform the services, and Owner agrees to pay such amounts, with
the express understanding that (x) such payment by Owner does not
prejudice Owner’s right to argue that it has no responsibility to pay for such
services, and (y) receipt of such payment by Design-Builder does not prejudice
Design-Builder’s right to seek full payment of the disputed services if Owner’s
order is deemed to be a change to the Work.

 30

13.3        Emergencies.  In any emergency affecting the safety of
persons and/or property, Design-Builder shall act, at its discretion, to
prevent threatened damage, injury or loss and shall notify the Owner as soon as
practicable and in any event within forty-eight (48) hours after Design-Builder
becomes aware of the emergency.  The
notice to Owner shall describe the emergency in detail, including a reasonable
estimation of its expected duration and impact, if any, on the performance of
Design-Builder’s obligations hereunder. 
Any change in the Contract Price and/or the Contract Time(s) on account
of emergency work shall be determined as provided in this Article 13.

13.4        Failure
to Complete Owner’s Milestones.  The dates when Owner’s obligations are
required to be completed to enable Design-Builder to achieve the Contract
Time(s) (“Owner’s Milestones”) are identified in Table 3 in Exhibit
C.  The Contract Time(s) shall be revised
to provide a Day-for-Day extension of the Contract Time(s) for completion of
the Work for each full Day during which Owner fails to timely complete its
obligations pursuant to the Owner’s Milestones. 
In the event of Owner’s failure to timely complete its obligations
pursuant to Owner’s Milestones results in the extension of the Contract Time(s),
the Contract Price shall be adjusted to compensate Design-Builder for the
effects, if any, of such change.

Article
14

Indemnity

14.1        Tax
Claim Indemnification. 
If, in accordance with Owner’s direction, an exemption for all or part
of the Work is claimed for taxes, Owner shall indemnify, defend and hold
harmless Design-Builder (and its officers, directors, agents, successors and
assigns) from and against any and all damages, claims costs, losses,
liabilities, and expenses (including penalties, interest, fines, taxes of any
kind, attorneys’ fees, accountants and other professional fees and associated
expenses) incurred by Design-Builder in connection with or as a result of any
action taken by Design-Builder in accordance with Owner’s directive.

14.2        Payment
Claim Indemnification. 
To the extent Design-Builder has received payment for the Work and such
payment is not subject to dispute pursuant to the terms hereof, Design-Builder
shall indemnify, defend and hold harmless Owner Indemnified Parties from any
claims or mechanic’s liens brought against Owner Indemnified Parties or against
the Project as a result of the failure of Design-Builder, or those for whose
acts it is responsible, to pay for any services, materials, labor, equipment,
taxes or other items or obligations furnished or incurred for or in connection
with the Work.  Within three (3) business
days of receiving written notice from Owner that such a claim or mechanic’s
lien has been filed, Design-Builder shall commence to take the steps necessary
to discharge such claim or lien.

14.3        Design-Builder’s General Indemnification.

14.3.1     Design-Builder,
to the fullest extent permitted by Law, shall indemnify, hold harmless and
defend Owner, Lenders, Lenders’ Agent, and their successors, assigns, officers,
directors, employees and agents (“Owner Indemnified Parties”) from and
against any and all losses, costs, damages, injuries, liabilities, claims,
demands, penalties, interest and causes of action, including without limitation
attorney’s fees (collectively, the “Damages”) for bodily injury,
sickness or death, and property damage or destruction (other than to the Work
itself) to

 31
 

the extent
resulting from the negligent or intentionally wrongful acts or from omissions
of Design-Builder, Design Consultants, Subcontractors, anyone employed directly
or indirectly by any of them or anyone for whose acts any of them may be
liable.

14.3.2     If
an employee of Design-Builder, Design Consultants, Subcontractors, anyone
employed directly or indirectly by any of them or anyone for whose acts any of
them may be liable has a claim against Owner Indemnified Parties,
Design-Builder’s indemnity obligation set forth in Section 14.3.1 above
shall not be limited by any limitation on the amount of damages, compensation
or benefits payable by or for Design-Builder, Design Consultants,
Subcontractors, or other entity under any employee benefit acts, including
workers’ compensation or disability acts.

14.3.3     Without
limiting the generality of Section 14.3.1 hereof, Design-Builder shall fully
indemnify, save harmless and defend the Owner Indemnified Parties from and
against any and all Damages in favor of any Governmental Authority or other
third party to the extent caused by (a) failure of Design-Builder or any
Subcontractor to comply with Legal Requirements as required by this Agreement,
or (b) failure of Design-Builder or any Subcontractor to properly
administer and pay any taxes or fees required to be paid by Design-Builder
under this Agreement.

14.3.4     Nothing
in the Design-Builder’s General Indemnification contained in this Section 14.3
shall be read to limit in any way any entitlement Design-Builder shall have to
insurance coverage under any insurance policy, including any insurance policy
required by either Party under this Agreement.

14.4        Owner’s
General Indemnification.  Owner, to the fullest extent permitted by
Law, shall indemnify, hold harmless and defend Design-Builder and any of
Design-Builder’s officers, directors, employees, or agents from and against
claims, losses, damages, liabilities, including attorneys’ fees and expenses,
for bodily injury, sickness or death, and property damage or destruction (other
than to the Work itself) to the extent resulting from the negligent acts,
willful misconduct, or omissions of Owner, its officers, directors, employees,
agents, or anyone for whose acts any of them may be liable.

14.4.1     Without
limiting the generality of Section 14.4 hereof, Owner shall fully indemnify,
save harmless and defend the Design-Builder and any of Design-Builder’s
officers, directors, employees, or agents from and against any and all Damages
in favor of any Governmental Authority or other third party to the extent
caused by (a) failure of Owner or any of Owner’s agents to comply with
Legal Requirements as required by this Agreement, or (b) failure of Owner
or Owner’s agents to properly administer and pay any taxes or fees required to
be paid by Owner under this Agreement.

14.4.2     Nothing
in the Owner’s General Indemnification contained in this Section 14.4 shall be read
to limit in any way any entitlement Owner shall have to insurance coverage
under any insurance policy, including any insurance policy required by either
Party under this Agreement.

 32
 

Article
15

Stop
Work; Termination for Cause

15.1        Owner’s
Right to Stop Work. 
Owner may, without cause and for its convenience, order Design-Builder
in writing to stop and suspend the Work. 
Such suspension shall not exceed sixty (60) consecutive Days or
aggregate more than ninety (90) Days during the duration of the Project.  Design-Builder is entitled to seek an
adjustment of the Contract Price and/or the Contract Time(s) if its cost or
time to perform the Work has been adversely impacted by any suspension or
stoppage of work by Owner.

15.2        Owner’s
Right to Perform and Terminate for Cause.

15.2.1     If
Design-Builder fails to comply with applicable Legal Requirements or to achieve
Final Completion by the date which is six hundred and ninety-five (695) Days
after the issuance of the Notice to Proceed for any reason other than a
material breach of this Agreement by Owner or an act of the Owner which
materially delays Design-Builder’s performance under this Agreement, or if
Design-Builder fails on a regular or continuous basis to: (i) provide a
sufficient number of skilled workers; (ii) supply the materials required by the
Contract Documents; (iii) timely pay, without cause, Design Consultants or
Subcontractors; (iv)  perform the Work with promptness and diligence to
ensure that the Work is completed by the Contract Time(s), as such times may be
adjusted in accordance with this Agreement; or (v) perform material obligations
under the Contract Documents; then Owner, in addition to any other rights and
remedies provided in the Contract Documents or by law or equity, shall have the
rights set forth in Sections 15.2.2 and 15.2.3 below.

15.2.2     Upon
the occurrence of an event set forth in Section 15.2.1 above, Owner may
provide written notice to Design-Builder that it intends to terminate the
Agreement unless the problem cited is cured, or commenced to be cured within
seven (7) Days of Design-Builder’s receipt of such notice.  If Design-Builder fails to cure, or
reasonably commence to cure such problem and thereafter diligently pursue such
cure to completion, then Owner may give a second written notice to
Design-Builder of its intent to terminate following an additional seven (7) Day
period.  If Design-Builder, within such
second seven (7) Day period, fails to cure, or reasonably commence to cure such
problem and thereafter diligently pursue such cure to completion, then Owner
may declare the Agreement terminated for default by providing written notice to
Design-Builder of such declaration. 
Notwithstanding the foregoing, the cure periods stated herein shall not
be applicable to the default set forth in Section 15.2.1(vii).  If (i) the
insurance coverage required by Design-Builder pursuant Article 17 hereof is
suspended or cancelled without Design-Builder providing immediate replacement
coverage (and, in any case, within fourteen (14) Days of the occurrence
thereof) meeting the requirements specified in Article 17 hereof; (ii) if
applicable, a default occurs under the Performance Bond or the Payment Bond, or
the Performance Bond or Payment Bond is revoked or terminated and such
Performance Bond or the Payment Bond is not immediately replaced (and, in any
case, within fourteen (14) Days of the occurrence thereof) by Design-Builder
with a Performance Bond or a Payment Bond providing at least the same level of
coverage in a form and from a surety acceptable to Owner and Lenders, or the
surety under the Performance Bond or Payment Bond institutes or has instituted
against it a case under the United States Bankruptcy Code; (iii) Design-Builder
purports to make an assignment of this Agreement in breach of the provisions of
Section 21.1 hereof, or (iv) any

 33
 

representation or warranty made by Design-Builder under Section 18.1
hereof was false or materially misleading when made, then Owner may terminate
this Agreement upon written notice to Design-Builder.

15.2.3     Upon
declaring the Agreement terminated pursuant to Section 15.2.2 above, Owner
may enter upon the premises and take possession, for the purpose of completing
the Work, of all materials, equipment, scaffolds, tools, appliances and other
items thereon, which have been purchased for the performance of the Work, all
of which Design-Builder hereby transfers, assigns and sets over to Owner for
such purpose, and to employ any person or persons to complete the Work and
provide all of the required labor, services, materials, equipment and other
items.  In the event of such termination,
Design-Builder shall not be entitled to receive any further payments under the
Contract Documents until the Work shall be finally completed in accordance with
the Contract Documents.  At such time, if
the unpaid balance of the Contract Price exceeds the cost and expense incurred
by Owner in completing the Work, Design-Builder will be paid promptly by Owner
for Work performed prior to its default. 
If Owner’s cost and expense of completing the Work exceeds the unpaid
balance of the Contract Price, then Design-Builder shall be obligated to
promptly pay the difference to Owner. 
Such costs and expense shall include not only the cost of completing the
Work, but also losses, damages, costs and expenses, including attorneys’ fees
and expenses, incurred by Owner in connection with the re-procurement and
defense of claims arising from Design-Builder’s default, subject to the waiver
of consequential damages set forth in Section 19.4 hereof.

15.2.4     If
Owner improperly terminates the Agreement for cause, the termination for cause
will be converted to a termination for convenience in accordance with the
provisions of Section 15.3.

15.3        Owner’s
Right to Terminate for Convenience.

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

(a)                                  to
the extent not already paid, all Work executed, and for proven loss, cost or
expense in connection with the Work;

(b)                                 the
reasonable costs and expenses attributable to such termination, including
demobilization costs;

(c)                                  amounts
due in settlement of terminated contracts with Subcontractors and Design Consultants;

(d)                                 overhead and profit
margin in the amount of fifteen percent (15%) on the sum of items (a) and (b)
above; and

(e)                                  all retainage
withheld by Owner on account of Work that has been completed in accordance with
the Contract Documents.

 34
 

15.3.2     If
Owner terminates this Agreement pursuant to this Section 15.3 and proceeds
to design and construct the Project through its employees, agents or third
parties, Owner’s rights to use the Work Product shall be as set forth in
Section 5.3.

15.4        Design-Builder’s
Right to Stop Work.

15.4.1     Design-Builder
may, in addition to any other rights afforded under the Contract Documents or
at Law, stop work for Owner’s failure to pay amounts properly due under
Design-Builder’s Application for Payment.

15.4.2     If
any of the events set forth in Section 15.4.1 above occur, Design-Builder
has the right to stop work by providing written notice to Owner that
Design-Builder will stop work unless such event is cured within seven (7) Days
from Owner’s receipt of Design-Builder’s notice. If Owner fails to cure or
reasonably commence to cure such problem and thereafter diligently pursue such
cure to completion, then Design-Builder may give a second written notice to
Owner of its intent to stop work within an additional seven (7) Day period.  If Owner, within such second seven (7) Day
period, fails to cure, or reasonably commence to cure such problem and
thereafter diligently pursue such cure to completion, then Design-Builder may
stop work.  In such case, Design-Builder
shall be entitled to make a claim for adjustment to the Contract Price and
Contract Time(s) to the extent it has been adversely impacted by such stoppage.

15.5        Design-Builder’s
Right to Terminate for Cause.

15.5.1     Design-Builder,
in addition to any other rights and remedies provided in the Contract Documents
or by Law, may terminate the Agreement for cause for the following reasons:

(a)                                  The
Work has been stopped for sixty (60) consecutive Days, or more than ninety (90)
Days during the duration of the Project, because of court order, any
Governmental Authority having jurisdiction over the Work, or orders by Owner
under Section 15.1 hereof, provided that such stoppages are not due to the
acts or omissions of Design-Builder, Design Consultant and their respective
officers, agents, employees, Subcontractors or any other person for whose acts
the Design-Builder may be liable under Law.

(b)                                 Owner’s
failure to provide Design-Builder with any information, permits or approvals
that are Owner’s responsibility under the Contract Documents which result in
the Work being stopped for sixty (60) consecutive Days, or more than ninety
(90) Days during the duration of the Project, even though Owner has not ordered
Design-Builder in writing to stop and suspend the Work pursuant to Section 15.1
hereof.

(c)                                  Owner
fails to meet its obligations under Exhibit C and such failure results in the
Work being stopped for sixty (60) consecutive Days, or more than ninety (90)
Days during the duration of the Project even though Owner has not ordered
Design-Builder in writing to stop and suspend the Work pursuant to
Section 15.1 hereof.

(d)                                 Owner’s
failure to cure the problems set forth in Section 15.4.1 above within
seven (7) Days after Design-Builder has stopped the Work.

 35
 

15.5.2     Upon
the occurrence of an event set forth in Section 15.5.1 above,
Design-Builder may elect to terminate this Agreement by providing written
notice to Owner that it intends to terminate the Agreement unless the problem
cited is cured within seven (7) Days of Owner’s receipt of such notice.  If Owner fails to cure, or reasonably
commence to cure, such problem, then Design-Builder may give a second written
notice to Owner of its intent to terminate within an additional seven (7) Day
period.  If Owner, within such second
seven (7) Day period, fails to cure such problem, then Design-Builder may
declare the Agreement terminated for default by providing written notice to
Owner of such declaration.  In such case,
Design-Builder shall be entitled to recover in the same manner as if Owner had
terminated the Agreement for its convenience under Section 15.3.

15.6        Bankruptcy
of Owner or Design-Builder.

15.6.1     If
either Owner or Design-Builder institutes or has instituted against it a case
under the United States Bankruptcy Code (such Party being referred to as the “Bankrupt
Party”), such event may impair or frustrate the Bankrupt Party’s ability to
perform its obligations under the Contract Documents.  Accordingly, should such event occur:

(a)                                  The
Bankrupt Party, its trustee or other successor, shall furnish, upon request of
the non-Bankrupt Party, adequate assurance of the ability of the Bankrupt Party
to perform all future obligations under the Contract Documents, which
assurances shall be provided within ten (10) Days after receiving notice of the
request; and

(b)                                 The
Bankrupt Party shall file an appropriate action within the bankruptcy court to
seek assumption or rejection of the Agreement within sixty (60) Days of the
institution of the bankruptcy filing and shall diligently prosecute such
action.

15.6.2     If
the Bankrupt Party fails to comply with its foregoing obligations, the
non-Bankrupt Party shall be entitled to request the bankruptcy court to reject
the Agreement, declare the Agreement terminated and pursue any other recourse
available to the non-Bankrupt Party under this Article 15.

15.6.3     The
rights and remedies under this Section 15.6 shall not be deemed to limit
the ability of the non-Bankrupt Party to seek any other rights and remedies
provided by the Contract Documents or by Law, including its ability to seek
relief from any automatic stays under the United States Bankruptcy Code or the
right of Design-Builder to stop Work under any applicable provision of this
Agreement.

15.7        Lenders’
Right to Cure. 
At any time after the occurrence of any event set forth in Section
15.4.1 or Section 15.5.1, but within the timeframes set forth therein, the
Lenders shall have the right, but not the obligation, to cure such default on
behalf of Owner.

Article
16

Representatives
of the Parties

16.1        Designation
of Owner’s Representatives.  Owner designates the individual listed below
as its senior representative (“Owner’s Senior Representative”), which
individual has the authority and responsibility for avoiding and resolving
disputes under Article 19:

 36
 

Steve Domm

300 N Broadway

Marion, SD 57043

Telephone:  (605) 648-3941

Facsimile:   (605) 648-3943

Owner designates the individual
listed below as its representative (“Owner’s Representative”), which
individual has the authority and responsibility set forth in Section 4.4
and shall be vested with full authority to act as Owner’s agent in all respects
with regards to the obligations and rights set forth herein:

Peter Bendorf

Engineer, Sonnek Engineering, Inc.

47453 293rd St

Beresford, SD 57004

Telephone:  (605) 957-6558

Facsimile:   (605) 957-6558

16.2        Designation
of Design-Builder’s Representatives.  Design-Builder designates the individual
listed below as its senior representative (“Design-Builder’s Senior
Representative”), which individual has the authority and responsibility for
avoiding and resolving disputes under Article 19:

Roland “Ron” Fagen

CEO and President

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324

Facsimile: (320) 564-3278

Design-Builder designates the
individual listed below as its representative (“Design-Builder’s  Representative”),
which individual has the authority and responsibility set forth in
Section 3.1:

Aaron Fagen

Chief Operating Officer

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324 

Facsimile: (320) 564-3278

 37
 

Article
17

Insurance

17.1        Insurance.  Design-Builder shall procure and maintain in
force through the Final Completion Date the following insurance coverages with
the policy limits indicated, and otherwise in compliance with the provisions of
this Agreement:

	
  Commercial General
  Liability:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  General Aggregate

  	
   

  	
   

  	
   

  
	
  Products-Comp/Op AGG

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Personal & Adv
  Injury

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Fire Damage (Any one
  fire)

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  Med Exp (Any one
  person)

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Automobile Liability:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Combined Single Limit

  	
   

  	
   

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Excess Liability – Umbrella Form:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Aggregate

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Workers’ Compensation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Statutory limits as required by the state in which
  the Work is performed.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Employers’ Liability:

  	
   

  	
   

  	
   

  
	
  Each Accident

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Policy Limit

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Each Employee

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Professional Errors and Omissions

  	
   

  	
   

  	
   

  
	
  Per Claim

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  Annual

  	
   

  	
  $

  	
  5,000,000

  	
   

  

 

17.2        Design-Builder’s
Insurance Requirements.

17.2.1     Design-Builder
is responsible for procuring and maintaining from insurance companies
authorized to do business in the state in which the Project is located, the
following insurance coverages for certain claims which may arise from or out of
the performance of the Work and obligations under the Contract Documents:

 38
 

(a)                                  coverage
for claims arising under workers’ compensation, disability and other similar
employee benefit Laws applicable to the Work;

(b)                                 coverage
for claims by Design-Builder’s employees for bodily injury, sickness, disease,
or death;

(c)                                  coverage
for claims by any person other than Design-Builder’s employees for bodily injury,
sickness, disease, or death;

(d)                                 coverage
for usual personal injury liability claims for damages sustained by a person as
a direct or indirect result of Design-Builder’s employment of the person, or
sustained by any other person;

(e)                                  coverage
for claims for damages (other than to the Work) because of injury to or
destruction of tangible property, including loss of use;

(f)                                    coverage
for claims of damages because of personal injury or death, or property damage
resulting from ownership, use and maintenance of any motor vehicle; and

(g)                                 coverage
for contractual liability claims arising out of Design-Builder’s obligations
under Section 14.2.

17.2.2     Design-Builder’s
liability insurance required by this Section 17.2 shall be written for the
coverage amounts set forth in Section 17.1 and shall include completed
operations insurance for the period of time set forth in the Agreement.

17.2.3     Design-Builder’s
liability insurance set forth in Sections 17.2.1 (a) through (g) above shall
specifically delete any design-build or similar exclusions that could
compromise coverages because of the design-build delivery of the Project.

17.2.4     
To the extent Owner requires Design-Builder or any Design Consultant to provide
professional liability insurance for claims arising from the negligent
performance of design services by Design-Builder or the Design Consultant, the
coverage limits, duration and other specifics of such insurance shall be as set
forth in the Agreement.  Any professional
liability shall specifically delete any design-build or similar exclusions that
could compromise coverages because of the design-build delivery of the
Project.  Such policies shall be provided
prior to the commencement of any design services hereunder.

17.2.5     Prior
to commencing any construction services hereunder, Design-Builder shall provide
Owner with certificates evidencing that (i) all insurance obligations required
by the Contract Documents are in full force and in effect and will remain in
effect for the duration required by the Contract Documents and (ii) no
insurance coverage required hereunder will be canceled, renewal refused, or
changed unless at least thirty (30) Days prior written notice is given to
Owner.

17.3        Owner’s
Liability Insurance. 
Owner shall procure and maintain from insurance companies authorized to
do business in the state in which the Project is located such liability
insurance to protect Owner from claims which may arise from the performance of
Owner’s obligations under the Contract Documents or Owner’s conduct during the
course of the Project.

 39
 

The general and professional liability insurance obtained by Owner
shall name Design-Builder, Design Consultants, Subcontractors, the Lenders and
Lenders’ Agent as additional insureds, without application of deductible, retention
or retrospective premiums as to the additional insureds.

17.4        Owner’s
Property Insurance.

17.4.1     Unless
otherwise provided in the Contract Documents, Owner shall procure from
insurance companies authorized to do business in the state in which the Project
is located, and maintain through Final Completion, property insurance upon the
entire Project in a minimum amount equal to the full insurable value of the
Project, including professional fees, overtime premiums and all other expenses
incurred to replace or repair the insured property.  The property insurance obtained by Owner
shall include as additional insureds the interests of Owner, Design-Builder,
Design Consultants, Subcontractors, the Lenders and Lenders’ Agent and shall
insure against the perils of fire and extended coverage, theft, vandalism,
malicious mischief, collapse, flood, earthquake, debris removal and other
perils or causes of loss as called for in the Contract Documents and without
application of any deductible, retention or retrospective premium.  Owner shall maintain coverage equal to or in
excess of the value of each of Design-Builder’s, Design Consultants’, and
Subcontractors’ property on the Site. 
The property insurance shall include physical loss or damage to the
Work, including materials and equipment in transit, at the Site or at another
location as may be indicated in Design-Builder’s Application for Payment and
approved by Owner.

17.4.2     Unless
the Contract Documents provide otherwise, Owner shall procure and maintain
boiler and machinery insurance that will include as additional insureds the
Owner, Design-Builder, Design Consultants, and Subcontractors, in an amount not
less than Contract Price and without application of any deductible, retention
or retrospective premium as to the additional insureds. Owner shall maintain
coverage equal to or in excess of the value of each of Design-Builder’s, Design
Consultants’, and Subcontractors’ interest or investment in boiler or machinery
equipment on the Site.

17.4.3     Prior
to Design-Builder commencing any Work, Owner shall obtain a builder’s risk
insurance policy naming Owner as the insured, with Design-Builder, Design
Consultants and Subcontractors as additional insureds, in an amount not less
than the Contract Price and without application of deductible, retention or
retrospective premium as to the additional insureds.

17.4.4     Owner
shall also obtain, prior to Design-Builder commencing any Work, terrorism
coverage as described by the Terrorism Risk Insurance Act of 2002, Pub. L. No.
107-297, 116 Stat. 2322 (2002), as extended by the Terrorism Risk Insurance
Extension Act of 2005, Pub. L. No. 109-144 (2005), or any successor act or
renewing act for the period during which the Terrorism Risk Insurance Act or
any successor act or renewing act is in effect; provided, however, that no such
separate coverage shall be required if this coverage is provided under Owner’s
builder’s risk insurance policy provided pursuant to Section 17.4.3.

17.4.5     Prior
to Design-Builder commencing any Work, Owner shall provide Design-Builder with
copies of the insurance certificates reflecting coverages required under this
Section 17.4 evidencing that (i) all Owner’s insurance obligations required by
the Contract

 40

Documents are
in full force and in effect and will remain in effect until Design-Builder has
completed all of the Work and has received Final Payment from Owner, and (ii)
no insurance coverage will be canceled, renewal refused, or changed unless at
least thirty (30) Days prior written notice is given to Design-Builder.  Owner’s property insurance shall not lapse or
be cancelled during the term of this Agreement. 
Promptly after Owner’s receipt thereof, Owner shall be required to
provide Design-Builder with copies of all insurance policies to which
Design-Builder, Design Consultants, and Subcontractors are named as additional
insureds.  In the event Owner replaces
insurance providers for any policy required under this Section, revises policy
coverages, or otherwise modifies any applicable insurance policy in any way,
Owner shall provide Design-Builder, for its review or possession as provided
under this Section 17.4.5, the certificate of insurance and a copy of such new,
revised or modified policy when available.

17.4.6     Any
loss covered under Owner’s property insurance shall be adjusted with Owner and
Design-Builder and made payable to both of them as trustees for the insureds as
their interests may appear, subject to any applicable mortgage clause.  All insurance proceeds received as a result
of any loss will be placed in a separate account and distributed in accordance
with such agreement as the interested parties may reach.  Any disagreement concerning the distribution of
any proceeds will be resolved in accordance with Article 19 hereof.

17.4.7     Owner
and Design-Builder waive against each other and Owner’s separate contracts,
Design Consultants, Subcontractors, agents and employees of each and all of
them all damages covered by property insurance provided herein, except such
rights as they may have to the proceeds of such insurance.  Design-Builder and Owner shall, where
appropriate, require similar waivers of subrogation from Owner’s separate
contractors, Design Consultants Subcontractors, and insurance providers and
shall require each of them to include similar waivers in their contracts or
policies.

Article
18

Representations
and Warranties

18.1        Design-Builder
and Owner Representations and Warranties.  Each of Design-Builder and Owner represents
that:

(a)                                  it
is duly organized, validly existing and in good standing under the Laws of its
formation  and has all requisite power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby;

(b)                                 this
Agreement has been duly executed and delivered by such Party and constitutes
the legal, valid and binding obligations of such Party, enforceable against
such Party in accordance with their respective terms, except as enforcement may
be limited by bankruptcy, insolvency, moratorium or similar Laws affecting
creditor’s rights or by general equitable principles;

(c)                                  the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby do not and will not conflict with or
violate (a) the certificate of incorporation or bylaws or equivalent
organizational

 41
 

documents of such Party,
or (b) any Law applicable to such Party and
other than the permits listed on Exhibit G, such execution, delivery and performance
of this Agreement does not require any Governmental Approval; and

(d)                                 there
is no action pending or, to the knowledge of such Party, threatened, which
would hinder, modify, delay or otherwise adversely affect such Party’s ability
to perform its obligations under the Contract Documents.

18.2        Design-Builder
Representations and Warranties.  Design-Builder further represents that it has
the necessary financial resources to fulfill its obligations under this
Agreement.

Article
19

Dispute
Resolution

19.1        Dispute
Avoidance and Mediation.  The Parties are fully committed to working
with each other throughout the Project and agree to communicate regularly with
each other at all times so as to avoid or minimize disputes or disagreements.  If disputes or disagreements do arise,
Design-Builder and Owner each commit to resolving such disputes or
disagreements in an amicable, professional and expeditious manner so as to
avoid unnecessary losses, delays and disruptions to the Work.

Design-Builder and
Owner will first attempt to resolve disputes or disagreements at the field
level through discussions between Design-Builder’s Representative and Owner’s
Representative.

If a dispute or
disagreement cannot be resolved through Design-Builder’s Representative and
Owner’s Representative, Design-Builder’s Senior Representative and Owner’s
Senior Representative, upon the request of either Party, shall meet as soon as
conveniently possible, but in no case later than thirty (30) Days after such a
request is made, to attempt to resolve such dispute or disagreement.  Prior to any meetings between the Senior
Representatives, the Parties will exchange relevant information that will
assist the Parties in resolving their dispute or disagreement.

If, after meeting,
the Senior Representatives determine that the dispute or disagreement cannot be
resolved on terms satisfactory to both Parties, the Parties shall submit the
dispute or disagreement to non-binding mediation.  The mediation shall be conducted in
Minneapolis, Minnesota by a mutually agreeable impartial mediator or, if the
Parties cannot so agree, a mediator designated by the American Arbitration
Association (“AAA”) pursuant to its Construction Industry Arbitration
Rules and Mediation Procedures.  The
mediation will be governed by and conducted pursuant to a mediation agreement
negotiated by the Parties or, if the Parties cannot so agree, by procedures
established by the mediator.

19.2        Arbitration.  Any claims, disputes or controversies between
the Parties arising out of or relating to the Agreement, or the breach thereof,
which have not been resolved in accordance with the procedures set forth in
Section 19.1 above shall be decided by arbitration to be conducted in
Minneapolis, Minnesota in accordance with the Construction Industry

 42
 

Arbitration Rules and Mediation Procedures of the AAA 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.

Design-Builder and
Owner expressly agree that any arbitration pursuant to this Section 19.2
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 Design-Builder and
Owner will include appropriate provisions in all contracts they execute with
other parties in connection with the Project 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.

19.3        Duty
to Continue Performance.  Unless provided to the contrary in the
Contract Documents, Design-Builder shall continue to perform the Work and Owner
shall continue to satisfy its payment obligations to Design-Builder, pending
the final resolution of any dispute or disagreement between Design-Builder and
Owner.

19.4        Consequential
Damages.

19.4.1     Notwithstanding
anything herein to the contrary (except as set forth in Section 19.4.2 below),
neither Design-Builder nor Owner shall be liable to the other for any
consequential losses or damages, whether arising in contract, warranty, tort
(including negligence), strict liability or otherwise, including but not
limited to, losses of use, profits, business, reputation or financing, except
that Design-Builder does not waive any such damages resulting from or arising
out of any breach of Owner’s duties and obligations under the limited license
granted by Design-Builder to Owner pursuant to Article 5.

19.4.2     The
consequential damages limitation set forth in Section 19.4.1 above is not
intended to affect the payment of liquidated damages, if any, set forth in
Section 7.3 of the Agreement, which both Parties recognize has been
established, in part, to reimburse Owner for some damages that might otherwise
be deemed to be consequential.

19.5        Limitation
of Liability. 
Notwithstanding anything else in this Agreement to the contrary, the
aggregate liability of Design-Builder, its Subcontractors, vendors, suppliers,
agents and employees,  to Owner (or any
successor thereto or assignee thereof) for any and all claims and/or
liabilities arising out of or relating in any manner to the Work or to
Design-Builder’s performance or non-performance of its obligations under this
Agreement, whether based in contract, tort (including negligence), strict
liability, or otherwise, shall be limited, and shall not exceed, in the
aggregate, as follows: (A) the Contract Price, reduced upon the issuance of
each Application for Payment by the total value of each such Application for
Payment until the time that the aggregate liability hereunder is limited to
Fifty Percent (50%) of the Contract Price; and (B) upon Design-Builder
demonstrating the Performance Guarantee Criteria listed in Exhibit A,

 43
 

Design-Builder’s aggregate liability shall be limited to the greater of
(1) Ten Percent (10%) of the Contract Price or (2) the amount of insurance
coverage available to respond to the claim or liability under any policy of
insurance provided by Design-Builder under this Agreement.  This limitation of liability shall not apply
to claims or liabilities arising out of Design-Builder’s unilateral abandonment
of or withdrawal from this Agreement.

Article
20

Confidentiality
of Shared Information

20.1        Non-Disclosure
Obligation. 
Except as required by court order, subpoena, or Applicable Law, the
Parties will hold in confidence, and will use only for the purposes of
completing the Project, any and all Confidential Information disclosed to each
other.  Neither Party shall disclose to
third parties any Confidential Information 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 Confidential Information and
information regarding the terms and conditions of this Agreement
confidential.  However, the Parties may
disclose Confidential Information to their respective lenders, lenders’ agents,
advisors and/or consultants only as reasonably necessary in connection with the
financing of the Plant or to enable them to advise the Parties with regard to
the Contract Documents and the Project, provided that prior to such disclosure
any party to whom confidential information is disclosed is informed by the
disclosing Party of the existence of this confidentiality obligation and agrees
to be obligated to maintain the confidentiality of any information received.
The term “Confidential Information” will mean (i) 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, (ii) any and all information concerning the Contract
Documents, the Agreement, or the terms thereof, and (iii) all information which
one Party, directly or indirectly, may acquire from another Party;
however,   Confidential Information will
not include information falling into any of the following categories:

(a)                                  information
that, at the time of disclosure hereunder, is in the public domain;

(b)                                 information
that, after disclosure hereunder, enters the public domain other than by breach
of this Agreement or the obligation of confidentiality;

(c)                                  information
that, prior to disclosure hereunder, was already in the recipient’s possession,
either without limitation on disclosure to others or subsequently becoming free
of such limitation;

(d)                                 information
obtained by the recipient from a third party having an independent right to
disclose this information; and

(e)                                  information
that is available through discovery by independent research without use of or
access to the Confidential Information acquired from the other Party.

 44
 

Each Party’s
obligation to maintain Confidential Information in confidence will be deemed
performed if such Party observes with respect thereto the same safeguards and
precautions which such Party observes with respect to its own confidential
information of the same or similar kind. 
It will not be deemed to be a breach of the obligation to maintain
confidential information in confidence if confidential information is disclosed
upon the order of a court or other authorized Governmental Authority, or
pursuant to other Legal Requirements. 
However, if Owner is required to file the Contract Documents or a
portion thereof with a Governmental Authority, it agrees that it will not do so
without first informing Design-Builder of the requirement and seeking
confidential treatment of the Contract Documents prior to filing the documents
or a portion thereof.

20.2        Publicity
and Advertising. 
Neither Owner nor Design-Builder 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.

20.3        Term
of Obligation. 
The confidentiality obligations of the Parties pursuant to this
Article 20 shall survive the expiration or other termination of this
Agreement for a period of five (5) years.

Article
21

Miscellaneous

21.1        Assignment.  This Agreement shall be binding upon, shall
inure to the benefit of, and may be performed by, the successors and permitted
assigns of the Parties, except that neither Design-Builder nor Owner shall,
without the written consent of the other, assign or transfer this Agreement or
any of the Contract Documents. 
Design-Builder’s subcontracting portions of the Work in accordance with
this Agreement shall not be deemed to be an assignment of this Agreement.  Owner may assign all of its rights and
obligations under the Contract Documents to its Lenders or Lenders’ Agent as
collateral security in connection with Owner obtaining or arranging any
financing for the Project; provided, however, Owner shall deliver, at least ten
(10) Days prior to any such assignment, to Design-Builder (i) written notice of
such assignment and (ii) a copy of the instrument of assignment in form and
substance reasonably acceptable to Design-Builder, whose approval shall not be
unreasonably withheld.  The Lenders or
Lenders’ Agent may assign the Contract Documents or their rights under the
Contract Documents, including without limitation in connection with any
foreclosure or other enforcement of their security interest.  Design-Builder shall execute, if requested, a
consent to assignment for the benefit of the Lenders and/or the Lenders’ Agent
in form and substance reasonably acceptable to Design-Builder, provided that
with respect to any such assignments such assignee demonstrates to
Design-Builder’s satisfaction that it has the capability to fulfill Owner’s
obligations under this Agreement.

21.2        Successors.  Design-Builder and Owner intend that the
provisions of the Contract Documents are binding upon the Parties, their
employees, agents, heirs, successors and assigns.

 45
 

21.3        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.

21.4        Severability.  If any provision or any part of a provision
of the Contract Documents 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 Contract Documents, which shall remain in full force and
effect as if the unenforceable provision or part were deleted.

21.5        No
Waiver.  The
failure of either Design-Builder or Owner to insist, in any one (1) or more
instances, on the performance of any of the obligations required by the other
under the Contract Documents shall not be construed as a waiver or
relinquishment of such obligation or right with respect to future performance.

21.6        Headings.  The table of contents and the headings used
in this Agreement or any other Contract Document, 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.

21.7        Notice.  Whenever the Contract Documents require 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 machine-generated confirmation that notice was received at the facsimile
number of the intended recipient.

If to
Design-Builder, to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention: Aaron Fagen

Fax:  (320) 564-3278

with a copy to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention: Jennifer Johnson

Fax:  (320) 564-3278

and a copy to:

 46
 

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention: Wayne Mitchell

Fax (320) 564-3278

If to Owner, to:

Millennium Ethanol, LLC

300 N Broadway

P. O. Box 357

Marion, SD 57043

Attention: 
Steven Domm

Fax (605) 648-3943

and

Dougherty
Funding LLC

90
South Seventh Street

Suite
4300

Minneapolis,
MN 55402

Attention:  Senior V.P. Mortgage Loans

Fax (612) 317-2045

21.8        No
Privity with Design Consultant/Subcontractors.  Nothing in the Contract Documents is intended
or deemed to create any legal or contractual relationship between Owner and any
Design Consultant or Subcontractor.

21.9        Amendments.  The Contract Documents may not be changed,
altered, or amended in any way except in writing signed by a duly authorized
representative of each Party.

21.10      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.

21.11      Third-Party
Beneficiaries. 
Except as expressly provided herein, this Agreement is intended to be
solely for the benefit of the Owner, the Design-Builder and permitted assigns,
and is not intended to and shall not confer any rights or benefits on any
person not a signatory hereto.

21.12      Counterparts.  This Agreement may be executed in one (1) 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.

 47
 

21.13      Survival.  Notwithstanding any provisions herein to the
contrary, the Work Product provisions set forth in Article 5 and the indemnity
obligations set forth herein shall survive (in full force and effect) 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.

[The next page is
the signature page.]

 48
 

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 the Effective
Date.

	
  OWNER:

  	
   

  	
  DESIGN-BUILDER:

  
	
   

  	
   

  	
   

  
	
  Millennium
  Ethanol, LLC

  	
   

  	
  Fagen, Inc.

  
	
  (Name
  of Owner)

  	
   

  	
  (Name of Design-Builder)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Roland “Ron” Fagen

  
	
  (Printed
  Name)

  	
   

  	
  (Printed Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CEO and President

  
	
  (Title)

  	
   

  	
  (Title)

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
					

 

 49

EXHIBIT A

Performance
Guarantee Criteria

	
  Criteria

  	
   

  	
  Specification

  	
   

  	
  Testing Statement

  	
   

  	
  Documentation

  
	
  Plant Capacity – fuel grade ethanol

  	
   

  	
  Operate at a rate of 100 million gallons per year of
  denatured fuel grade ethanol meeting the specifications of ASTM 4806 based on
  353 days of operation per calendar year and 4.76% denaturant.

  	
   

  	
  Seven day performance test

  	
   

  	
  Production records and written report by
  Design-Builder.

  
	
  Corn to Ethanol Conversion ratio; ***

  	
   

  	
  Not be less than 2.80 denatured gallons of ethanol
  per bushel (56#) of corn

  	
   

  	
  As determined by meter readings during a seven day
  performance test.

  	
   

  	
  Production records and written analysis by
  Design-Builder.

  
	
  Electrical Energy

  	
   

  	
  0.75 kWh per denatured gallon of fuel grade ethanol ***

  	
   

  	
  As determined by meter readings during a seven day
  performance test.

  	
   

  	
  Production records and written analysis by
  Design-Builder.

  
	
  Natural Gas

  	
   

  	
  Shall not exceed 34,000 Btu per denatured gallon of
  fuel grade ethanol. (This Performance Criteria relates to production of
  ethanol and excludes any natural gas usage that may occur for drying corn.)

  	
   

  	
  As determined by meter readings during a seven day
  performance test.

  	
   

  	
  Production records and written analysis by
  Design-Builder.

  

 

*** Confidential material omitted and filed separately with the United
States Securities and Exchange Commission pursuant to a request for
confidential treatment. 

 

 A-1
 

 

	
  Process Water Discharge (not including cooling tower
  and boiler blowdown and water pre-treatment (RO) discharge)

  	
   

  	
  Zero gallons under normal operations.

  	
   

  	
  Process discharge meter.

  	
   

  	
  Control System reports.

  
	
  Air Emissions

  	
   

  	
  Must meet the requirements prescribed as of the date
  hereof by the South Dakota Department of Environment and Natural Resources,
  Air Quality Division.

  	
   

  	
  Must meet the requirements as prescribed in the Air
  Permit Application attached as Exhibit K.

  	
   

  	
  Written report by Owner’s Air Emission Tester.

  

As part of the Performance
Guarantee Criteria the Plant shall operate in accordance with all Legal
Requirements.

DISCLAIMER:

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

Owner understands that the startup of the
plant requires resources and cooperation of the Owner, vendors and other
suppliers to the project.  Design-Builder
disclaims any liability and Owner indemnifies Design-Builder for non-attainment
of the Performance Guarantee Criteria directly or indirectly caused by material
non-performance or negligence of third parties not retained by Design-Builder.

 A-2

EXHIBIT B

General
Project Scope

Construct a 100 (MGY) dry mill
fuel ethanol plant near Marion, South Dakota. 
The plant will grind approximately 35.8 million bushels of corn per year
to produce approximately 100 MGY of denatured fuel ethanol.  The plant will also produce approximately
321,000 tons per year of 11% moisture dried distillers grains with solubles
(DDGS), and approximately 285,700 tons per year of raw carbon dioxide (CO2) gas.

Delivered corn will be dumped
in the receiving building.  The receiving
building will have two truck grain receiving bays and a rail receiving bay,
including an underground conveyor from the rail pit to the second truck
receiving bay both of which share a common receiving leg.  The truck driver will drive onto the pitless
scale located near the administration building, be weighed and sampled, then
drive to the receiving building, dump the grain, then proceed back to the
pitless scale and obtain a final weight ticket from the scale operator.  Two independent 15,000 -bushel legs will lift
the corn to one of two 500,000 – bushel concrete storage bins.  A dust collection system will be installed on
the grain receiving system to limit particulate emissions as described in the
Air Quality Permit application.

Ground corn will be mixed in a
slurry tank, routed through a pressure vessel and steam flashed off in a flash
vessel.  Cooked mash will continue
through liquefaction tanks and into one of the fermenters.  Simultaneously, propagated yeast will be
added to the mash as the fermenter is filling. 
After batch fermentation is complete, the beer will be pumped to the
beer well and then to the beer column to vaporize the alcohol from the mash.

Alcohol streams are dehydrated
in the rectifier column, the side stripper and the molecular sieve system.  Two hundred proof alcohol is pumped to the
tank farm day tank and blended with five percent natural gasoline as the
product is being pumped into one of two 1,500,000 gallon final storage tanks.  Loading facilities for truck and rail cars
will be provided.  Tank farm tanks
include:  one tank for 190 proof storage,
one tank for 200 proof storage, one tank for denaturant storage and two
1,500,000 gallon tanks for denatured ethanol storage.

Corn mash from the beer
stripper is dewatered in the centrifuge(s). 
Wet cake from the centrifuge(s) is conveyed to the DDGS dryer system.
Wet cake is conveyed from the centrifuges to the dryer(s) where the water is
removed from the cake and the product is dried to 11% moisture.  A modified wet or wet cake pad is located
along side the DDGS dryer building to divert modified wet or wet cake to the
pad when necessary or for limited production of modified wet or wet cake for
sales.  Water in the thin stillage is
evaporated and recycled by the Bio-Methanation system.  Syrup is added to the wet cake entering the
dryer(s).  DDGS is cooled in a drum and
conveyed to flat storage in the DDGS storage building.  Shipping is accomplished by scooping and
pushing the product with a front-end loader into an in-floor conveyor system.  The DDGS load out pit has capacity for
approximately one semi-trailer load. 
DDGS is weighed as it is loaded for shipment through a bulk-weigh
system.

 B-1
 

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

Steam energy will be provided
by one Thermal Oxidizer (TO) driven boiler system utilizing a high percentage
of condensate return to a condensate receiver tank.

The TO/Heat Recovery Steam
Generator is a process used to thermally oxidize the exhaust gasses from the
Dryers.  This process will be used to
reduce VOCs and particulates that are in the dryer exhaust and ensure
compliance with environmental regulations. 
The energy required to complete thermal oxidization will then be ducted
to a waste heat boiler that will produce 100% of the steam requirements of the
ethanol plant.  The exhaust gasses from
the waste heat boiler will be ducted through stack gas economizer(s) to recover
the maximum amount of energy possible from the exhaust gas stream.  After the economizer(s), the gas stream will
be vented to atmosphere through a stack.

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

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

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

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

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

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

 B-2

EXHIBIT C

Owner’s
Responsibilities

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

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

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

Owner is encouraged to obtain preliminary
designs/information and estimates of the cost of performing all Owner required
permits and services as stated in this Exhibit C.  Specifically, the cost of the fire water systems
(including associated fire water pumps, required tank, building (if required),
sprinklers, and all other equipment and materials associated with the fire
water delivery systems) is estimated being in excess of $2,000,000.00.  The requirements of each state and the
decisions of each Owner will increase or decrease the actual cost.  Owner shall prepare site according to
Design-Builder’s engineering plans provided for the site work under the Phase I
and Phase II Engineering Services Agreement.

2)              Permits
- Owner shall obtain all Operating Permits including, but not limited to, air
quality permits, in a timely manner to allow construction and startup of the
plant as scheduled by Design-Builder.

 C-1
 

3)              Storm Water
Runoff Permit – Owner shall obtain the construction storm-water runoff
permit and permanent storm-water runoff permit. Design-Builder shall obtain the
erosion control/land disturbance permit.

4)              South Dakota
Pollutant Elimination Discharge Permit – Owner shall obtain a permit
to discharge cooling tower water, boiler blowdown water, reverse osmosis (“R.O.”)
reject water, and any other waste water directly to a designated waterway or
other location.  If required by item 9
below, Owner will secure appropriate permits for emergency process water
discharges.

5)              Natural Gas
Supply and Service Agreement – Continuous supply of natural gas of
at least 3.2 billion cubic feet per year, at a minimum rate of 450 - 550 MCF
per hour and at a minimum pressure of 75 — 200 psi at the plant site.  Pressure reducing stations must be located so
as to provide stable pressure at the point of use.  Owner shall provide all gas piping to the use
points and supply meters and regulators to provide burner tip pressures as
specified by Design-Builder.  Owner shall
also supply a digital flowmeter on-site with appropriate output for monitoring
by the plant’s computer control system.

6)              Temporary
Electrical Service – Owner shall secure electrical service to supply
a minimum 750 KW of 3 phase, 480/277 volt electrical power during
construction.  Owner shall procure,
install, and maintain temporary service to up to three 3 phase, 480/277 volt
temporary service transformers located throughout the site.  The transformer sizing, locations, and
underground electrical feed routing layout are to be determined jointly by the
Owner, the Design-Builder and the energy supplier.  Design-Builder shall pay energy demand and
usage charges up to Substantial Completion.

7)              Permanent
Electrical Service – (1) Owner is responsible to secure continuous
service from an energy supplier to serve the facility.  The service from the energy supplier shall be
of sufficient size to provide at a minimum 12.5 MW of electrical capacity to
the site.  (2) The Owner is responsible
for procurement, installation and maintenance of the site supply and
distribution system, including but not limited to the required substation and
all associated distribution lines.  An
on-site digital meter is also to be supplied for monitoring of electrical
usage.  (3) The responsibility of the
Design-Builder starts at the secondary electrical terminals of the site
distribution system transformers that have been installed by Owner (i.e., the
480 volt terminals for the process building transformers; the 480 volt
terminals for the energy center transformers; the 480 volt terminals for the
grains transformer; the 480 volt terminals for the pumphouse transformer; and
the 4160 volt terminals for the chiller transformer; and the 4160 volt
terminals of the thermal oxidizer transformer). (4)  The site distribution system requirements,
layout, and meters are to be determined jointly by the Owner, the
Design-Builder and the energy supplier.

Design-Builder will be providing soft start motor
controllers for all motors greater than 150 horsepower and where demanded by
process requirements.  Owner is
encouraged to discuss with its electrical supplier whether additional soft
start motor controllers are advisable for this facility and such can be added,
with any increased cost being an Owner’s cost.

 C-2
 

Design-Builder will provide power factor correction to
0.92 lagging at plant nameplate capacity. 
Owner is encouraged to discuss with its electrical service supplier any
requirements for power factor correction above 0.92 lagging.  Additional power factor correction can be
added with any increased cost being an Owner’s cost.

8)              Water
Supply, Service Agreement, and Pre-Treatment System – Owner shall
supply on-site process wells or other water source that is capable of providing
a quantity of raw water satisfying the needs of the Plant.  Owner should consider providing a redundant
water supply source.  Design-Builder
shall provide the standard zeolite water softener system for boiler feedwater
polishing.  Owner will supply one process
fresh water supply line terminating within five (5) feet of the point of entry
designated by Design-Builder, and one potable supply line terminating within
five (5) feet of the process building and to the administration building at a
point of entry designated by administration building contractor.

Owner shall pay for a water pre-treatment system to be
designed and constructed by Design-Builder and to be integrated into the
Plant.  The pre-treatment system will be
designed to provide the Plant with the quantity and quality of raw and treated
water needed to supply the Plant’s process needs. The water pre-treatment
system design will also consider and recommend to Owner equipment required to
meet the discharge requirements under the Plant’s wastewater discharge
permit.  Owner is to execute separate
contracts as necessary for the design and construction of such water
pre-treatment system.  Design-Builder
shall recover costs for the design and construction of such system from the
Owner at Design-Builder’s standard time plus material rates during the relevant
time period and at the relevant locale.   
A separate contract between Owner and Design-Builder shall be executed
by Owner and Design-Builder to compensate Design-Builder, at Design-Builder’s
standard time plus materials rates during the relevant time period and at the
relevant locale, for any costs  and
expenses related to such water pre-treatment system.

9)              Wastewater
Discharge System, Permits and/or Service Agreement – Owner to
provide discharge piping, septic tank and drainfield system or connect to
municipal system as required for the sanitary sewer requirements of the
Plant.  These provisions shall comply
with all federal, state, and local regulations, including any permitting
issues.

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

Except as otherwise specifically stated herein the
Owner shall install all utilities so that they are within five (5) feet of the
designated building/structure locations.

11)        Administration
Building – The administration building – one story free standing,
office computer system, telephone system, office copier and fax machine and
office furniture and any other office equipment and personal property for the administration
building shall be the 

 C-3
 

sole and absolute cost and responsibility of Owner and
Design-Builder shall have no responsibility in regards thereto.

12)        Maintenance and Power
Equipment – The maintenance and power equipment as described in Table 2 and
any other maintenance and power equipment as required by the plant or desired
by Owner shall be the sole and absolute cost and responsibility of Owner and
Design-Builder shall have no responsibility in regards thereto.

13)        Railroads – Owner is
responsible for any costs associated with the railroads including, but not
limited to, all rail design and engineering and construction and Design-Builder
shall have no responsibility in regards thereto.  Owner shall supply drawings and Phase II
redline drawings to Design-Builder.

14)        Drawings – Owner shall
supply drawings to Design-Builder of items supplied under items 11) and 13) and
also supply Phase II redline drawings.

15)        Fire Protection System –
Fire Protection System requirements vary by governmental requirements per
location and by insurance carrier requirements. 
Owner is responsible to provide the required fire protection system for
the Plant.  This may include storage
tanks, pumps, underground fire water mains, fire hydrants, foam or water
monitor valves, sprinkler systems, smoke and heat detection, deluge systems, or
other provisions as required by governmental codes or Owner’s insurance carrier’s
fire protection criteria.

Owner shall pay for a Fire Protection System to be
designed and constructed by Design-Builder and to be integrated into the
Plant.  The Fire Protection System shall
be designed and constructed to meet the governmental and insurance
requirements.  Owner is to execute
separate contracts as necessary for the design and construction of such Fire
Protection System.  Design-Builder shall
recover costs for the design and construction of such system from Owner at
Design-Builder’s standard time plus material rates during the relevant time
period and at the relevant locale.  A
separate contract between Owner and Design-Builder shall be executed by Owner
and Design-Builder to compensate Design-Builder, at Design-Builder’s standard
time plus materials rates during the relevant time period and at the relevant
locale, for any costs and expenses related to such Fire Protection System.

 C-4
 

Table 1 Minimum Soil Bearing Pressure –
Responsibility of Owner

** Subject to revision based on detailed design and engineering.

	
  Description

  	
   

  	
  Required Allowable Soil Bearing

  Pressure (pounds per square foot)

  	
   

  
	
  Grain Storage
  Silos

  	
   

  	
  8,000

  	
   

  
	
  DDGS Storage Silos

  	
   

  	
  8,000

  	
   

  
	
  Cook Water Tank

  	
   

  	
  3,500

  	
   

  
	
  Methanator Feed
  Tank

  	
   

  	
  3,500

  	
   

  
	
  Liquefaction
  Tank #1

  	
   

  	
  3,500

  	
   

  
	
  Liquefaction
  Tank #2

  	
   

  	
  3,500

  	
   

  
	
  Fermentation
  Tank #1

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #2

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #3

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #4

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #5

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #6

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #7

  	
   

  	
  5,000

  	
   

  
	
  Beerwell

  	
   

  	
  5,000

  	
   

  
	
  Whole Stillage
  Tank

  	
   

  	
  3,500

  	
   

  
	
  Thin Stillage
  Tank

  	
   

  	
  3,500

  	
   

  
	
  Syrup Tank

  	
   

  	
  3,500

  	
   

  
	
  190 Proof Day
  Tank

  	
   

  	
  3,000

  	
   

  
	
  200 Proof Day
  Tank

  	
   

  	
  3,000

  	
   

  
	
  Denaturant Tank

  	
   

  	
  3,000

  	
   

  
	
  Fire Water Tank

  	
   

  	
  3,000

  	
   

  
	
  Denatured
  Ethanol Tank #1

  	
   

  	
  4,000

  	
   

  
	
  Denatured
  Ethanol Tank #2

  	
   

  	
  4,000

  	
   

  
	
  All Other Areas

  	
   

  	
  3,000

  	
   

  

 

 C-5
 

Table
2 Maintenance and Power Equipment – Responsibility of Owner

	
  Description

  	
   

  	
  Additional Description

  	
   

  
	
  Spare Parts

  	
   

  	
  Spare parts

  Parts bins

  Misc. materials, supplies and equipment

  	
   

  
	
  Shop supplies and equipment

  	
   

  	
  One shop welder

  One portable gas welder

  One plasma torch

  One acetylene torch

  One set of power tools

  Two sets of hand tools with tool boxes

  Carts and dollies

  Hoists (except centrifuge overhead crane)

  Shop tables

  Maintenance office furnishings & supplies

  Fire Extinguishers

  Reference books

  Safety manuals

  Safety cabinets & supplies, etc.

  Safety showers as required

  	
   

  
	
  Rolling stock

  	
   

  	
  Used 1 1⁄2 yard front end loader

  New Skid loader

  Used Fork lift

  Used Scissors lift, 30 foot

  Used Pickup truck

  Track Mobile

  	
   

  

 

 C-6
 

Table 3 Owner’s Milestones

	
  Owner’s Responsibilities

  	
   

  	
  Number of Days to be Completed

  after Notice to Proceed

  
	
  Notice to
  Proceed

  	
   

  	
  0

  
	
  Obtain Builder’s
  Risk policy in the amount of the Contract Price, obtain Boiler and Machinery
  Insurance, and obtain Terrorism Coverage per TRIA as long as it is required
  under Article 17 of the Agreement.

  	
   

  	
  10

  
	
  Storm Water
  Permits Complete: Modify the existing storm water discharge permit to reflect
  the ethanol plant, if required.

  	
   

  	
  60

  
	
  Natural
  Gas/Propane Transportation / Storage Agreement Complete

  	
   

  	
  90

  
	
  Water Supply and
  Service Agreements Complete

  	
   

  	
  90

  
	
  Electrical
  Service Arrangement

  	
   

  	
  90

  
	
  Wastewater
  Discharge System Complete

  	
   

  	
  180

  
	
  TTB Operating
  Permits Complete

  	
   

  	
  200

  
	
  Discharge
  Permits Complete

  	
   

  	
  200

  
	
  Pumphouse/Water
  System Complete

  	
   

  	
  305

  
	
  Fire Protection
  System Complete

  	
   

  	
  305

  
	
  Paving (Plant
  Roads) Complete

  	
   

  	
  90 days prior to
  SC

  
	
  Rail Spur
  Complete

  	
   

  	
  90 days prior to
  SC

  
	
  Employees Hired
  and Ready for Training

  	
   

  	
  60 days prior to
  SC

  
	
  Natural Gas
  Pipeline Complete

  	
   

  	
  60 days prior to
  SC

  

 

 C-7

EXHIBIT D

ICM License Agreement

THIS LICENSE AGREEMENT (this “License Agreement”) is entered into and made effective as of the
5th day of May, 2006 (“Effective
Date”) by and between Millennium Ethanol, LLC, a South Dakota limited liability
company (“OWNER”), and ICM, Inc., a Kansas corporation (“ICM”).

WHEREAS, OWNER has entered into that certain Design-Build Lump Sum
Contract dated May 5, 2006 (the “Contract”) with Fagen, Inc., a Minnesota
corporation (“Fagen”), under which Fagen is to design and construct a 100
million gallon per year ethanol plant for OWNER to be located in or near
Marion, South Dakota (the “Plant”);

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

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

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

1.     Upon substantial completion
of the Plant by Fagen pursuant to the terms of the Contract or, if later,
payment by OWNER of all amounts due and owing to Fagen under the Contract, ICM
grants to OWNER a limited license to use the Proprietary Property (hereinafter
defined) solely in connection with the ownership, operation, maintenance and
repair of the Plant, subject to the limitations provided herein (the “Purpose”).

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

 D-1
 

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

3.     OWNER shall not use the
Proprietary Property for any purpose other than the Purpose.  OWNER shall not use the Proprietary Property
in connection with any expansion or enlargement of the Plant.  ICM and its Representatives shall have the
express right at any time to enter upon the premises of the Plant to inspect
the Plant and its operation to ensure that OWNER is complying with the terms of
this License Agreement.

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

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

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

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

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

 D-2
 

9.     The Proprietary Property is
confidential and proprietary.  OWNER
shall keep the Proprietary Property confidential and shall use all reasonable
efforts to maintain the Proprietary Property as secret and confidential for the
sole use of OWNER and its Representatives for the Purpose.  OWNER shall retain all Proprietary Property
at its principal place of business and/or the Plant.  OWNER shall not at any time without ICM’s
prior written consent, copy, duplicate, record, or otherwise reproduce the
Proprietary Property, in whole or in part, or otherwise make the same available
to any unauthorized person provided, OWNER shall be permitted to copy,
duplicate or otherwise reproduce the Proprietary Property in whole or in part
in connection with, and to the extent it is necessary and essential for, the
Purpose so long as all such copies, duplicates or reproductions are kept at its
principal place of business and/or the Plant and are treated the same as any
other Proprietary Property.  OWNER shall
not disclose the Proprietary Property except to its Representatives who are
directly involved with the Purpose, and even then only to such extent as is
necessary and essential for such Representative’s involvement.  OWNER shall inform such Representatives of
the confidential and proprietary nature of such information and, if requested
by ICM, OWNER shall obtain from such Representative a written instrument, in
form and substance reasonably acceptable to ICM, agreeing to be bound by all of
the terms and provisions of this License Agreement to the same extent as
OWNER.  OWNER shall make all reasonable
efforts to safeguard the Proprietary Property from disclosure by its
Representatives to anyone other than permitted hereby.  OWNER shall notify ICM immediately
upon discovery of any unauthorized use or disclosure of the Proprietary
Property, or any other breach of this License Agreement by OWNER or its
Representatives, and shall cooperate with ICM in every reasonable way to help
ICM regain possession of the Proprietary Property and prevent its further
unauthorized use or disclosure.  In the event that OWNER or its
Representatives are required by law to disclose the Proprietary Property, OWNER
shall provide ICM with prompt written notice of same so that ICM may seek a
protective order or other appropriate remedy. 
In the event that such protective order or other appropriate remedy is
not obtained, OWNER or its Representatives will furnish only that portion of
the Proprietary Property which in the reasonable opinion of its or their legal
counsel is legally required and will exercise its reasonable efforts to obtain
reliable assurance that the Proprietary Property so disclosed will be accorded
confidential treatment.

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

11.   The duties and obligations
of OWNER under this License Agreement, and all provisions relating to the
enforcement of such duties and obligations shall survive and remain in full
force and effect notwithstanding any termination or expiration of the Contract
or this License Agreement.

12.   ICM may terminate this
License Agreement upon written notice to OWNER if OWNER willfully or wantonly
(a) uses the Proprietary Property for any purpose, or (b) discloses the
Proprietary Property to anyone, in each case other than permitted herein.  Upon termination of this License Agreement,
OWNER shall cease using the Proprietary Property for any purpose (including the
Purpose) and, upon request by ICM, shall promptly return to ICM all documents
or other materials in OWNER’s or its Representatives’ possession that contain
Proprietary Property in whatever format,

 D-3
 

whether written or electronic, including any and all copies or
reproductions of the Proprietary Property. 
OWNER shall permanently delete all such Proprietary Property from its
computer hard drives and any other electronic storage medium (including any
backup or archive system).  OWNER shall
deliver to ICM a written certificate which certifies that all electronic copies
or reproductions of the Proprietary Property have been permanently deleted.

13.   The laws of the State of Kansas, United States of America (or US),
shall govern the validity of the provisions contained herein, the construction
of such provisions, and the interpretation of the rights and duties of the
parties.  Any legal action brought to
enforce or construe the provisions of this License Agreement shall be brought
in the federal or state courts located in Wichita, Kansas, and the parties
agree to and hereby submit to the exclusive jurisdiction of such courts and
agree that they will not invoke the doctrine of forum non conveniens or other
similar defenses in any such action brought in such courts.  Notwithstanding the foregoing, nothing in
this License Agreement will affect any right ICM may otherwise have to bring
any action or proceeding relating to this License Agreement against OWNER or
its properties in the courts of any jurisdiction.  In the event the Plant is located in, or
OWNER is organized under the laws of, a country other than the US, OWNER hereby
specifically agrees that any injunctive or other equitable relief granted by a
court located in the State of Kansas, US, or any award by a court located in
the State of Kansas, shall be specifically enforceable as a foreign judgment in
the country in which the Plant is located, OWNER is organized or both, as the
case may be, and agrees not to contest the validity of such relief or award in
such foreign jurisdiction, regardless of whether the laws of such foreign
jurisdiction would otherwise authorize such injunctive or other equitable
relief, or award.  

14.   OWNER hereby agrees to waive all claims against ICM and ICM’s
Representatives for any consequential damages that may arise out of or relate
to this License Agreement, the Contract or the Proprietary Property whether
arising in contract, warranty, tort (including negligence), strict liability or
otherwise, including but not limited to losses of use, profits, business,
reputation or financing.  OWNER further
agrees that the aggregate recovery of OWNER and Fagen (and everyone claiming by
or through OWNER and Fagen), as a whole, against ICM and ICM’s Representatives,
collectively, for any and all claims that arise out of, relate to or result
from this License Agreement, the Proprietary Property or the Contract, whether
arising in contract, warranty, tort (including negligence), strict liability or
otherwise,  shall not
exceed One Million US Dollars ($1,000,000).   

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

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

17.   In the event that any of the
terms, conditions, covenants or agreements contained in this License Agreement,
or the application of any thereof, shall be held by a court of competent
jurisdiction to be

 D-4
 

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

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

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

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

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

	
  OWNER:

  	
  ICM:

  
	
   

  Millennium Ethanol, LLC

  	
   

  ICM,
  Inc.

  
	
   

  By:

  	
   

  By:  

  
	
   

  Title:  

  	
   

  Title:  

  
	
   

  Date Signed:

  	
   

  Date Signed:

  
	
   

  Address for giving notices:

  	
   

  Address for giving notices:

  
	
   

   

  	
   

  301
  N First Street

  Colwich,
  KS  67030

  

 

 D-5

EXHIBIT E 

Schedule of Values

	
  

  	
   

  	
  Schedule of Values for:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MILLENNIUM ETHANOL, LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Marion, SD

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  100 MGY Dry Grind Ethanol Plant

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
  DESCRIPTION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  MOBILIZATION

  	
   

  	
  $

  	
  ***

  	
   

  
	
  2

  	
   

  	
  ENGINEERING

  	
   

  	
  $

  	
  ***

  	
   

  
	
  3

  	
   

  	
  GENERAL CONDITIONS

  	
   

  	
  $

  	
  ***

  	
   

  
	
  4

  	
   

  	
  SITEWORK

  	
   

  	
  $

  	
  ***

  	
   

  
	
  5

  	
   

  	
  CONCRETE

  	
   

  	
  $

  	
  ***

  	
   

  
	
  6

  	
   

  	
  MASONRY / ARCHITECTURAL

  	
   

  	
  $

  	
  ***

  	
   

  
	
  7

  	
   

  	
  STRUCTURAL STEEL - MISC. METALS

  	
   

  	
  $

  	
  ***

  	
   

  
	
  8

  	
   

  	
  PRE-ENGINEERED BUILDINGS

  	
   

  	
  $

  	
  ***

  	
   

  
	
  9

  	
   

  	
  GRAIN HANDLING SYSTEM

  	
   

  	
  $

  	
  ***

  	
   

  
	
  10

  	
   

  	
  PROCESS TANKS & VESSELS

  	
   

  	
  $

  	
  ***

  	
   

  
	
  11

  	
   

  	
  FIELD ERECTED TANKS

  	
   

  	
  $

  	
  ***

  	
   

  
	
  12

  	
   

  	
  HEAT EXCHANGERS

  	
   

  	
  $

  	
  ***

  	
   

  
	
  13

  	
   

  	
  PROCESS EQUIPMENT

  	
   

  	
  $

  	
  ***

  	
   

  
	
  14

  	
   

  	
  CENTRIFUGES

  	
   

  	
  $

  	
  ***

  	
   

  
	
  15

  	
   

  	
  CHILLER

  	
   

  	
  $

  	
  ***

  	
   

  
	
  16

  	
   

  	
  TRUCK SCALES & PROBE

  	
   

  	
  $

  	
  ***

  	
   

  
	
  17

  	
   

  	
  ETHANOL LOADOUT & FLARE
  SYSTEM

  	
   

  	
  $

  	
  ***

  	
   

  
	
  18

  	
   

  	
  COOLING TOWER

  	
   

  	
  $

  	
  ***

  	
   

  
	
  19

  	
   

  	
  DRYER SYSTEM

  	
   

  	
  $

  	
  ***

  	
   

  
	
  20

  	
   

  	
  THERMAL OXIDIZER

  	
   

  	
  $

  	
  ***

  	
   

  
	
  21

  	
   

  	
  METHANATOR

  	
   

  	
  $

  	
  ***

  	
   

  
	
  22

  	
   

  	
  PROCESS PIPING & VALVES

  	
   

  	
  $

  	
  ***

  	
   

  
	
  23

  	
   

  	
  PAINTING

  	
   

  	
  $

  	
  ***

  	
   

  
	
  24

  	
   

  	
  INSULATION

  	
   

  	
  $

  	
  ***

  	
   

  
	
  25

  	
   

  	
  PLUMBING & HVAC

  	
   

  	
  $

  	
  ***

  	
   

  
	
  26

  	
   

  	
  ELECTRICAL

  	
   

  	
  $

  	
  ***

  	
   

  
	
  27

  	
   

  	
  START-UP

  	
   

  	
  $

  	
  ***

  	
   

  
	
  28

  	
   

  	
  DEMOBILIZATION

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TOTAL

  	
   

  	
  $

  	
  105,997,000

  	
   

  

 

*** Confidential material omitted and filed
separately with the United States Securities and Exchange Commission pursuant
to a request for confidential treatment.

 E-1

EXHIBIT F

Form of Informational Report

	
  

  	
  PROJECT MEETING: 
  Two-Week Look Ahead(s)  

  

 

	
  JOBSITE:

  	
   

  	
   

  	
  MEETING

  DATE:

  	
   

  	
   

  

 

	
  ▼ MANPOWER

  	
   

  	
  TOTALS ▼

  	
   

  
	
  Fagen, Inc.

  	
   

  	
  0

  	
   

  
	
  (sub)

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
  JOBSITE TOTAL

  	
   

  	
  0

  	
   

  

 

▼ SAFETY ISSUES

1.               text

2.               text

 

▼ WAREHOUSE ISSUES

1.               text

2.               text

 

▼ PROCUREMENT ISSUES

1.               text

2.               text

 

▼ OPERATIONS ISSUES

1.               text

2.               text

 

 F-1
 

▼ CIVIL

Area

1.               text

2.               text

 

▼ STRUCTURAL

Area

1.               text

2.               text

 

▼ SIDING / INSULATION

Area

1.               text

2.               

 

▼ MILLWRIGHT

Area

1.               text

2.               

 

▼ PIPE

Area

1.               text

2.               

 

▼ ELECTRICAL

Area

1.               text

2.               

 

▼ DELIVERIES

Area

1.               text

 

▼ SUBCONTRACTOR

Subcontractor Name

1.               text

 

 F-2

EXHIBIT G

Required Permits

 

	
  No.

  	
   

  	
  Type of Application/Permit

  	
   

  	
  Responsibility for

  Obtaining Permit

  	
   

  	
  Assistance in

  Preparation

  	
   

  	
  Notes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Underground Utility Locating Service

  	
   

  	
  Design-Builder/Owner

  	
   

  	
   

  	
   

  	
  Notification service for underground work.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Septic Tank & Drain Field Permit

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Railroad Permit/Approval

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Archeological Survey

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Highway Access Permit

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
  State Department of Transportation or County

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6 

  	
   

  	
  Building Permits

  Mechanical

  Electrical

  Structures 

  	
   

  	
  Design-Builder

  Design-Builder

  Design-Builder

  Design-Builder

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Construction Air Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  Construction Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  Operations Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  Wastewater Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Water Appropriation Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Fire Protection

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Above Ground Storage Tank Permit

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  TTB Permit

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
   

  

 

 G-1

EXHIBIT H

Form of
Performance Bond

PERFORMANCE BOND

The American Institute of Architects,

AIA Document No. A312 (December, 1984 Edition)

Any singular reference to Contractor, Surety, Owner or other

party shall be considered plural where applicable.

	
  CONTRACTOR (Name and
  Address):

  	
  Amount: [Amount]

  
	
  Fagen, Inc.

  	
  Description (Name and Location):

  
	
  P. O. Box 159

  	
  [Project Name and Location]

  
	
  Granite Falls, MN 
  56241

  	
  OWNER (Name and Address):

  
	
  CONSTRUCTION CONTRACT

  	
  [Owner Name/Address]

  
	
  Date:

  	
  SURETY (Name and Principal Place of

  Business): [Name/Place of Business]

  

 

BOND# 

Date (Not earlier than Construction Contract Date): 

Amount:

Modifications to this
Bond:                               o
None                 o
See Page 2

	
  CONTRACTOR AS PRINCIPAL

  	
  SURETY

  
	
  Company:

  	
  (Corporate Seal)

  	
  Company:

  	
  (Corporate Seal)

  
	
  Fagen, Inc.

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
  Name and Title:

  	
   

  
	
  (Any additional signatures appear an page 2.)

  	
   

  
	
  (FOR INFORMATION Only- Name, Address and
  Telephone)

  	
  OWNER’S REPRESENTATIVE (Architect, Engineer or other
  party):

  
									

 

AGENT or BROKER:

 

1.             The Contractor and the Surety, jointly and severally,
bind themselves, their heirs, executors, administrators, successors and assigns
to the Owner for the performance of the Construction Contract, which is
incorporated herein by reference.

2.             If the Contractor performs the Construction Contract,
the Surety and the Contractor shall have no obligation under this Bond, except
to participate in conferences as provided in Subparagraph 3.1.

3.             If there is no Owner Default, the Surety’s obligation
under this Bond shall arise after:

3.1           The Owner has notified the Contractor
and the Surety at its address described in Paragraph 10 below that the Owner is
considering declaring a Contractor Default and has requested and attempted to
arrange a conference with the Contractor and the Surety to be held not later
than fifteen days after receipt of such notice to discuss methods of performing
the Construction Contract.  If the Owner,
the Contractor and the Surety agree, the Contractor shall be allowed a
reasonable time to perform the Construction Contract, but such an agreement
shall not waive the Owner’s right, if any, subsequently to declare a Contractor
Default; and

3.2           The Owner has declared a Contractor
Default and formally terminated the Contractor’s right to complete the
contract.  Such Contractor Default shall
not be declared earlier than twenty days after the Contractor and Surety have
received notice as provided in Subparagraph 3.1; and

 H-1
 

3.3           The Owner has agreed to pay the
Balance of the Contract Price to the Surety in accordance with the terms of the
Construction Contract or to a contractor selected to perform the Construction
Contract in accordance with the terms of the contract with the Owner.

4.             When the Owner has satisfied the conditions of Paragraph
3, the Surety shall promptly and at the Surety’s expense take one of the
following actions:

4.1           Arrange for the Contractor with
consent of the Owner, to perform and complete the Construction Contract; or

4.2           Undertake to perform and complete the
Construction Contract itself, through its agents or through independent
contractors; or

4.3           Obtain bids or negotiated proposals
from qualified contractors acceptable to the Owner for a contract for
performance and completion of the Construction Contract, arrange for a contract
to be prepared for execution by the Owner and the contractor selected with the
Owner’s concurrence, to be secured with performance and payment bonds executed
by a qualified surety equivalent to the bonds issued on the Construction
Contract, and pay to the Owner the amount of damages as described in Paragraph
6 in excess of the Balance of the Contract Price incurred by the Owner
resulting from the Contractor’s default; or

4.4           Waive its right to perform and complete,
arrange for completion, or obtain a new contractor and with reasonable
promptness under the circumstances:

.1             After
investigation, determine the amount for which it may be liable to the Owner
and, as soon as practicable after the amount is determined, tender payment
therefor to the Owner; or

.2             Deny
liability in whole or in part and notify the Owner citing reasons therefor.

5.             If the Surety does not proceed as provided in Paragraph
4 with reasonable promptness, the Surety shall be deemed to be in default on
this Bond fifteen days after receipt of an additional written notice from the
Owner to the Surety demanding that the Surety perform its Obligations under
this Bond, and the Owner shall be entitled to enforce any remedy available to
the Owner.  If the Surety proceeds as
provided in Subparagraph 4.4, and the Owner refuses the payment tendered or the
Surety has denied liability, in whole or in part, without further notice the
Owner shall be entitled to enforce any remedy available to the Owner.

6.             After the Owner has terminated the Contractor’s right to
complete the Construction Contract, and if the Surety elects to act under
Subparagraph 4.1, 4.2, or 4.3 above, then the responsibilities of the Surety to
the Owner shall not be greater than those of the Contractor under the
Construction Contract, and the responsibilities of the Owner to the Surety
shall not be greater than those of the Owner under the Construction
Contract.  To the limit of the amount of
this Bond, but subject to commitment by the Owner of the Balance of the
Contract Price to mitigation of costs and damages on the Construction Contract,
the Surety is obligated without duplication for:

6.1           The responsibilities of the
Contractor for correction of defective work and completion of the Construction
Contract;

6.2           Additional legal design professional
and delay costs resulting from the Contractor’s Default, and resulting from the
actions or failure to act of the Surety under Paragraph 4; and

6.3           Liquidated damages, or if no
liquidated damages are specified in the Construction Contract, actual damages
caused by delayed performance or non-performance of the Contractor.

 H-2
 

7.             The Surety shall not be liable to the Owner or others
for obligations of the Contractor that are unrelated to the Construction Contract
and the Balance of the Contract Price shall not be reduced or set off on
account of any such unrelated obligations. No right of action shall accrue on
this Bond to any person or entity other than the Owner or its heirs, executors,
administrators or successors.

8.             The Surety hereby waives notice of any change, including
changes of time, to the Construction Contract or to related subcontracts,
purchase orders and other obligations.

9.             Any proceeding, legal or equitable, under this Bond may
be instituted in any court of competent jurisdiction in the location in which
the work or part of the work is located and shall be instituted within two
years after Contractor Default or within two years after the Contractor ceased
working or within two years after the Surety refuses or fails to perform its
obligations under this Bond, whichever occurs first.  If the provisions of this Paragraph are void
or prohibited by law, the minimum period of limitation available to sureties as
a defense in the jurisdiction of the suit shall be applicable.

10.           Notice to the Surety, the Owner or
the Contractor shall be mailed or delivered to the address shown on the
signature page.

11.           When this Bond has been furnished to
comply with a statutory or other legal requirement in the location where the
construction was to be performed, any provision in this Bond conflicting with
said statutory or legal requirement shall be deemed deleted herefrom and
provisions conforming to such statutory or other legal requirement shall be
deemed incorporated herein. The intent is that this Bond shall be construed as
a statutory bond and not as a common law bond.

12.           DEFINITIONS

12.1         Balance of the Contract Price: The
total amount payable by the Owner to the Contractor under the Construction
Contract after all proper adjustments have been made, including allowance to
the Contractor of any amounts received or to be received by the Owner in
settlement of insurance or other claims for damages to which the Contractor is
entitled, reduced by all valid and proper payments made to or on behalf of the
Contractor under the Construction Contract.

12.2         Construction Contract: The agreement
between the Owner and the Contractor identified on the signature page,
including all Contract Documents and changes thereto.

12.3         Contractor Default: Failure of the
Contractor, which has neither been remedied nor waived, to perform or otherwise
to comply with the terms of the Construction Contract.

12.4         Owner Default: Failure of the Owner,
which has neither been remedied nor waived, to pay the Contractor as required
by the Construction Contract or to perform and complete or comply with the
other terms thereof.

MODIFICATIONS
TO THIS BOND ARE AS FOLLOWS:

This bond is
subject to the attached Dual Obligee Rider dated

(Space is provided below
for additional signatures of added parties other than those appearing on the
cover page.)

 H-3
 

 

	
  CONTRACTOR AS PRINCIPAL

  	
  SURETY

  
	
   

  	
  (Corporate Seal)

  	
   

  	
  (Corporate Seal)

  
	
  Company:

  	
   

  	
   

  	
  Company:

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
  Name and Title:

  	
   

  
	
  Signature:

  	
   

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
											

 

 H-4
 

DUAL
OBLIGEE RIDER

(TO BE ATTACHED TO BOND AT TIME OF ISSUANCE)

TO BE ATTACHED
TO AND FORM PART OF Performance and Payment
Bond NO.                   ,
dated concurrently with the execution of this Rider, issued by the                   ,
a                   
corporation, as Surety, on behalf of Fagen,
Inc., as Principal, and in favor of                          ,
as Obligee.

IT IS HEREBY UNDERSTOOD AND AGREED that the above
described bond(s) are hereby amended to include the following paragraph:

Notwithstanding anything
contained herein to the contrary, there shall be no liability on the part of
the Principal or Surety under this bond to the Obligees, or either of them,
unless the Obligees, or either of them, shall make payments to the Principal or
to the Surety in case it arranges for completion of the Contract upon default
of the Principal, strictly in accordance with the terms of said Contract as to
payments, and shall perform all the other obligations required to be performed
under said Contract at the time and in the manner therein set forth.

IT IS FURTHER UNDERSTOOD AND AGREED that nothing
herein contained shall be held to change, alter or vary the terms of the above
described bond(s) except as hereinbefore set forth.

SIGNED, SEALED AND DATED this          
day of                   ,
200   .

	
   

  	
  Fagen, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Contractor)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [                      ]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Surety)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

 H-5

EXHIBIT I

Form of Payment Bond

PAYMENT BOND

The American Institute of Architects,

AIA Document No. A312 (December, 1984 Edition)

Any singular reference to Contractor, Surety, Owner or other

party shall be considered plural where applicable.

	
  CONTRACTOR (Name and Address):

  Fagen, Inc.

  P. O. Box 159

  Granite Falls, MN  56241

  	
  SURETY (Name and Principal Place of Business):

  
	
  OWNER (Name and Address):

  [NAME AND ADDRESS] 

  	
   

  
	
  CONSTRUCTION CONTRACT

  Date: 

  Amount: 

  Description (Name and Location):

  	
   

  
	
   

  	
   

  
	
  BOND #

  Date (Not earlier than Construction Contract Date): 

  Amount:

  	
   

  
	
   

  	
   

  
	
  Modifications to this Bond:               □ None   □
  See Page 2

  
	
   

  
	
  CONTRACTOR AS PRINCIPAL

  	
  SURETY

  
	
  Company:                              (Corporate
  Seal)

  	
  Company:                              (Corporate
  Seal)

  
	
  Fagen, Inc.

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
  Name and Title:

  	
   

  	
   

  
	
  (Any
  additional signatures appear an page 2.)

  
	
  (FOR INFORMATION
  Only—Name, Address and Telephone)

  	
  OWNER’S REPRESENTATIVE (Architect, Engineer or other
  party):

  
								

 

AGENT or BROKER:

1.             The
Contractor and the Surety, jointly and severally, bind themselves, their heirs,
executors, administrators, successors and assigns to the Owner to pay for
labor, materials and equipment furnished for use in the performance of the
Construction Contract, which is incorporated herein by reference.

2.             With
respect to the Owner, this obligation shall be null and void if the Contractor:

2.1           Promptly
makes payment, directly or indirectly, for all sums due Claimants, and

2.2           Defends,
indemnifies and holds harmless the Owner from claims, demands, liens or suits
by any person or entity whose claim, demand, lien or suit is for the payment
for labor, materials or equipment furnished for use in the performance of the
Construction Contract, provided the Owner has promptly notified the Contractor
and the Surety

 I-1
 

(at the address described
in Paragraph 12) of any claims; demands, liens or suits and tendered
defense of such claims, demands, liens or suits to the Contractor and the
Surety, and provided there is no Owner Default.

3.             With
respect to Claimants, this obligation shall be null and void if the Contractor
promptly makes payment, directly or Indirectly, for all sums due.

4.             The
Surety shall have no obligation to Claimants under this Bond until:

4.1           Claimants
who are employed by or have a direct contract with the Contractor have given
notice to the Surety (at the address described in Paragraph 12) and sent a
copy, or notice thereof, to the owner, stating that a claim is being made under
this Bond and, with substantial accuracy, the amount of the claim.

4.2           Claimants
who do not have a direct contract with the Contractor:

4.2.1        Have
furnished written notice to the Contractor and sent a copy, or notice thereof,
to the Owner, within 90 days after having last performed labor or last
furnished materials or equipment included in the claim stating, with
substantial accuracy, the amount of the claim and the name of the party to whom
the materials were furnished or supplied or for whom the labor was done or
performed; and

4.2.2        Have
either received a rejection in whole or in part from the Contractor, or not
received within 30 days of furnishing the above notice any communication from
the Contractor by which the Contractor has indicated the claim will be paid
directly or Indirectly; and

4.2.3        Not
having been paid within the above 30 days, have sent a written notice to the
Surety (at the address described in Paragraph 12) and sent a copy, or notice
thereof, to the Owner, stating that a claim is being made under this Bond and
enclosing a copy of the previous written notice furnished to the Contractor.

5.             If
a notice required by Paragraph 4 is given by the Owner to the Contractor or to
the Surety that is sufficient compliance.

6.             When
the Claimant has satisfied the conditions of Paragraph 4, the Surety shall
promptly and at the Surety’s expense take the following actions:

6.1           Send
an answer to the Claimant, with a copy to the Owner, within 45 days after
receipt of the claim, stating the amounts that are undisputed and the basis for
challenging any amounts that are disputed.

6.2           Pay
or arrange for payment of any undisputed amounts.

7.             The
Surety’s total obligation shall not exceed the amount of this Bond, and the
amount of this Bond shall be credited for any payments made in good faith by
the Surety.

 I-2
 

8.             Amounts
owed by the Owner to the Contractor under the Construction Contract shall be
used for the performance of the Construction Contract and to satisfy claims, if
any, under any Construction Performance Bond. 
By the Contractor furnishing and the Owner accepting this Bond, they
agree that all funds earned by the Contractor in the performance of the
Construction Contract are dedicated to satisfy obligations of the Contractor
and the Surety under this Bond, subject to the Owner’s priority to use the
funds for the completion of the work.

9.             The
Surety shall not be liable to the Owner, Claimants or others for obligations of
the Contractor that are unrelated to the Construction Contract.  The Owner shall not be liable for payment of
any costs or expenses of any Claimant under this Bond, and shall have under
this Bond no obligation to make payments to, give notices on behalf of, or
otherwise have obligations to Claimants under this Bond.

10.           The
Surety hereby waives notice of any change, including changes of time, to the
Construction Contract or to related subcontracts, purchase orders and other
obligations.

11.           No
suit or action shall be commenced by a Claimant under this Bond other than in a
court of competent jurisdiction in the location in which the work or part of
the work is located or after the expiration of one year from the date (1) on
which the Claimant gave the notice required by Subparagraph 4.1 or Clause
4.2.3, or (2) on which the last labor or service was performed by anyone or the
last materials or equipment were furnished by anyone under the Construction
Contract, whichever of (1) or (2) first occurs. If the provisions of this
Paragraph are void or prohibited by law, the minimum period of limitation
available to sureties as a defense in the jurisdiction of the suit shall be
applicable.

12.           Notice
to the Surety, the Owner or the Contractor shall be mailed or delivered to the
address shown on the signature page. Actual receipt of notice by Surety, the
Owner or the Contractor, however accomplished, shall be sufficient compliance
as of the date received at the address shown on the signature page.

13.           When
this Bond has been furnished to comply with a statutory or other legal
requirement in the location where the construction was to be performed, any
provision in this Bond conflicting with said statutory or legal requirement
shall be deemed deleted herefrom and provisions conforming to such statutory or
other legal requirement shall be deemed incorporated herein.  The intent is that this Bond shall be
construed as a statutory bond and not as a common law bond.

14.           Upon
request by any person or entity appearing to be a potential beneficiary of this
Bond, the Contractor shall promptly furnish a copy of this Bond or shall permit
a copy to be made.

15.           DEFINITIONS

15.1         Claimant:
An individual or entity having a direct contract with the Contractor or with a
subcontractor of the Contractor to furnish labor, materials or equipment for
use in the performance of the Contract. The intent of this Bond shall be to
include without limitation in the terms “labor, materials or equipment” that
part of water, gas, power, light, heat, oil, gasoline, telephone service or
rental equipment used in the Construction Contract,

 I-3
 

architectural and
engineering services required for performance of the work of the Contractor and
the Contractor’s subcontractors, and all other items for which a mechanic’s
lien may be asserted in the jurisdiction where the labor, materials or
equipment were furnished.

15.2         Construction
Contract: The agreement between the Owner and the Contractor identified on the
signature page, including all Contract Documents and changes thereto.

15.3         Owner
Default: Failure of the Owner, which has neither been remedied nor waived, to
pay the Contractor as required by the Construction Contract or to perform and
complete or comply with the other terms thereof.

MODIFICATIONS
TO THIS BOND ARE AS FOLLOWS:

This bond is subject to
the attached Dual Obligee Rider dated [                   ].

(Space is provided below
for additional signatures of added parties other than those appearing on the
cover page.)

	
  CONTRACTOR AS PRINCIPAL

  	
  SURETY

  
	
   

  	
  (Corporate Seal)

  	
   

  	
  (Corporate Seal)

  
	
  Company:

  	
   

  	
   

  	
  Company:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
  Name and Title:

  	
   

  
	
  Signature:

  	
   

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
											

 

 I-4
 

DUAL OBLIGEE RIDER

(TO BE ATTACHED TO
BOND AT TIME OF ISSUANCE)

TO BE ATTACHED TO AND
FORM PART OF Performance and Payment Bond NO.
                 ,
dated concurrently with the execution of this Rider, issued by the                      ,
a                      
corporation, as Surety, on behalf of Fagen,
Inc., as Principal, and in favor of                         ,
as Obligee.

IT IS HEREBY UNDERSTOOD
AND AGREED that the above described bond(s) are hereby amended to include the
following paragraph:

Notwithstanding
anything contained herein to the contrary, there shall be no liability on the
part of the Principal or Surety under this bond to the Obligees, or either of
them, unless the Obligees, or either of them, shall make payments to the
Principal or to the Surety in case it arranges for completion of the Contract
upon default of the Principal, strictly in accordance with the terms of said
Contract as to payments, and shall perform all the other obligations required
to be performed under said Contract at the time and in the manner therein set
forth.

IT IS FURTHER UNDERSTOOD
AND AGREED that nothing herein contained shall be held to change, alter or vary
the terms of the above described bond(s) except as hereinbefore set forth.

SIGNED, SEALED AND DATED
this           day of                          ,
200   .

	
   

  	
  Fagen, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Contractor)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [                              ]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Surety)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

 I-5

EXHIBIT J

Draw (Payment) Schedule

MILLENNIUM
ETHANOL, LLC

Marion,
SD

Monthly Draw Schedule -
18 Month Project

 

	
   

  	
   

  	
   

  	
   

  	
  Previously

  	
   

  	
   

  	
   

  
	
  Month #

  	
   

  	
  This Month

  	
   

  	
  Completed

  	
   

  	
  Total

  	
   

  
	
  1

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  2

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  3

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  4

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  5

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  6

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  7

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  8

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  9

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  10

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  11

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  12

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  13

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  14

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  15

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  16

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  17

  	
   

  	
  $               ***

  	
   

  	
  $                ***

  	
   

  	
  $                ***

  	
   

  
	
  18

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  105,997,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
  105,997,000

  	
   

  	
   

  	
   

  
											

 

***
$8,000,000 Mobilization Fee included in 1st Billing

 

***
Confidential material omitted and filed separately with the United States
Securities and Exchange Commission pursuant to a request for confidential
treatment. 

 J-1

EXHIBIT K

Air
Emissions Application or Permit

See Air Permit Application Attached

 K-1

EXHIBIT L

Phase I
and Phase II Engineering Services Agreement

See Phase I and
Phase II Engineering Services Agreement Attached

 L-1

EXHIBIT M

Form of
Application for Payment

See Form of
Application for Payment Attached

 M-1

EXHIBIT N

Form of
Lien Waiver

GENERAL CONTRACTOR’S
PARTIAL WAIVER OF MECHANIC’S LIEN

RIGHTS AND AFFIDAVIT OF
DEBTS AND CLAIMS

CONDITIONAL LIEN
WAIVER

STATE:  (   INSERT STATE   )                                                                                          FAGEN,
INC.

COUNTY:  (  
INSERT COUNTY   )

The undersigned is the
General Contractor (aka Design-Builder) regarding labor and materials for
construction and maintenance work performed for (   INSERT OWNER/PLANT NAME   ), at the Facility located at or near (   INSERT PLANT CITY & STATE   ) under the terms of a contract.

On condition of receiving
full payment for billings up to date hereof under the terms
of the above mentioned contract, and other good and valuable consideration, the
receipt of which is hereby acknowledged, the undersigned does hereby waive and
release any and all liens, and any and all claims and rights to lien on the
Facility  (including all buildings on the
premises) under the statutes of the State of (   INSERT STATE   ) relating to mechanic’s liens on
account of labor and materials furnished by the undersigned up to the date
hereof at the Facility, as located on real estate legally described as follows:

TRACT 1:  (  
INSERT LEGAL DESCRIPTION   )

TRACT 2:  (  
INSERT LEGAL DESCRIPTION   )

 N-1
 

The undersigned further
certifies that all obligations of General Contractor entered into between
suppliers/subcontractors and General Contractor regarding this Facility are
current as of this date, including all obligations of General Contractor for
all work, labor and services performed; materials and equipment furnished; and
all known indebtedness and claims against General Contractor for damages
arising in any manner in connection with General Contractor’s performance of
the contract mentioned above for which General Contractor or property of
General Contractor might in any way be held responsible.

Dated this           
day of                         ,
200   .

	
  

  	
  GENERAL CONTRACTOR:

  
	
   

  	
  FAGEN, INC.

  
	
   

  	
   

  
	
   

  	
  By (Print):

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature):

  	
   

  
	
   

  	
   

  
	
   

  	
  Witness (Print):

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature):

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  In the
  alternative (or if requested):

  
	
  Subscribed and
  sworn to before me this

  
	
                 
  day of                            ,
  200   .

  
	
   

  
	
   

  	
   

  	
   

  
	
  Notary Public  

  	
   

  
	
  My Commission
  Expires:

  	
   

  	
   

  
											

 

 N-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]