Document:

[FAGEN,
                  INC. LOGO]

              	 	
                501
                  West Hwy. 212, P.O. Box 159

              
	 	
                www.fageninc.com

              	
                Granite
                  Falls, MN 56241

              
	 	 	
                320-564-3324

              
	 	 	
                320-564-3278
                  fax

              

      

    

    
      

      

      February
        1, 2007

      

      

      Prairie
        Creek Ethanol, LLC

      Attention:
        Brad Davis

      c/o
        Corn
        LP

      1303
        Highway 3 East

      Goldfield,
        IA 50542

      

      
        	
              	Re:	
                Prairie
                  Creek Ethanol, LLC Ethanol Project

              

      

      

      Dear
        Brad:

      

      This
        letter of intent will confirm our discussions regarding the proposed terms
        and
        conditions under which Fagen, Inc. (“Fagen”)
        will
        enter into exclusive negotiations with Prairie Creek Ethanol, LLC (“Owner”)
        to
        implement the transaction described in Paragraph 1 below (the “Transaction”).
        (Fagen and Owner are referred to herein individually as a “Party”
and
        collectively as the “Parties”).
        This
        letter will constitute a letter of intent between us (the “Letter
        of Intent”)
        if
        this letter is executed and returned by you within thirty (30) days of the
        date
        hereof.

      

      The
        Parties agree to effect the Transaction subject only to the execution and
        delivery (in each case in a form satisfactory to Fagen) of a definitive
        Design-Build Agreement and other ancillary instruments and agreements (the
        “Transaction
        Documents”).
        The
        Parties agree that Transaction Documents must be executed and delivered by
        the
        parties thereto no later than December 31, 2007 (the “Closing
        Date”)
        or
        this Letter of Intent will terminate by its terms in accordance with Paragraph
        11(a) hereof. 

      

      
        	
                1.

              	
                The
                  Transaction.
                  The Parties agree that the Transaction will consist of the
                  following:

              

      

      

      
        	 	
                (a)

              	
                Fagen
                  agrees to provide Owner with those services as described in this
                  Letter of
                  Intent which are necessary for Owner to develop a detailed description
                  of
                  a one hundred (100) million gallons per year (“MGY”)
                  dry grind ethanol production facility located at Wesley, Iowa (the
                  “Plant”)
                  and to establish a price for which Fagen would provide design,
                  engineering, procurement of equipment and construction services
                  for the
                  Plant. The description of the Plant will be sufficiently detailed
                  to
                  permit an analysis of the Owner’s lump-sum cost to develop the Plant and
                  to develop an economic pro forma sufficient to determine if the
                  Plant can
                  be financed. 

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
            2
of
            15

        

         

      

      
        	 	
                (b)

              	
                Fagen
                  will also provide Owner with assistance in evaluating, from both
                  a
                  technical and business perspective, Owner’s organizational options, the
                  appropriate location of the Plant, and business plan development.
                  Fagen
                  will assume no risk or liability of representation or advice to
                  Owner by
                  assisting in evaluating the above and all decisions made regarding
                  feasibility, financing, and business risks are the Owner’s sole
                  responsibility and liability. Owner acknowledges that Fagen has
                  no control
                  over cost of labor, materials, equipment, or services furnished
                  by others,
                  over other contractors’ methods of determining prices, or other
                  competitive bidding or market conditions. Fagen’s estimates of project
                  construction cost will be made on the basis of its experience and
                  qualifications and will represent Fagen’s best judgment as experienced and
                  qualified professionals familiar with the construction industry.
                  Fagen
                  does not guarantee that proposals, bids, or actual construction
                  cost will
                  not vary from its estimates of project cost and Owner acknowledges
                  the
                  same. 

              

      

      

      
        	 	
                (c)

              	
                Fagen
                  will also provide Owner with conceptual design and technical information
                  required to support Owner’s application for a construction air permit
                  prior to the commencement of Plant Construction.
                  

              

      

      

      
        	 	
                (d)

              	
                If
                  Owner determines that the Plant is economically feasible and desires
                  to
                  proceed with the development of the Plant, then Owner agrees to
                  enter into
                  a Lump Sum Design-Build contract with Fagen for the design, procurement
                  of
                  equipment and construction of the Plant (the “Design-Build
                  Agreement”).
                  

              

      

      
        	 	 	 

      

      
        	 	
                (e)

              	
                Owner
                  shall offer Fagen the right to invest in the project an amount
                  up to $5.0
                  million as decided by Fagen. Such investment shall entitle Fagen
                  to one
                  seat on the board of directors. Except as set forth above, and
                  unless
                  otherwise specifically agreed between Fagen and Owner, such investment
                  shall be offered on the same terms and conditions as all other
                  investors.

              

      

      

      
        	 	
                (f)

              	
                Owner
                  agrees that the Design-Build Agreement will be Fagen’s chosen form of
                  Design-Build Agreement and will contain among other things, those
                  terms
                  and conditions set forth in the General Terms and Conditions section
                  of
                  this Letter of Intent.

              

      

      

      
        	
                2.

              	
                Contract
                  Price.
                  Owner shall pay Fagen One Hundred Twenty-eight Million Eighty-five
                  Thousand One Hundred Ninety Dollars ($128,085,190.00) (the “Contract
                  Price”)
                  as full consideration to Fagen for complete performance of the
                  services
                  described in the Design-Build Agreement and all costs incurred
                  in
                  connection therewith. 

              

      

      

      
        	 	
                (a)

              	
                The
                  Contract Price shall not include any costs related to union labor
                  or
                  prevailing wage requirements. If any action by Owner, a change
                  in
                  Applicable Law, or a Governmental Authority (as those terms are
                  defined in
                  the Design-Build Agreement) acting pursuant to a change in Applicable
                  Law,
                  shall require Fagen 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 Fagen’s sole discretion and that if such option is
                  executed by Owner without Fagen’s agreement, Fagen shall have the right to
                  terminate this Letter of Intent or the Design-Build Agreement,
                  as
                  applicable, and receive compensation pursuant to Paragraph 4(c)
                  hereof or
                  the terms of the Design-Build Agreement, whichever is
                  applicable.

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
            3
of
            15

        

         

      

      
        	 	
                (b)

              	
                If
                  the Construction Cost Index published by Engineering News-Record
                  Magazine
                  (“CCI”)
                  for the earlier of (i) the month in which a Notice to Proceed is
                  given to
                  Fagen or (ii) September 2007, is greater than 7887.62 (December
                  2006), the
                  Contract Price shall be increased by a percentage amount equal
                  to the
                  percentage increase in CCI over such time
                  period.

              

      

      

      
        	 	
                (c)

              	
                Due
                  to rapidly accelerating costs of certain specialty materials required
                  for
                  Plant Construction, in addition to any adjustment provided for
                  in
                  Paragraph 2(b) hereof, Fagen shall also add a surcharge to the
                  Contract
                  Price of one half of one percent (0.50%) for each calendar month
                  that has
                  passed between December 2006 and the earlier of (i) the month in
                  which a
                  valid Notice to Proceed is given to Fagen or (ii) July 2007 (said
                  calculation to include the month of July). By way of example, if
                  a valid
                  Notice to Proceed is given in July 2007 and the CCI has increased two
                  percent (2%) over such period of time, the total adjustment to
                  the
                  Contract Price shall be two percent (2%) in accordance with Paragraph
                  2(b)
                  plus one half of one percent (0.50%) for each of the seven months
                  from
                  December 2006 to the delivery of a valid Notice to Proceed in accordance
                  with this paragraph, for a total adjustment of five and one half
                  percent
                  (5.5%).

              

      

      

      
        	
                3.

              	
                General
                  Terms and Conditions.
                  The consummation of the Transaction will be subject to the Design-Build
                  Agreement containing the following
                  conditions:

              

      

      

      
        	 	
                (a)

              	
                Fagen
                  will have no responsibility for and will not perform any site preparation
                  work. Owner’s site responsibilities will include, but will not be limited
                  to:

              

      

      
        	 	
                i.

              	
                Obtaining
                  land and legal authority to use the site for its intended
                  purpose;

              

      

      
        	 	
                ii.

              	
                site
                  grading including soil stabilization and the costs connected
                  therewith;

              

      

      
        	 	
                iii.

              	
                final
                  grading, seeding, and mulching;

              

      

      
        	 	
                iv.

              	
                site
                  security, including any site
                  fencing;

              

      

      
        	 	
                v.

              	
                procuring
                  boundary and topographic surveys;

              

      

      
        	 	
                vi.

              	
                procuring
                  soil borings and geotechnical
                  reports;

              

      

      
        	 	
                vii.

              	
                obtaining
                  all operating permits, including any fees, bonding, and required
                  testing;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
            4
of
            15

        

         

      

      
        	 	
                viii.

              	
                obtaining
                  storm water runoff permit;

              

      

      
        	 	
                ix.

              	
                obtaining
                  any necessary pollutant elimination discharge
                  permit;

              

      

      
        	 	
                x.

              	
                obtaining
                  a natural gas supply and service agreement and providing all gas
                  piping to
                  the use points, providing burner tip pressures as specified by
                  Fagen, and
                  supplying a digital flowmeter; 

              

      

      
        	 	
                xi.

              	
                securing
                  temporary and permanent electrical service, including all infrastructure
                  design and installation for any line/service extensions, substation,
                  primary feed and metering system, and on-site electrical distribution
                  system up to and including the service
                  transformers;

              

      

      
        	 	
                xii.

              	
                supplying
                  a water source, storage, and water supply lines of appropriate
                  quality and
                  quantity;

              

      

      
        	 	
                xiii.

              	
                paying
                  for a water pre-treatment system should the project require such
                  a system,
                  the cost of which is not included in the Contract Price, and which
                  shall
                  be provided by Fagen pursuant to a separate side-letter agreement
                  executed
                  by Owner and Fagen at Fagen’s standard time plus material rates during the
                  relevant time period and at the relevant
                  locale;

              

      

      
        	 	
                xiv.

              	
                providing
                  wastewater discharge piping, septic tank and drainfield or connect
                  to a
                  municipal system as required for the sanitary sewer requirements
                  of the
                  Plant;

              

      

      
        	 	
                xv.

              	
                providing
                  and maintain required ditches and permanent
                  roads;

              

      

      
        	 	
                xvi.

              	
                constructing,
                  furnishing, and equipping the administration
                  building;

              

      

      
        	 	
                xvii.

              	
                providing
                  maintenance and power equipment and spare
                  parts;

              

      

      
        	 	
                xviii.

              	
                providing
                  all rail design, engineering, and construction, including any railroad
                  permits or approvals;

              

      

      
        	 	
                xix.

              	
                supplying
                  drawings of rail system and administration building to Fagen;
                  and

              

      

      
        	 	
                xx.

              	
                paying
                  for the required fire protection system for the Plant (as defined
                  by
                  Fagen, and which includes but is not limited to all piping systems,
                  instrumentation, controls, fire water process storage tank, deluge
                  system,
                  and other equipment areas as required by Fagen, applicable code,
                  and
                  Owner’s selected insurance requirements), the cost of which is not
                  included in the Contract Price. Owner shall have all fire protection
                  systems and equipment ordered within thirty (30) days of Fagen’s provision
                  of all necessary specifications, as determined by Fagen. Any labor
                  or
                  materials provided by Fagen with respect to such system shall be
                  provided
                  at Fagen’s standard time plus material rates during the relevant time
                  period and at the relevant locale.

              

      

      

      
        	 	
                (b)

              	
                Owner
                  will enter into a Phase I and Phase II Engineering Services Agreement
                  with
                  Fagen Engineering, LLC. The Phase I and Phase II Engineering Services
                  Agreement will provide for commencement of work on the Phase I
                  and Phase
                  II engineering for the project as set forth therein. The Phase
                  I
                  engineering shall consist of engineering and design of the Plant
                  site and
                  shall include: property layout; grading, drainage and erosion control
                  plan
                  drawings; roadway alignment drawings; culvert cross sections and
                  details;
                  and seeding and landscaping, if required. The Phase II engineering
                  shall
                  consist of engineering and design of site work and utilities for
                  the
                  Plant, all within the property line of the Plant, including: property
                  layout; site grading and drainage drawings; roadway alignment;
                  all utility
                  layout including fire loop, potable water, well water if applicable,
                  sanitary sewer, utility water blowdown, and natural gas; geometric
                  layout;
                  site utility piping tables; tank farm layout; tank farm details;
                  sections
                  and details drawing, if required, and miscellaneous details drawing,
                  if
                  required. Owner will pay Fagen Engineering, LLC One Hundred Eighty-five
                  Thousand Dollars ($185,000.00) 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 the
                  terms of
                  the Design-Build Agreement, or Financial Closing is not obtained,
                  then
                  Fagen Engineering, LLC shall keep the full amount paid under the
                  Phase I
                  and Phase II Engineering Services Agreement as compensation for
                  the
                  services provided thereunder.

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
            5
of
            15

        

         

      

      
        	 	
                (c)

              	
                Fagen
                  will provide reasonable assistance to Owner in obtaining Owner’s permits,
                  approvals and licenses.

              

      

      

      
        	 	
                (d)

              	
                Owner
                  will provide: surveys describing the property’s boundaries; geotechnical
                  studies describing subsurface conditions; temporary and permanent
                  easements, zoning and other requirements and encumbrances to enable
                  Fagen
                  to perform the work; a legal description of the site; as-built
                  and record
                  drawings of any existing structures; environmental studies, reports,
                  and
                  statements describing the environmental conditions, including hazardous
                  conditions at the site.

              

      

      

      
        	 	
                (e)

              	
                Owner
                  will be responsible for securing and executing all necessary real
                  estate
                  agreements to secure the site and is responsible for all costs
                  incurred in
                  obtaining those agreements. 

              

      

      

      
        	 	
                (f)

              	
                Fagen
                  may subcontract portions of the
                  work.

              

      

      

      
        	 	
                (g)

              	
                Fagen
                  will provide up to two (2) weeks of training for Owner’s employees and, if
                  applicable, Owner’s Operator’s employees required for the operation and
                  maintenance of the Plant.

              

      

      

      
        	 	
                (h)

              	
                Owner
                  must obtain Financial Closing prior to the issuance of a Notice
                  to
                  Proceed, or if agreeable to Fagen, in its sole discretion, provide
                  Fagen
                  an acceptable Owner’s certificate containing terms and conditions
                  satisfactory to Fagen.

              

      

      

      
        	 	
                (i)

              	
                Owner
                  will pay all reasonable costs incurred by Fagen for frost removal
                  so that
                  winter construction can proceed. Such costs will be in addition
                  to, and
                  not included in, the Contract
                  Price.

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
            6
of
            15

        

         

      

      
        	 	
                (j)

              	
                Fagen
                  will utilize certain proprietary property and information of ICM,
                  Inc., a
                  Kansas corporation (“ICM”),
                  in the design and construction of the project, and may incorporate
                  proprietary property and information of ICM into the project. Owner’s use
                  of the proprietary property and information of ICM shall be governed
                  by
                  the terms and provisions of a license agreement between Owner and
                  ICM
                  which shall be attached as an exhibit to the Design-Build Agreement.
                  Owner
                  will be responsible for negotiating any requested changes to the
                  ICM
                  license directly with ICM, not
                  Fagen.

              

      

      

      
        	 	
                (k)

              	
                All
                  drawings, specifications, calculations, data, notes and other materials
                  and documents, including electronic data furnished by Fagen to
                  Owner under
                  the Design-Build Agreement (“Work
                  Product”)
                  will be instruments of service and Fagen will retain the ownership
                  and
                  property interests therein, including copyrights
                  thereto.

              

      

      

      
        	 	
                (l)

              	
                Upon
                  payment in full under the Design-Build Agreement, Fagen will grant
                  Owner a
                  limited license to the Work Product for use solely in connection
                  with the
                  operation, maintenance, and repair of the Plant. The limited license
                  will
                  not permit Owner to use the Work Product in connection with any
                  expansion
                  or enlargement of the Plant, however, nothing in the limited license
                  granted to Owner is intended to limit Owner’s use of the Plant’s actual
                  production capability as built.

              

      

      

      
        	 	
                (m)

              	
                Work
                  will commence following receipt of Owner’s written valid notice to proceed
                  (“Notice
                  to Proceed”).
                  The Notice to Proceed cannot be given until (1) the
                  Owner has title to the real estate on which the project will be
                  constructed; (2)
                  the site work required of Owner is completed; (3)
                  the air permit(s) and/or other applicable local, state or federal
                  permits
                  necessary for construction to begin have been obtained; (4)
                  Owner has obtained Financial Closing; (5)
                  if applicable, Owner executes a sales tax exemption certificate
                  and
                  provides to Fagen; (6) Owner provides 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; and
                  (8)
                  Fagen
                  has provided Owner written notification of its acceptance of the
                  Notice to
                  Proceed,
                  provided that Fagen shall not be required to accept the Notice
                  to Proceed
                  prior to September 24, 2007. If
                  Owner has not fulfilled its requirements for the issuance of a
                  Notice to
                  Proceed as set forth in this Paragraph 3(m) by the date referenced
                  in item
                  number 8 of this Paragraph, Fagen may, at its sole option, terminate
                  the
                  Design-Build Agreement, thus releasing Fagen of all
                  obligations.

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
            7
of
            15

        

         

      

      
        	 	
                (n)

              	
                “Substantial
                  Completion”
                  will be the date on which the Plant construction has been completed
                  to a
                  point that the Plant is ready to grind the first batch of corn
                  for
                  producing ethanol and begin operation for its intended use as a
                  one
                  hundred (100) MGY dry grind ethanol production facility. No production
                  capacity is guaranteed on the Substantial Completion date, but
                  the Plant
                  is largely completed as of that date.

              

      

      

      
        	 	
                (o)

              	
                Substantial
                  Completion will occur within Six Hundred Thirty-Five (635) days
                  after the
                  date of the Notice to Proceed.

              

      

      

      
        	 	
                (p)

              	
                Fagen
                  will be entitled to an early completion bonus for each day that
                  Substantial Completion occurs in advance of Five Hundred Forty-Five
                  (545)
                  days (“Early
                  Completion Bonus”).
                  The Early Completion Bonus is earned for achieving Substantial
                  Completion
                  early, but is not due until the final
                  payment.

              

      

      

      
        	 	
                (q)

              	
                “Final
                  Completion”
                  will be achieved once Owner reasonably determines that: Substantial
                  Completion has been achieved; any outstanding amounts owed by Fagen
                  to
                  Owner have been paid; remaining items of work have been completed;
                  clean-up of the site has been completed; all permits required to
                  have been
                  obtained by Fagen have been obtained; certain information including
                  an
                  affidavit stating that there are no outstanding liens, a release
                  from
                  further compensation, consent to final payment, and a hard copy
                  of the
                  as-built plans (which will remain Work Product) has been provided
                  to
                  Owner; releases and waivers of all claims and liens from Fagen
                  and
                  subcontractors have been provided; and the Performance Tests have
                  been
                  successfully completed. Final Completion will occur no more than
                  ninety
                  (90) days after the actual Substantial Completion date. The 90-day
                  period
                  between Substantial Completion and Final Completion will be tied
                  directly
                  to actual Substantial Completion. By way of example, if Substantial
                  Completion is achieved 10 days early, then the 90-day period to
                  Final
                  Completion would begin on that earlier
                  date.

              

      

      

      
        	 	
                (r)

              	
                Fagen
                  will demonstrate certain performance guarantee criteria through
                  performance testing performed following Substantial Completion
                  but prior
                  to Final Completion (“Performance
                  Tests”).
                  Air permit testing shall be done by a third party contractor retained
                  by
                  Owner.

              

      

      

      
        	 	
                (s)

              	
                Owner
                  will take control of the Plant after completion and acceptance
                  of the
                  Performance Tests. The Performance Tests will be completed by Owner’s
                  personnel under Fagen’s direction. 

              

      

      

      
        	 	
                (t)

              	
                Fagen
                  will pay liquidated damages at a daily amount equal to the daily
                  Early
                  Completion Bonus amount for each day past 90 days after Substantial
                  Completion that Final Completion is not attained. Fagen’s liability for
                  liquidated damages shall be capped at and shall not exceed One
                  Million
                  Dollars ($1,000,000.00).

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
            8
of
            15

        

         

      

      
        	 	
                (u)

              	
                The
                  aggregate liability of Fagen, 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 Fagen’s performance or
                  non-performance of its obligations under the Design-Build Agreement,
                  whether based on contract, tort (including negligence), strict
                  liability,
                  or otherwise, shall not exceed in the aggregate, the Contract Price
                  and
                  shall be reduced, upon the issuance of each Application for Payment,
                  by
                  the total value of such Application for Payment; provided, however,
                  that
                  upon the earlier of Substantial Completion or such point in time
                  that
                  requests for payment pursuant to the Design-Build Agreement have
                  been made
                  for ninety percent (90%) of the Contract Price, Fagen'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 Fagen under the Design-Build
                  Agreement.

              

      

      

      
        	 	
                (v)

              	
                The
                  warranty period for work completed pursuant to the Design-Build
                  Agreement
                  will extend for one year past Substantial Completion. The Warranty
                  will
                  not apply to defects caused by abuse, alterations, or failure to
                  maintain
                  the work by persons other than Fagen or anyone for whose acts Fagen
                  may be
                  liable. The warranty period will be extended one day for each day
                  that
                  such part of the work repaired under such warranty is malfunctioning
                  or
                  not in conformance with project requirements provided that Owner
                  must
                  report such non-conformance or malfunction within seven (7) days
                  of the
                  appearance of such non-conformance or malfunction.
                  

              

      

      

      
        	 	
                (w)

              	
                Owner
                  will pay Fagen a mobilization fee in the amount of Ten Million
                  Dollars
                  ($10,000,000.00) as soon as possible following the execution of
                  the
                  Design-Build Agreement, and at the latest, at the earlier to occur
                  of
                  financial closing or the issuance of a Notice to
                  Proceed.

              

      

      

      
        	 	
                (x)

              	
                Fagen
                  will request payment and Owner will pay Fagen in accordance with
                  the
                  following procedures:

              

      

      

      
        	 	
                i.

              	
                Fagen
                  will submit to Owner a request for payment (an “Application
                  for Payment”)
                  on or before the twenty-fifth (25th) day of each month following
                  the
                  acceptance of Notice to Proceed. Along with each Application for
                  Payment,
                  Fagen will submit to Owner signed lien waivers for the work included
                  in
                  the Application for Payment submitted for the immediately preceding
                  pay
                  period and for which payment has been received.

              

      

      
        	 	
                ii.

              	
                The
                  Application for Payment will constitute Fagen’s representation that the
                  work has been performed consistent with the Transaction Documents
                  and has
                  progressed to the point indicated in the Application for Payment.
                  No
                  additional documentation will be provided to Owner in support of
                  the
                  Application for Payment. The work completed at the site and the
                  comparison
                  of the Application for Payment against the Schedule of Values shall
                  provide sufficient substantiation to Owner of the accuracy of the
                  Application for Payment. The Schedule of Values subdivides the
                  work into
                  its respective parts, includes values for all items comprising
                  the work,
                  and serves as the basis for the monthly progress
                  payments.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
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            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
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                iii.

              	
                The
                  Application for Payment may request payment for equipment and materials
                  not yet incorporated into the project
                  only if Owner is reasonably satisfied that the materials and equipment
                  are
                  suitably stored at the site or elsewhere and are protected by suitable
                  insurance. Upon payment, Owner will receive title to such equipment
                  and
                  materials.

              

      

      
        	 	
                iv.

              	
                Owner
                  shall make payment within ten (10) days of receipt of the Application
                  for
                  Payment. Failure to make such payment will result in the accrual
                  of
                  interest at a rate of eighteen percent (18%) per annum commencing
                  five (5)
                  days after the payment is due. Failure to make such payment, except
                  if due
                  to appropriate withholding of payment due to a good faith dispute,
                  entitles Fagen to stop work.

              

      

      
        	 	
                v.

              	
                If
                  Owner wishes to dispute any portion of the Application for Payment,
                  Owner
                  must notify Fagen in writing at least five (5) days prior to the
                  date
                  payment is due. Such notice must state the specific amounts Owner
                  intends
                  to withhold, the reasons and contractual basis for withholding,
                  and the
                  specific measures Fagen must take to rectify Owner’s concerns. Regardless
                  of a dispute as to a portion of the Application for Payment, Owner
                  must
                  pay all undisputed amounts by the payment due
                  date.

              

      

      
        	 	
                vi.

              	
                Retainage
                  on progress payments made pursuant to the Design-Build Agreement
                  will be
                  capped at five percent (5%) of the total price. Owner will retain
                  ten
                  percent (10%) of each payment up to a maximum of five percent (5%)
                  of the
                  total Contract Price. Once five percent (5%) of the total price
                  has been
                  retained, Owner will not retain any additional amounts from subsequent
                  payments. Owner will release retainage, less the amount equal to
                  the value
                  of subcontractor lien waivers not yet obtained, upon completion
                  of the
                  Performance Tests.

              

      

      
        	 	
                vii.

              	
                Upon
                  Final Completion, Fagen will deliver to Owner a request for final
                  payment.
                  Owner will make the final payment within thirty (30) days after
                  the
                  receipt of such request. Owner’s failure to make Final Payment will void
                  any and all warranties, whether express or implied, provided by
                  Fagen
                  pursuant to the Design-Build
                  Agreement.

              

      

      

      
        	 	
                (y)

              	
                Fagen
                  will not be responsible for any hazardous condition encountered
                  at the
                  site and may stop work in an affected area until such hazardous
                  condition
                  is removed by Owner.

              

      

      

      
        	 	
                (z)

              	
                Fagen
                  will not be responsible for differing site conditions including
                  concealed
                  or latent physical conditions or subsurface conditions and will
                  be
                  entitled to a price adjustment to the Contract Price to the extent
                  that
                  its cost and/or time of performance is adversely impacted by the
                  differing
                  site conditions. 

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
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            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
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                (aa)

              	
                “Force
                  Majeure Events”
                  shall mean any 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); economic hardship or
                  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 of the Design-Build
                  Agreement (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.

              

      

      

      
        	 	
                (bb)

              	
                If
                  Fagen 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 Fagen or its subcontractors which is experienced
                  or
                  expected to be experienced by certain markets providing essential
                  materials, equipment or labor to the project during the performance
                  of the
                  work and such economic fluctuation or disruption adversely impacts
                  the
                  price, availability, and delivery timeframes of essential materials
                  and
                  equipment (such event an “Industry-Wide
                  Disruption”),
                  Fagen shall be entitled to an equitable extension of the Contract
                  Time on
                  a day-for-day basis equal to such delay and an equitable adjustment
                  to the
                  Contract Price. The Owner and Fagen shall undertake reasonable
                  steps to
                  mitigate the effect of such delays. Notwithstanding any other provision
                  to
                  the contrary, Fagen 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.

              

      

      

      
        	
                4.

              	
                Exclusivity,
                  No Solicitation or Negotiations.
                  

              

      

      

      
        	 	
                (a)

              	
                Neither
                  Owner, nor its affiliates, shareholders, members or other equity
                  owners,
                  or their officers, representatives, agents or employees will solicit
                  or
                  negotiate, directly or indirectly, with any third party to obtain
                  the
                  services contemplated by this Letter of
                  Intent.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
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            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
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                (b)

              	
                During
                  the term of this Letter of Intent the Owner agrees that Fagen will
                  have
                  the exclusive right to provide to Owner the services contemplated
                  by the
                  Letter of Intent. Developer and Owner will not disclose any information
                  related to this Letter of Intent to a competitor or prospective
                  competitor
                  of Fagen.

              

      

      

      
        	 	
                (c)

              	
                Should
                  Owner choose not to develop the project or to develop or pursue
                  a
                  relationship with a company other than Fagen to provide the preliminary
                  engineering or design-build services for the project, then Owner
                  will
                  reimburse Fagen for all expenses Fagen has incurred in connection
                  with the
                  project
                  based upon Fagen’s standard rate schedule plus all third party costs
                  incurred from the date of this Letter of Intent. Such expenses
                  include,
                  but are not limited to, labor rates and reimbursable expenses such
                  as
                  legal charges for document review and preparation, travel expenses,
                  reproduction costs, long distance phone costs, and postage.
                  

              

      

      

      
        	 	
                (d)

              	
                In
                  the event Fagen’s services are terminated by Owner, title to the technical
                  data, which may include preliminary engineering drawings and layouts
                  and
                  proprietary process related information, will remain with Fagen
                  and any
                  copies thereof will be returned to
                  Fagen.

              

      

      

      
        	 	
                (e)

              	
                Owner
                  acknowledges that the technical data provided by Fagen under this
                  Letter
                  of Intent is preliminary and may not be suitable for construction.
                  Owner
                  agrees that any use of such technical data following termination
                  of
                  Fagen’s services will be at Owner’s sole
                  risk.

              

      

      

      
        	
                5.

              	
                Confidentiality.
                  Owner will hold in confidence and will use only for the purposes
                  of
                  completing the Transaction any and all confidential information
                  disclosed
                  to it except that Owner may disclose confidential information to
                  its
                  lenders, lenders’ agents, prospective investors, advisors and/or
                  consultants as may be reasonably necessary to enable them to advise
                  Owner
                  on the Transaction, provided that any party to whom confidential
                  information is disclosed is informed of the existence of this
                  confidentiality obligation and agree to be obligated to keep such
                  information confidential. The term “confidential
                  information”
                  will mean (i) any and all information concerning the Transaction,
                  including that Fagen and Owner are negotiating the consummation
                  of the
                  Transaction, and (ii) all information which Owner, directly or
                  indirectly,
                  may acquire from Fagen, but 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;

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
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            Creek Ethanol, LLC 

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            of
            Intent

          February
            1, 2007

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                (c)

              	
                information
                  that, prior to disclosure hereunder, was already in the Owner’s
                  possession, either without limitation on disclosure to others or
                  subsequently becoming free of such
                  limitation;

              

      

      

      
        	 	
                (d)

              	
                information
                  obtained by the Owner 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
                  Fagen.

              

      

      

      Owner’s
        obligation to maintain confidential information in confidence will be deemed
        performed if Owner observes with respect thereto the same safeguards and
        precautions which Owner 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 entity, or pursuant to other legal requirements.
        However, if Owner is required to file the Transaction Documents or a portion
        thereof with a governmental entity, it agrees that it will not do so without
        first informing Fagen of the requirement and seeking confidential treatment
        of
        the Transaction Documents prior to filing the documents or a portion thereof.
        Owner’s
        confidentiality obligations under this section shall survive the expiration
        or
        termination of this Letter of Intent and shall be a legally binding obligation
        of Owner for five (5) years following
        the later to occur of termination of this Letter of Intent or completion
        of the
        Plant contemplated by the Transaction Documents.

      

      
        	
                6.

              	
                Publicity.
                  Neither Owner nor any of its affiliates, shareholders, subcontractors,
                  or
                  vendors or their officers, representatives, agents and employees
                  will
                  issue any press or publicity release or otherwise release, distribute,
                  announce, or disseminate any information for publication concerning
                  the
                  Transaction, the existence of the negotiations among Fagen and
                  Owner, the
                  participation of Fagen in the Transaction, or any other matter
                  affecting
                  Fagen hereunder, without the prior written consent of Fagen, which
                  consent
                  may be withheld for any reason, except where such press or publicity
                  release is required by order of a court or necessary or appropriate
                  under
                  the rules or regulations of any governmental
                  agency.

              

      

      

      The
        Parties will jointly agree on the timing and content of any public disclosure
        by
        Owner, including but not limited to, press releases, relating to Fagen’s
        involvement in Owner’s project,
        and no
        such disclosure will be made without Fagen’s consent and approval, except as may
        be required by applicable law.

       

      
        	
                7.

              	
                Disclaimer
                  of Consequential Damages.
                  In no event will either Fagen or Owner be liable to the other pursuant
                  to
                  this Letter of Intent, or for activities conducted under this Letter
                  of
                  Intent, under any theory of recovery for any indirect, special,
                  incidental
                  or consequential damages (including, without limitation, loss of
                  revenues
                  or profits, loss of use, cost of replacement, cost of capital and
                  claims
                  of customers, interest charges, or increased costs of nature
                  whatsoever).

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
            13
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                8.

              	
                Legal
                  Effect. Although
                  this Letter of Intent does not contain all matters upon which agreement
                  must be reached in order for the Transaction to be consummated,
                  Fagen and
                  Owner wish to set forth, prior to the execution of the Transaction
                  Documents, their mutual agreement as to the material terms and
                  conditions
                  of the Transaction. Each Party agrees to negotiate in good faith
                  towards
                  entering into the written, definitive and legally binding Transaction
                  Documents containing, among other terms and conditions, those terms
                  and
                  conditions set forth in this Letter of Intent including, without
                  limitation, those terms set forth in Paragraphs 2 and 3 hereof;
                  provided, however, that except as specifically identified and set
                  forth
                  herein, nothing in this Agreement shall be read to promise, guarantee,
                  or
                  otherwise secure on Owner’s behalf any specific construction start date
                  with respect to the Plant including but not limited to any pour
                  concrete
                  date, scheduling slots or dates for the delivery of design packages
                  or to
                  entitle Owner to any rights, privileges, or claims with respect
                  thereto or
                  any right, privilege, or claim to any place on Fagen’s construction
                  schedule.
                  Notwithstanding the foregoing, the provisions of this Paragraph
                  and of
                  Paragraphs 1, 4, 5, 6, 7, 10, 11, 13, 16, and 17 hereof are agreed
                  to be
                  legally binding obligations of the Parties upon the execution and
                  acceptance of this Letter of Intent.

              

      

      

      
        	
                9.

              	
                Negotiation
                  of Definitive Agreements.
                  The Transaction Documents will contain reasonable terms and conditions
                  regarding releases, payment obligations, cooperation as to tax
                  planning
                  and structuring, other financial matters, legal opinions, confidentiality,
                  limitations of liability, assignment, breach, dispute resolution,
                  events
                  of default, remedies, representations, warranties, indemnifications
                  and
                  other provisions customary for similar transactions. Time is of
                  the
                  essence in the performance of this Letter of Intent in all
                  respects.

              

      

      

      
        	
                10.

              	
                Termination.
                  This Letter of Intent will terminate on December 31, 2007 unless
                  the basic
                  size and design of the Plant have been determined and mutually
                  agreed
                  upon, a specific site or sites have been determined and mutually
                  agreed
                  upon, and at least 10% of the necessary equity has been raised.
                  This date
                  may be extended upon mutual written agreement of the Parties. Furthermore,
                  unless otherwise agreed to by the Parties, this Letter of Intent
                  will
                  terminate:

              

      

      

      
        	 	
                (a)

              	
                at
                  the option of either Fagen or Owner if the Design-Build Agreement
                  is not
                  completed and executed by the Closing Date;
                  or

              

      

      

      
        	 	
                (b)

              	
                upon
                  the execution and delivery of the Transaction
                  Documents.

              

      

      

      
        	11.	
                Governing
                  Law. This
                  Letter of Intent and Transaction are governed by, and will be construed
                  and interpreted in accordance with the laws of the State of Minnesota,
                  without regard to any conflicts of law or choice of law
                  rules.

              

      

      

      
        	
                12.

              	
                Expenses.
                  Except as set forth in Paragraph 4(c) above, unless otherwise agreed
                  by
                  Fagen and Owner, each Party will bear its own expenses in connection
                  with
                  the negotiation and execution of definitive documentation for the
                  transactions contemplated herein. 

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page
            14
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                13.

              	
                Indemnification.
                  Each Party will indemnify, defend and hold harmless the other Party
                  and
                  its respective agents, servants, officers, directors, employees
                  and
                  affiliates from and against any loss, cost, liability, claim, damage,
                  expense (including reasonable attorneys’ and consultants’ fees and
                  disbursements), penalty or fine incurred in connection with any
                  claim or
                  cause of action arising from or in connection with this Letter
                  of Intent
                  to the extent caused by the negligence, misrepresentation, fraud,
                  fault or
                  misconduct of the indemnifying Party.

              

      

      

      
        	
                14.

              	
                Assignability;
                  Binding Effect; Benefit. This
                  Letter of Intent will inure to the benefit of and be binding upon
                  the
                  Parties and their respective successors and assigns. Nothing in
                  this
                  Letter of Intent, either expressed or implied, is intended to confer
                  on
                  any person other than the Parties and their respective successors
                  and
                  permitted assigns, any rights, remedies, obligations or liabilities
                  under
                  or by reason of this Letter of Intent. Neither Fagen nor Owner
                  shall,
                  without the written consent of the other, assign or transfer this
                  Letter
                  of Intent. Any sale, transfer, or disposition by Owner of over
                  fifty
                  percent (50%) of its assets or any sale, transfer, or disposition
                  of more
                  than fifty percent (50%) of Owner to any single entity by one or
                  more
                  entities holding interest in Owner shall be deemed an assignment
                  subject
                  to this paragraph. Notwithstanding any consent granted by Fagen
                  to any
                  assignment, Owner shall remain jointly liable for any failure of
                  any
                  assignee to fulfill its obligations under this Letter of Intent,
                  including
                  but not limited to any payment and confidentiality obligations
                  established
                  hereunder.

              

      

      

      
        	
                15.

              	
                Further
                  Action.
                  Each Party agrees to execute and deliver all further instruments,
                  legal
                  opinions and documents, and take all further action not inconsistent
                  with
                  the provisions of this Letter of Intent that may be reasonably
                  necessary
                  to complete performance of the Parties’ obligations hereunder and to
                  effectuate the purposes and intent of this Letter of
                  Intent.

              

      

      

      
        	
                16.

              	
                Amendments.
                  The Parties agree that this Letter of Intent may be modified only
                  by
                  written agreement by the Parties.

              

      

      

      
        	
                17.

              	
                Integration;
                  Letter of Intent.
                  This Letter of Intent represents the entire understanding between
                  the
                  Parties in relation to the subject matter hereof, and supersedes
                  any and
                  all previous agreements, arrangements or discussions between the
                  Parties
                  (whether written or oral) in respect of the subject matter hereof.
                  No
                  change, amendment or modification of this Letter of Intent will
                  be valid
                  or binding upon the Parties unless such change, amendment or modification
                  will be in writing and duly executed by both
                  Parties.

              

      

      

      
        	
                18.

              	
                No
                  Representation, Warranties 
                  or Covenants. Notwithstanding
                  anything contained herein to the contrary, Fagen is not making
                  any
                  representation, warranty or covenant of any kind with respect to
                  any
                  design, engineering or construction scheduling, or with respect
                  to
                  projections, estimates or budgets heretofore delivered to or made
                  available to Owner of future revenues, expenses or expenditures,
                  future
                  results of operations (or any component thereof) or the future
                  business
                  and operations of the Owner, nor any other commitments or assurances
                  except as may be provided in the Transaction
                  Documents.

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Prairie
            Creek Ethanol, LLC 

          Letter
            of
            Intent

          February
            1, 2007

          Page 15
            of
            15

        

         

      

      
        	
                19.

              	
                Counterparts.
                  This
                  Letter of Intent may be executed in one or more counterpart, each
                  of which
                  when so executed and delivered will be deemed an original, but
                  all of
                  which taken together constitute one and the same instrument. Signatures
                  which have been affixed and transmitted by facsimile or other electronic
                  means will be binding to the same extent as an original signature,
                  although the Parties contemplate that a fully executed counterpart
                  with
                  original signatures will be delivered to each Party.
                  

              

      

      

      
        	20.	
                Owner
                  will market its ethanol through US BioEnergy Corporation (“USBio”) for a
                  period of two (2) years from the date of Final Completion, provided
                  that
                  such obligation is contingent on Owner obtaining competitive (though
                  not
                  necessarily superior) rates and services from
                  USBio.

              

      

      

      If
        the
        foregoing terms accurately reflect your understanding of our discussions
        and are
        acceptable to you, please sign and return the enclosed counterpart of this
        Letter of Intent to the attention of Becky Dahl at Fagen.

       

       

      
        	 	
                Yours
                  sincerely,

                 

                Fagen,
                  Inc.

                

                

                /s/
                  Roland
                  Fagen                                              
                  

                By:    
                  Roland
                  “Ron” Fagen

                Title: 
                  President
                  and CEO

              

      

       

      

      Accepted
        and agreed to this 1st

      day
        of
        February, 2007.

      

      Prairie
        Creek Ethanol, LLC

      

      

      /s/
        Clay
        Hansen                                             

      By:
        Clay
        Hansen

      Title:
        PresidentEXHIBIT 4.20

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES LAWS AS EVIDENCED, IF SO REQUESTED BY THE COMPANY, BY A LEGAL OPINION
OF  COUNSEL  TO THE  TRANSFEROR  TO  SUCH  EFFECT,  WHICH  SHALL  BE  REASONABLY
ACCEPTABLE TO THE COMPANY.

                               WARRANT TO PURCHASE
                                 COMMON STOCK OF
                           INTRAOP MEDICAL CORPORATION
                                  WARRANT #CC-

         FOR VALUE  RECEIVED,  subject  to the terms and  conditions  herein set
forth,  ___________________  ("Holder")  is entitled to  purchase  from  Intraop
Medical Corporation, a Nevada corporation (the "Company"), at any time after the
Second  Closing  Date (as defined  below) and prior to the  Expiration  Date (as
defined  below)  at a price per  share as set  forth in  Section  1 hereof  (the
"Warrant Price"),  the number of fully paid and non-assessable  shares of Common
Stock of the  Company  as set forth in  Section  2 hereof  (the  "Shares").  For
purposes  hereof,  "Second Closing Date" shall have the meaning set forth in the
Common Stock and Warrant Purchase  Agreement dated as of August ___, 2007 by and
among the Company and the Investors named therein (the "Purchase Agreement").

         1. Warrant Price. The Warrant Price for each of the Shares  purchasable
hereunder  shall be Zero  Dollars  ($0.00)  (the  "Warrant  Price"),  subject to
adjustment as provided in Section 10.

         2. Number of Shares.  The number of Shares  issuable  upon  exercise of
this  Warrant  shall  be  _______________________   (____________),  subject  to
adjustment as provided in Section 10.

         3. Expiration of Warrant. This Warrant shall expire and shall no longer
be exercisable  on the 10th day after the Second  Closing Date (the  "Expiration
Date").

         4. No  Fractional  Shares.  This  Warrant  may not be  exercised  as to
fractional Shares.

<PAGE>

         5. No Stockholder  Rights. This Warrant shall not entitle Holder to any
of the rights of a stockholder of the Company.

         6.  Reservation  of Shares.  The  Company  covenants  that,  subject to
stockholder  approval and filing of an amendment  to the  Company's  Amended and
Restated  Articles  of  Incorporation  authorizing  an increase in the number of
shares of Common  Stock  issuable  by the  Company  to  500,000,000  shares  (as
adjusted for stock splits,  combinations or other similar transactions),  during
the period this Warrant is  exercisable  it will reserve from its authorized and
unissued shares of Common Stock a sufficient number of shares to provide for the
issuance  of the  maximum  number of shares of Common  Stock  issuable  upon the
exercise of this Warrant.  The Company  agrees that its issuance of this Warrant
shall  constitute  full  authority  to its  officers to instruct  the  Company's
transfer  agent to issue the necessary  certificates  for shares of Common Stock
upon the exercise of this Warrant.

         7. Exercise of Warrant.

                  (a) This Warrant may be  exercised  by Holder,  in whole or in
part, by the  surrender of this Warrant at the principal  office of the Company,
together with the Subscription Form attached hereto duly completed and executed,
accompanied  by payment in full of the  aggregate  Warrant  Price for the Shares
being purchased upon such exercise.  In the event of exercise of this Warrant in
compliance with the provisions hereof,  certificates for the Shares so purchased
shall be delivered to Holder  promptly  and,  unless this Warrant has been fully
exercised or expired, a new Warrant  representing that portion of the Shares, if
any, with respect to which this Warrant will not then have been exercised, shall
be issued  to  Holder.  The  Warrant  shall be  deemed  to have  been  exercised
immediately  prior to the close of  business  on the date of its  surrender  for
exercise as provided above,  and Holder shall be treated for all purposes as the
holder of record of such shares as of the close of business on such date.

                  (b) Issuance of certificates  for the Shares upon the exercise
of this Warrant shall be made without charge to the registered holder hereof for
any issue or  transfer  tax or other  incidental  expense  with  respect  to the
issuance of such certificates,  all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued in the name of the registered
holder  of this  Warrant  or in such  name or  names as may be  directed  by the
registered  holder  of  this  Warrant;  provided,  however,  that  in the  event
certificates  for the  Shares  are to be issued in a name other than the name of
the  registered  holder of this Warrant,  this  Warrant,  when  surrendered  for
exercise,  shall be  accompanied  by the  Assignment  Form attached  hereto duly
executed by Holder hereof,  and provided  further,  that any such transfer shall
comply with Section 9 hereof.

         8. Stock Dividends and Other Distributions.  If the Company at any time
while this  Warrant  is  outstanding  and  unexpired  shall pay a dividend  with
respect to Common  Stock or make any other  distribution  with respect to Common
Stock (except for any distribution  specifically  provided for in Sections 10(a)
and 10(b)), then, in each such case, provision shall be made by the Company such
that  the  Holder   hereof  shall  receive  upon  exercise  of  this  Warrant  a
proportionate  share of any such dividend or  distribution as though it were the
holder of the Common Stock as of the record date fixed for the  determination of
the   stockholders  of  the  Company   entitled  to  receive  such  dividend  or
distribution.  The Company shall promptly after the declaration of such dividend
or  distribution,  mail to the Holder a  certificate  setting forth the terms of
such  dividend or  distribution  and the amount of stock or other  securities or
property that will become payable to the Holder upon exercise of this Warrant as
a result thereof.

                                       2
<PAGE>

         9. Transfer or Assignment of Warrant.

                  (a)  This  Warrant,  and  any  rights  hereunder,  may  not be
assigned or  transferred,  except as provided  herein and in accordance with and
subject to the provisions of (i) applicable  state securities laws, and (ii) the
Securities Act of 1933, as amended,  and the rules and  regulations  promulgated
thereunder  (such  Act  and  such  rules  and  regulations   being   hereinafter
collectively  referred to as the "Securities  Act").  Any purported  transfer or
assignment  made other than in accordance  with this Section 9 shall be null and
void and of no force and effect.

                  (b) This Warrant, and any rights hereunder, may be transferred
or assigned only with the prior written  consent of the Company  (which  consent
shall not be unreasonably withheld or delayed), which shall be granted only upon
receipt by the Company of an opinion of counsel  satisfactory to the Company (if
so requested by the Company)  that (i) the  transferee  is a person to whom this
Warrant may be legally  transferred  without  registration  under the Securities
Act, and (ii) such transfer will not violate any applicable law or  governmental
rule or regulation,  including,  without  limitation,  any applicable federal or
state securities law.

                  (c) The requirements of Sections 9(a) and 9(b) above shall not
apply to any  transfer of this  warrant  (or the Common  Stock  obtainable  upon
exercise hereof) or any part hereof (i) to a partner of the Holder if the Holder
is a  partnership  or to a member  of the  Holder  if the  Holder  is a  limited
liability company,  (ii) to a partnership of which the Holder is a partner or to
a  limited  liability  company  of which the  Holder  is a member,  (iii) to any
affiliate of the Holder;  (iv) without  consideration to the Holder's ancestors,
descendants  or spouse or to  trusts  for the  benefit  of such  persons  or the
Holder;  or (v)  pursuant  to a will or the  laws of  descent  or  distribution;
provided that, in any such transfer, if applicable,  the transferee shall on the
Company's  request  agree in writing to be bound by the terms of this warrant as
if an original Holder hereof.

                  (d)  Any  assignment  permitted  hereunder  shall  be  made by
surrender  of this  Warrant to the  Company  at its  principal  office  with the
Assignment  Form annexed  hereto duly  executed and funds  sufficient to pay any
transfer tax, if any. In such event, the Company shall, without charge,  execute
and deliver a new Warrant in the name of the assignee  named in such  instrument
of assignment and this Warrant shall be promptly canceled.

         10. Adjustments to Shares.

                  (a) If the  outstanding  shares of the Company's  Common Stock
shall be  subdivided  into a greater  number of shares or a  dividend  in Common
Stock  shall be paid in respect of Common  Stock,  the  Warrant  Price in effect
immediately  prior to such  subdivision  or at the record date of such  dividend
shall  simultaneously  with the effectiveness of such subdivision or immediately
after  the  record  date  of  such  dividend  be  proportionately   reduced.  If
outstanding  shares of Common Stock shall be combined  into a smaller  number of
shares, the Warrant Price in effect immediately prior to such combination shall,
simultaneously  with the effectiveness of such combination,  be  proportionately
increased.  When any adjustment is required to be made in the Warrant Price, the
number of shares of Common Stock  purchasable  upon the exercise of this Warrant
shall be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment,  multiplied by the Warrant Price in effect immediately prior to
such  adjustment,  by (ii) the Warrant  Price in effect  immediately  after such
adjustment.

                                       3
<PAGE>

                  (b) In case  of (i)  any  reclassification  or  change  of the
outstanding  securities of the Company,  (ii) the merger or consolidation of the
Company (or any other  corporation  the stock or  securities of which are at the
time  receivable  upon the exercise of this Warrant) with or into another entity
in which the Company's (or such other corporation's)  stockholders do not own at
least a majority of the outstanding  voting  securities of the surviving  entity
after such transaction, (iii) the sale of all or substantially all of the assets
of the Company or (iv) any similar corporate reorganization on or after the date
hereof, then and in each such case the holder of this Warrant, upon the exercise
hereof at any time  after the  consummation  of such  reclassification,  change,
reorganization,  merger or conveyance,  shall be entitled to receive, in lieu of
the stock or other  securities and property  receivable upon the exercise hereof
prior to such  consummation,  the stock or other securities or property to which
such holder would have been entitled upon such  consummation  if such holder had
exercised  this  Warrant  immediately  prior  thereto  (without  regard  to  any
limitations on exercise contained herein),  all subject to further adjustment as
provided in Section  10(a);  and in each such case, the terms of this Section 10
shall  be  applicable  to the  shares  of stock  or  other  securities  properly
receivable upon the exercise of this Warrant after such consummation.

                  (c) When any  adjustment  is required to be made in the number
of shares of Common Stock purchasable hereunder or the Warrant Price pursuant to
this Section 10, the Company  shall  promptly  mail to the Holder a  certificate
setting forth (i) a brief statement of the facts requiring such adjustment, (ii)
the Warrant Price after such  adjustment  and (iii) the kind and amount of stock
or other  securities or property  into which this Warrant  shall be  exercisable
after such adjustment.

         11. Loss, Theft,  Destruction or Mutilation of Warrant. Upon receipt by
the  Company  of  evidence  reasonably  satisfactory  to it of the loss,  theft,
destruction  or  mutilation  of this  Warrant,  and in case of  loss,  theft  or
destruction,  of indemnity or security  reasonably  satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto,  and
upon surrender and cancellation of this Warrant, if mutilated,  the Company will
make and  deliver  a new  warrant  identical  in tenor  and date in lieu of this
Warrant.

         12.  General.  This  Warrant  shall be governed by and  interpreted  in
accordance with the laws of the State of Delaware,  except for its principles of
conflicts of laws.  The headings in this Warrant are for purposes of convenience
and reference only and shall not be deemed to constitute a part hereof.  Neither
this  Warrant  nor  any  term  hereof  may be  changed,  waived,  discharged  or
terminated  orally but rather  only by an  instrument  in writing  signed by the
Company and Holder.  All  notices and other  communications  from the Company to
Holder shall be mailed by prepaid courier or first-class registered or certified
mail,  postage  pre-paid,  to the address furnished to the Company in writing by
the last holder who shall have furnished an address to the Company in writing.

                                       4
<PAGE>

         13.  Amendment and Waiver.  Any provisions of this Warrant  (including,
without limitation, termination of exercisability) may be amended or waived, and
any and all such  amendments  or waivers  shall be binding upon Holder,  only if
approved in writing by the Company and Holder.

                                       5
<PAGE>

         Issued this ________ day of _____________, 2007.

                                       INTRAOP MEDICAL CORPORATION

                                       By:
                                           -------------------------------------
                                           Name: Donald A. Goer
                                           Title: President and
                                                  Chief Executive Officer

                                       6
<PAGE>

                                SUBSCRIPTION FORM

         The undersigned  registered owner of the Warrant which accompanies this
Subscription Form hereby  irrevocably  exercises such warrant for, and purchases
______ shares of Intraop Medical Corporation Common Stock,  purchasable upon the
exercise of such Warrant, and herewith makes payment therefor,  all at the price
and on the terms and conditions specified in such Warrant.

         Dated:
               ----------------

                                       ------------------------------------
                                       (Signature of Registered Owner)

                                       ------------------------------------
                                       (Name)

                                       ------------------------------------
                                       (Street Address)

                                       ------------------------------------
                                       (City, State, Zip Code)

<PAGE>

                               FORM OF ASSIGNMENT
                               ------------------

                 (To be signed only upon assignment of Warrant)

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:

                       ----------------------------------

                       ----------------------------------

                       ----------------------------------

          (Name and address of assignee must be printed or typewritten)

___________ shares of Intraop Medical Corporation Common Stock purchasable under
the   within   Warrant,   hereby   irrevocably   constituting   and   appointing
______________________  Attorney  to transfer  said  Warrant on the books of the
Company, with full power of substitution in the premises.

         Dated:
                -------------

                                       --------------------------------
                                       (Signature of Registered Owner)

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