Document:

exv10w6

 

Exhibit 10.6

***** PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE OMISSIONS HAVE BEEN INDICATED BY
ASTERISKS (“*****”), AND THE OMITTED TEXT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

MASTER AGREEMENT

FOR

DESIGN, ENGINEERING AND CONSTRUCTION OF

DRY GRIND ETHANOL PRODUCTION FACILITIES

(FUTURE DEVELOPMENT)

BETWEEN

US BIOENERGY CORPORATION

AND

FAGEN, INC.

August 1, 2006

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

 

 

MASTER AGREEMENT

     This MASTER AGREEMENT FOR DESIGN, ENGINEERING AND CONSTRUCTION OF DRY GRIND ETHANOL PRODUCTION
FACILITIES (FUTURE DEVELOPMENT) (the “Agreement”) is made as of August 1, 2006 (the
“Effective Date”), by and between US BioEnergy Corporation, a South Dakota corporation
(“US BioEnergy”), and Fagen, Inc., a Minnesota corporation (“Fagen”) (each a
“Party” and, collectively, the “Parties”).

RECITALS

     WHEREAS, US BioEnergy plans to develop, build, own and operate, directly or through
subsidiaries, multiple dry grind fuel grade ethanol plants in the United States with capacities of
100 or 40-50 million gallons per year (“MGY”) (each a “Plant” and, collectively,
“Plants”); and

     WHEREAS, Fagen desires to provide design, engineering, procurement and construction services
(the “Services”) for the Plants; and

     WHEREAS US BioEnergy and Fagen have entered into that certain Master Design Build Letter
Agreement dated January 31, 2005 (“Initial Agreement”); and

     WHEREAS US BioEnergy and Fagen desire to terminate the Initial Agreement and replace it in its
entirety with this Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein and
for other good and valuable consideration, US BioEnergy and Fagen agree as follows:

AGREEMENT

	1.	 	Design-Build Agreements. Fagen agrees that, if US BioEnergy so requests, it will enter into
a separate Lump-Sum Design-Build Agreement with US BioEnergy or its designated subsidiary for
the design, engineering and construction of each Committed Plant on, and subject to, the terms
and conditions set forth in this Section 1 (each a “Design-Build Agreement”). As used
in this Agreement, “Committed Plant” means a series of Plants in various locations
throughout the continental, contiguous, United States designated by US BioEnergy construction
of which shall commence at a pace of ***** per year for each of the calendar years 2007, 2008,
2009, and 2010; provided, however, that (x) if US BioEnergy so requests, Fagen will use its
best efforts to commence construction on ***** each year, such additional Plant at Fagen’s
discretion; (y) if US BioEnergy so requests, Fagen will use its best efforts, at Fagen’s
discretion, to commence construction on ***** to be developed by US BioEnergy in conjunction
with farmers and farmer cooperatives as part of US BioEnergy’s Farmer Partner Program; and (z)
the number of Committed Plants construction for which is to commence during a given year shall
be reduced by the number of Plants construction for which Plants is to commence during that
year and for which Fagen and US BioEnergy and/or its subsidiaries enter into Lump-Sum
Design-Build Agreements under the terms of the Master Agreement for Design, Engineering and
Construction of Dry Grind Ethanol Production Facilities (Projects in Advanced Development)
dated the date of this Agreement between the Parties (the “Advanced Development Master
Agreement”), provided, however, that the Janesville,

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

 

 

MN, Hankinson, ND, Dyersville, IA, and Grinnell, IA Plants listed on Exhibit A to the
Advanced Development Master Agreement, shall not count against US BioEnergy’s annual
entitlement to Committed Plants hereunder so long as such Plants are not substituted
pursuant to Section 1 of the Advanced Development Master Agreement.

	 	(a)	 	Each Design-Build Agreement will be in the form of Exhibit A to this Agreement,
with appropriate information completed as contemplated by this Agreement, subject to
such additions, deletions and other changes as mutually agreed by the Parties.
	 
	 	(b)	 	Subject to Section 2(d) below, the “Contract Price” under each Design-Build
Contract will be determined for each of the Plants upon determination of the particular
Plant’s project scope. The Contract Price for each Plant shall be Fagen’s standard
lump sum pricing for facilities of that size during the relevant time period and at the
relevant locale as adjusted based on Plant location to compensate for site specific
conditions including, but not limited to, seismic zone, labor rates and tax
considerations; provided, however, that the Contract Price for any one hundred (100)
MGY Plants shall include a discount of ***** from Fagen’s standard lump sum pricing for
one hundred (100) MGY facilities.
	 
	 	(c)	 	*****

	 	 	 	
	 
	 	 	 	
	 
	 	 	 	

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

Page 2 of 9

 

 

	2.	 	Development Services. Fagen also will provide US BioEnergy the following services related to
the development of Plants:

	 	(a)	 	Front-end design and engineering sufficient for development and analysis of the
cost of construction and the feasibility of financing;
	 
	 	(b)	 	Conceptual design and technical information required to support application by
US BioEnergy or its subsidiaries for construction air permits;
	 
	 	(c)	 	Assistance in evaluating, form both a technical and a commercial perspective,
US BioEnergy’s organizational options, the appropriate location of Plants and business
development generally;

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

Page 3 of 9

 

 

	 	(d)	 	Subject to compliance with applicable securities laws, assistance in presenting
information on Plants to potential equity investors in, lenders to, or governmental or
other entities regulating US BioEnergy and its subsidiaries; and
	 
	 	(e)	 	Assistance in locating appropriate management for Plants.

Fagen assumes no risk or liability for advice or information provided to US BioEnergy under
this Section 2, it being understood that all decisions regarding the feasibility, financing
and commercial risks of a particular Plant are US BioEnergy’s responsibility. Further, US
BioEnergy acknowledges that the technical data provided by Fagen under this Section 2 is
preliminary and may not be suitable for construction. US BioEnergy further 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 costs 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 costs will not vary from its
estimates of project cost and US BioEnergy acknowledges the same.

	3.	 	Default by Fagen. Notwithstanding the other provisions of this Agreement, including, without
limitation, Section 1(c)(iii) above, if Fagen willfully or through gross negligence fails or
refuses to comply with its obligations under this Agreement, Fagen shall be solely responsible
for all its costs or expenses with respect to any Plant and US BioEnergy shall have the right
to select a company other than Fagen to perform the services with respect to the Plant in
question upon thirty (30) days’ written notice to Fagen and Fagen’s failure to cure such
failure within ten (10) days thereof.

	4.	 	Default by US BioEnergy; Failure to Develop the Plants. Should US BioEnergy choose not to
develop a Plant prior to the execution of the Design-Build Agreement for such Plant or to
develop or pursue a relationship with a company other than Fagen to provide the preliminary
engineering or design-build services for the Plant, then US BioEnergy will reimburse Fagen for
all expenses Fagen has incurred in connection with the Plant based upon Fagen’s standard rate
schedule plus all third party costs incurred from the date of this Agreement. 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.

	5.	 	Confidentiality. Each Party will, and will cause its affiliates to, hold in confidence and
use only for the purposes of completing the Plants and the other transactions under this
Agreement any and all confidential information disclosed to it, except that a Party or its
affiliates 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
a Party or its affiliates on the Plants and the other transactions contemplated by this
Agreement, provided that any party to which 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” means (i) any

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

Page 4 of 9

 

 

	 	 	 	and all information concerning the Plants and the other transactions contemplated by this
Agreement, including that Fagen and US BioEnergy have entered into this Agreement and its
terms, and (ii) all information that one Party, directly or indirectly, may acquire from the
other, but confidential information does 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 possession
of a Party or its affiliates, either without limitation on disclosure to others or
subsequently becoming free of such limitation;
	 
	 	(d)	 	information obtained by a Party or its affiliates 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 as its
affiliates.

A Party’s obligation to maintain confidential information in confidence will be deemed
performed if that Party observes with respect to the confidential information the same
safeguards and precautions that Party observes with respect to its own confidential
information of the same or similar kind. Notwithstanding the preceding provisions of this
Section 5, 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, including,
without limitation, disclosure of confidential information to a governmental entity required
in connection with an offering of securities by a Party or any of its affiliates. However,
if a Party or its affiliates is required to file this Agreement with or disclose the terms
of this Agreement to a governmental entity, it agrees that, to the extent permitted by
applicable law, it will not do so without first informing the other Party of the requirement
and, if requested by the other Party, seeking confidential treatment prior to filing this
Agreement or disclosing the terms thereof if there is a reasonable basis to seek
confidential treatment. The Parties’ confidentiality obligations under this Section 5 shall
survive the expiration or termination of this Agreement and shall be a legally binding
obligation of each Party for five (5) years following the later to occur of termination of
this Agreement or completion of the Plants contemplated by the Transaction Documents.

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

Page 5 of 9

 

 

	6.	 	Publicity. Neither Party 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 this Agreement or the transactions it contemplates, the existence
of this Agreement, the participation of the other Party in this Agreement or the
transactions it contemplates, or any other matter affecting the other Party hereunder,
without the prior written consent of the other Party, 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,
including, without limitation, disclosure of confidential information to a governmental
entity required in connection with an offering of securities by a Party or any of its
affiliates.
	 
	 	 	The Parties will jointly agree on the timing and content of any public disclosure by US
BioEnergy, including but not limited to, press releases, relating to Fagen’s involvement in
the Plants, and no such disclosure will be made without Fagen’s consent and approval, except
for disclosures required by applicable law, including, without limitation, disclosure of
confidential information to a governmental entity required in connection with an offering of
securities by a Party or any of its affiliates.
	 
	7.	 	Disclaimer of Consequential Damages. Except as specifically set forth herein, in no event
will Fagen or US BioEnergy be liable to the other pursuant to this Agreement, or for
activities conducted under this Agreement, 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 any nature whatsoever).
	 
	8.	 	Governing Law. This Agreement is 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.
	 
	9.	 	Expenses. Except as set forth in Sections 1, 2 and 3 above, unless otherwise agreed by Fagen
and US BioEnergy, each Party will bear its own expenses in connection with the negotiation and
execution of definitive documentation for the transactions contemplated herein.
	 
	10.	 	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 Agreement to the extent caused by the
negligence, misrepresentation, fraud, fault or misconduct of the indemnifying Party or its
breach of this Agreement.
	 
	11.	 	Notices. All notices under this Agreement, to be effective, must be in writing and shall be
effective only on physical delivery (including by courier) or facsimile transmission to the
following address or such other address as the receiving Party may have specified by

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

Page 6 of 9

 

 

     notice to the other Party:

     If to US BioEnergy:

US BioEnergy Corporation

Attn: General Counsel

5500 Cenex Drive, MS 175

Inver Grove Heights, MN 55077

Fax: (651) 355-8301

     With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Attn: John C. Ale

1000 Louisiana Street, Suite 6800

Houston, Texas 77002

Facsimile No.: (713) 655-5200

     If to Fagen:

Fagen, Inc.

Attn: Aaron Fagen

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Facsimile No.: (320) 564-3278

     With a copy to:

Fagen, Inc.

Attn: Jennifer Johnson

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Facsimile No.: (320) 564-3278

     and to:

Fagen, Inc.

Attn: Wayne Mitchell

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Facsimile No.: (320) 564-5190

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

Page 7 of 9

 

 

	12.	 	Assignability; Binding Effect; Benefit. This Agreement will inure to the benefit of and be
binding upon the Parties and their respective successors and assigns. Nothing in this
Agreement, 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 Agreement. Neither Fagen nor US
BioEnergy shall, without the written consent of the other, assign or transfer this Agreement,
except that Fagen agrees that US BioEnergy may assign its rights and obligations under the
Agreement to entities in which US BioEnergy holds a majority ownership or voting control (each
a “subsidiary”); provided, however, US BioEnergy shall deliver, at least ten days
prior to any such assignment, to Fagen (i) notice of such assignment and (ii) a copy of the
instrument of assignment in form and substance reasonably acceptable to Fagen, whose approval
shall not be unreasonably withheld. Notwithstanding any such assignment, US BioEnergy shall
remain jointly liable for any failure of any assignee to fulfill its obligations under this
Agreement, including but not limited to any payment and confidentiality obligations
established hereunder.

	13.	 	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 Agreement that may be reasonably necessary to complete performance of the Parties’
obligations hereunder and to effectuate the purposes and intent of this Agreement.

	14.	 	Amendments. The Parties agree that this Agreement may be modified only by written agreement
by the Parties.

	15.	 	Integration. This Agreement 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, including the Initial Agreement, but does not supersede the Advanced
Development Master Agreement or any existing Design-Build Agreement or services agreement
between the Parties and/or their affiliates, other than the Initial Agreement. No change,
amendment or modification of this Agreement will be valid or binding upon the Parties unless
such change, amendment or modification will be in writing and duly executed by both Parties.

	16.	 	No Representations, Warranties or Covenants. Notwithstanding anything contained herein to
the contrary, Fagen is not making any representation, warranty or covenant of any kinds with
respect to any design, engineering or construction scheduling, or with respect to any
projections, estimates or budgets heretofore delivered to or made available to US BioEnergy of
future revenues, expenses, expenditures, future results of operations (or any component
thereof) or the future business and operations of US BioEnergy, nor any commitments or
assurances except as maybe provided in the Design-Build Agreement(s).

	17.	 	Counterparts. This Agreement 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

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

Page 8 of 9

 

 

	 	 	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.
	 
	18.	 	Term and Termination. The Parties’ obligations under Section 2 of this Agreement will
terminate on December 31, 2010. For the avoidance of doubt, the obligations of Fagen and US
BioEnergy or its applicable subsidiary under any executed Design-Build Agreement will survive
the termination of this Agreement. Notwithstanding the foregoing, in the event that Fagen has
fulfilled its obligations hereunder and US BioEnergy refuses, for any reason whatsoever, to
execute any of the Design-Build Agreements delivered by Fagen pursuant to Section 1, this
agreement shall terminate and Fagen shall be compensated by US BioEnergy pursuant to Section
4 hereof.

     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 August 1, 2006.

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	US BIOENERGY CORPORATION	 	 	 	FAGEN, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ GORDON OMMEN
	 	 	 	By:
	 	/s/ RON FAGEN	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Gordon Ommen	 	 	 	Roland “Ron” Fagen	 	 
	 	 	 	 	 	 	 
	(Printed Name)	 	 	 	(Printed Name)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Chief Executive Officer	 	 	 	CEO and President	 	 
	 	 	 	 	 	 	 
	(Title)	 	 	 	(Title)	 	 

			
	 	 	 
	US BioEnergy Corporation 

Master Agreement
	 	August 1, 2006

Page 9 of 9

 

 

EXHIBIT A

FORM DESIGN-BUILD AGREEMENT

 

 

LUMP SUM DESIGN-BUILD AGREEMENT

BETWEEN

[Name of Project Company] (“OWNER”)

AND

FAGEN, INC. (“DESIGN-BUILDER”)

                     ___, 20___

 

 

TABLE OF CONTENTS

	 	 	 
	 	 	Page
	Article 1 Definitions; Rules of Interpretation
	 	1
	 
	 	 
	1.1 Rules of Construction
	 	1
	1.2 Defined Terms
	 	1
	 
	 	 
	Article 2 The Project
	 	6
	 
	 	 
	2.1 Services to be Performed
	 	6
	2.2 Extent of Agreement
	 	7
	2.3 Conflicting Provisions
	 	7
	 
	 	 
	Article 3 Design-Builder Responsibilities
	 	8
	 
	 	 
	3.1 Design-Builder’s Services in General
	 	8
	3.2 Design Development and Services
	 	8
	3.3 Standard of Care
	 	9
	3.4 Government Approvals and Permits
	 	9
	3.5 Subcontractors
	 	9
	3.6 Maintenance of Site
	 	10
	3.7 Project Safety
	 	10
	3.8 Submission of Reports
	 	11
	3.9 Training
	 	11
	 
	 	 
	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
	 	13
	4.5 Government Approvals and Permits
	 	13
	4.6 Owner’s Separate Contractors
	 	13
	4.7 Security
	 	13
	 
	 	 
	Article 5 Ownership of Work Product; Risk of Loss
	 	14
	 
	 	 
	5.1 Work Product
	 	14
	5.2 Owner’s Limited License Upon Payment in Full
	 	14
	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
	 	15
	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
	 	16
	 
	 	 
	6.1 Phase I and Phase II Engineering
	 	16
	6.2 Notice to Proceed; Commencement
	 	16
	6.3 Project Start-Up and Testing
	 	16

 i

 

 

Table of contents

(continued)

	 	 	 
	 	 	Page
	6.4 Substantial Completion
	 	17
	6.5 Final Completion
	 	17
	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
	 	23
	 
	 	 
	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
	 	25
	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
	 	29
	 
	 	 
	13.1 Change Orders
	 	29
	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

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

 ii

 

 

Table of contents

(continued)

	 	 	 
	 	 	Page
	14.3 Design-Builder’s General Indemnification
	 	31
	14.4 Owner’s General Indemnification
	 	33
	 
	 	 
	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
	 	34
	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
	 	37
	 
	 	 
	17.1 Insurance
	 	37
	17.2 Design-Builder’s Insurance Requirements
	 	38
	17.3 Owner’s Liability Insurance
	 	39
	17.4 Owner’s Property Insurance
	 	39
	 
	 	 
	Article 18 Representations and Warranties
	 	41
	 
	 	 
	18.1 Design-Builder and Owner Representations and Warranties
	 	41
	18.2 Design-Builder Representations and Warranties
	 	41
	 
	 	 
	Article 19 Dispute Resolution
	 	41
	 
	 	 
	19.1 Dispute Avoidance and Mediation
	 	41
	19.2 Arbitration
	 	42
	19.3 Duty to Continue Performance
	 	43
	19.4 No 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
	 	46
	21.3 Governing Law
	 	46
	21.4 Severability
	 	46
	21.5 No Waiver
	 	46
	21.6 Headings
	 	46

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

 iii

 

 

Table of contents

(continued)

	 	 	 
	 	 	Page
	21.7 Notice
	 	46
	21.8 No Privity with Design Consultant/Subcontractors
	 	47
	21.9 Amendments
	 	47
	21.10 Entire Agreement
	 	47
	21.11 Third-Party Beneficiaries
	 	47
	21.12 Counterparts
	 	47
	21.13 Survival
	 	47
	 
	 	 
	EXHIBIT A Performance Guarantee Criteria
	 	A-1
	 
	 	 
	EXHIBIT B General Project Scope
	 	B-1
	 
	 	 
	EXHIBIT C Owner’s Responsibilities
	 	C-1
	 
	 	 
	EXHIBIT D ICM License Agreement
	 	D-1
	 
	 	 
	EXHIBIT E Schedule of Values
	 	E-1
	 
	 	 
	EXHIBIT F Form of Informational Report
	 	F-1
	 
	 	 
	EXHIBIT G Required Permits
	 	G-1
	 
	 	 
	EXHIBIT H Form of Performance Bond
	 	H-1
	 
	 	 
	EXHIBIT I Form of Payment Bond
	 	I-1
	 
	 	 
	EXHIBIT J Draw (Payment) Schedule
	 	J-1
	 
	 	 
	EXHIBIT K Air Emissions Application or Permit
	 	K-1
	 
	 	 
	EXHIBIT L Phase I and Phase II Engineering Services Agreement
	 	L-1
	 
	 	 
	EXHIBIT M Form of Application for Payment
	 	M-1
	 
	 	 
	EXHIBIT N Form of Lien Waiver
	 	N-1
	 
	 	 
	EXHIBIT O Form of Consent to Assignment
	 	O-1

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

 iv

 

 

LUMP SUM DESIGN-BUILD CONTRACT

This LUMP SUM DESIGN-BUILD CONTRACT (the “Agreement”) is made as of [Date], (the
“Effective Date”) by and between [Name of Project Company], a [State] [type of entity], a
(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 [Capacity Spelled Out] ([Capacity in
Numbers]) million gallons per year (“MGY”) dry grind ethanol production facility located
[in/near] [City], [State] (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 any tense or variant form. 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 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.
	 
	 	(d)	 	The use of “includes” and its variants is without limitation.

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

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

 

 

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 3.2.1.

Contract Documents is defined in Section 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.

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

2

 

Damages is defined in Section 14.3.1.

Day or Days means 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 means 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 a Subcontractor, to furnish design services required under the Contract
Documents.

Differing Site Conditions is defined in Section 11.2.1.

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 persons or entities 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 the persons or entities providing financing for the construction
or term financing of the Plant to fund the construction of the Plant.

Force Majeure Event is defined in Section 12.1.

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

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

3

 

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.1

Industry-Wide Disruption is defined in Section 12.4.

Informational Report is defined in Section 3.8.

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 persons or entities providing financing under the Financing Documents.

Lenders’ Agent means an agent or agents acting on behalf of the Lenders, including any trustee.

 

			
	1	 	This definition is only applicable if Lender
requires that an independent engineer have participation and review
rights. If this definition is not applicable, references to “Independent
Engineer” should be deleted from Sections 3.2.4, 3.2.5, 6.3, 7.2.2, 7.2.3,
and 10.2.2. The following sentences from Section 4.3 should also be
deleted.:

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.

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

4

 

Manufacturer’s Warranty means 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.

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 this Agreement and in the ICM License Agreement.

Owner is defined in the Preamble.

Owner Indemnified Parties is defined in Section 14.3.1.

Owner’s Milestones is defined in Section 13.4.

Owner’s Operator means [Name of Operator] or any other entity that Owner chooses to replace [Name
of Operator] as operator of the Project.2

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
required to be 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 (a) the twenty-fourth (24th) day of the calendar month
during which the Notice to Proceed is issued; or (b) if Notice to Proceed is issued on or after the
twenty-fourth (24th) day of a calendar month, on the twenty-fourth (24th) day of the calendar month
following the month in which Notice to Proceed is issued.

Payment Bond is defined in Section 7.4.2.

Performance Bond is defined in Section 7.4.1.

 

			
	2	 	This definition is only applicable if Owner
contracts with an Operator to operate the Plant. If not applicable, this
definition should be deleted. References to Operator and Operator’s personnel
or employees in Sections 3.9, 6.3, and 6.6 should also be deleted.

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

5

 

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.

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 means the land or premises on which the Project is located.

Subcontractor means 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,

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

6

 

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 Change Orders and written amendments to this Agreement entered into as provided in
this Agreement.

          2.2.2 This Agreement, including all exhibits and attachments, executed by Owner and
Design-Builder, including those below:

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
	Exhibit O

	 	Form of Consent to Assignment

          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.

			
	 	 	 
	[Name of Project Company]
	 	                     ___, 2006

7

 

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 other Work of the
Design-Builder shall be performed in accordance with (i) the general project scope guidelines 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 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 Engineer3 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

 

			
	3	 	See footnote to definition of Independent Engineer. (Footnote 1).

	 	 	 
	[Name of Project Company]

	 	              , 2006

8

 

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 Engineer4 of any
documents or submittals that Design-Builder is required to submit to Owner (or its designees) or
Independent Engineer5 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.

     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 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 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 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 any of the
Work performed by Subcontractors and any acts and omissions in connection with such performance.
Nothing in the Contract Documents is intended or deemed to

 

			
	4	 	See footnote to definition of Independent Engineer. (Footnote 1).
	 
	5	 	See footnote to definition of Independent Engineer. (Footnote 1).

	 	 	 
	[Name of Project Company]

	 	              , 2006

9

 

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.

     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 shall, and shall ensure that all 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

	 	 	 
	[Name of Project Company]

	 	              , 2006

10

 

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 up to two
(2) weeks of training at the Plant (or another suitable location) for all of Owner’s employees and
Owner Operator’s6 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 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 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, and that the payment of such costs, which shall be billed on a weekly
basis, shall not require the issuance of a Change Order or the obtaining of any Owner approval
prior to the issuance of invoices for such costs.

     4.2 Furnishing of Services and Information.

 

			
	6	 	See footnote to definition of Owner’s Operator. (Footnote 2).

	 	 	 
	[Name of Project Company]

	 	              , 2006

11

 

          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.

          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.7 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 reasonable
requirements of Owners’ financing arrangements, including, where appropriate and reasonable, 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.
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 reasonable
participation and review rights with respect to Design-Builder’s performance of the Work.
Design-Builder acknowledges and agrees that such reasonable participation and review rights shall
consist of the right to (i) enter the Site and inspect the Work

 

			
	7	 	See footnote to definition of Independent Engineer. (Footnote 1).

	 	 	 
	[Name of Project Company]

	 	              , 2006

12

 

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.

     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 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. 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.

	 	 	 
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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 hereby grants Owner a limited license to use
the Work Product in connection with Owner’s ownership, operation, 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”), it being 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.

          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

	 	 	 
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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 [Negotiated
Amount] 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 adjudged 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 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 gross 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 gross 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, any 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

	 	 	 
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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 shall have entered into that certain Phase I and Phase
II Engineering Services Agreement dated [Date] 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 [Price Spelled Out Dollars ($Price in Numbers]
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. Design-Builder shall commence the Work within five (5) Days
of Design-Builder’s receipt of Owner’s written notice to proceed (“Notice to Proceed”)
unless the Parties mutually agree otherwise in writing. The Parties agree that a Notice to
Proceed cannot be given until: *****. Provided that Owner has fulfilled all of the requirements
listed in (1) through (7) above to Design-Builder’s satisfaction, Design-Builder shall accept
Notice to Proceed no later than [DATE]. 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) 564-5190

     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

	 	 	 
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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’s8 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
and Forty Five (545) Days after the date of the Notice to Proceed, subject to adjustment in
accordance with the Contract Documents (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 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.

     6.5 Final Completion.

          6.5.1 Design-Builder shall cause Final Completion to be achieved within ninety (90) Days after
the earlier of the actual date of Substantial Completion or the Scheduled Substantial Completion
Date (the “Final Completion Date”).

 

			
	8	 	See footnote to definition of Owner’s Operator. (footnote 2)

	 	 	 
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          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)	 	release and waiver of all claims and liens from Design-Builder and
Subcontractors have been provided; and
	 
	 	(h)	 	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, and as a condition to
receipt of the Final 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
	 
	 	(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,

	 	 	 
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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’s9 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 so that the
Performance Guarantee Criteria are met. 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 United States) to
remedy any performance related issues.

     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, 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

 

			
	9	 	See footnote to definition of Owner’s Operator. (footnote 2)

	 	 	 
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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 later 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.

          7.2.4 If Owner, for whatever reason, 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.

     7.3 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 ***** 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 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.

	 	 	 
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          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 *****.

          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
in connection with any default by Design-Builder under Section 15.2 hereof.

          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 the sole
responsibility 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 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 the sole responsibility
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.

	 	 	 
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	 	(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 any warranty. Design-Builder hereby assigns 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 the appearance 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 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 notice that Owner will
commence or assume correction of such nonconforming

	 	 	 
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Work and repair of such damaged Work with its
own resources. If, following such notice, Owner performs such corrective and repair Work,
Design-Builder shall be responsible for all reasonable costs incurred by Owner in performing the
correction.

     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 under Section 8.2 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 [Contract Price Spelled Out] Dollars
($[Contract Price in Numbers]) (“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
side-letter agreement 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.

     9.2 Effect of Construction Cost Index Increase on Contract Price. If between the Effective Date
and the date on which a Notice to Proceed is given to Design-Builder the Construction Cost Index
published by Engineering News-Record Magazine (“CCI”) increases over the Baseline Index
established in Section 9.2.1, Design-Builder shall notify Owner that it is adjusting the Contract
Price.

          9.2.1 The Baseline Index for this Agreement shall be [CCI Spelled Out (CCI in Number)]
(“Baseline Index”).

          9.2.2 In the event that 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 to the percentage increase in CCI plus four percent (4%). By way of example, if

	 	 	 
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the CCI
increases two percent (2%), the total adjustment to the Contract Price shall be six percent (6%).

Article 10

Payment Procedures

     10.1 Payment at Financial Closing. As part of the Contract Price, Owner shall pay Design-Builder
***** 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 ***** 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
calendar month beginning with the first (1st) calendar 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
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,
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 Engineer10 in support
of an Application for Payment. Title to the Work, including Work reflected in an Application for
Payment which is in process, is in transit, is in storage, or has been incorporated into the Site,
shall pass to Owner free and clear of all claims, liens, encumbrances, and security interests upon
Design-Builder’s receipt of payment therefor.

          10.2.3 Within ten (10) Days after Owner’s receipt of each Application for Payment, Owner shall
pay Design-Builder all amounts set forth in the Application for Payment that are properly due, but
in each case less the total of payments previously made, and less amounts properly withheld or
retained 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 location acceptable to Owner, provided,
however, that Owner’s acceptance shall not be unreasonably withheld; (ii) the equipment and
materials are protected by suitable insurance; and (iii) upon payment, Owner will

 

			
	10	 	See footnote to definition of Independent Engineer. (Footnote 1).

	 	 	 
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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 set forth in the Application for Payment that are 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 at least five (5) Days prior to the date payment in respect
of that Application for Payment is due. The notice shall indicate the specific amounts Owner
contests, the reasons and contractual basis for the contest, and the specific measures
Design-Builder must take to rectify Owner’s concerns. Owner may withhold amounts so contested.
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 Percent of Contract Price Spelled Out] Dollars($[5% of Price in Numbers]).
Once [Five Percent of Contract Price Spelled Out] Dollars($[5% of Price in Numbers]) 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
as demonstrated in Performance Tests conducted pursuant to Section 7.2.

     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”).

     10.4 Failure to Pay Amounts Due.

          10.4.1
Interest. Payments which are due and unpaid by Owner to Design-Builder, whether
progress payments or Final Payment, shall bear interest commencing five (5) Days after payment is
due at the rate of eighteen percent (18%) per annum, or the maximum rate allowed by Law.

	 	 	 
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          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.

          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.

     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 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

	 	 	 
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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,
provided that such Hazardous Materials were not introduced to the Site by Design-Builder,
Subcontractors or anyone for whose acts they may be liable.

          11.1.6 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 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
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.

	 	 	 
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Article 12

Force Majeure; Change in Legal Requirements

     12.1 Force Majeure Event. A 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); 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 (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”).

     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 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;
	 
	 	(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;

	 	 	 
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	 	(e)	 	when the nonperforming Party is able to resume performance of its obligations
under the Contract Documents, that Party shall give the other Party 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 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 markets providing essential materials and
equipment 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, 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.

          12.4.1 If during the course of the Project the CCI increases over the Baseline Index
established in Section 9.2.1, Design-Builder shall notify Owner that it is adjusting the Contract
Price.

          12.4.2 In the event that the CCI increases over the Baseline Index, the Contract Price shall
be adjusted to reflect such increase, but only with respect to those Applications for Payment
submitted after the date on which written notice of the adjustment in Contract Price is given.

          12.4.3 Payment for any adjustment in the Contract Price as a result of this Article 12 shall
be made in accordance with the terms of this Agreement.

Article 13

Changes to the Contract Price and Scheduled Completion Dates

     13.1 Change Orders.

	 	 	 
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          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. 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.

	 	 	 
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     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) are identified in Table 3 in
Exhibit C (“Owner’s Milestones”). 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, 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
the extent resulting from the negligent or intentionally wrongful acts or from omissions of

	 	 	 
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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.

			
	 	 	 
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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 persistently fails to: (i) provide a sufficient number of skilled
workers; (ii) supply the materials required by the Contract Documents; (iii) comply with applicable
Legal Requirements; (iv) timely pay, without cause, Design Consultants or Subcontractors; (v)
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 (vi) 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
notice to Design-Builder that it may 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 notice to Design-Builder that it may
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. 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 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 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

			
	 	 	 
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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
and the limitation of liability set forth in Section 19.5 hereof.

          15.2.4 If Owner improperly terminates this Agreement pursuant to Section 15.2, the termination
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’ 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.

          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.

			
	 	 	 
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          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, when due, amounts properly due under
Design-Builder’s Application for Payment.

          15.4.2 If the events set forth in Section 15.4.1 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.

          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)

			
	 	 	 
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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:

[Owner’s Representative

Title

Address

Telephone:

			
	 	 	 
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Facsimile:]

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:

[Owner’s Senior Representative

Title

Address

Telephone:

Facsimile:]

     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

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:

			
	 	 	 
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	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:

	 	(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;

			
	 	 	 
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	 	(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. 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

			
	 	 	 
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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.

          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 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 polices 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

			
	 	 	 
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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 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

			
	 	 	 
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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 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.

			
	 	 	 
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     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 No 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 hereunder, whether based in 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 requests
for payment pursuant to Article 10 have been made for ninety percent (90%) of the Contract Price,
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. The
aggregate liability of Design-Builder shall not include increased costs of purchasing equipment,
materials, supplies, or services, except to the extent Owner has terminated the Agreement pursuant
to Section 15.2 and such equipment, materials, supplies, and services are required to complete the
Work or to the extent that any of such equipment, materials, supplies, and services may be included
in the payment of liquidated damages pursuant to Section 7.3 hereof. Notwithstanding the
foregoing, (a) the maximum aggregate liability of Design-Builder for failure to achieve the
Contract Time(s) shall be as set forth in Section 7.3; and (b) the maximum aggregate liability of
Design-Builder for the performance of the warranty obligations set forth in Article 8 shall not
exceed the Contract Price.

			
	 	 	 
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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; and
	 
	 	(f)	 	photographs and descriptive information regarding the Project, including Plant
capacity, Owner’s name, and Project location, as used by Fagen for purposes of
marketing and promotion.

Each Party’s obligation to maintain Confidential Information in confidence will be deemed

			
	 	 	 
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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, including disclosures to Governmental
Authorities in connection with any offering or registration of securities. 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. Owner shall not make or permit any of its 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 Fagen unless prior written
consent is obtained from Fagen, 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, which form is attached hereto
as Exhibit O, 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. Notwithstanding the foregoing, following Design-Builder’s receipt of Final Payment,
Design-Builder’s consent to assignment shall not be required with respect to Owner’s successors as
owners of the Plant.

			
	 	 	 
	[Name of Project Company]
	 	_____ ___, 2006

45

 

     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.

     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, including by courier, to the individual
intended to receive such notice at the address below or at another address designated by the
intended recipient by notice to the other Party, or (ii) 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

			
	 	 	 
	[Name of Project Company]
	 	_____ ___, 2006

46

 

Attention: Jennifer Johnson

Fax: (320) 564-3278

     and to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN 56241

Attention: Wayne Mitchell

Fax: (320) 564-5190

     If to Owner, to:

[Owner Contact]

[Address]

     and

Lender’s Agent at the address provided for Lender’s Agent to Design-Builder by Owner
by notice within five (5) Days following the Financial Closing.

     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.

     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

			
	 	 	 
	[Name of Project Company]
	 	_____ ___, 2006

47

 

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.]

			
	 	 	 
	[Name of Project Company]
	 	_____ ___, 2006

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 this [Effective Date].

	 	 	 	 	 	 	 	 	 	 	 
	OWNER:	 	 	 	DESIGN-BUILDER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	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:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

			
	 	 	 
	[Name of Project Company]
	 	_____ ___, 2006

49

 

[THESE EXHIBITS ARE EXAMPLES ONLY AND WILL BE REVISED FOR EACH

PROJECT’S SPECIFICATIONS —  THIS GENERIC EXHIBIT IS NOT FINAL OR

BINDING AND CANNOT BE RELIED UPON FOR ANY PURPOSE WHATSOEVER]

EXHIBIT A

Performance Guarantee Criteria

	 	 	 	 	 	 	 
	Criteria	 	Specification	 	Testing Statement	 	Documentation
	Plant Capacity –

fuel grade ethanol

	 	Operate at a rate
of [Capacity]
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.
	 
	 	 	 	 	 	 
	Process Water
Discharge (not
including cooling
tower and boiler
blowdown and

	 	Zero gallons under
normal operations.
	 	Process discharge
meter.
	 	Control System
reports.

			
	 	 	 
	[Name of Project Company]
	 	_____ ___, 2006

A-1

 

	 	 	 	 	 	 	 
	Criteria	 	Specification	 	Testing Statement	 	Documentation
	water pre-treatment
(RO) discharge)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Air Emissions

	 	Must meet the
requirements
prescribed as of
the date hereof by
the [State Agency].
	 	Must meet the
requirements as
prescribed in the
[Draft Air Permit
or Air Permit or
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.

			
	 	 	 
	[Name of Project Company]
	 	_____ ___, 2006

A-2

 

[THESE EXHIBITS ARE EXAMPLES ONLY AND WILL BE REVISED FOR EACH PROJECT’S SPECIFICATIONS —  THIS

GENERIC EXHIBIT IS NOT FINAL OR BINDING AND CANNOT BE RELIED UPON FOR ANY PURPOSE WHATSOEVER]

EXHIBIT B

General Project Scope

Construct a [Capacity Spelled Out (Capacity in Numbers)] MGY dry mill fuel ethanol plant near
[City, State]. The plant will grind approximately [Spelled Out (in Numbers)] million bushels of
corn per year to produce approximately [Capacity Spelled Out (Capacity in Numbers)] MGY of
denatured fuel ethanol. The plant will also produce approximately [Spelled Out (in Numbers)] tons
per year of 11% moisture dried distillers grains with solubles (DDGS), and approximately [Spelled
Out (in Numbers)] tons per year of raw carbon dioxide (CO2) gas.

[Delete]Corn will be supplied to the ethanol plant corn surge day bin from the elevator located
adjacent to the site. The Design-Builder will install hammermills and the associated equipment to
grind the corn and transfer it to the slurry system.

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 ___-bushel legs
will lift the corn to one of two ___– bushel concrete/steel 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 [Spelled Out (in Numbers)]
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 [Spelled Out (in Numbers)] 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

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

B-1

 

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 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.

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.

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

B-2

 

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.

NOTE: This Exhibit B is a general description of the Plant’s basic design and operation only. It
is not intended to be the final Project scope or to establish the final specifications. The final
design of the Plant, including equipment incorporated, and equipment specifications will be
reflected in the As Built Plans.

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

B-3

 

[THESE EXHIBITS ARE EXAMPLES ONLY AND WILL TO BE REVISED FOR EACH PROJECT’S SPECIFICATIONS —  THIS

GENERIC EXHIBIT IS NOT FINAL OR BINDING AND CANNOT BE RELIED UPON FOR ANY PURPOSE WHATSOEVER]

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 [City, State]. 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 Two Million Dollars ($2,000,000).
The requirements of each state and the decisions of each Owner will increase or decrease the
actual cost. Additionally, the cost of the required soil stabilization in Table 1 can be in the
range of, or may exceed, $2.5MM which cost is not included in the Contract Price. 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.

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

C-1

 

	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.
	 
	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)	 	[State] 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

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

C-2

 

	 	 	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.
	 
	 	 	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. 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 side-letter agreements 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 side-letter
agreement 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

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

C-3

 

	 	 	any other office equipment and personal property for the administration building shall be the
sole and absolute cost and responsibility of Owner and Design-Builder shall have no
responsibility in regards thereto.
	 
	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 side-letter agreements 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
side-letter agreement 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.

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

C-4

 

Table 1 Minimum Soil Bearing Pressure – Responsibility of Owner

** Subject to revision based on detailed design and engineering.

	 	 	 	 	 
	 	 	Required Allowable Soil Bearing
	Description
	 	Pressure (pounds per square foot)
	Grain Storage Silos
	 	 	8,000	 
	DDGS Storage Silos
	 	 	8,000	 
	Corn/DDGS Building
	 	 	4,000	 
	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	 

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

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

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

C-6

 

Table 3 Owner’s Milestones

	 	 	 
	 	 	Number Of Days To Be
	 	 	Completed After Notice To
	Owner’s Responsibilities	 	Proceed
	Temporary Electrical Service In Place
	 	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.
	 	0
	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
	Permanent Electrical Service Complete
	 	60 days prior to SC
	Maintenance and Power Equipment Onsite (Table
2)
	 	60 days prior to SC
	Employees Hired and Ready for Training
	 	60 days prior to SC
	Natural Gas Pipeline/Delivery System Complete
	 	60 days prior to SC

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

C-7

 

EXHIBIT D

ICM License Agreement

THIS LICENSE AGREEMENT (this “License Agreement”) is entered into and made effective as of the
___ day of                     , 2006 (“Effective Date”) by and between
                                        , a                      corporation (“OWNER”), and ICM, Inc.,
a Kansas corporation (“ICM”).

     WHEREAS, OWNER has entered into that certain Design-Build Lump Sum Contract dated
                    , 2006 (the “Contract”) with Fagen, Inc., a Minnesota corporation (“Fagen”),
under which Fagen is to design and construct a ___ million gallon per year ethanol plant for OWNER
to be located in or near                      (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

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

D-1

 

Fagen; (iii) was disclosed to OWNER by a third party other than Fagen having the legal right to
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.

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

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

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

D-3

 

OWNER’s or its Representatives’ possession that contain Proprietary Property in whatever format,
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

	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

D-4

 

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

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

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

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:
	 
	 	 
	 

	 	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

 
	 	 	 
	[Name of Project Company]

	 	_____ ___, 2006

D-5

 

[This exhibit is project-specific and will be provided by Fagen]

EXHIBIT E

Schedule of Values

Schedule of Values for:

[Owner Company Name]

Payment Request Breakdown

	 	 	 	 	 
	Description	 	 	 
	 
	MOBILIZATION	 	$ [Amount in 10.1]
	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	CONTRACT AMOUNT
	 	$[Price from 9.1]

			
	 	 	 
	[Name of Project
Company]
	 	___  ___, 2006

E-1

 

EXHIBIT F

Form of Informational Report

	 	 	 
	

	 	PROJECT MEETING: Two-Week Look Ahead(s)

	 	 	 	 	 	 	 
	JOBSITE:

	 	 	 	MEETING	 	 
	 

	 	 	 	DATE:	 	 
	 

	 	 
	 	 	 	 

	 	 	 	 	 
	6 MANPOWER	 	TOTALS 6
	Fagen, Inc.

	 	 	0	 
	(sub)

	 	 	0	 
	 

	 	 	0	 
	 

	 	 	0	 
	 

	 	 	0	 
	 

	 	 	0	 
	 

	 	 	0	 
	 

	 	 	0	 
	 

	 	 	0	 
	 

	 	 	0	 
	JOBSITE TOTAL

	 	 	0	 

6 SAFETY ISSUES

	 	1.	 	text
	 
	 	2.	 	text

6 WAREHOUSE ISSUES

	 	1.	 	text
	 
	 	2.	 	text

6 PROCUREMENT ISSUES

	 	1.	 	text
	 
	 	2.	 	text

6 OPERATIONS ISSUES

	 	1.	 	text
	 
	 	2.	 	text

6 CIVIL

Area

	 	1.	 	text
	 
	 	2.	 	text

			
	 	 	 
	[Name of Project Company]
	 	___  ___, 2006

F-1

 

6 STRUCTURAL

Area

	 	1.	 	text
	 
	 	2.	 	text

6 SIDING / INSULATION

Area

	 	1.	 	text
	 
	 	2.	 	 

6 MILLWRIGHT

Area

	 	1.	 	text
	 
	 	2.	 	 

6 PIPE

Area

	 	1.	 	text
	 
	 	2.	 	 

6 ELECTRICAL

Area

	 	1.	 	text
	 
	 	2.	 	 

6 DELIVERIES

Area

	 	1.	 	text

6 SUBCONTRACTOR

Subcontractor Name

	 	1.	 	text

			
	 	 	 
	[Name of Project Company]
	 	___  ___, 2006

F-2

 

EXHIBIT G

Required Permits

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Responsibility for	 	Assistance in	 	 
	No.	 	Type of Application/Permit	 	Obtaining Permit	 	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
	 	Design-Builder	 	 	 	 
	 

	 	Mechanical
	 	Design-Builder	 	 	 	 
	 

	 	Electrical
	 	Design-Builder	 	 	 	 
	 

	 	Structures
	 	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	 	 	 	 

			
	 	 	 
	[Name of Project Company]
	 	___  ___, 2006

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):

	 	Description (Name and Location):
	Fagen, Inc.

	 	[Project Name and Location]
	P. O. Box 159

	 	OWNER (Name and Address):
	Granite Falls, MN 56241

	 	[Owner Name/Address]
	CONSTRUCTION CONTRACT

	 	SURETY (Name and Principal Place of
	Date:

	 	Business): [Name/Place of Business]
	Amount: [Amount]
	 	 
	Date (Not earlier than Construction Contract Date):
	 	 
	Amount:
	 	 

	 	 	 	 	 	 	 
	Modifications to this Bond:

	 	q None
	 	 	 	q See Page 2

	 	 	 	 	 	 	 	 	 	 	 
	CONTCONTRACTOR 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:	 	 	 	 	 	 	 	 

			
	 	 	 
	 
	 	___  ___, 2006

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

3.3 The Owner has agreed to pay the Balance of the Contract Price to the Surety in

			
	 	 	 
	[Name of Project Company]
	 	___  ___, 2006

H-1

 

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.

7. The Surety shall not be liable to the Owner or others for obligations of the Contractor that

			
	 	 	 
	[Name of Project Company]
	 	___  ___, 2006

H-2

 

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.)

	 	 	 	 	 
	CONTRACTOR AS PRINCIPAL

	 

	(Corporate Seal)

	 

			
	 	 	 
	Company:	 	 
	 
	Address:	 	 
	 
	[Name of Project Company]
	 	___  ___, 2006

H-3

 

	 	 	 	 	 	 	 	 	 	 	 
	Name and Title:	 	 	 	SURETY	 	 	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Signature:	 	 	 	 	 	(Corporate Seal)
	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Company:	 	 	 	 
	 	 	 	 	 	 	 

	
 	 	 	 	 	 	 
	 	 	 	 	Address:	 	 	 	 
	 	 	 	 

	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name and Title:	 	 
	 	 	 

	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Signature:	 	 	 	 
	 	 	 	 	 	 	 

			
	 	 	 
	[Name of Project Company]
	 	___  ___, 2006

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:	 	 	 	 	 	 
	 	 	 	 	 	 	 

			
	 	 	 
	[Name of Project Company]
	 	___  ___, 2006

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):

	 	SURETY (Name and Principal Place of Business):
	Fagen, Inc.
	 	 
	P. O. Box 159
	 	 
	Granite Falls, MN 56241
	 	 
	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:           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:
	 	 

     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.

     With respect to the Owner, this obligation shall be null and void if the Contractor:

          Promptly makes payment, directly or indirectly, for all sums due Claimants, and

          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 (at the address described

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

I-1

 

 

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.

     With respect to Claimants, this obligation shall be null and void if the Contractor promptly
makes payment, directly or Indirectly, for all sums due.

     The Surety shall have no obligation to Claimants under this Bond until:

          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.

          Claimants who do not have a direct contract with the Contractor:

          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

          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

          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.

     If a notice required by Paragraph 4 is given by the Owner to the Contractor or to the Surety
that is sufficient compliance.

     When the Claimant has satisfied the conditions of Paragraph 4, the Surety shall promptly and
at the Surety’s expense take the following actions:

          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.

          Pay or arrange for payment of any undisputed amounts.

     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.

     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

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

I-2

 

 

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.

     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.

     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.

     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.

     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.

     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.

     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.

DEFINITIONS

          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, 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.

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

I-3

 

 

          Construction Contract: The agreement between the Owner and the Contractor identified on the
signature page, including all Contract Documents and changes thereto.

          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:	 	 
	 	 	 	 	 	 	 	 	 

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)
	 	 

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

I-4

 

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	[                    ]	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	(Surety)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

I-5

 

EXHIBIT J

Draw (Payment) Schedule

	 	 	 	 	 	 
	MONTH	 	BILLING	 	TOTAL BILLING	 
	 
	1
	 	$	 	$	%	 
	2
	 	$	 	$	%	 
	3
	 	$	 	$	%	 
	4
	 	$	 	$	%	 
	5
	 	$	 	$	%	 
	6
	 	$	 	$	%	 
	7
	 	$	 	$	%	 
	8
	 	$	 	$	%	 
	9
	 	$	 	$	%	 
	10
	 	$	 	$	%	 
	11
	 	$	 	$	%	 
	12
	 	$	 	$	%	 
	13
	 	$	 	$	%	 
	14
	 	$	 	$	%	 
	15
	 	$	 	$	%	 
	16
	 	$	 	$	%	 
	 
	 	$     [Price]	 	 	 	 
	 

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

J-1

 

EXHIBIT K

Air Emissions Application or Permit

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

K-1

 

 

EXHIBIT L

Phase I and Phase II Engineering Services Agreement

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

L-1

 

 

EXHIBIT M

Form of Application for Payment

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

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 )

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

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:
	 	 	 	 
	 

	 	 	 	 

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

N-2

 

 

EXHIBIT O

Form of Consent to Assignment

			
	 	 	 
	[Name of Project Company]
	 	                             , 2006

N-1exv10w7

 

Exhibit 10.7

MASTER LOAN AGREEMENT

by and among

US BIO ALBERT CITY, LLC

and

AGSTAR FINANCIAL SERVICES, PCA

dated

as of

November 15, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I. DEFINITIONS AND ACCOUNTING MATTERS
	 	 	1	 
	Section 1.01 Certain Defined Terms
	 	 	1	 
	Section 1.02 Accounting Matters
	 	 	11	 
	Section 1.03 Construction
	 	 	11	 
	 
	 	 	 	 
	ARTICLE II. AMOUNTS AND TERMS OF THE TERM LOANS
	 	 	11	 
	Section 2.01 Supplements
	 	 	11	 
	Section 2.02 Construction Loan
	 	 	11	 
	Section 2.03 Revolving Loan
	 	 	11	 
	Section 2.04 Conversion of Construction Loan Into Term Loan
	 	 	12	 
	Section 2.05 Adjustments to Interest Rate
	 	 	13	 
	Section 2.06 Underwriting/Participation/Facility Fees
	 	 	14	 
	Section 2.07 Default Interest.
	 	 	14	 
	Section 2.08 Late Charge
	 	 	15	 
	Section 2.09 Prepayment of Term Loan
	 	 	15	 
	Section 2.10 Changes in Law Rendering Certain LIBOR Rate Loans Unlawful
	 	 	15	 
	Section 2.11 Payments and Computations
	 	 	15	 
	Section 2.12 Maximum Amount Limitation
	 	 	16	 
	Section 2.13 Lender Records
	 	 	17	 
	Section 2.14 Loan Payments
	 	 	17	 
	Section 2.15 Purchase of Equity Interests in AgStar Financial Services, PCA
	 	 	17	 
	Section 2.16 Compensation
	 	 	18	 
	 
	 	 	 	 
	ARTICLE III. CONDITIONS PRECEDENT
	 	 	18	 
	Section 3.01 Conditions Precedent to Funding
	 	 	18	 
	 
	 	 	 	 
	ARTICLE IV. REPRESENTATIONS AND WARRANTIES
	 	 	22	 
	Section 4.01 Representations and Warranties of the Borrower
	 	 	22	 
	 
	 	 	 	 
	ARTICLE V. COVENANTS OF THE BORROWER
	 	 	26	 
	Section 5.01 Affirmative Covenants
	 	 	26	 
	Section 5.02 Negative Covenants
	 	 	34	 
	 
	 	 	 	 
	ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
	 	 	37	 
	Section 6.01 Events of Default
	 	 	37	 
	Section 6.02 Remedies
	 	 	40	 
	Section 6.03 Remedies Cumulative
	 	 	41	 
	 
	 	 	 	 
	ARTICLE VII. MISCELLANEOUS
	 	 	42	 
	Section 7.01 Amendments, etc
	 	 	42	 

i

 

	 	 	 	 	 
	 	 	Page	 
	Section 7.02 Notices, etc
	 	 	42	 
	Section 7.03 No Waiver; Remedies
	 	 	43	 
	Section 7.04 Costs, Expenses and Taxes.
	 	 	43	 
	Section 7.05 Right of Set-off
	 	 	44	 
	Section 7.06 Severability of Provisions
	 	 	44	 
	Section 7.07 Binding Effect; Successors and Assigns; Participations.
	 	 	44	 
	Section 7.08 Consent to Jurisdiction.
	 	 	45	 
	Section 7.09 Governing Law
	 	 	45	 
	Section 7.10 Execution in Counterparts
	 	 	45	 
	Section 7.11 Survival
	 	 	45	 
	Section 7.12 Waiver of Jury Trial
	 	 	46	 
	Section 7.13 Entire Agreement
	 	 	46	 

LIST OF SCHEDULES AND EXHIBITS

	 	 	 
	Schedule 3.01(d)

	 	Real Property
	Schedule 4.01(a)

	 	Description of Certain Transactions Related to the Borrower’s Stock
	Schedule 4.01(f)

	 	Description of Certain Threatened Actions, etc.
	Schedule 4.01(k)

	 	Location of Inventory and Farm Products; Third Parties in Possession; Crops
	Schedule 4.01(l)

	 	Office Locations; Fictitious Names; Etc.
	Schedule 4.01(p)

	 	Intellectual Property
	Schedule 4.01(t)

	 	Environmental Compliance
	Schedule 5.01(o)

	 	Management
	Schedule 5.02(a)

	 	Description of Certain Liens, Lease Obligations, etc.
	Schedule 5.02(k)

	 	Transactions with Affiliates
	 
	Exhibit A

	 	Compliance Certificate
	Exhibit B

	 	Project Sources and Uses Statement
	Exhibit C

	 	Form of Opinion Letter

ii

 

MASTER LOAN AGREEMENT

     THIS MASTER LOAN AGREEMENT (this “Agreement”), dated as of November 15, 2005, between AGSTAR
FINANCIAL SERVICES, PCA, a United States corporation (“Lender”) and US BIO ALBERT CITY, LLC, an
Iowa limited liability company (the “Borrower”).

RECITALS

     A. The Borrower has requested the Lender extend to the Borrower various credit facilities for
the purposes of acquiring, constructing, equipping and furnishing of an ethanol production facility
to be located near Albert City, Buena Vista County, Iowa (the “Project”).

     B. Lender has agreed to make such loans to the Borrower, and in order to reduce the amount of
paperwork associated therewith, Lender and the Borrower would like to enter into a master loan
agreement.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing, intending to be legally bound hereby, and
in consideration of Lender making one or more loans to the Borrower, Lender and the Borrower agree
as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING MATTERS

     Section 1.01. Certain Defined Terms. As used in this Agreement and in the
Supplements, the following terms shall have the following meanings. Terms not otherwise defined in
this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code, as
amended from time to time. All references to dollar amounts shall mean amounts in lawful money of
the United States of America.

     “Advances” means the Loans or Letters of Credit provided the Borrower pursuant to this
Agreement and the Supplements to this Agreement. .

“Affiliate” means, as to any Person, any other Person: (a) that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or is under
common control with, such Person; (b) that directly or indirectly beneficially owns or holds
ten percent (10%) or more of any class of voting stock of such Person; or (c) ten percent
(10%) or more of the voting stock of which is directly or indirectly beneficially owned or
held by the Person in question. The term “control” means the possession, directly or
indirectly, of the power to direct or cause direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or otherwise;
provided, however, in no event shall the Lender or any Bank be deemed an Affiliate of the
Borrower or any of their subsidiaries.

1

 

“Agreement” means this Agreement, as this Agreement may be amended or modified from
time to time, together with all exhibits and schedules attached to this Agreement from time
to time.

“Allowed Distributions” has the meaning specified in Section 5.02(b).

“Borrower” means US Bio Albert City, LLC, an Iowa limited liability company.

“Borrower’s Equity” means funds of at least 40% of Project Costs consisting of (i)
member cash equity of not less than $35,000,000.00; and (ii) Subordinated Debt.

“Business Day” means any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized to close under the Laws of, or are in fact closed in, the
state where the Lender’s Office is located and, if such day relates to any LIBOR Rate, means
any such day on which dealings in dollar deposits are conducted by and between banks in the
applicable offshore dollar interbank market.

“Capital Expenditures” means, for any period, the sum of all amounts that would, in
accordance with generally accepted accounting principles consistently applied, be included
as additions to property, plant and equipment on a statement of cash flows for the Borrower
during such period, with respect to: (a) the acquisition, construction, improvement,
replacement or betterment of land, buildings, machinery, equipment or of any other fixed
assets or leaseholds; or (b) other capital expenditures and other uses recorded as capital
expenditures having substantially the same effect.

“Closing Date” means November 15, 2005.

“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended.

“Collateral” means and includes, without limitation, all property and assets granted
as collateral security for the Loans or Indebtedness, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the future, and whether
granted in the form of a security interest, mortgage, assignment of rents, deed of trust,
assignment, pledge, chattel mortgage, chattel trust, factor’s lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien interest
whatsoever, whether created by law, contract or otherwise.

“Commitment” means the respective amounts committed to by Lender under the
Supplements and the Notes.

“Completion Date” means the earlier of (i) March 30, 2007, or (ii) the date a
Completion Certificate is issued for the Project executed by the Borrower, General
Contractor and Inspecting Engineer, whichever shall first occur.

2

 

“Completion Certificate” means a certificate executed by the Borrower, General
Contractor and Inspecting Engineer stating that the Project is completed and that the corn
processing equipment and fixtures are completely operational.

“Compliance Certificate” means a certificate of the Treasurer, or any other officer
reasonably acceptable to the Lender, of the Borrower, substantially in the form attached
hereto as Exhibit A, setting forth the calculations of current financial covenants and
stating: (a) the Financial Statements are true and correct and, other than the unaudited
interim financial statements, have been prepared in accordance with generally accepted
accounting principles consistently applied; (b) whether they have knowledge of the
occurrence of any Event of Default under this Agreement, and if so, stating in reasonable
detail the facts with respect thereto; and (c) reaffirm and ratify the representations and
warranties, as of the date of the certificate, contained in this Agreement.

“Construction Advance” means any Advance for the payment of Project Costs.

“Construction Contracts” means any and all contracts, written or oral, between the
Borrower and any Contractor and any subcontractor and between any of the foregoing and any
other person or entity relating in any way to the construction of the Project, including the
performing of labor or the furnishing of standard or specially fabricated materials in
connection therewith.

“Construction Loan” means the loan from the Lender to the Borrower in the amount of
$75,000,000.00 and pursuant to the terms and conditions provided for in the First Supplement
to this Agreement.

“Construction Note” means that certain promissory note of even date herewith
executed and delivered to the Lender by the Borrower in the amount of $75,000,000.00 and
pursuant to the terms and conditions provided for in the First Supplement to this Agreement.

“Construction Loan Maturity Date” means 60 days after the Completion Date.

“Contractor” means and includes any person or entity, including the General
Contractor, engaged to work on or to furnish materials or supplies for the Project.

“Current Portion of Long Term Debt” means that portion of Funded Debt payable within
one year from the date of such determination, determined in accordance with generally
accepted accounting principles, consistently applied.

“Debt” means: (A) indebtedness for borrowed money or for the deferred purchase
price of property or services; (B) obligations as lessee under leases which shall have been
or should be, in accordance with generally accepted accounting principles, recorded as
capital leases; (C) obligations under direct or indirect guaranties in respect of, and

3

 

obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of others of the
kinds referred to in clause (A) or (B) above or (E) through (G) below; (D) liabilities in
respect of unfunded vested benefits under plans covered by Title IV of ERISA; (E)
indebtedness in respect of mandatory redemption or mandatory dividend rights on equity
interests but excluding dividends payable solely in additional equity interests; (F) all
obligations of a Person, contingent or otherwise, for the payment of money under any
noncompete, consulting or similar agreement entered into with the seller of a company or its
assets or any other similar arrangements providing for the deferred payment of the purchase
price for an acquisition permitted hereby or an acquisition consummated prior to the date
hereof; and (G) all obligations of a Person under any Hedging Agreement.

“Default Rate” means the lesser of: (a) the Maximum Rate; or (b) the rate per annum
which shall from day-to-day be equal to two percent (2%) in excess of the then applicable
rate of interest under any Supplement or Note.

“Disbursing Agent” means Lender, its successors and assigns.

“Disbursing Agreement” means the Disbursing Agreement, of even date herewith,
executed by the Title Company, the Borrower, and the Lender, and any holder of Subordinated
Debt, as the same may be from time to time amended, modified, or supplemented.

“Distribution” means any dividend, distribution, payment, or transfer of property to
any member of the Borrower.

“Environmental Laws” means all laws and regulations relating to environmental,
health, safety and land use matters applicable to any property.

“EBITDA” means for any period, the total of the following each calculated without
duplication for the Borrower for such period: (i) net income from operations; plus (ii) any
provision for (or less any benefit from) income taxes included in determining such net
income; plus (iii) Interest Expense deducted in determining such net income; plus (iv)
amortization and depreciation expense deducted in determining such net income.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“Events of Default” has the meaning specified in Section 6.01.

“Excess Cash Flow” means EBITDA, less the sum of: (i) required payments in respect
of Funded Debt; (ii) Maintenance Capital Expenditures; and (iii) Allowed Distributions.

“Excess Cash Flow Payment” has the meaning specified in Section 2.04(b).

4

 

“Excess Distributions” shall have the meaning specified in Section 5.02(b).

“Extraordinary Items” means items which are material and significantly different
from the Borrower’s typical business activities, determined in accordance with generally
accepted accounting principles, consistently applied.

“Facility Fee” shall have the meaning specified in Section 2.06.

“Fixed Charge Coverage Ratio” means the ratio of (EBITDA +/- Extraordinary Items)
divided by the sum of Current Portion of Long Term Debt + Interest Expense + Dividends +
Distributions + Tax Distributions + Maintenance Capital Expenditures).

“Food Security Act” means the Food Security Act of 1985, 7 U.S.C. §1631, as amended,
and the regulations promulgated thereunder.

“Funded Debt” means the principal amount of all Debt of the Borrower having a final
maturity of more than one year from the date of origin thereof (or which is renewable or
extendible at the option of the obligor for a period or periods more than one year from the
date of origin) excluding, however, the principal amount due under any Revolving Note or any
other line of credit used by Borrower for working capital purposes, all determined in
accordance with generally accepted accounting principles, consistently applied for the
period in question.

“GAAP” means generally accepted accounting principals, consistently applied.

“General Contractor” means Fagen, Inc., a Minnesota corporation, and its
successors and assigns.

“Governmental Authority” means and includes any and all courts, boards, agencies,
commissions, offices, or authorities of any nature whatsoever for any governmental unit
(federal, state, county, district, municipal, city, or otherwise) whether now or hereafter
in existence.

“Guarantor” means and includes US BioEnergy Corporation, a South Dakota
corporation, together with all other of the guarantors, sureties, and accommodation parties
in connection with any Indebtedness.

Guaranties. The terms “Guaranty” and “Guaranties” shall mean those guaranties given
by the Guarantor, pursuant to which the Guarantor shall guarantee the full and prompt
payment and performance of the Borrower under the Note and this Agreement.

“Income Taxes” means the applicable state, local or federal tax on the net income of
the Borrower.

“IDNR” means the Iowa Department of Natural Resources of the State of Iowa.

5

 

“Inspecting Engineer” means BBI, Inc., and its successors and permitted assigns.

“Intellectual Property” has the meaning specified in Section 4.01(p).

“Interest Expense” means for any period, the total interest expense of the Borrower
calculated on a consolidated basis.

“Interest Period” means the period commencing on the date of an Advance and ending
on the numerically corresponding day in the first calendar month thereafter, except that
each such Interest Period which commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (a) each Interest Period which would otherwise end
on a day which is not a Business Day shall end on the next succeeding Business Day or if
such succeeding Business Day falls in the next succeeding calendar month, on the next
preceding Business Day; (b) any Interest Period which would otherwise extend beyond the
Maturity Date shall end on the Maturity Date; and (c) no Interest Period shall have a
duration of less than one (1) month.

“Inventory” means all of the Borrower’s inventory, as such term is defined in the
UCC, whether now owned or hereafter acquired, whether consisting of whole goods, spare parts
or components, supplies or materials, whether acquired, held or furnished for sale, for
lease or under service contracts or for manufacture or processing, and wherever located.

“Lender” means AgStar Financial Services, PCA, and its successors and assigns.

“Letter of Credit” means any letter of credit issued by Lender pursuant to the terms
of this Agreement and any Supplement.

“Letter of Credit Liabilities” means, at any time, the aggregate maximum amount
available to be drawn under all outstanding Letters of Credit (in each case, determined
without regard to whether any conditions to drawing could then be met) and all unreimbursed
drawings under Letters of Credit.

“LIBOR Rate” (London Interbank Offered Rate) means the rate (rounded upward to the
nearest sixteenth and adjusted for reserves required on Eurocurrency Liabilities (as
hereinafter defined) for banks subject to FRB Regulation D (as hereinafter defined) or
required by any other federal law or regulation, quoted by the British Bankers Association
(the “BBA”) at 11:00 a.m. London time two Banking Days (as hereinafter defined) before the
commencement of the Interest Period for the offering of U.S. Dollar deposits in the London
interbank market for an Interest Period of one month, as published by Bloomberg or another
major information vendor listed on BBA’s official website. “Banking Day” shall mean a day
on which Lender is open for business, dealings in U.S. dollar deposits are being carried out
in the London interbank market, and banks are open for business in New York City and London,
England. “Eurocurrency Liabilities” has the

6

 

meaning as set forth in FRB Regulation D. “FRB Regulation D” means Regulation D as
promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as
amended from time to time.

“Loan and Carrying Charges” means all commitment fees to the Lender, brokerage fees,
standby fees, interest charges, service fees, attorneys’ fees, contractors’ fees,
developers’ fees, funding fees, title insurance fees and charges, recording fees,
registration taxes, real estate taxes, special assessments, insurance premiums, utility
charges incurred by the Borrower in the construction of the Project and issuance of the
Notes, all costs incurred in acquisition of the Real Property and any other costs incurred
in the development of the Project.

“Loan Documents” means this Agreement, any and all Supplements to this Agreement,
the Notes, Letters of Credit, the Security Agreement, the Mortgage and all other agreements,
documents, instruments, and certificates of the Borrower delivered to, or in favor of, the
Lender under this Agreement or in connection herewith or therewith, including, without
limitation, all agreements, documents, instruments, certificates and delivered in connection
with the extension of Advances by the Lender.

“Loan Obligations” means all obligations, indebtedness, and liabilities of the
Borrower to the Lender, including the Reimbursement Obligations, arising pursuant to any of
the Loan Documents, whether now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint
and several, including, without limitation, the obligation of the Borrower to repay the
Advances, interest on the Advances, and all fees, costs, and expenses (including attorneys’
fees and expenses) provided for in the Loan Documents.

“Loan/Loans” means and includes the Construction Loan, the Revolving Loan and any
other financial accommodations extended to the Borrower by the Lender pursuant to the terms
of this Agreement and any Supplements.

“Long Term Debt” means indebtedness that matures more than one year after the date
of determination thereof.

“Long Term Marketing Agreement” means any contract, agreement or understanding of
the Borrower having a term of one year or more after the date of determination thereof
relating to the sale of any raw materials, inventory, products or by-products of the
Borrower.

“Maintenance Capital Expenditures” means all Capital Expenditures made in the
ordinary course of business to maintain existing business operations of the Borrower in any
fiscal year, determined in accordance with generally accepted accounting principles,
consistently applied.

“Material Adverse Effect” means any set of circumstances or events which: (i) has
or could reasonably be expected to have any material adverse effect upon the validity or

7

 

enforceability of any Loan Documents or any material term or condition contained therein;
(ii) is or could reasonably be expected to be material and adverse to the condition
(financial or otherwise), business assets, operations, or property of the Borrower; or (iii)
materially impairs or could reasonably be expected to materially impair the ability of the
Borrower to perform the obligations under the Loan Documents.

“Material Contract” means (i) any contract or any other agreement, written or oral,
or any of the Borrower or its Subsidiaries involving monetary liability of or to any such
person in an amount in excess of $500,000.00 per annum; and (ii) any other contract or
agreement, written or oral, of any of the Borrower or any of its Subsidiaries the failure to
comply with which could reasonably be expected to have a Material Adverse Effect on any of
the Borrower or its Subsidiaries; provided, however, that any contract or agreement which is
terminable by a party other than any of the Borrower or its Subsidiaries without cause upon
notice of 90 days or less shall not be considered a Material Contract.

“Maturity Date” means the fifth anniversary of the Construction Loan Maturity Date.

“Maximum Rate” means the maximum nonusurious interest rate, if any, at any time, or
from time to time, that may be contracted for, taken, reserved, charged or received under
applicable state or federal laws.

“Mortgage” means that certain Mortgage of even date herewith, pursuant to which a
mortgage interest shall be given by the Borrower to the Lender in the Real Property to secure
payment to the Lender of the Loan Obligations.

“Net Income” means net income as determined in accordance with GAAP.

“Note/Notes” means and includes the Construction Note, Revolving Note and any
promissory notes executed and delivered to the Lender by the Borrower pursuant to the terms
of this Agreement and any Supplements as the same may be amended, modified, supplemented,
extended or restated from time to time.

“Ordinary Trade Payable Dispute” means trade accounts payable, in an aggregate
amount not in excess of $100,000.00 with respect to the Borrower, with respect to which:
(a) there exists a bona fide dispute between Borrower and the vendor; (b)
the Borrower is contesting the same in good faith by appropriate proceedings; and (c) the
Borrower has established appropriate reserves on its financial statements.

“Participation Fee” shall have the meaning specified in Section 2.06.

“Person” means any individual, corporation, business trust, association, company,
partnership, joint venture, governmental authority, or other entity.

“Personal Property” means all buildings, structures, equipment, fixtures,
improvements, building supplies and materials and personal property now or hereafter
attached to, located in, placed in or necessary to the use of the improvements on the Real
Property including, but without being limited to, all machinery, fixtures, equipment,
furnishings,

8

 

and appliances, as well as all renewals, replacements, additions, and substitutes thereof,
and all products and proceeds thereof, and including without limitation all accounts,
instruments, chattel paper, other rights to payment, money, deposit accounts, insurance
proceeds and general intangibles of the Borrower, whether now owned or hereafter acquired.

“Plans and Specifications” means the final plans and specifications for the
construction of the Project, to be prepared by the General Contractor, and approved by the
Lender, and all amendments and modifications thereof approved by Lender.

“Project” means any and all buildings, structures, fixtures, and other improvements
made to the Real Property and other uses identified in the Project Sources and Uses
Statement as part of the acquisition and construction of an ethanol production facility in
Albert City, Iowa, for which the Loans to Borrower are being made hereunder.

“Project Costs” means the total of all costs of acquiring the Real Property and
constructing the Project as identified in the Project Sources and Uses Statement, together
with all Loan and Carrying Charges.

“Project Sources and Uses Statement” means the statement attached hereto as Exhibit
B which identifies the sources and uses of monies in a total amount of $125,000,000.00
related to the Project.

“Real Property” means that real property located in the County of Buena Vista, State
of Iowa, owned by the Borrower, upon which the Project is to be constructed and which is
described in Schedule 3.01(d).

“Reimbursement Obligation” means the obligation of the Borrowers to reimburse the
Lender for any demand for payment or drawing under a Letter of Credit.

“Related Documents” means and includes without limitation all promissory notes,
credit agreements, loan agreements, supplements, guaranties, security agreements, mortgages,
deeds of trust, assignments and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.

“Revolving Loan” means any revolving loan provided by the Lender to the Borrower
pursuant to the terms and conditions provided for in this Agreement and in any Revolving Loan
Supplement.

“Revolving Loan Maturity” means the maturity date set forth in any revolving loan
supplement.

9

 

“Revolving Note” means that certain promissory note in the amount of $6,500,000.00
executed and delivered to the Lender by the Borrower pursuant to the terms and conditions
provided for in the Second Supplement to this Agreement.

“SARA” means the Superfund Amendment and Reauthorizations Act of 1986, as amended.

“Security Agreement” means and includes, without limitation, any agreements,
promises, covenants, arrangements, understandings, or other agreements, whether created by
law, contract, or otherwise, which evidence, govern, represent, or create a Security
Interest, as the same has been and may hereafter be amended or otherwise modified.

“Security Interest” means and includes without limitation any type of collateral
security, whether in the form of a lien, charge, mortgage, assignment of rents, deed of
trust, assignment, pledge, chattel mortgage, chattel trust, factor’s lien, equipment trust,
conditional sale, trust receipt, lien or title retention contract, lease or consignment
intended as a security device, or any other security or lien interest whatsoever, whether
created by law, contract, or otherwise.

“Subordinated Debt” means Debt, in an amount not to exceed $15,000,000.00, obtained
by the Borrower (i) on terms reasonably acceptable to the Lender; (ii) subject to an
intercreditor and subordination agreement in form and substance reasonably acceptable to
Lender; and (iii) subject to the terms and conditions of the Disbursing Agreement.

“Subordinated Debt Distributions” shall have the meaning specified in Section
5.02(b).

“Supplement” has the meaning set forth in Section 2.01 of this Agreement.

“Tangible Net Worth” means the excess of total assets over total liabilities except
Subordinated Debt, total assets and total liabilities each to be determined in accordance
with generally accepted accounting principles consistent with those applied in the
preparation of the financial statements referred to in Section 5.01(c) for the Borrower,
excluding, however, from the determination of total assets: (i) goodwill, organizational
expenses, research and development expenses, trademarks, trade names, copyrights, patents,
patent applications, licenses and rights in any thereof, and other similar intangibles; (ii)
treasury stock; (iii) securities which are not readily marketable; (iv) cash held in a
sinking or other analogous fund established for the purpose of redemption, retirement or
prepayment of capital stock or Debt; (v) any write-up in the book value of any asset
resulting from a revaluation thereof subsequent to the Closing Date; (vi) amortized start-up
costs; and (vii) any items not included in clauses (i) through (vi) above which are treated
as intangibles in conformity with generally accepted accounting principles.

“Tangible Owner’s Equity” means the Tangible Net Worth divided by total assets,
measured annually at the end of each fiscal year, and expressed as a percentage.

10

 

“Tax Distributions” has the meaning specified in Section 5.02(b).

“Term Loan” means any amortizing loan with a maturity of greater than one year
provided by the Lender to the Borrower pursuant to the terms and conditions of this Agreement and
Supplement to this Agreement.

“Underwriting Fee” shall have the meaning specified in Section 2.06.

“Working Capital” means current assets of the Borrower less current liabilities of
the Borrower as determined in accordance with GAAP.

     Section 1.02. Accounting Matters. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting principles consistently
applied, except as otherwise stated herein. To enable the ready and consistent determination of
compliance by the Borrower with its obligations under this Agreement, the Borrower will not change
the manner in which either the last day of its fiscal year or the last days of the first three
fiscal quarters of its fiscal years is calculated.

     Section 1.03. Construction. Wherever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender shall include each other gender
where appropriate. The headings, captions or arrangements used in any of the Loan Documents are,
unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or
modify the terms of the Loan Documents, nor affect the meaning thereof.

ARTICLE II

AMOUNTS AND TERMS OF THE LOANS

     Section 2.01. Supplements. In the event the Borrower desires to borrow from Lender
and Lender is willing to lend to the Borrower, or in the event Lender and Borrower desire to
consolidate any existing loans hereunder, the parties will enter into a supplement to this
Agreement (each supplement, as it may be amended, modified, supplemented, extended or restated from
time to time, a “Supplement” and, collectively, the “Supplements”). Each Supplement will set forth
Lender’s commitment to make a Loan to the Borrower, the amount of the Loan(s), the purpose of the
Loan(s), the interest rate or rate options applicable to the Loan(s), the repayment terms of the
Loan(s), and any other terms and conditions applicable to the Loan(s). Each Supplement will also
be accompanied by a Note of the Borrower setting forth the Borrower’s obligation to make payments
of interest on the unpaid principal balance of the Loan(s), and fees and premiums, if any, and to
repay the principal balance of the Loan(s). Each Loan will be governed by the terms and conditions
contained in this Agreement and in the Note and the Supplement relating to that Loan.

     Section 2.02. Construction Loan. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties set forth in this Agreement,

11

 

the Lender has agreed to lend to Borrower and Borrower has agreed to borrow from Lender the lesser
of: (i) $75,000,000.00; or (ii) 60% of the Project Costs. Such amount shall be loaned by Lender
pursuant to the terms and conditions set forth in this Agreement and the First Supplement to this
Agreement.

     Section 2.03. Revolving Loan. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties set forth in this Agreement, the Lender has
agreed, as of the Closing Date, to lend to Borrower and Borrower has agreed to borrow from Lender
from time to time on a revolving basis an amount not to exceed $6,500,000.00. Such amount shall be
loaned by Lender pursuant to the terms and conditions set forth in this Agreement and the Second
Supplement to this Agreement. Pursuant to the terms and conditions in this Agreement, the Lender
may extend additional term Revolving Loans to the Borrower. Any such future term Revolving Loans
shall be provided by Lender pursuant to the terms and conditions of a future term Revolving Loan
Supplement.

     Section 2.04. Conversion of Construction Loan Into Term Loan. Pursuant to the terms
and conditions contained in this Agreement, the Lender shall extend a term loan to the Borrower on
the Construction Loan Maturity Date. Any such amount shall be provided by Lender pursuant to
the terms and conditions set forth in this Agreement and a future Supplement to this Agreement
setting forth the terms and conditions of such term loan, provided, however, that (i) all unpaid
principal and all accrued interest on the Term Loan shall be due and payable on the Maturity Date
and (ii) the Borrower shall have the right to convert all or any part of the Term Loan into a fixed
rate loan, with the consent of the Lender, which shall bear interest at a rate equal to the most
recent ten-year fixed rate bonds sold by the Federal Farm Credit Banks Funding Corporation prior to
the Construction Loan Maturity Date, plus 300 basis points. Should the Borrower elect such fixed
rate option, such rate of interest shall not be subject to any adjustments under Section 2.05 of
this Agreement.

          (a) Conditions Precedent. In addition to the terms and conditions of disbursement set
forth in this Agreement and the Disbursing Agreement, the Lender shall not be obligated to extend a
term loan to the Borrower on the Construction Loan Maturity Date unless and until:

               (i) Completion of Project. The Project shall have been completed per the Plans and
Specifications and a Completion Certificate has been obtained;

               (ii) Amount of Term Loan. The maximum amount of the Term Loan shall be the lesser of
the following: (A) $75,000,000.00; or (B) 60% of the Project Costs. On the Borrower’s written
request on or before the Construction Loan Maturity Date, the Construction Loan may be segmented
into two credit facilities: (i) a term revolving loan in an amount not to exceed $17,000,000.00,
with no required amortization; and (ii) a term loan in an amount not to exceed $58,000,000.00, with
a twelve (12) year amortization. Both the term revolving loan and the term loan shall be payable
in full on the Maturity Date.

               (iii) Construction Loan Exceeds Term Loan. In the event that the amount of the
Construction Loan advanced by Lender exceeds the amount of the term loan to be

12

 

made by the Lender, the Borrower shall immediately repay the amount of the Construction Loan
which is not being converted into a term loan;

               (iv) Facility Fee. The Borrower shall have paid Lender the Facility Fee which is due
pursuant to Section 2.06;

               (v) Representations and Warranties. The representations and warranties set forth in
this Agreement and the First Supplement are true and correct in all material respects as of the
Construction Loan Maturity Date to the same extent and with the same effect as if made at and as of
the date thereof;

               (vi) No Defaults. The Borrower is not in default under the terms of this Agreement,
the Related Documents or any other agreement to which the Borrower is a party and which relates to
the construction or operation of the Project;

               (vii) Government Action. No license, permit, permission or authority necessary for
the construction or operation of the Project has been revoked or challenged by or before any
Governmental Authority; and

               (viii) Marketing Agreements. The Borrower has executed marketing agreements for all
ethanol and DDGs to be produced at the Project and provided Lender with collateral assignments of
all such agreements in form and content which is reasonably satisfactory to Lender and its counsel
and acknowledged by the non-Borrower party to all such agreements.

          (b) Excess Cash Flow. Such term loan shall require that, beginning with the first
calendar quarter following the Construction Loan Maturity Date, and continuing throughout the term
of the Term Loan, the Borrower shall remit to Lender, in addition to all other installments of
principal and interest, an amount equal to 50% of the Borrower’s Excess Cash Flow for the
immediately preceding calendar quarter (the “Excess Cash Flow Payment”), provided however, that the
total Excess Cash Flow Payments required hereunder shall not exceed $5,000,000.00 in any calendar
year. All Excess Cash Flow Payments shall be applied to the reduction of the outstanding principal
balance of the Revolving Term Loan. No Excess Cash Flow Payments shall be required during any
calendar year should the Tangible Owner’s Equity be greater than 60% at the end of the immediately
preceding fiscal year of the Borrower.

          (c) Principal Payment Suspension. Principal payments may be suspended by prepaying up
to four quarterly term loan principal payments under the Term Loan. At any subsequent time to the
prepayment during the course of the term of the loan Borrower may skip as many quarterly principal
payments as have been prepaid (up to four) as long as all loan covenants are in compliance.
Interest payments will continue to be paid according to the original amortization and due dates.

     Section 2.05. Adjustments to Interest Rate. Notwithstanding any other provision of
this Agreement, the Supplements, the Notes, or the Related Documents, after the Construction

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Loan Maturity Date, the rate of interest under any Loan which bears interest on a variable rate,
shall be adjusted according to the following schedule should the Tangible Owner’s Equity of the
Borrower, achieve the levels set forth below:

	 	 	 
	Tangible Owner’s Equity	 	Interest Rate
	 
	 	 
	Less than 49.99%

	 	Applicable LIBOR Rate plus 325 basis points
	 
	 	 
	50.00%—59.99%

	 	Applicable LIBOR Rate plus 300 basis points
	 
	 	 
	Greater Than 60.00%

	 	Applicable LIBOR Rate plus 275 basis points

Upon delivery of the monthly financial statements and the Compliance Certificate pursuant to
Section 5.01(c)(iii) for each month that corresponds with each month end, the rate of interest for
any month shall automatically be adjusted in accordance with the Tangible Owner’s Equity set forth
therein and the rates set forth above. Such automatic adjustment to the rate of interest shall
take effect as of the first Business Day of the month in which the Lender received the related
Compliance Certificate. The term “Adjustment Date” shall mean each such Business Day when such
rates, margins or fees change pursuant to the immediately prior sentence or the next following
sentence. If the Borrower fails to deliver such Compliance Certificate which so sets forth the
Tangible Owner’s Equity within the period of time required by Section 5.01(c)(iii) hereof or if any
Event of Default occurs, the rate of interest shall automatically be adjusted to a rate equal to
the applicable LIBOR Rate plus 375 basis points, such automatic adjustments: (a) to take effect as
of the first Business Day after the last day on which the Borrower were required to deliver the
applicable Compliance Certificate in accordance with Section 5.01(c)(iii) hereof or in the case of
an Event of Default, on the date the written notice is given to the Borrower; and (b) to remain in
effect until subsequently adjusted in accordance herewith upon the delivery of such Compliance
Certificate or, in the case of an Event of Default, when such Event of Default has been cured to
the satisfaction of the Lender.

     Section 2.06. Underwriting/Participation/Facility Fees. The Borrower agrees to pay to
the Lender on the Closing Date: (i) a Underwriting Fee of $70,000.00, less any amount of this
underwriting fee already paid by Borrower; and (ii) a Participation Fee of $489,000.00. In
addition, the Borrower shall pay to Lender on or before the Construction Loan Maturity Date, and on
each anniversary of the Construction Loan Maturity Date through the fourth anniversary, an annual
Facility Fee of $35,000.00, provided that in the event the loans are refinanced, accelerated or for
any other reason do not reach the Maturity Date, the Lender shall be entitled to payment of the
total amount of such Facility Fees in an amount not less than $175,000.00.

     Section 2.07. Default Interest. In addition to the rights and remedies set forth
above and notwithstanding any Note: (i) if the Borrower fails to make any payment to Lender when
due (including, without limitation, any purchase of equity of Lender when required), then at

14

 

Lender’s option in each instance, such obligation or payment shall bear interest from the date due
to the date paid at 2% per annum in excess of the rate of interest that would otherwise be
applicable to such obligation or payment; (ii) upon the occurrence and during the continuance of an
Event of Default beyond any applicable cure period, if any, at Lender’s option in each instance,
the unpaid balances of the Loans shall bear interest form the date of the Event of Default or such
later date as Lender shall elect at 2% per annum in excess of the rate(s) of interest that would
otherwise be in effect on the Loans under the terms of the applicable Note; (iii) after the
maturity of any Loan, whether by reason of acceleration or otherwise, the unpaid principal balance
of the Loan (including without limitation, principal, interest, fees and expenses) shall
automatically bear interest at 2% per annum in excess of the rate of interest that would otherwise
be in effect on the Loan under the terms of the applicable Note. Interest payable at the Default
Rate shall be payable from time to time on demand or, if not sooner demanded, on the last day of
each calendar month.

     Section 2.08. Late Charge. If any payment of principal or interest due under the
Supplements or the Notes is not paid within ten (10) days of the due date thereof, the Borrower
shall, in addition to such amount, pay a late charge equal to five percent (5%) of the amount of
such payment.

     Section 2.09. Prepayment of Term Loan. The Borrower may, by notice to the Lender,
prepay the outstanding amount of the Term Loan in whole or in part with accrued interest to the
date of such prepayment on the amount prepaid, without penalty or premium, except as provided in
this Section and Section 2.16. In the event the Term Loan is prepaid, in whole or in part, within
two (2) years following the Closing Date, the Borrower shall pay a prepayment fee equal to the
following specified percentage of the amount of principal prepaid:

	 	 	 	 	 
	Months 1-12
	 	 	2.00	%
	Months 13-24
	 	 	1.00	%

Notwithstanding the foregoing, no prepayment fee shall be required if such prepayment is made
pursuant to Section 2.04(b) of this Agreement. Any prepayment does not otherwise affect Borrower’s
obligation to pay any fees due under this Agreement. In addition, in the event any Loan is
converted to a fixed rate loan, the Borrower shall pay the prepayment penalty applicable to that
fixed interest rate, if any.

     Section 2.10. Changes in Law Rendering Certain LIBOR Rate Loans Unlawful. In the
event that any change in any applicable law (including the adoption of any new applicable law) or
any change in the interpretation of any applicable law by any judicial, governmental or other
regulatory body charged with the interpretation, implementation or administration thereof, should
make it (or in the good-faith judgment of the Lender should raise a substantial question as to
whether it is) unlawful for the Lender to make, maintain or fund LIBOR Rate Loans, then: (a) the
Lender shall promptly notify each of the other parties hereto; and (b) the obligation of the Lender
to make LIBOR rate loans of such type shall, upon the effectiveness of such event, be suspended for
the duration of such unlawfulness. During the period of any suspension, Lender

15

 

shall make loans to Borrower that are deemed lawful and that as closely as possible reflect the
terms of this Agreement.

     Section 2.11. Payments and Computations.

          (a) Method of Payment. Except as otherwise expressly provided herein, all payments of
principal, interest, and other amounts to be made by the Borrower under the Loan Documents shall be
made to the Lender in U.S. dollars and in immediately available funds, without set-off, deduction,
or counterclaim, not later than 2:00 P.M. (Minneapolis, Minnesota time) on the date on which such
payment shall become due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day). The Borrower shall, at the time of making
each such payment, specify to the Lender the sums payable under the Loan Documents to which such
payment is to be applied and in the event that the Borrower fail to so specify or if an Event of
Default exists, the Lender may apply such payment and any proceeds of any Collateral to the Loan
Obligations in such order and manner as it may elect in its sole discretion.

          (b) Application of Funds. Lender may apply all payments received by it to the Loan
Obligations in such order and manner as Lender may elect in its sole discretion; provided that any
payments received from any guarantor or from any disposition of any collateral provided by such
guarantor shall only be applied against obligations guaranteed by such guarantor.

          (c) Payments on a Non-Business Day. Whenever any payment under any Loan Document
shall be stated to be due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be included in the
computation of the payment of interest and fees, as the case may be.

          (d) Proceeds of Collateral. All proceeds received by the Lender from the sale or
other liquidation of the Collateral when an Event of Default exists shall first be applied as
payment of the accrued and unpaid fees and expenses of the Lender hereunder, including, without
limitation, under Section 7.04 and then to all other unpaid or unreimbursed Loan Obligations
(including reasonable attorneys’ fees and expenses) owing to the Lender and then any remaining
amount of such proceeds shall be applied to the unpaid amounts of Loan Obligations, until all the
Loan Obligations have been paid and satisfied in full or cash collateralized. After all the Loan
Obligations (including without limitation, all contingent Loan Obligations) have been paid and
satisfied in full, all Commitments terminated and all other obligations of the Lender to the
Borrower otherwise satisfied, any proceeds of Collateral shall be delivered to the Person entitled
thereto as directed by the Borrower or as otherwise determined by applicable law or applicable
court order.

          (e) Computations. Except as expressly provided otherwise herein, all computations of
interest and fees shall be made on the basis of actual number of days lapsed over a year of 365 or
366 days, as appropriate. Interest shall accrue from and include the date of borrowing, but
exclude the date of payment.

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     Section 2.12. Maximum Amount Limitation. Anything in this Agreement, any Supplement,
any Note, or the other Loan Documents to the contrary notwithstanding, Borrower shall not be
required to pay unearned interest on any Note or any of the Loan Obligations, or ever be required
to pay interest on any Note or any of the Loan Obligations at a rate in excess of the Maximum Rate,
if any. If the effective rate of interest which would otherwise be payable under this Agreement,
any Note or any of the other Loan Documents would exceed the Maximum Rate, if any, then the rate of
interest which would otherwise be contracted for, charged, or received under this Agreement, any
Note or any of the other Loan Documents shall be reduced to the Maximum Rate, if any. If any
unearned interest or discount or property that is deemed to constitute interest (including, without
limitation, to the extent that any of the fees payable by Borrower for the Loan Obligations to the
Lender under this Agreement, any Supplement, any Note, or any of the other Loan Documents are
deemed to constitute interest) is contracted for, charged, or received in excess of the Maximum
Rate, if any, then such interest in excess of the Maximum Rate shall be deemed a mistake and
canceled, shall not be collected or collectible, and if paid nonetheless, shall, at the option of
the holder of such Note, be either refunded to the Borrower, or credited on the principal of such
Note. It is further agreed that, without limitation of the foregoing and to the extent permitted
by applicable law, all calculations of the rate of interest or discount contracted for, charged or
received by the Lender under its Note, or under any of the Loan Documents, that are made for the
purpose of determining whether such rate exceeds the Maximum Rate applicable to the Lender, if any,
shall be made, to the extent permitted by applicable laws (now or hereafter enacted), by
amortizing, prorating and spreading during the period of the full terms of the Advances evidenced
by the Notes, and any renewals thereof all interest at any time contracted for, charged or received
by Lender in connection therewith. This Section 2.11 shall control every other provision of all
agreements among the parties to this Agreement pertaining to the transactions contemplated by or
contained in the Loan Documents, and the terms of this Section 2.11 shall be deemed to be
incorporated in every Loan Document and communication related thereto.

     Section 2.13. Lender Records. All advances and all payments or prepayments made
thereunder on account of principal or interest may be evidenced by the Lender in accordance with
its usual practice in an account or accounts evidencing such advances and all payments or
prepayments thereunder from time to time and the amounts of principal and interest payable and paid
from time to time thereunder; in any legal action or proceeding in respect of the Notes, the
entries made in such account or accounts shall be prima facie evidence of the
existence and amounts of all advances and all payments or prepayments made thereunder on account of
principal or interest. Lender shall provide monthly statements of such entries to Borrower for the
purpose of confirming the accuracy of such entries.

     Section 2.14. Loan Payments. During the continuance of an Event of Default, the
Lender may deduct any obligations due or any other amounts due and payable by the Borrower under
the Loan Documents from any accounts maintained with the Lender.

     Section 2.15. Purchase of Equity Interests in AgStar Financial Services, PCA. In
addition to (and not in lieu of) the other amounts payable by Borrower under this Agreement or

17

 

any Supplement, Borrower shall purchase $1,000.00 of equity interests in AgStar Financial Services,
PCA. The purchase price for the equity interests shall be payable in full on or prior to the date
hereof. Such purchases of equity interests shall comply with AgStar Financial Services, PCA’s
respective by-laws and capital plans applicable to borrowers generally. Borrower hereby
acknowledges receipt of the following information and materials pertaining to AgStar Financial
Services, PCA prior to the execution of this Agreement: (i) copies of the by-laws of AgStar
Financial Services, PCA; (ii) a written description of the terms and conditions under which the
equity interests are issued; (iii) a copy of the most recent annual reports of AgStar Financial
Services, PCA; and (iv) if more recent than the latest annual reports, the latest quarterly reports
of AgStar Financial Services, PCA. AgStar Financial Services, PCA shall possess a statutory
security interest in its equity interests. AgStar Financial Services, PCA reserves the right to
sell participations on a non-patronage basis.

     Borrower acknowledges and agrees that: (a) only the portions of the Loans provided to
Borrower by AgStar Financial Services, PCA are entitled to patronage distributions in accordance
with the bylaws of AgStar Financial Services, PCA and its practices and procedures; and (b) any
patronage or similar payments to which Borrower is entitled as a result of its ownership of the
equity interests in AgStar Financial Services, PCA will not be based on any of the Loans not
belonging to AgStar Financial Services, PCA or in which AgStar Financial Services, PCA has granted
a participation interest at any time.

     Section 2.16. Compensation. Upon the request of the Lender, the Borrower shall pay to
the Lender such amount or amounts as shall be sufficient (in the reasonable opinion of the Lender)
to compensate it for any loss, cost, or expense (excluding loss of anticipated profits incurred by
it) as a result of: (i) any payment, prepayment, or conversion of a LIBOR rate loan for any reason
on a date other than the last day of the Interest Period for such Loan; or (ii) any failure by the
Borrower for any reason (including, without limitation, the failure of any condition precedent
specified in Section 3.01 to be satisfied) to borrow, extend, or prepay a LIBOR rate loan on the
date for such borrowing, extension, or prepayment specified in the relevant notice of borrowing,
extension or prepayment under this Agreement.

     Such indemnification may include any amount equal to the excess, if any, of: (a) the amount
of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or
extended, for the period from the date of such prepayment or of such failure to borrower, convert
or extend to the last day of the applicable Interest Period (or in the case of a failure to borrow,
convert or extend, the Interest Period that would have commenced on the date of such failure) in
each case at the applicable rate of interest for such loan as provided for herein; over (b) the
amount of interest (as reasonably determined by the Lender) which would have accrued to the Lender
on such amount by placing such amount on deposit for a comparable period with leading banks in the
interbank LIBOR market. The covenants of the Borrower set forth in this Section 2.16 shall survive
the repayment of the Loans and other obligations under the Loan Documents hereunder.

18

 

ARTICLE III.

CONDITIONS PRECEDENT

     Section 3.01. Conditions Precedent to Funding. The effectiveness of this Agreement
and obligations of the Lender to make any Advance, are subject to the conditions precedent that the
Lender shall have received the following, in form and substance satisfactory to the Lender:

     (a) This Agreement, duly executed by the Borrower and the Lender;

     (b) The Supplements, duly executed by the Borrower and the Lender;

     (c) The Construction Note and the Revolving Note duly executed by the Borrower;

     (d) The Mortgage, fully executed and notarized, to secure the Loans encumbering on a first
Lien basis the fee interest and/or leasehold interest of the Borrower in the Real Property and the
fixtures thereon described in Schedule 3.01(d);

     (e) A Security Agreement duly executed by the Borrower and in a form as provided by the Lender
by which security agreement the Lender is granted a security interest by the Borrower in the
Collateral;

     (f) A copy of the Construction Contract(s) and a complete set of the Plans and Specifications,
together with copies of all permits and government approvals relating to the construction and use
of the Project;

     (g) An assignment of contract for each of the Construction Contracts and the Plans and
Specifications, duly executed by the Borrower and pursuant to which the Borrower shall have
assigned to the Lender all of the Borrower’s right, title and interest in and to each such
Construction Contract, and which assignment shall have been consented to and certified in writing
by the other party(ies) to each such Construction Contract;

     (h) Copies of all Material Contracts between Borrower and third parties used in the normal
operations of Borrower, including but not limited to management agreements, marketing agreements,
and corn delivery agreements;

     (i) Assignments of the Material Contracts between Borrower, duly executed by the Borrower and
pursuant to which the Borrower shall have assigned to the Lender all of the Borrower’s right, title
and interest in and to each such contracts, and which assignment shall have been consented to and
certified in writing by the other party(ies) to each such contract;

     (j) Financing Statements in form and content satisfactory to the Lender and in proper form
under the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of
the Lender, desirable to perfect the security interests created by the Security Agreement;

     (k) Copies of UCC, tax and judgment lien search reports listing all financing statements and
other encumbrances which name the Borrower (under its present name and any

19

 

previous name) and which are filed in the jurisdictions in which the Borrower is located, organized
or maintains collateral, together with copies of such financing statements (none of which shall
cover the collateral purported to be covered by the Security Agreement);

     (l) Evidence that all other actions necessary or, in the opinion of the Lender, desirable to
enable the Lender to perfect and protect the security interests created by the Security Agreement
have been taken;

     (m) An ALTA mortgagee title insurance policy issued by a title insurance company acceptable to
Lender, with respect to the Real Property, assuring the Lender that the Mortgage creates a valid
and enforceable encumbrance on the Real Property, free and clear of all defects and encumbrances
except Permitted Liens and containing: (i) a comprehensive endorsement (ALTA form 9); (ii) a
zoning endorsement (ALTA form 3.1) specifying an ethanol production facility as a permitted use for
all of the parcels included in the Real Property; and (iii) such endorsements as the Lender shall
reasonably require. All such title insurance policies shall be in form and substance reasonably
satisfactory to the Lender and shall provide for affirmative insurance and such reinsurance as the
Lender may reasonably request, all of the foregoing in form and substance reasonably satisfactory
to the Lender;

     (n) Maps or plats of the Real Property certified to the Lender and the title insurance company
issuing the policy referred to in Subsection 3.01(n) (the “Title Insurance Company”) in a manner
reasonably satisfactory to each of the Lender and the Title Insurance Company, dated a date
reasonably satisfactory to each of the Lender and the Title Insurance Company by an independent
professional licensed land surveyor, which maps or plats and the surveys on which they are based
shall be sufficient to delete any standard printed survey exception contained in the applicable
title policy and be made in accordance with the Minimum Standard Detail Requirements for Land Title
Surveys jointly established and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the generality of the foregoing,
there shall be surveyed and shown on such maps, plats or surveys the following: (i) the locations
on such sites of all the buildings, structures and other improvements and the established building
setback lines; (ii) the lines of streets abutting the sites and width thereof; (iii) all access and
other easements appurtenant to the sites necessary to use the sites; (iv) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar encumbrances affecting
the site, whether recorded, apparent from a physical inspection of the sites or otherwise known to
the surveyor; (v) any encroachments on any adjoining property by the building structures and
improvements on the sites; and (vi) if the site is described as being on a filed map, a legend
relating the survey to said map;

     (o) Evidence as to: (i) whether any portion of the Real Property is in an area designated by
the Federal Emergency Management Agency as having special flood or mud slide hazards (a “Flood
Hazard Property”); and (ii) if any portion of the Real Property is a Flood Hazard Property: (A)
whether the community in which such Real Property is located is participating in the National Flood
Insurance Program; (B) the Borrower’s written acknowledgment of receipt of written notification
from the Lender (1) as to the fact that such Real Property is a Flood Hazard Property and (2) as to
whether the community in which each

20

 

such Flood Hazard Property is located is participating in the National Flood Insurance Program; and
(C) copies of insurance policies or certificates of insurance of the Borrower evidencing flood
insurance satisfactory to the Lender and naming the Lender as sole loss payee on behalf of the
Lender;

     (p) Evidence reasonably satisfactory to the Lender that the Real Property and the
contemplated use of the Real Property, are in compliance in all material respects with all
applicable Laws including without limitation health and Environmental Laws, including, but not
limited to all concentrated animal feedlot operations rules and regulations, erosion control
ordinances, storm drainage control laws, doing business and/or licensing laws, zoning laws (the
evidence submitted as to zoning should include the zoning designation made for the Real Property,
the permitted uses of the Real Property under such zoning designation and zoning requirements as to
parking, lot size, ingress, egress and building setbacks) and laws regarding access and facilities
for disabled persons including, but not limited to, the Federal Architectural Barriers Act, the
Fair Housing Amendments Act of 1988, the Rehabilitation Act of 1973 and the Americans with
Disabilities Act of 1990;

     (q) A certificate of the secretary of the Borrower together with true and correct copies of
the following: (i) the Articles of Organization of the Borrower, including all amendments thereto,
certified by the Office of the Secretary of State of the state of its incorporation and dated
within 30 days prior to the date hereof; (ii) the Operating Agreement of the Borrower, including
all amendments thereto; (iii) the resolutions of the Board of Governors of the Borrower authorizing
the execution, delivery and performance of this Agreement, the other Loan Documents, and all
documentation executed and delivered in connection therewith to which the Borrower is a party; (iv)
certificates of the appropriate government officials of the state of organization of the Borrower
as to its existence and good standing, and certificates of the appropriate government officials in
each state where each corporate Borrower does business and where failure to qualify as a foreign
corporation would have a material adverse effect on the business and financial condition of the
Borrower, as to its good standing and due qualification to do business in such state, each dated
within 30 days prior to the date hereof; and (v) the names of the officers of the Borrower
authorized to sign this Agreement and the other Loan Documents to be executed by each corporate
Borrower, together with a sample of the true signature of each such officer;

     (r) Legal opinion of Lindquist & Vennum, PLLP, legal counsel for the Borrower, substantially
in the form attached hereto as “Exhibit C”;

     (s) The Participation Fee and Underwriting Fee due pursuant to Section 2.06 have been paid;

     (t) An intercreditor and subordination agreement between the Lender and any holder of
Subordinated Debt as to the priority of the Lender’s security interests in the Collateral, rights
to payment following an Event of Default, and as to such other matters as reasonably requested by
the Lender;

21

 

     (u) Evidence that the costs and expenses (including, without limitation, attorney’s fees)
referred to in Section 7.04, to the extent incurred and invoiced, shall have been paid in full;

     (v) The results of the Lender’s inspection of the Collateral, and the Lender’s receipt of an
appraisal of the Collateral acceptable to Lender in its sole discretion;

     (w) Satisfactory review by the Lender of any pending litigation relating to the Borrower;

     (x) A Phase I Environmental Assessment in form and substance acceptable to the Lender;

     (y) The Borrower shall have ordered the General Contractor to begin construction of the
Project, and construction shall have commenced;

     (z) A schedule, certified by Borrower as accurate and complete, setting forth: (i) the
necessary licenses, permits and consents required by applicable federal, state, and local
governmental entities required for the lawful construction and operation of the Project; and (ii)
the deadlines to obtain such licenses, permits and consents so that the Completion Date occurs as
scheduled;

     (aa) Lender shall have received in form and substance acceptable to Lender, an agreement with
an Inspecting Engineer of recognized standing and acceptable to Lender, by which agreement such
Inspecting Engineer agrees to assist Lender in its inspection of the Project during construction,
review and approve requests for Advances on the Construction Loan on behalf of Lender, and provide
such additional services as Lender may reasonably require at the sole expense of Borrower;

     (bb) The Borrower shall have provided commitment to the Lender of its Borrower’s Equity;

     (cc) The Borrower shall have provided to Lender evidence reasonably satisfactory to the Lender
that the Borrower is an eligible Farm Credit System borrower under 12 CFR §613.3010;

     (dd) A Commodity Account Control Agreement for all commodity accounts kept and maintained by
the Borrower;

     (ee) A Deposit Account Control Agreement for all deposit accounts kept and maintained by the
Borrower;

     (ff) The Guarantor shall have executed and delivered to Lender the Guaranty pursuant to which
the Guarantor shall have guaranteed the full and prompt payment and performance by Borrower of the
Notes, Indebtedness, the Supplements and this Agreement; and

22

 

     (gg) Evidence that the insurance required by Sections 5.01(j) and 5.01(r)(xii) has been
obtained by the Borrower.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

     Section 4.01 Representations and Warranties of the Borrower. The Borrower represents
and warrants as follows:

          (a) Borrower. The Borrower is a limited liability company duly organized and validly
existing and in good standing under the laws of the State of Iowa and is qualified to do business
in all jurisdictions in which the nature of its business makes such qualification necessary and
where failure to so qualify would have a Material Adverse Effect on its respective financial
condition or operations. The Borrower has the power and authority to own and operate its assets
and to carry on its business and to execute, deliver, and perform its obligations under the Loan
Documents to which it is or may become a party. There are no outstanding subscriptions, options,
warrants, calls, or rights (including preemptive rights) to acquire, and no outstanding securities
or instruments convertible into, membership interests (units) of the Borrower, except for those
transactions set forth on Schedule 4.01(a);

          (b) The Loan Documents. The execution, delivery and performance by the Borrower of
the Loan Documents are within the Borrower’s powers, have been duly authorized by all necessary
action, do not contravene: (i) the articles of organization or operating agreements of the
Borrower; or (ii) any law or any contractual restriction binding on or affecting the Borrower, and
do not result in or require the creation of any lien, security interest or other charge or
encumbrance (other than pursuant to the terms thereof) upon or with respect to any of its
respective properties;

          (c) Governmental Approvals. No consent, permission, authorization, order or license
of any Governmental Authority or of any party to any agreement to which the Borrower is a party or
by which it or any of its respective property may be bound or affected, is necessary in connection
with the project, acquisition or other activity being financed by this Agreement, the execution,
delivery, performance or enforcement of the Loan Documents or the creation and perfection of the
liens and security interest granted thereby, except as such have been obtained and are in full
force and effect or which are required in connection with the exercise of remedies hereunder;

          (d) Enforceability. This Agreement is, and each other Loan Document to which the
Borrower is a party when delivered will be, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditor’s rights generally and by general principles of equity;

          (e) Financial Condition and Operations. The balance sheet of the Borrower , as of
November 10, 2005, and, with respect to the period ended November 10, 2005,

23

 

the related statement of cash flow of the Borrower for the fiscal period then ended, copies of
which have been furnished to the Lender, fairly present in all material respects the financial
condition of the Borrower as at such date, and the results of the operations of the Borrower for
the period ended on such dates and since November 10, 2005, there has been no material adverse
change in such condition or operations;

          (f) Litigation. Except as described on Schedule 4.01(f), there is no pending or
threatened action or proceeding affecting the Borrower or any of the transactions contemplated
hereby before any court, governmental agency or arbitrator, which may materially adversely affect
the financial condition or operations of the Borrower. As of the Closing Date, there are no
outstanding judgments against the Borrower;

          (g) Use of Proceeds of Advances, etc. (i) No proceeds of the Loans will be used to
acquire any security in any transaction which is subject to Sections 13 and 14 of the Securities
Exchange Act of 1934 (provided, however, that this provision shall not prohibit Borrower from
investing in certain value added cooperatives for the purposes of carrying out their overall
business operations); (ii) the Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the
Board of Governors of the Federal Reserve System); and (iii) no proceeds of the Loans will be used
to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing
or carrying any margin stock;

          (h) Liens. Except as created by the Loan Documents, there is no lien, security
interest or other charge or encumbrance, and no other type of preferential arrangement, upon or
with respect to any of the properties or income of the Borrower, which secures Debt of any Person,
except as described in Schedule 5.02(a);

          (i) Taxes. The Borrower has filed or caused to be filed all federal, state and local
tax returns that are required to be filed and has paid all other taxes, assessments, and
governmental charges or levies upon it and its property, income, profits and assets which are due
and payable, except where the payment of such tax, assessment, government charge or levy is being
contested in good faith and by appropriate proceedings and adequate reserves in compliance with
GAAP have been set aside on the Borrower’s books therefore;

          (j) Solvency. As of and from and after the date of this Agreement, the Borrower: (i)
owns and will own assets the fair saleable value of which are: (A) greater than the total amount of
liabilities (including contingent liabilities); and (B) greater than the amount that will be
required to pay the probable liabilities of its then existing debts as they become absolute and
matured considering all financing alternatives and potential asset sales reasonably available to
it; (ii) has capital that is not unreasonably small in relation to its business as presently
conducted or any contemplated or undertaken transaction; and (iii) does not intend to incur and
does not believe that it will incur debts beyond its ability to pay such debts as they become due;

          (k) Location of Inventory and Farm Products; Third Parties in Possession; Crops. The
Borrower’s inventory and farm products pledged as collateral under the

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Security Agreement are located at the places (or, as applicable, jurisdictions) specified in
Schedule 4.01(k) for the Borrower, except to the extent any such inventory and farm products are in
transit. Schedule 4.01(k) correctly identifies, as of the date hereof, the landlords or
mortgagees, if any, of each of its locations identified in Schedule 4.01(k) currently leased or
owned by the Borrower. Except for the Persons identified on Schedule 4.01(k), no Person other than
the Borrower and the Lender has possession of any of the Collateral. Except as described in above,
none of its Collateral has been located in any location within the past four months other than as
set forth on Schedule 4.01(k) for the Borrower;

          (l) Office Locations; Fictitious Names; Predecessor Companies; Tax I.D. Number. The
Borrower’s chief place of business, its chief executive office, and its jurisdiction of
organization is located at the place identified for the Borrower on Schedule 4.01(l). Within the
last four months it has not had any other chief place of business, chief executive office, or
jurisdiction of organization. Schedule 4.01 (l) also sets forth all other places where the
Borrower keeps its books and records and all other locations where the Borrower has a place of
business. The Borrower does not do business nor has the Borrower done business during the past
five (5) years under any trade-name or fictitious business name except as disclosed on Schedule
4.01(l). Schedule 4.01(l) sets forth an accurate list of all names of all predecessor companies of
the Borrower including the names of any entities it acquired (by stock purchase, asset purchase,
merger or otherwise) and the chief place of business and chief executive office of each such
predecessor company. For purposes of the foregoing, a “predecessor company” shall mean any Person
whose assets or equity interests are acquired by the Borrower or who was merged with or into the
Borrower within the last four months prior to the date hereof. The Borrower’s United States
Federal Income Tax I.D. Number and state organizational identification number are identified on
Schedule 4.01(l);

          (m) Title to Properties. The Borrower has such title or leasehold interest in and to
the Real Property owned or leased by it as is necessary or desirable to the conduct of its business
and valid and legal title or leasehold interest in and to all of its Personal Property, including
those reflected on the financial statements of the Borrower previously delivered to Lender, except
those which have been disposed of by the Borrower subsequent to the date of such delivered
financial statements which dispositions have been in the ordinary course of business or as
otherwise expressly permitted hereunder;

          (n) Disclosure. All factual information furnished by or on behalf of the Borrower or
its subsidiaries in writing to the Lender (including, without limitation, all factual information
contained in the Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all other such factual
information hereafter furnished by or on behalf of the Borrower to the Lender, will be true and
accurate in all material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such information not misleading
in any material respect at such time in light of the circumstances under which such information was
provided;

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          (o) Operation of Business. The Borrower possesses all licenses, permits, franchises,
patents, copyrights, trademarks, and tradenames, or rights thereto, necessary to conduct its
business substantially as now conducted and will obtain all such licenses, permits, franchises,
patents, copyrights, trademarks, and tradenames, or rights thereto necessary to conduct its
business as presently proposed to be conducted except those that the failure to so possess could
not reasonably be expected to have a Material Adverse Effect on its financial condition or
operations, and the Borrower is not in violation of any valid rights of others with respect to any
of the foregoing except violations that could not reasonably be expected to have such a Material
Adverse Effect;

          (p) Intellectual Property. The Borrower owns, or has the legal right to use, all
patents, trademarks, tradenames, copyrights, technology, know-how and processes (the “Intellectual
Property”) necessary for it to conduct its business as currently conducted except for those the
failure to own or have such legal right to use could not reasonably be expected to have a Material
Adverse Effect. As of the Closing Date, set forth in Schedule 4.01(p) is a list of all
Intellectual Property registered with the United States Copyright Office or the United States
Patent and Trademark Office and owned by the Borrower or that the Borrower has the right to use.
Except as provided in Schedule 4.01(p), no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower know of any such claim, and,
to the knowledge of the Borrower, the use of such Intellectual Property by the Borrower does not
infringe on the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;

          (q) Employee Benefit Plans. The Borrower is in compliance in all material respects
with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder, the failure to comply with which
could have a Material Adverse Effect on the Borrower;

          (r) Investment Company Act. The Borrower is not required to be registered as an
“investment company” within the meaning of the Investment Company Act of 1940, as amended;

          (s) Compliance with Laws. The Borrower is in compliance in all material respects with
all laws, rules, regulations, ordinances, codes, orders, and the like, the failure to comply with
which could have a Material Adverse Effect on the Borrower;

          (t) Environmental Compliance. Borrower, except as set forth in Schedule 4.01(t), is
in material compliance with all applicable Environmental Laws; and

          (u) Material Change. The Borrower has performed all of its material obligations,
other than those obligations for which performance is not yet due, under all Material Contracts
and, to the best knowledge of the Borrower, each other party thereto is in compliance with each
such Material Contract. Each such Material Contract is in full force and effect in

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accordance with the terms thereof. The Borrower has made available a true and complete copy of
each such Material Contract for inspection by Lender.

ARTICLE V.

COVENANTS OF THE BORROWER

     Section 5.01. Affirmative Covenants. So long as any Loan Obligations remain unpaid or
the Lender shall have any commitment hereunder, the Borrower shall, unless the Lender shall
otherwise consent in advance in writing:

          (a) Compliance with Laws, etc. Comply in all material respects with all applicable
laws, rules, regulations and orders, such compliance to include, without limitation, (i) all
applicable zoning and land use laws; (ii) all employee benefit and Environmental Laws, and (iii)
paying before the same become delinquent all taxes, assessments and governmental charges imposed
upon it or upon its property except to the extent contested in good faith;

          (b) Visitation Rights; Field Examination. At any reasonable time and from time to
time, permit the Lender or representatives, to (i) examine and make copies of and abstracts from
the records and books of account of the Borrower, and (ii) enter onto the property of the Borrower
to conduct unannounced field examinations and collateral inspections, with such frequency as Lender
in its sole discretion may deem appropriate, and (iii) discuss the affairs, finances, and accounts
of the Borrower with any of Borrower’s officers or directors. Borrower consents to and authorizes
Lender to enter onto the property of Borrower for purposes of conducting the examinations,
inspections and discussions provided above. Upon and during the occurrence of an Event of Default
or in the event that there are deemed by the Lender to be any material inconsistencies and/or
material noncompliance with respect to any financial or other reporting on the part of the
Borrower, any and all visits and inspections deemed necessary or desirable on account of such Event
of Default, inconsistency and/or noncompliance shall be at the expense of the Borrower. In
addition to the foregoing, at any reasonable time and from time to time, the Borrower also shall
permit the Lender or representatives thereof, at the expense of the Lender, to examine and make
copies of and abstracts from the records and books of account of, and visit the properties of, the
Borrower, and to discuss the affairs, finances and accounts of the Borrower with any of its
respective officers or directors;

          (c) Reporting Requirements. Furnish to the Lender:

               (i) As soon as available, but in no event later than 120 days after the end of each fiscal
year of the Borrower occurring during the term hereof, annual consolidated financial statements of
the Borrower, prepared in accordance with GAAP consistently applied and in a format that
demonstrates any accounting or formatting change that may be required by the various jurisdictions
in which the business of the Borrower is conducted (to the extent not inconsistent with GAAP).
Such financial statements shall: (i) be audited by independent certified public accountants
selected by the Borrower and acceptable to Lender; (ii) be accompanied by a report of such
accountants containing an certified opinion, without qualification, thereon acceptable to Lender;
(iii) be prepared in reasonable detail, and in

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comparative form; and (iv) include a balance sheet, a statement of income, a statement of
stockholders’, members’ or partner’s equity, a statement of cash flows, and all notes and schedules
relating thereto and any management letter;

               (ii) Beginning with the first (1st) month following the Completion Date, as soon as
available and in any event within 30 days after the end of each month, balance sheets of the
Borrower as of the end of such month and statement of income of the Borrower for the period
commencing at the end of the previous fiscal year and ending with the end of such month, certified
by an authorized officer of the Borrower;

               (iii) As soon as available but in no event later than 30 days after the end of each of the
first three fiscal quarters of each fiscal year of the Borrower occurring during the term hereof,
unaudited quarterly consolidated financial statements of the Borrower, in each case prepared in
accordance with GAAP consistently applied (except for the omission of footnotes and for the effect
of normal year-end audit adjustments) and in a format that demonstrates any accounting or
formatting change that may be required by various jurisdictions in which the business of the
Borrower is conducted (to the extent not inconsistent with GAAP). Each of such financial
statements shall (i) be prepared in reasonable detail and in comparative form, including a
comparison of actual performance to the budget for such quarter and year-to-date, delivered to
Lender under Subsection 5.01(c)(vi) below, and (ii) include a balance sheet, a statement of income
for such quarter and for the period year-to-date, and such other quarterly statements as Lender may
specifically request which quarterly statements shall include any and all supplements thereto.
Such quarterly statements shall be certified by an authorized officer of the Borrower, and
be accompanied by a Compliance Certificate which: (A) states that no Event of Default, and no
event or condition that but for the passage of time, the giving of notice or both would constitute
an Event of Default, has occurred or is in existence; and (B) shows in detail satisfactory to the
Lender the calculation of, and the Borrower’ compliance with, each of the covenants contained in
Sections 5.01(d), 5.01(e), 5.01(f), and 5.01(g);

               (iv) promptly upon the Lender’s request therefor, copies of all reports and notices which the
Borrower or any of its subsidiaries files under ERISA with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation or the U.S. Department of Labor or which the Borrower or any
its subsidiary receives from such Corporation;

               (v) notwithstanding the foregoing Section 5.01(c)(iv), provide to Lender within 30 days after
it becomes aware of the occurrence of any Reportable Event (as defined in Section 4043 of ERISA)
applicable to the Borrower or any of its Subsidiaries, a statement describing such Reportable Event
and the actions it proposes to take in response to such Reportable Event;

               (vi) by November 1 of each fiscal year of the Borrower, an annual (with monthly break out)
operating and capital assets budget of the Borrower for the immediately succeeding fiscal year
containing, among other things, pro forma financial statements and forecasts for all planned lines
of business;

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               (vii) as soon as available but in any event not more than 30 days after the end of each month,
production reports for the immediately preceding calendar month setting forth
corn inputs, ethanol output, DDGS output, natural gas usage and CO2 output, together
with such additional production information as requested by Lender;

               (viii) promptly, upon the occurrence of an Event of Default or an event or condition that but
for the passage of time or the giving of notice or both would constitute an Event of Default,
notice of such Event of Default or event;

               (ix) promptly after the receipt thereof, a copy of any management letters or written reports
submitted to the Borrower by its independent certified public accountants with respect to the
business, financial condition or operation of the Borrower;

               (x) promptly after the receipt thereof, a copy of any notice of default under any Long-Term
Marketing Agreement;

               (xi) furnish to the Lender, promptly after transmittal or filing thereof by the Borrower,
copies of all proxy statements, notices and reports as it shall send to its members and copies of
all registration statements (without exhibits) and all reports which it files with the Securities
and Exchange Commission (or any governmental body or agency succeeding to the functions of the
Securities and Exchange Commission), and promptly after the receipt thereof by the Borrower, copies
of all management letters or similar documents submitted to the Borrower by independent certified
public accountants in connection with each annual and any interim audit of the accounts of the
Borrower or of the Borrower and any of its Subsidiaries.

               (xii) such other information respecting the condition or operations, financial or otherwise,
of the Borrower or any of its respective subsidiaries as the Lender may from time to time
reasonably request;

               (xiii) promptly after the commencement thereof, notice of the commencement of all actions,
suits, or proceedings before any court, arbitrator, or government department, commission, board,
bureau, agency, or instrumentality affecting the Borrower or any of its subsidiaries which, if
determined adversely, could have a Material Adverse Effect on any of the Borrower or its
subsidiaries;

               (xiv) without limiting the provisions of Section 5.01(c)(xiii) above, promptly after receipt
thereof, notice of the receipt of all pleadings, orders, complaints, indictments, or any other
communication alleging a condition that may require the Borrower or any of its subsidiaries to
undertake or to contribute to a cleanup or other response under all laws relating to environmental
protection, or which seek penalties, damages, injunctive relief, or criminal sanctions related to
alleged violations of such laws, or which claim personal injury or property damage to any person as
a result of environmental factors or conditions;

29

 

               (xx) promptly after filing, receipt or becoming aware thereof, copies of any filings or
communications sent to and notices or other communications received by the Borrower or any of its
subsidiaries from any Governmental Authority, including, without limitation, the Securities and
Exchange Commission, the FCC, the PUC, or any other state utility commission relating to any
material noncompliance by the Borrower or any of its subsidiaries with any laws or with respect to
any matter or proceeding the effect of which, if adversely determined, could have a Material
Adverse Effect on any of the Borrower of its subsidiaries;

               (xxi) promptly after becoming aware thereof, notice of any matter which has had or could have
a Material Adverse Effect on any of the Borrower or its subsidiaries

          (d)  Working Capital. Achieve and maintain, Working Capital of at least $5.0 million
at the end of the 12th month following the Completion Date. Achieve and maintain
Working Capital of at least $10.0 million at the end of the 24th month following the
Completion Date. Thereafter, continually maintain Working Capital of at least $10.0 million;

          (e) Tangible Net Worth. On the Completion Date, the Borrower’s Tangible Net Worth
shall be not less than $45,000,000.00. After the Completion Date, the Borrower shall maintain
Tangible Net Worth, measured at the end of each fiscal year, in an amount equal to the lesser of:
(i) the Borrower’s Tangible Net Worth at the end of the immediately preceding fiscal year plus
$1,000,000.00; or (ii) the Borrower’s Tangible Net Worth at the end of the immediately preceding
fiscal year plus the Borrower’s retained earnings at the end of the current fiscal year;

          (f) Tangible Owner’s Equity. Achieve and maintain Tangible Owner’s Equity of at least
40% beginning at the end of the 12th month following the Completion Date and maintained
and measured annually thereafter;

          (g) Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio of not less
than 1.25 to 1.00, measured initially at the end of the 12th month following the
Completion Date and maintained and measured annually thereafter.

          (h) Liens. There shall be no lien, security interest or other charge or encumbrance,
and no other type of preferential arrangement, upon or with respect to any of the properties or
income of the Borrower, which secures Debt of any Person, except for the security interests of the
Security Agreement or except as described in Schedule 5.02(a);

          (i) Landlord and Mortgagee Waivers. Obtain and furnish to the Lender as soon as
available, waivers, acknowledgments and consents, duly executed by each: (i) real property owner,
landlord and mortgagee having an interest in any of the premises owned or leased by the Borrower or
in which any Collateral of the Borrower is located or to be located (and if no Collateral of
Borrower is located at a parcel of property not owned or leased by a Borrower, no such waivers,
acknowledgments or consents will be required); and (ii) each third party holding any Collateral,
all in form and substance acceptable to the Lender, except as otherwise agreed to by the Lender;

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          (j) Insurance. Maintain insurance with financially sound and reputable insurance
companies in such amounts and covering such risks as are usually carried by entities engaged in
similar businesses and owning similar properties in the same general areas in which the Borrower
operates, and make such increases in the type of amount or coverage as Lender may reasonably
request, provided that in any event the Borrower will maintain and cause each of its subsidiaries
to maintain workers’ compensation insurance, property insurance and comprehensive general liability
insurance reasonably satisfactory to the Lender. All such policies insuring any collateral for the
Borrower’s obligations to Lender shall have lender or mortgagee loss payable clauses or
endorsements in form and substance acceptable to Lender. Each insurance policy covering Collateral
shall be in compliance with the requirements of the Security Agreement;

          (k) Property and Insurance Maintenance. Maintain and preserve all of its property and
each and every part and parcel thereof that is necessary to or useful in the proper conduct of its
business in good repair, working order, and condition, ordinary wear and tear excepted, and in
compliance with all applicable laws, and make all alterations, replacements, and improvements
thereto as may from time to time be necessary in order to ensure that its properties remain in good
working order and condition and compliance. The Borrower agrees that upon the occurrence and
continuing existence of an Event of Default, at Lender’s request, which request may not be made
more than once a year, the Borrower will furnish to Lender a report on the condition of the
Borrower’s and any of its subsidiaries’ property prepared by a professional engineer satisfactory
to Lender;

          (l) Keeping Books and Records. Maintain and cause each of its subsidiaries to,
maintain proper books of record and account in which full, true, and correct entries in conformity
with generally accepted accounting principles shall be made of all dealings and transactions in
relation to its business and activities;

          (m) Food Security Act Compliance. If the Borrower acquires any Collateral which may
have constituted farm products in the possession of the seller or supplier thereof, such Borrower
shall, at its own expense, use its best efforts to take such steps to insure that all Liens (except
the liens granted pursuant hereto) in such acquired Collateral are terminated or released,
including, without limitation, in the case of such farm products produced in a state which has
established a Central Filing System (as defined in the Food Security Act), registering with the
Secretary of State of such state (or such other party or office designated by such state) and
otherwise take such reasonable actions necessary, as prescribed by the Food Security Act, to
purchase farm products free of liens (except the liens granted pursuant hereto); provided, however,
that such Borrower may contest and need not obtain the release or termination of any lien asserted
by any creditor of any seller of such farm products, so long as it shall be contesting the same by
proper proceedings and maintain appropriate accruals and reserves therefor in accordance with the
generally accepted accounting principles. Upon the Lender’s request made, the Borrower agrees to
forward to the Lender promptly after receipt copies of all notices of liens and master lists of
Effective Financing Statements delivered to the Borrower pursuant to the Food Security Act, which
notices and/or lists pertain to any of the Collateral. Upon the Lender’s

31

 

request, the Borrower agrees to provide the Lender with the names of Persons who supply the
Borrower with such farm products and such other information as the Lender may reasonably request
with respect to such Persons;

          (n) Warehouse Receipts. If any warehouse receipt or receipts in the nature of a
warehouse receipt is issued in respect of any portion of the Collateral, then the Borrower: (i)
will not permit such warehouse receipt or receipts in the nature thereof to be “negotiable” as such
term is used in Article 7 of the Uniform Commercial Code; and (ii) will deliver all such receipts
to the Lender (or a Person designated by the Lender) within five (5) days of the Lender’s request
and from time to time thereafter. If no Event of Default exists, the Lender agrees to deliver to
such Borrower any receipt so held by the Lender upon such Borrower’s request in connection with
such sale or other disposition of the underlying inventory, if such disposition is in ordinary
course of such Borrower’s business;

          (o) Management of Borrower. Management of the Borrower shall be maintained as set
forth on Schedule 5.01(o) hereto, unless otherwise approved in Lender’s reasonable discretion;

          (p) Compliance with Other Agreements. Borrower will perform in all material respects
all obligations and abide in all material respects by all covenants and agreements contained in the
following agreements: (i) any and all Long Term Marketing Agreements; and (ii) any other Material
Contracts.

          (q) Additional Assurances. Make, execute and deliver to Lender such promissory notes,
mortgages, deeds of trust, financing statements, control agreements, instruments, documents and
other agreements as Lender or its counsel may reasonably request to evidence and secure the Loans
and to perfect all Security Interest; and

          (r) Construction of Project. Borrower shall:

               (i) diligently proceed with construction of the Project in accordance with the Plans and
Specifications and in accordance with all applicable laws and ordinance and will complete the
Project on or before the Completion Date;

               (ii) use the proceeds of all Advances solely to pay the Project Costs as specified in the
Project Sources and Uses Statement;

               (iii) use its best efforts to require the Contractor(s) to comply with all rules, regulations,
ordinances and laws relating to work on the Project;

               (iv) obtain the Lender’s prior written approval of any change in the Plans and Specifications
for the Project approved by the Lender which might materially adversely affect the value of the
Lender’s security, and has a cost of $25,000.00 or greater. The Lender will have a reasonable time
to evaluate any requests for its approval of any changes referred to in this paragraph. The Lender
may approve or disapprove changes in its discretion,

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subject to the foregoing provisions of this Section 5.01(r)(iv). If it reasonably appears to
the Lender that any change may increase the Project Costs, the Lender may require the Borrower to
deposit additional funds with the Lender pursuant to the provisions of this Agreement in an amount
sufficient to cover the increased costs as a condition to giving its approval;

               (v) comply with and keep in effect all necessary permits and approvals obtained from any
Governmental Authority relating to the lawful construction of the Project. The Borrower will
comply with all applicable existing and future laws, regulations, orders, and requirements of any
Governmental Authority, judicial, or legal authorities having jurisdiction over the Real Property
or Project, and with all recorded restrictions affecting the Real Property;

               (vi) furnish to the Lender from time to time on request by the Lender, in a form acceptable to
the Lender, correct lists of all contractors and subcontractors employed in connection with
construction of the Project and true and correct copies of all executed contracts and subcontracts.
The Lender may contact any contractor or subcontractor to verify any facts disclosed in the lists,
Borrower must consent to the disclosure of such information by the contractors and subcontractors
to Lender or its agents upon Lender’s request, and Borrower must assist Lender or its agents in
obtaining such information upon Lender’s request;

               (vii) upon completion of the building foundation of the Project, deliver to the Lender an
“as-built” survey of the Real Property which: (a) sets forth the location and exterior lines and
egress and other improvements completed on the Real Property and demonstrates compliance with all
applicable setback requirements; (b) demonstrates that the Project is entirely within the exterior
boundaries of the Real Property and any building restriction lines and does not encroach upon any
easements or rights-of-way; and (c) contains such other information as the Lender may reasonably
request;

               (viii) not purchase any materials, equipment, fixtures, or articles of personal property
placed in the Project prior to the Construction Loan Maturity Date under any security agreement or
other agreement where the seller reserves or purports to reserve title or the right of removal or
repossession, or the right to consider them personal property after their incorporation in the work
of construction, unless authorized by the Lender in writing;

               (ix) provide the Lender and its representatives with access to the Real Property and the
Project at any reasonable time and upon reasonable notice to enter the Real Property and inspect
the work or construction and all materials, plans, specifications, and other matters relating to
the construction. The Lender will also have the right to, at any reasonable time and upon
reasonable notice, examine, copy, and audit the books, records, accounting data, and other
documents of the Borrower and its contractors relating to the Real Property or construction of the
Project;

               (x) pay and discharge all claims and liens for labor done and materials and services furnished
in connection with the construction of the Project. The Borrower will have the right to contest in
good faith any claim or lien, provided that it does so diligently and without prejudice to the
Lender or the ability to obtain title insurance in the manner required by

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this Agreement and the Disbursing Agreement. Upon the Lender’s request, the Borrower will promptly
provide a bond, cash deposit, or other security reasonably satisfactory to the Lender to protect
the Lender’s interest and security should the contest be unsuccessful;

               (xi) at the Lender’s request and expense, post signs on the Real Property for the purpose of
identifying the Lender as the “Lender.” At the request of the Lender, or the participating local
community banks, the Borrower will use its best efforts to identify the Lender as the lender in
publicity concerning the Project;

               (xii) maintain in force until full payment of the builder’s risk insurance in such amounts,
form, risk coverage, deductibles, insurer, loss payable and cancellation provision s as required by
the Lender. The Lender’s approval, however, will not be a representation of the solvency of any
insurer or the sufficiency of any amount of insurance;

               (xiii) cooperate at all times with the Lender in bringing about the timely completion of the
Project, and resolve all disputes arising during the work of construction in a manner which will
allow work to proceed expeditiously. With respect to such disputes, the Borrower will have the
right to contest in good faith claims resulting in disputes, provided that it does so diligently
and without prejudice to the Lender. Upon the Lender’s request, the Borrower will promptly provide
a bond, cash deposit, or other security reasonably satisfactory to the Lender to protect the
Lender’s interest and security should the contest be unsuccessful;

               (xiv) pay the Lender’s and the Disbursing Agent’s out-of-pocket costs and expenses incurred in
connection with the making or disbursement of the Loans or in the exercise of any of its rights or
remedies under this Agreement, including but not limited to title insurance and escrow charges,
disbursing agent fees, recording charges, and mortgage taxes, reasonable legal fees and
disbursements, and reasonable fees and costs for services which are not customarily performed by
the Lender’s salaried employees and are not specifically covered by the fees charged to originate
the Loan, if any. The provision of this paragraph will survive the termination of this Agreement
and the repayment of the Loan;

               (xv) keep true and correct financial books and records on a cash basis for the construction of
the Project and maintain adequate reserves for all contingencies. If required by the Lender, the
Borrower will submit to the Lender at such times as it requires (which will in no event be more
often than monthly) a statement which accurately shows the application of all funds expended to
date for construction of the Project and the source of those funds as well as the Borrower’s best
estimate of the funds needed to complete the Project and the source of those funds. The Borrower
will promptly supply the Lender with any financial statements or other information concerning its
affairs and properties as the Lender may reasonably request, and will promptly notify the Lender of
any material adverse change in its financial condition or in the physical condition of the Property
or Project;

               (xvi) comply with the requirements of any commitment or agreement entered into by Borrower
with any Governmental Authority to assist the construction or

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financing of the Real Property and/or Project and with the terms of all applicable laws,
regulations, and requirements governing such assistance;

               (xvii) indemnify and hold the Lender harmless from and against all liabilities, claims,
damages, reasonable costs, and reasonable expenses (including but not limited to reasonable legal
fees and disbursements) arising out of or resulting from any defective workmanship or materials
occurring in the construction of the Project. Upon demand by the Lender, the Borrower will defend
any action or proceeding brought against the Lender alleging any defective workmanship or
materials, or the Lender may elect to conduct its own defense at the reasonable expense of the
Borrower. The provisions of this paragraph will survive the termination of this Agreement and the
repayment of the Loan; and

               (xviii) obtain and deliver to the Lender copies of all necessary occupancy certificates
relating to the Project.

     Section 5.02. Negative Covenants. So long as any of the Loan Obligations remain
unpaid or the Lender shall have any commitment hereunder, the Borrower will not, without the prior
written consent of the Lender:

          (a) Liens, etc. Create or suffer to exist, or permit any of its subsidiaries to
create or suffer to exist, any lien, security interest or other charge or encumbrance, or any other
type of preferential arrangement, upon or with respect to any of its properties, whether now owned
or hereafter acquired, or assign, or permit any of its subsidiaries to assign, any right to receive
income, in each case to secure any Debt (as defined below) of any Person, other than:

               (i) those described on Schedule 5.02(a) hereto and renewals and extensions on the same or
substantially the same terms and conditions and at no increase in the debt or obligation; or

               (ii) liens or security interests which are subject to an intercreditor and subordination
agreement in form and substance reasonably acceptable to Lender in Lender’s sole discretion; or

               (iii) the liens or security interests of the Security Agreement; or

               (iv) liens (other than liens relating to environmental liabilities or ERISA) for taxes,
assessments, or other governmental charges that are not more than 30 days overdue or, if the
execution thereof is stayed, which are being contested in good faith by appropriate proceedings
diligently pursued and for which adequate reserves have been established; or

               (v) liens of warehousemen, carriers, landlords, mechanics, materialmen, or other similar
statutory or common law liens securing obligations that are not yet due and are incurred in the
ordinary course of business or, if the execution thereof is stayed,

35

 

which are being contested in good faith by appropriate proceedings diligently pursued and for which
adequate reserves have been established in accordance with generally accepted accounting
principles; or

               (vi) liens resulting from good faith deposits to secure payments of workmen’s compensation
unemployment insurance, or other social security programs or to secure the performance of tenders,
leases, statutory obligations, surety, customs and appeal bonds, bids or contracts (other than for
payment of Debt); or

               (vii) any attachment or judgment lien not constituting an Event of Default; or

               (viii) liens arising from filing UCC financing statements regarding leases not prohibited by
this Agreement; or

               (ix) customary offset rights of brokers and deposit banks arising under the terms of
securities account agreements and deposit agreements; or

               (x) any real estate easements and easements, covenants and encumbrances that customarily do
not affect the marketable title to real estate or materially impair its use; or

          (b) Distributions, etc. Declare or pay any dividends, purchase or otherwise acquire
for value any of its membership interests (units) now or hereafter outstanding, or make any
distribution of assets to its stockholders, members or general partners as such, or permit any of
its subsidiaries to purchase or otherwise acquire for value any stock, membership interest or
partnership interest of the Borrower, provided, however, the Borrower may: (i) declare and pay
dividends and distributions payable in membership interests (units); (ii) purchase or otherwise
acquire shares of the membership interests (units) of the Borrower with the proceeds received from
the issuance of new membership interests (units); (iii) pay distributions in an amount not to
exceed, in the aggregate, the difference between $15,000,000.00 and the original principal amount
of all Subordinated Debt in place immediately prior to such distribution (the “Subordinated Debt
Distributions”); (iv) pay redemptions, dividends or distributions in an amount not to exceed, in
the aggregate, 20% of the Borrower’s immediately preceding fiscal year’s Net Income (“Allowed
Distributions”); (v) pay dividends or distributions which are immediately reinvested in the
Borrower (“Reinvestment Distributions”); (vi) complete the transactions reflected on Schedule
4.01(a) and (vi) after payment of the Excess Cash Flow Payment required by Section 2.04(b), if any,
pay additional distributions in an amount reasonably acceptable to Lender (“Excess
Distributions”), provided, however, that immediately prior to the proposed payment of any dividends
or distributions permitted by this Section 5.02(b), or after giving effect thereto, no Default or
Event of Default shall exist; or

          (c) Capital Expenditures. Except for costs identified in the Project Costs and Uses
Statement, make any investment in fixed assets in the aggregate amount of $1,000,000.00 during any
fiscal year during the term of this Agreement; or

36

 

          (d) Consolidation, Merger, Dissolution, Etc. Directly or indirectly, merge or
consolidate with any other Person or permit any other Person to merge into or with or consolidate
with the Borrower or any of its subsidiaries; or

          (e) Indebtedness, etc. Create, incur, assume or suffer to exist any Debt or other
indebtedness, liabilities or obligations, whether matured or unmatured, liquidated or unliquidated,
direct or contingent, joint or several, except: (i) the liabilities of the Borrower to the Lender
hereunder; (ii) trade accounts payable and accrued liabilities (other than Debt) arising in the
ordinary course of the Borrower’s business; (iii) Subordinated Debt; and (iv) the liabilities of
the Borrower described on Schedule 5.02(a); or

          (f) Organization; Name; Chief Executive Office. Change its state of organization,
name or the location of its chief executive office without the prior written consent of the
Lender, except that the principal office shall be moved to the plant site when construction of the
administration office is substantially complete; or

          (g) Loans, Guaranties, etc. Make any loans or advances to (whether in cash, in-kind,
or otherwise) any Person, or directly or indirectly guaranty or otherwise assure a creditor against
loss in respect of any indebtedness, obligations or liabilities (contingent or otherwise) of any
Person; or

          (h) Subsidiaries; Affiliates. Form or otherwise acquire any subsidiary or affiliated
business, or acquire the assets of or acquire any equity or ownership interest in any Person,
unless such subsidiary, affiliate or Person executes and delivers to the Lender: (i) a guaranty of
all of the Loan Obligations, in form and substance acceptable to the Lender in its sole discretion;
(ii) security agreements in form substantially similar to the Security Agreement; and (iii) such
other documents and amendments to this Agreement and the other Loan Documents as the Lender shall
reasonably require; or

          (i) Transfer of Assets. Sell, lease, assign, transfer, or otherwise voluntarily
dispose of any of its assets, or permit any of its subsidiaries to sell, lease, assign, transfer,
or otherwise voluntarily dispose of any of its assets except: (i) dispositions of inventory in the
ordinary course of business; and (ii) dispositions of: (A) obsolete or worn out equipment; (B)
equipment or real property not necessary for the operation of its business; or (C) equipment or
real property which is replaced with property of equivalent or greater value as the property which
is disposed;

          (j) Lines of Business. Engage in any line or lines of business activity other than
the production of ethanol and DDGS;

          (k) Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any transaction (including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate or with any director, officer or employee of the
Borrower or any Affiliate, except (i) transactions listed on Schedule 5.02(k), (ii) transactions in

37

 

the ordinary course of and pursuant to the reasonable requirements of the business of the Borrower
or any of its subsidiaries and upon fair and reasonable terms which are fully disclosed to Lender
and are no less favorable to the Borrower or such subsidiary than would be obtained in a comparable
arm’s length transaction with a person or entity that is not an Affiliate, and (iii) payment of
compensation to directors, officers and employees in the ordinary course of business for services
actually rendered in their capacities as directors, officers and employees, provided such
compensation is reasonable and comparable with compensation paid by companies of like nature and
similarly situated. Notwithstanding the foregoing, upon the election of Lender, no payments may be
made with respect to any items set forth in clauses (i) and (ii) of the preceding sentence upon the
occurrence and during the continuation of a Potential Default or an Event of Default; or

          (l) Management Fees and Compensation. Directly or indirectly pay any management,
consulting or other similar fees to any person, except legal or consulting fees paid to persons or
entities that are not Affiliates of the Borrower or its subsidiaries for services actually rendered
and in amounts typically paid by entities engaged in the Borrower’s or such subsidiary’s business.
Not withstanding the foregoing and only with the prior written consent of the Lender, a management
fee of up to 5% of the Borrower’s EBITDA for the immediately proceeding fiscal year may be paid by
the Borrower after the Lender has determined that all applicable covenants will be met after the
distribution of the management fee; or

          (m) Material Control or Management. (i) One or more of the members of the Borrower as
of the date hereof shall fail, in the aggregate, to own, directly or indirectly, 100% of the common
(voting) membership interests in the Borrower, or (ii) there should be any change in the chief
executive officer of the Borrower, unless within 90 days of such event a person reasonably
acceptable to Lender is appointed to such position.

ARTICLE VI.

EVENTS OF DEFAULT AND REMEDIES

     Section 6.01. Events of Default. Each of the following events shall be an “Event of
Default”:

          (a) The Borrower shall fail to pay any installments of principal or interest, fees, expenses,
charges or other amounts payable hereunder or under the other Loan Documents or to make any deposit
of funds required under this Agreement when due; or

          (b) Any representation or warranty made by the Borrower, or any of its officers or directors
under or in connection with any Loan Document shall prove to have been incorrect in any material
respect when made; or

          (c) The Borrower shall fail to perform or observe any term, covenant or agreement contained in
Sections 5.01(d), (e), (f) or (g) or take any action as prohibited by Section 5.02; or

38

 

          (d) The Borrower shall fail to deliver the financial statements or Compliance Certificate
under Section 5.01(c) within 5 days of the date due; or

          (e) The Borrower shall fail to perform or observe any term, covenant or agreement contained in
any Loan Document (other than those listed in clauses (a) through (d) of this Section 6.01) on its
part to be performed or observed (other than the covenants to pay the Loan Obligations) and any
such failure shall remain unremedied for ten (10) days after written notice thereof shall have been
given to the Borrower by the Lender, provided, however, that no Event of Default shall be deemed to
exist if, within said ten (10) day period, Borrower have commenced appropriate action to remedy
such failure and shall diligently and continuously pursue such action until such cure is completed,
unless such cure is or cannot be completed within thirty (30) days after written notice shall have
been given; or

          (f) The Borrower shall fail to pay any indebtedness in an amount in excess of $100,000.00
(either in any individual case or in the aggregate) excluding indebtedness evidenced by the Notes
and excluding Ordinary Trade Payable Disputes, or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any, specified in the agreement or
instrument relating to such indebtedness; or any other default under any agreement or instrument
relating to any such indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if the effect of such
default or event is to accelerate, or to permit the acceleration of, the maturity of such
indebtedness (excluding Ordinary Trade Payable Disputes); or any such indebtedness shall be
declared to be due and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof (excluding Ordinary Trade Payable
Disputes); or

          (g) The Borrower shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against the Borrower seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee or other similar official for it or
for any substantial part of its property, and, in the case of any such proceeding instituted
against it (but not instituted by it) either such proceeding shall remain undismissed or unstayed
for a period of 30 days or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against it or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its property) shall
occur; or the Borrower shall take any corporate action to authorize any of the actions set forth
above in this subsection; or

          (h) Any one or more judgment(s) or order(s) for the payment of money in excess of $100,000.00
in the aggregate shall be rendered against the Borrower and either: (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or

39

 

order; or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

          (i) Any provision of any Loan Document shall for any reason cease to be valid and binding on
the Borrower or the Borrower shall so state in writing; or

          (j) The Mortgage or the Security Agreement shall for any reason, except to the extent
permitted by the terms thereof, cease to create a valid lien, encumbrance or security interest in
any of the property purported to be covered thereby; or

          (k) The termination of any Long Term Marketing Agreement prior to its stated expiration date,
unless such Long Term Marketing Agreement is replaced by another Long Term Marketing Agreement
acceptable to the Lender, within thirty (30) days of the termination of such Long Term Marketing
Agreement; or

          (l) The Borrower dissolves, suspends, or discontinues doing
business; or

          (m) Construction of the Project is halted or abandoned prior to completion for any period of
thirty (30) consecutive days for any cause which is not beyond the reasonable control of the
Borrower, its contractors and subcontractors; or

          (n) The construction of the Project shall be delayed for any reason and for such period that,
in the reasonable judgment of the Lender, the Project will not be completed by the Completion Date.
If such delay is curable and if Borrower has not been given a notice of a similar breach within
the preceding twelve (12) months, it may be cured (and no Event of Default will have occurred) if
Borrower cures the failure within thirty (30) days, which shall include advancing the progress of
the Project to the point that, in the reasonable judgment of the Lender, the Project will be
completed by the Completion Date; pr

          (o) Any event, change or condition not referred to elsewhere in this Section 6.01 should occur
which results in a Material Adverse Effect on the Borrower, any subsidiary or any guarantor of the
Borrower’s obligations hereunder; or

          (p) Any guarantee, suretyship, subordination agreement, maintenance agreement, or other
agreement furnished in connection with the Borrower’s obligations hereunder and under any Note
shall, at any time, cease to be in full force and effect, or shall be revoked or declared null and
void, or the validity or enforceability thereof shall be contested by the guarantor, surety or
other maker thereof, or the Guarantor shall deny any further liability or obligations thereunder,
or shall fail to perform its obligations thereunder, or any representation or warranty set forth
therein shall be breached, or the Guarantor shall breach or be in default under the terms of any
other agreement with Lender (including any loan agreement or security agreement); or

          (q) The loss, suspension or revocation of, or failure to renew, any franchise, license,
certificate, permit, authorization, approval or the like now held or hereafter acquired by

40

 

the Borrower or any of its subsidiaries, if such loss, suspension, revocation or failure to
renew could reasonably be expected to have a Material Adverse Effect on the Borrower or (ii) any
regulatory or Governmental Authority replaces the management of the Borrower or any of its
subsidiaries or assumes control over the Borrower or such subsidiary; or

          (r) The Borrower should breach or be in default under a Material Contract in any material
respect, including any material breach or default, or any termination shall have occurred, or any
other event which would permit any party other than the Borrower to cause a termination, or any
Material Contract shall have ceased for any reason to be in full force and effect prior to its
stated or optional expiration date.

          (s) The Borrower should terminate, change, amend or restate, without the Lender’s prior
consent any Material Contract, or any material Construction Contract.

     Section 6.02. Remedies. Upon the occurrence of an Event of Default and at any time
while such Event of Default is continuing, the Lender:

          (a) may accelerate the due date of the unpaid principal balance of the Notes, all accrued but
unpaid interest thereon and all other amounts payable under this Agreement making such amounts
immediately due and payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith immediately due and payable, without presentment, notice of intent to
accelerate or notice of acceleration, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to any of the Borrower under the Federal
Bankruptcy Code, the Notes, all such interest and all such amounts shall automatically become due
and payable, without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower;

          (b) may withhold or direct the Disbursing Agent to withhold any one or more Advances in its
discretion, and terminate the Lender’s obligations, if any, under this Agreement to make any
Advances whereupon the commitment and obligations of the Lender to extend credit or to make
Advances hereunder shall terminate, and no disbursement of Loan funds by the Lender will cure any
default of the Borrower, unless the Lender agrees otherwise in writing;

          (c) may, by notice to the Borrower, obtain the appointment of a receiver to take possession of
all Collateral of the Borrower, including, but not limited to all personal property, including all
fixtures and equipment leased, occupied or used by any of the Borrower. Borrower hereby
irrevocably consents to the appointment of such receiver and agrees to cooperate and assist any
such receiver as reasonably requested to facilitate the transfer of possession of the Collateral
to such receiver and to provide such receiver access to all books, records, information and
documents as requested by such receiver;

          (d) in its discretion, enter the Real Property and take any and all actions necessary in its
judgment to complete construction of the Project, including but not limited to making changes in
Plans and Specifications, work or materials, and entering into, modifying, or

41

 

terminating any contractual arrangements, subject to the Lender’s right at any time to
discontinue any work without liability. If the Lender elects to complete the Project, it will not
assume any liability to the Borrower or any other person for completing the Project or for the
manner or quality of construction of the Project, and the Borrower expressly waives any such
liability. The Borrower irrevocably appoints the Lender as its attorney-in-fact, with full power
of substitution, to complete the Project in the Borrower’s name, or the Lender may elect to
complete construction in its own name. In any event, all sums expended by the Lender in completing
construction will be considered to have been disbursed to the Borrower and will be secured by the
Mortgage and any other instruments or documents securing the Loans, and any such sums that cause
the principal amount of the Loans to exceed the face amount of the Notes will be considered to be
an additional loan to the Borrower bearing interest at the rate provided in the Notes and will be
secured by the Mortgage and any other instrument or documents securing the Loans. The Lender will
not have any obligation under the Plans and Specifications prepared for the Project, any studies,
data, and drawings with respect thereto prepared by or for Borrower, or the contracts and
agreements relating to the Plans and Specifications, or the aforesaid studies, data, and drawings,
or to the construction of the Project unless it expressly hereafter agrees in writing. The Lender
will have the right to exercise any rights of the Borrower under those contracts and agreements or
with respect to such Plans and Specifications, studies, data, and drawings upon any default by the
Borrower under this Agreement, and shall have such other rights and remedies with respect thereto
as are afforded a secured creditor under applicable law; and

          (e) may, by notice to the Borrower, require the Borrower to pledge to the Lender as security
for the Loan Obligations an amount in immediately available funds equal to the then outstanding
Letter of Credit Liabilities, such funds to be held in an interest bearing cash collateral account
at the Lender without any right of withdrawal by the Borrower; provided, however, that in the event
of an actual or deemed entry of an order for relief with respect to the Borrower or any of its
subsidiaries under the Federal Bankruptcy Code, the Borrower shall, without notice, pledge to the
Lender as security for the Loan Obligations an amount in immediately available funds equal to the
then outstanding Letter of Credit Liabilities, such funds to be held in such an interest bearing
cash collateral account at the Lender; and

          (f) may exercise all other rights and remedies afforded to the Lender under the Loan Documents
or by applicable law or equity.

     Section 6.03. Remedies Cumulative. Each and every power or remedy herein specifically
given shall be in addition to every other power or remedy, existing or implied, given now or
hereafter existing at law or in equity, and each and every power and remedy herein specifically
given or otherwise so existing may be exercised from time to time and as often and in such order as
may be deemed expedient by Lender, and the exercise or the beginning of the exercise of one power
or remedy shall not be deemed a waiver of the right to exercise at the same time or thereafter any
other power or remedy. No delay or omission of Lender in the exercise of any right or power
accruing hereunder shall impair any such right or power or be construed to be a waiver of any
default or acquiescence therein.

42

 

ARTICLE VII.

MISCELLANEOUS

     Section 7.01. Amendments, etc. No amendment or waiver of any provision of any Loan
Document to which the Borrower is a party, nor any consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be agreed or consented to by the
Lender and the Borrower, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

     Section 7.02. Notices, etc. All notices and other communications provided for under
any Loan Document shall be in writing and mailed, faxed, or delivered at the addresses set forth
below, or at such other address as such party may specify by written notice to the other parties
hereto:

	 	 	 	 	 
	 

	 	If to the Borrower:
	 	US Bio Albert City, LLC
	 

	 	 	 	111 Main Avenue
	 

	 	 	 	Suite 200
	 

	 	 	 	Brookings, South Dakota 57006
	 

	 	 	 	Telephone: (605) 696-3150
	 

	 	 	 	Fax: (605) 696-3153
	 

	 	 	 	Attention: President
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Lindquist & Vennum P.L.L.P.
	 

	 	 	 	4200 IDS Center
	 

	 	 	 	80 South Eighth Street
	 

	 	 	 	Minneapolis, MN 55402-2205
	 

	 	 	 	Telephone: (612) 371-3211
	 

	 	 	 	Fax: (612) 371-3207
	 

	 	 	 	Attn. Michael Weaver
	 
	 	 	 	 
	 

	 	If to the Lender:
	 	AgStar Financial Services, PCA
	 

	 	 	 	1921 Premier Drive
	 

	 	 	 	P.O. Box 4249
	 

	 	 	 	Mankato, MN 56002-4249
	 

	 	 	 	Telephone: (507) 386-4242
	 

	 	 	 	Facsimile: (507) 344-5088
	 

	 	 	 	Attention: Mark Schmidt
	 
	 	 	 	 
	 

	 	With copy to:	 	Phillip L. Kunkel
	 

	 	 	 	Gray Plant Mooty
	 

	 	 	 	1010 West St. Germain, Suite 600
	 

	 	 	 	St. Cloud, MN 56301
	 

	 	 	 	Facsimile: (320) 252-4482

All such notices and communications shall have been duly given and shall be effective: (a) when
delivered; (b) when transmitted via facsimile to the number set forth above; (c) the Business Day

43

 

following the day on which the same has been delivered prepaid (or pursuant to an invoice
arrangement) to a reputable national overnight air courier service; or (d) the third Business Day
following the day on which the same is sent by certified or registered mail, postage prepaid. Any

confirmation sent by the Lender to the Borrower of any borrowing under this Agreement shall, in the
absence of manifest error, be conclusive and binding for all purposes.

     Section 7.03. No Waiver; Remedies. No failure on the part of the Lender to exercise,
and no delay in exercising, any right under any Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies provided in the Loan
Documents are cumulative and not exclusive of any remedies provided by law.

     Section 7.04. Costs, Expenses and Taxes.

          (a) The Borrower agrees, jointly and severally, to pay on demand all costs and expenses in
connection with the preparation, execution, delivery, filing, recording and administration of the
Loan Documents and the other documents to be delivered under the Loan Documents, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the Lender (who may be
in-house counsel), and local counsel who may be retained by said counsel, with respect thereto and
with respect to advising the Lender as to its respective rights and responsibilities under the Loan
Documents, and all costs and expenses (including reasonable counsel fees and expenses) for the
Lender in connection with the filing of the Financing Statements and the enforcement of the Loan
Documents and the other documents to be delivered under the Loan Documents, including, without
limitation, in the context of any bankruptcy proceedings. In addition, the Borrower agrees to pay
on demand the expenses described in Section 5.01(b). In addition, the Borrower shall pay any and
all stamp and other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of the Loan Documents and the other documents to be
delivered under the Loan Documents, and agrees to save the Lender harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes
and fees.

          (b) If, due to payments made by the Borrower pursuant to Section 2.06 or due to acceleration
of the maturity of the Advances pursuant to Section 6.01 or due to any other reason, the Lender
receives payments of principal of any Loan other than on the last day of an Interest Period
relating thereto, the Borrower shall pay to the Lender on demand any amounts required to compensate
the Lender for any additional losses, costs or expenses which it may incur as a result of such
payment, including, without limitation, any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired
by the Lender to fund or maintain such Loan.

     Section 7.05. Right of Set-off. The Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and other indebtedness
at any time owing by the Lender to or for the credit or the account of the Borrower against any

44

 

and all of the Loan Obligations, irrespective of whether or not the Lender shall have made any
demand under such Loan Document and although deposits, indebtedness or such obligations may be
unmatured or contingent. The Lender agrees promptly to notify the Borrower after any such set-off
and application, provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Lender under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off) which the Lender may
have.

     Section 7.06. Severability of Provisions. Any provision of this Agreement or of any
other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof or affecting the validity or
unenforceability of such provision in any other jurisdiction.

     Section 7.07. Binding Effect; Successors and Assigns; Participations.

          (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender
and their respective successors and assigns, except that the Borrower shall not have the right to
assign or otherwise transfer its rights hereunder or any interest herein without the prior written
consent of the Lenders. Upon the request of Borrower, Lender shall provide copies of all invoices
for costs and expenses to be reimbursed by Borrower under this Agreement or under any of the Loan
Documents.

          (b) Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or
more participation interests in the Loans to one or more purchasers, whether related or unrelated
to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers,
or potential purchasers, any information or knowledge Lender may have about Borrower or about any
other matter relating to the Loans, and Borrower hereby waives any rights to privacy it may have
with respect to such matters; provided, however, that any information received by any such
purchaser or potential purchaser under this provision which concerns the personal, financial or
other affairs of the Borrower shall be received and kept by the purchaser or potential purchaser in
full confidence and will not be revealed to any other persons, firms or organizations nor used for
any purpose whatsoever other than for determining whether or not to participate in the Loans and in
accord with the rights of Lender if a participation interest is acquired. Borrower additionally
waives any and all notices of sale of participation interests, as well as all notices of any
repurchase of such participation interest. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such interests in the Loans
and will have all the rights granted under the participation agreement or agreements governing the
sale of such participation interests. Borrower further waives all rights of offset or counterclaim
that it may have now or later against Lender or against any purchaser of such a participation
interest arising out of or by virtue of the participation and unconditionally agrees that either
Lender or such purchaser may enforce Borrower’s obligation under the Loans irrespective of the
failure or insolvency of any holder of any interests in the Loans. Borrower further agrees that
the purchaser of any such participation interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against Lender.

45

 

     Section 7.08. Consent to Jurisdiction.

          (a) The Borrower hereby irrevocably submits to the jurisdiction of any Minnesota state court
or federal court over any action or proceeding arising out of or relating to this Agreement, the
Note and any instrument, agreement or document related hereto or thereto, and the Borrower hereby
irrevocably agrees that all claims in respect of such action or proceeding may be heard and
determined in such Minnesota state court or federal court. The Borrower hereby irrevocably waives,
to the fullest extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Borrower irrevocably consents to the service of
copies of the summons and complaint and any other process which may be served in any such action or
proceeding by the mailing of copies of such process to Borrower at its address specified in Section
7.02. The Borrower agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.

          (b) Nothing in this Section 7.08 shall affect the right of the Lender to serve legal process
in any other manner permitted by law or affect the right of the Lender to bring any action or
proceeding against the Borrower or its property in the courts of other jurisdictions.

     Section 7.09. Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA.

     Section 7.10. Execution in Counterparts. This Agreement may be executed in any number
of counterparts and on telecopy counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute but one and the same agreement.

     Section 7.11. Survival. All covenants, agreements, representations and warranties
made by the Borrower in the Loan Documents and in the certificates or other instruments delivered
in connection with or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the execution and delivery of
the Loan Documents and the making of any Advances and issuance of any Letters of Credit, regardless
of any investigation made by any such other party or on its behalf and notwithstanding that Lender
may have had notice or knowledge of any Event of Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and effect as long as
any Loan Obligations are outstanding and unpaid and so long as the Lender has any unexpired
commitments under this Agreement or the Loan Documents. The expense reimbursement, additional
cost, capital adequacy and indemnification provisions of this Agreement shall survive and remain in
full force and effect regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loan Obligations or the termination of this Agreement or any provision hereof.

46

 

     Section 7.12. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY IRREVOCABLY
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENT TO WHICH IT IS A PARTY OR ANY INSTRUMENT OR DOCUMENT DELIVERED
THEREUNDER.

     Section 7.13. Entire Agreement. THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN
DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES THERETO.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers and duly authorized, as of the date first above written.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS MASTER LOAN AGREEMENT, AND BORROWER
AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF THE DATE FIRST ABOVE STATED.

[SIGNATURE PAGE ON FOLLOWING PAGE]

47

 

SIGNATURE PAGE TO:

MASTER LOAN AGREEMENT

by and among

US BIO ALBERT CITY, LLC

and

AGSTAR FINANCIAL SERVICES, PCA

48

 

BORROWER:

US BIO ALBERT CITY, LLC, an Iowa limited liability company

	 	 	 
	/s/ CHAD D. HATCH

	 	 
	 

By Chad D. Hatch

	 	 
	  Its Vice President and Treasurer
	 	 
	 
	 	 
	LENDER:
	 	 
	 
	 	 
	AGSTAR FINANCIAL SERVICES, PCA

an United States corporation
	 	 
	 
	
/s/ MARK SCHMIDT

	 	 
	 

By Mark Schmidt

	 	 
	  Its Vice President
	 	 

49

 

EXHIBIT A

COMPLIANCE CERTIFICATE

TO: AGSTAR FINANCIAL SERVICES, PCA (the “Lender”)

     Pursuant to that certain Master Loan Agreement dated November 15, 2005, by and between US BIO
ALBERT CITY, LLC, an Iowa limited liability company (the “Borrower”), and the Lender, and any
amendments thereto and extensions thereof (the “Loan Agreement”), the undersigned hereby
represents, warrants and certifies to the Lender as follows:

	 	1.	 	The financial statement(s) attached hereto are complete and correct in all
material respects and fairly present the financial condition of the Borrower as of the
date of said financial statement(s) and the result of its business operations for the
period covered thereby;
	 
	 	2.	 	Repeats and reaffirms to the Lender each and all of the representations and
warranties made by the Borrower in the Loan Agreement and the agreements referred to
therein or related thereto, and represents and warrants to the Lender that each and all
of said warranties and representations are true and correct as of the date hereof,
except as disclosed in writing to the Lender;
	 
	 	3.	 	No Event of Default (as that term is defined in the Loan Agreement), and no
event which with the giving of notice or the passage of time or both would constitute
an Event of Default, has occurred and is continuing as of the date hereof; and
	 
	 	4.	 	All the calculations set forth below are made pursuant to the terms of the Loan
Agreement and are true and accurate as of the date of the attached financial
statements:

	1.	 	Section 5.01(d) – Working Capital.

(tested annually)

	 	 	 	 	 	 	 	 	 
	(a)
	 	Required Working Capital	 	(12 months from Completion Date)	 	$	5,000,000.00	 
	 
	 	 	 	(24 months from Completion Date
 and continually thereafter)	 	$	10,000.000.00	 
	 
	 	 	 	 	 	 	 	 
	(a)
	 	Current Assets	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 
	(b)
	 	Current Liabilities	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Line (a) less line (b)	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 

	 	 	 	 	 
	In Compliance

	 	Yes ___
	 	No ___

	2.	 	Section 5.01(e) – Tangible Net Worth.

(tested annually)

	 	 	 	 	 	 	 
	(a)
	 	Required Tangible Net Worth	 	$	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	(b)
	 	Actual Tangible Net Worth	 	 	 	 

50

 

	 	 	 	 	 	 	 
	 
	 	(1)  Total Assets	 	$	 	 
	 
	 	 	 	 	 	 
	 
	 	(2)  Less Intangible Assets (per definition)	 	$	 	 
	 
	 	 	 	 	 	 
	 
	 	(3)  Total Tangible Assets	 	$	 	 
	 
	 	 	 	 	 	 
	 
	 	(4)  Total Liabilities	 	$	 	 
	 
	 	 	 	 	 	 
	 
	 	(5)  Tangible Net Worth	 	$	 	 
	 
	 	 	 	 	 	 
	 
	 	(line (4) minus line (5))	 	 	 	 

	 	 	 	 	 
	In Compliance

	 	Yes ___
	 	No___

	3.	 	Section 5.01(f) – Owner Equity Ratio

(tested annually)

	 	 	 	 	 	 	 
	(a)
	 	Tangible Net Worth	 	$	 	 
	 
	 	 	 	 	 	 
	(b)
	 	Total Assets	 	$	 	 
	 
	 	 	 	 	 	 
	(c)
	 	Owner Equity Percentage
(percent of line (b) to (c))	 	 	—	%
	 
	 	 	 	 	 	 
	 
	 	Required Percentage of 40%	 	 	 	 

	 	 	 	 	 
	In Compliance

	 	Yes ___
	 	No___

	4.	 	Section 5.01(g) – Fixed Charge Ratio

	 	 	 	 	 	 	 
	(a)
	 	EBITDA	 	$	 	 
	 
	 	 	 	 	 	 
	(b)
	 	Extraordinary Items	 	$	 	 
	 
	 	 	 	 	 	 
	(c)
	 	Numerator (sum of lines (a) and (b))	 	$	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	(d)
	 	Current Portion of Long Term Debt	 	$	 	 
	 
	 	 	 	 	 	 
	(e)
	 	Interest Expense	 	$	 	 
	 
	 	 	 	 	 	 
	(f)
	 	Dividends	 	$	 	 
	 
	 	 	 	 	 	 
	(g)
	 	Tax Distributions	 	$	 	 
	 
	 	 	 	 	 	 
	(h)
	 	Maintenance Capital Expenditures	 	$	 	 
	 
	 	 	 	 	 	 
	(i)
	 	Denominator (sum of lines (d) through (h))	 	$	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Ratio of line (c) to (i)
	 	________ to 1.00	 
	 
	 	 	 	 	 	 
	Required Ratio of 1.25 to 1.00
	 	 	 	 

	 	 	 	 	 
	In Compliance

	 	Yes ___
	 	No ___

51

 

     IN WITNESS WHEREOF, the undersigned has signed and delivered this Certificate to the Lender as
of the ___day of ___, ___.

BORROWER:

US BIO ALBERT CITY, LLC

an Iowa limited liability company

	 	 	 	 	 	 	 
	By
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Its
	 	 

	 	 

52

 

EXHIBIT B

PROJECT SOURCE AND USE STATEMENT

	 	 	 	 	 
	 	US BioEnergy 

Sources and Uses of Cash

 	 
	 	 	 
	 	 	 
	 	 	 
	 

	 	 	 	 	 
	 	 	Albert City, IA	 
	Sources:
	 	 	 	 
	Owner Equity
	 	$	35,000,000	 
	Sub Debt/Mezzanine
	 	$	14,600,000	 
	Construction Loan
	 	$	75,000,000	 
	Grant Income
	 	 	 	 
	Low/zero interest loans
	 	$	400,000	 
	 
	 	 	 
	 
	 	$	125,000,000	 
	 
	 	 	 	 
	Uses:
	 	 	 	 
	General Contractor fees
	 	$	97,250,000	 
	Accounting fees
	 	$	90,000	 
	Consulting fees
	 	$	533,000	 
	Legal fees
	 	 	 	 
	Electric
	 	 	 	 
	Dues
	 	$	10,000	 
	Insurance
	 	$	200,000	 
	Real Estate
	 	$	385,000	 
	Site Engineering
	 	$	50,000	 
	Phase 1 site grading
	 	$	1,600,000	 
	Phase 2 site work
	 	$	765,000	 
	Septic
	 	 	 	 
	Site improvements and tiling
	 	$	100,000	 
	Water wells
	 	$	325,000	 
	Other
	 	$	23,692,000	 
	 
	 	 	 
	 
	 	$	125,000,000	 

53

 

EXHIBIT C

FORM OF OPINION LETTER

November ____, 2005

AgStar Financial Services, PCA

1921 Premier Drive

P.O. Box 4249

Mankato, MN56002-4249

	 	 	Re: Master Loan Agreement Dated November ___, 2005 by and between US Bio Albert
City, LLC and AgStar Financial Services, PCA

     Ladies and Gentlemen:

     We have acted as counsel to US Bio Albert City, LLC, an Iowa limited liability company (the
“Company”), in connection with the negotiation of the Master Loan Agreement dated November 15, 2005
(the “Loan Agreement”) by and between the Company and Agstar Financial Services, PCA (the “Lender”
or “you”) dated as of the date hereof and the consummation of the transactions described therein.
This letter is furnished to satisfy a condition set forth in Section 3.01(r) of the Loan Agreement.
All capitalized terms used in this letter that are not otherwise defined herein have the meanings
assigned to them in the Loan Agreement unless the context requires otherwise.

     In our capacity as counsel to the Company, and for purposes of this opinion, we have examined
the following documents:

     (i) the Loan Agreement;

     (ii) the First Supplement to the Loan Agreement;

     (iii) the Second Supplement to the Loan Agreement;

     (iv) the Construction Note;

     (v) the Revolving Note;

     (vi) the Security Agreement;

     (vii) the Mortgage;

     (viii) the Disbursing Agreement;

     (ix) the Articles of Organization and Operating Agreement, as amended, of the Company;

54

 

     (x) the records of proceedings and actions of the members and Board of Managers of the Company
with respect to the transactions between you and the Company contemplated by the Loan Agreement;

     (xi) such other documents, agreements and materials as we have deemed necessary and
appropriate to render the opinions set forth in this letter, subject to the limitations,
assumptions and qualifications noted below.

     The documents listed as items (i) through (viii) above are dated as of the first date written
above and are collectively referred to herein as the “Loan Documents.” In addition, we have
examined and relied upon representations and warranties as to matters of fact (other than facts
constituting conclusions of law) contained in and made pursuant to the Loan Documents.

     In addition, we have examined such other resolutions, documents, certificates and records and
have made such investigations of law and fact as we have deemed necessary or appropriate to enable
us to render the opinions expressed herein.

     In reaching the opinions set forth below, we have assumed, and have not independently
verified, the genuineness of all signatures on all documents, the legal capacity and competency for
all purposes relevant hereto of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to the authentic originals of all documents submitted to us as
copies, the correctness, completeness and accuracy of all facts set forth in all representations,
warranties and certificates referred to or identified in this opinion, and that there are no
documents, agreements or understandings to which the Lender is a party between the Lender, on the
one hand, and the Company on the other hand, other than the Loan Documents, which would have an
effect on the opinions set forth below. In examining documents executed by parties other than the
Company, we have assumed that such parties had the requisite power, right and authority (corporate
or otherwise) to execute, deliver and perform all of their respective obligations thereunder and
have also assumed the due authorization by all requisite corporate action and execution and
delivery of such documents by such parties, and the validity, legality and binding effect of those
documents on those parties. As to questions of fact material to our opinions, we have relied upon
the representations and warranties made in the Loan Documents and upon certificates of officers or
other representatives of the Company and of public officials (“Certificates”). We have not
independently or through third parties verified such representations and warranties or
Certificates, or made any independent investigation as to the existence of agreements, instruments
or other documents, orders, judgments or decrees by which the Company or any of its properties or
assets may be bound.

     In basing the opinions and other matters set forth herein on phrases such as “best of our
knowledge,” “our knowledge,” or “known to us,” such phrases signify that, in the course of our
representation of the Company in matters with respect to which we have been engaged by the Company
to give substantive attention as counsel, no information has come to our attention that would give
us actual knowledge that any such opinion or other matters are not accurate or that any of the
foregoing Certificates and other matters on which we have relied are not accurate and complete.
Except as otherwise stated herein, we have undertaken no independent investigation or verification
of such matters. The phrases “best of our knowledge,” “our knowledge,” “known

55

 

to us” and similar language used herein are intended to be limited to the knowledge of the lawyers
currently employed by our firm who have performed substantive legal services related to the Loan
Documents and have specific knowledge of the substance of this opinion.

     Based on our review of the foregoing, and subject to the assumptions, qualifications and
limitations set forth herein, it is our opinion that:

     1. The Company is a limited liability company duly organized, validly existing, and in good
standing under the laws of the State of Iowa.

     2. The Company has the power to enter into and perform its obligations under the Loan
Documents.

     3. The Company has taken all necessary company action to authorize the execution, delivery,
and performance by the Company of the Loan Documents, and the consummation by the Company of the
transactions set forth in the Loan Documents.

     4. The Loan Documents have been duly and validly executed and delivered by the Company and
constitute legal, valid, binding, and enforceable obligations of the Company.

     5. The execution and delivery by the Company of the Loan Documents do not, and the
consummation by the Company of the transactions contemplated by the Loan Documents and the
compliance by the Company with the provisions of the Loan Documents do not, (a) conflict with or
result in a breach of any provision of the Company’s Articles of Organization, or Operating
Agreement, (b) to our knowledge, conflict with or result in a material violation of any applicable
state or federal law or regulation, (c) to our knowledge, conflict with any order, judgment, or
decree to which the Company are a party or subject or by which any of its properties or assets are
bound, or (d) to our knowledge, conflict with any Material Contract to which the Company is a party
or by which the Company or any of its properties or assets are bound.

     6. To our knowledge, except as expressly disclosed in the Loan Documents, there are no
actions, suits or proceedings pending or threatened in writing against or affecting the Company
before any court or arbitrator or by or before any administrative agency or government authority,
which, if adversely determined, would constitute an material adverse effect on the Company. We do,
however, call your attention to the recently completed private placement of the Company’s sole
member US BioEnergy Corporation pursuant to private placement memorandum dated May 31, 2005, and
the release of the Company’s equity funds (through contributions by US BioEnergy Corporation) for
use in the transactions contemplated by the Loan Documents. We make no opinions herein with
respect to the outcome or impact of those matters.

     The foregoing opinions are subject to the following qualifications (in addition to the
qualifications, exceptions, limitations and assumptions specified above):

56

 

     A. Our opinions as they relate to the legality, validity, binding effect and/or enforceability
of the Loan Documents are subject to the limitations that might result from bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent or preferential transfer, fraudulent
conveyance, and other state and federal laws relating to or affecting the rights or remedies of
creditors generally, now or hereafter, in effect.

     B. Our opinions as they relate to the legality, validity, binding effect and/or enforceability
of the Loan Documents are subject to the qualification that the availability of the remedies of
specific performance or injunctive relief, or any other equitable remedy, is subject to the
discretion of the court before which a proceeding therefor may be brought, equitable defenses and
the application of general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), including without limitation, concepts of
materiality, reasonableness, good faith, fair dealing and other similar doctrines affecting the
enforcement of agreements generally.

     C. Except as expressly stated herein, no opinion is expressed or implied as to the truth,
accuracy or completeness of any of the representations, warranties or other statements of the
Company or any other person contained in any of the Loan Documents or in any exhibit, schedule or
attachment thereto.

     D. We express or imply no opinion as to what actions the parties to the Loan Documents are
required to or may take or fail to take on or after the date hereof which, if taken or not taken,
would affect or impair the legality, validity, binding effect and/or enforceability of the Loan
Documents or the rights and remedies of the parties thereunder.

     E. With respect to the legality, validity, binding effect and enforceability of the remedies
available to the Lender under the Uniform Commercial Code in force in the State of Minnesota
(“UCC”), we have assumed that the Lender will enforce such remedies in accordance with the UCC and
under such circumstances and in a manner in which it is commercially reasonable to do so. In
addition, because a claimant bears the burden of proof required to support its claim, our opinion
assumes that you will undertake the effort and expense necessary to present your claims in the
prosecution of any remedy accorded you under the Loan Documents.

     F. We express or imply no opinion as to the creation, attachment, perfection or priority of
any security interest, mortgage or other lien which the Lender may claim in any real or personal
property of the Company under any of the Loan Documents or otherwise.

     G. Our opinions as they relate to the legality, validity, binding effect and/or enforceability
of the Loan Documents are subject to the limitations arising from state and federal court decisions
involving statutes, public policy and/or principles of equity holding that (i) purported waivers of
notice, remedies (or the delay in, omission of, or enforcement thereof) or the benefits of
statutory provisions or constitutional or common law rights and broadly or vaguely stated
provisions waiving rights or waivers of unknown future rights or duties imposed by law are or may
be void or unenforceable, (ii) under certain circumstances, provisions declaring that the failure
to exercise or delay in exercising rights or remedies will not operate as

57

 

a waiver of any such right or remedy are invalid, (iii) provisions declaring that the documents may
only be amended or waived in writing may be unenforceable to the extent that an oral agreement or
an implied agreement by trade practice or course of conduct has been created modifying one or more
provisions of the Loan Documents, (iv) the enforcement of public policy is of a paramount public
interest which may prohibit enforcement of certain contractual provisions; (v) the indemnification
and exculpation provisions of the Loan Documents may be unenforceable to the extent that the
enforcement of such provisions is determined to be against public policy; and (vi) certain other
provisions in the Loan Documents, including, without limitation, self-help provisions, provisions
that purport to establish evidentiary standards, provisions requiring the payment of a late payment
or repayment charge, fee, reinvestment charge, premium or penalty, however denominated, are or may
be unenforceable in whole or in part.

     H. Since it is necessary for the Lender to elect its proper remedy in certain instances, no
opinion is expressed or implied that any cumulative remedy provision contained in any of the Loan
Documents is valid or enforceable.

     I. No opinion is expressed or implied as to the legality, validity, binding effect or
enforceability of (i) any power of attorney granted to the Lender in any of the Loan Documents, or
(ii) any document, certificate, agreement or instrument executed or delivered by the Lender
pursuant thereto.

     J. Minnesota Statutes, Section 290.371, subd. 4, provides that any corporation required to
file a Notice of Business Activities Report does not have a cause of action upon which it may bring
suit under Minnesota law unless the corporation has filed a Notice of Business Activities Report
and that the use of the courts of the State of Minnesota for all contracts executed and all causes
of action that arose before the end of any period for which a corporation failed to file a required
report is precluded. We note, however, that a court may excuse the failure to file such a report
under certain circumstances described in the statute. Insofar as the foregoing opinion may relate
to the legality, validity, binding effect and/or enforceability of any agreement under Minnesota
law or in a Minnesota court, we have assumed that any party seeking to enforce the agreement has at
all times been, and will continue at all times to be, exempt from the requirement of filing a
Notice of Business Activities Report or, if not exempt, has duly filed, and will continue to duly
file, all Notice of Business Activities Reports.

     K. In giving this opinion, we advise you that a Minnesota court may not strictly enforce
certain covenants contained in the Loan Documents or allow acceleration of the maturity of the
indebtedness evidenced by the Notes if it concludes that such enforcement or acceleration would be
unreasonable under the then existing circumstances. We do believe, however, that subject to the
limitations expressed elsewhere in this opinion, enforcement or acceleration would be available if
an Event of Default occurs as a result of a material breach of a material covenant contained in the
Loan Documents.

     L. Certain rights, remedies, waivers and indemnities contained in the Loan Documents, in
addition to those specifically enumerated above, may be limited or rendered

58

 

ineffective by applicable Minnesota laws or judicial decisions governing such provisions, but such
laws and judicial decisions do not render the Loan Documents invalid as a whole, and there exist,
in the Loan Documents or pursuant to applicable law, legally adequate remedies for a realization of
the principal benefits intended to be provided by the Loan Documents.

     In addition to the qualifications set forth above, the opinions set forth herein are also
subject to the following qualifications:

     M. We are members of the Bar of the State of Minnesota. The opinions expressed herein are
limited to matters of Minnesota and federal law. We express no opinion with respect to (i) the
laws of any other jurisdiction nor any state or federal law or regulation governing AgStar
Financial Services, PCA or (ii) the impact of such laws on the Loan Documents or the transactions
contemplated thereby. For purposes of this opinion we have assumed that the internal laws (as
opposed to the choice of law rules) of the State of Minnesota and applicable federal law would
apply and have rendered our opinion on that basis. To the extent that the law of another
jurisdiction applies, we have assumed that the law of that jurisdiction would be the same as
Minnesota law. We render no opinion as to the enforceability of any choice of law provision.

     N. We express no opinion with respect to title to any property, nor do we express any opinion
with respect to the existence of encumbrances upon any property or the attachment, validity,
perfection or priority of any liens or security interests.

     O. Except as explicitly addressed in the numbered opinions above, no opinion is expressed
herein as to any of the topics listed under Section 19 “Specific Legal Issues” of the Third-Party
Legal Opinion Report, published in 1991 by the Section of Business Law of the American Bar
Association.

     This opinion is limited to the specific legal issues addressed herein and no opinion is
implied or may be inferred beyond the matters expressly set forth herein. Our opinion is rendered
to you solely for your benefit in connection with consummation of the transactions set forth in the
Loan Documents and may not be quoted in whole or in part, filed publicly or delivered to, or relied
upon by any other person without our prior written consent. Our opinion is based upon the state of
facts and the law existing and in effect on the date hereof, and we assume no obligation to revise,
supplement or update this opinion in any respect at any time subsequent to the date hereof in order
to account for any change in the law (whether or not hereinafter enacted or adopted) or future
facts, events or circumstances affecting any of the transactions contemplated by any of the Loan
Documents.

	 	 	 	 	 
	 

	 	 	 	Very truly yours,
	 
	 	 	 	 
	 

	 	 	 	LINDQUIST & VENNUM p.l.l.p.

59

 

Schedule 3.01(d)

Real Property

All that part of the W1/2 NE1/4 and the E1/2 NW1/4 lying East of the right of way of the Chicago,
Milwaukee and St. Paul Railway company in Sec. 23, T92N, R35W, Buena Vista County, Iowa.

60

 

Schedule 4.01(a)

Description of Certain Transactions Related to the Borrowers’ Stock

There are no outstanding subscriptions, options, warrants, calls, or rights (including preemptive
rights) to acquire, and no outstanding securities or instruments convertible into, membership
interests (units) of US Bio Albert City, LLC.

Borrower does set forth the following transactions with respect to capital stock of US BioEnergy
Corporation, the sole member of Borrower:

US BioEnergy Corporation has adopted the US BioEnergy Corporation 2005 Stock Incentive Plan (the
“Plan”). There are 10,000,000 shares of the Company’s Class A common stock reserved for issuance
in respect of awards under the Plan. As of November 15, 2005, there were issued and outstanding
options to purchase an aggregate of 455,000 shares of the Company’s Class A common stock under the
Plan as follows:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number of Shares of Class
	 	 	 	 	 	 	A Common Stock Underlying
	Name of Optionee	 	Grant Date of Option	 	Option
	Chad D. Hatch
	 	 	1/28/2005	 	 	 	30,000	 
	O. Wayne Mitchell
	 	 	1/28/2005	 	 	 	30,000	 
	Steven P. Myers
	 	 	1/28/2005	 	 	 	30,000	 
	Roland “Ron” J. Fagen
	 	 	1/28/2005	 	 	 	30,000	 
	Jennifer A. Johnson
	 	 	1/28/2005	 	 	 	30,000	 
	Gordon W. Ommen
	 	 	1/28/2005	 	 	 	30,000	 
	Brian Thome
	 	 	1/28/2005	 	 	 	30,000	 
	Jill L. Wilts
	 	 	1/28/2005	 	 	 	30,000	 
	Jeff Roskam
	 	 	5/10/2005	 	 	 	50,000	 
	Mike Malecha
	 	 	5/10/2005	 	 	 	25,000	 
	Randy Ives
	 	 	5/10/2005	 	 	 	25,000	 
	Jerry Byrnes
	 	 	5/10/2005	 	 	 	25,000	 
	David Dykstra
	 	 	5/10/2005	 	 	 	20,000	 
	Greg Krissek
	 	 	5/10/2005	 	 	 	20,000	 
	Ron Hansen
	 	 	5/10/2005	 	 	 	10,000	 
	Anita Mead
	 	 	5/10/2005	 	 	 	10,000	 
	Kristi Lee
	 	 	9/26/2005	 	 	 	15,000	 
	Virg Garbers
	 	 	10/11/2005	 	 	 	15,000	 
	 
	 	 	 	 	 	 	 	 
	Total:
	 	 	 	 	 	 	455,000	 
	 
	 	 	 	 	 	 	 	 

On October 11, 2005, US BioEnergy Corporation entered into a letter of intent with CHS Inc.
pursuant to which US BioEnergy Corporation may sell between 35 million to 40 million shares of its
Class A common stock to CHS Inc. The letter of intent is not a binding commitment and the
transactions contemplated by the letter of intent are subject in all respects to definitive
agreements.

If US BioEnergy Corporation and CHS Inc. complete the transactions contemplated by the letter of
intent, it is expected that the Administrative Services Agreement currently in place between US
BioEnergy Corporation and US Bio Resource Group, LLC (a holding company owned 50%

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by Capitaline Advisors, LLC, an affiliate of Gordon W. Ommen, and 50% by Global Ethanol, Inc., an
affiliate of Ron Fagen) will be terminated. As part of this termination, US BioEnergy Corporation
would grant options to Gordon Ommen and Ron Fagen to purchase 3,250,000 shares of Class A common
stock each (for a total of 6,500,000 shares covered by the options).

Other than as stated above, there are no outstanding subscriptions, options, warrants, calls, or
rights (including preemptive rights) to acquire, and no outstanding securities or instruments
convertible into, capital stock of US BioEnergy Corporation.

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Schedule 4.01(f)

Description of Certain Threatened Actions, etc.

NONE.

63

 

Schedule 4.01(k)

Location of Inventory and Farm Products; Third Parties in Possession; Crops

2356 510th St.

Albert City, IA 50510

64

 

Schedule 4.01(l)

Office Locations; Fictitious Names; Etc.

	 	 	 
	Chief Place of Business.

	 	2356 510th St.
	 

	 	Albert City, IA 50510
	 
	 	 
	Chief Executive Office.

	 	111 Main Avenue, Suite 200
	 

	 	Brookings, SD 57006
	 
	 	 
	Jurisdiction of Organization.

	 	Iowa
	 
	 	 
	Location of Books and Records/

Place of Business

	 	2356 510th St.

Albert City, IA 50510

111 Main Avenue, Suite 200

Brookings, SD 57006
	 
	 	 
	Trade Names

	 	US Bio, US Bio Albert City
	 
	 	 
	Predecessor Companies.

	 	None
	Federal Income Tax I.D. Number.
	 	 
	 
	 	 
	State Organizational Identification Number
	 	 

65

 

Schedule 4.01(p)

Intellectual Property

NONE.

66

 

Schedule 4.01(t)

Environmental Compliance

NONE, except for (1) nominal amounts of Hazardous Substances used in the ordinary course of
business as permissible under the Environmental Indemnity Agreement of even date herewith between
Borrower and Lender and (2) the environmental conditions (if any) set forth in the Environmental
Report referenced in such agreement.

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Schedule 5.01(o)

Management

Management will be maintained in accordance with the Operating Agreement of the Borrower,
which includes the following:

Board of Managers

Gordon W. Ommen

Steven P. Myers

Brian Thome

Jeff Roskam

Officers

	 	 	 
	Name	 	Title
	Gordon W. Ommen

	 	President and Chief Executive Officer
	Michael Malecha

	 	Senior Vice President
	Steven P. Myers

	 	Vice President
	Chad D. Hatch

	 	Vice President and Treasurer
	Brian Thome

	 	Vice President
	John Van Meeter

	 	Assistant Vice President
	Jill Wilts

	 	Secretary

In the event US BioEnergy Corporation completes the transaction described in Schedule 4.01(a) with
CHS Inc., a CHS appointee will be added to the Board of Managers of Borrower.

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Schedule 5.02(a)

Description of Certain Liens, Lease Obligations, etc.

Borrower has secured a $100,000 letter of credit from First National Bank of Sioux Falls in Sioux
Falls, South Dakota for purposes of the natural gas line to serve the Ethanol Plant from Northern
Natural Gas in IA. The LC is secured by Borrower’s cash on deposit with that bank.

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Schedule 5.02(k)

Transactions with Affiliates

All of the membership interest in US Bio Albert City, LLC is owned by US BioEnergy Corporation (the
“Parent”). Certain services relating to procurement of inputs, marketing and sale of ethanol and
DDGs, risk management and plant operation are, or will be, performed by the Parent’s wholly-owned
subsidiary, United Bio Energy, LLC. The Company has also entered into a Design-Build Agreement
with Fagen, Inc., an affiliate of the Parent. Roland J. Fagen, a director of the Parent, is the
principal of Fagen, Inc. and other directors of the Parent are employees or officers of Fagen, Inc.
The Company has also entered into an agreement relating to environmental consulting services with
ICM, Inc., of which David Vander Griend, a director of Parent, is the principal. In addition,
members of the Company’s Board of Managers are also officers of or members of the Board of
Directors of the Parent. In addition, affiliates of the Parent may provide management or
administrative services to Borrower.

[Below is descriptions of affiliate transactions from the PPM – these are transactions with the

issuer (US Bio Energy Corporation) and do not necessarily impact Bio Albert City]

RECENT DEVELOPMENTS

     This Amended and Restated Confidential Private Placement Memorandum amends and restates
in its entirety our Confidential Private Placement Memorandum dated January 31, 2005 (the
“Memorandum”) relating to the offering for sale of up to 100,000,000 shares of our Class A common
stock to accredited investors. The following explains recent developments in our business and our
capital structure that occurred after the distribution of the Memorandum that are now reflected in
this Amended and Restated Confidential Private Placement Memorandum.

Extension of Offering until September 30, 2005

     On April 18, 2005, our Board of Directors extended the duration of this offering. As
extended by our Board on April 18, 2005, we intend to terminate the offering on June 30, 2005, but
we may extend the offering one or more times in our discretion to no later than September 30, 2005
to raise up to the maximum amount offered.

Issuances of Class A Common Stock; Conversion of Class B Common Stock

     As a result of the Acquisition Transactions described below, we issued 1,500,000 shares
of our Class A common stock on April 30, 2005 and 5,000,000 shares of our Class A common stock on
May 5, 2005. On May 17, 2005, we closed on the options to purchase the land for our proposed
ethanol plant in Lake Odessa, Michigan and as payment for the land, we issued 294,000 shares of our
Class A common stock to the land holders.

     Additionally, on April 18, 2005 and on April 28, 2005, US Bio Resource Group made payments of
$500,000 and $750,000, respectively, under its December 2004 subscription agreement for which we
issued it an additional 1,515,150 shares and 2,272,727 shares of our Class B common stock,
respectively. Immediately following these issuances, US Bio Resource Group had been issued an
aggregate of 14,537,877 shares of our Class B common stock and,

70

 

upon our receipt of an additional $3,500,000 in subscription payments from US Bio Resource
Group pursuant to its December 2004 subscription agreement, would be issued an additional
10,462,123 shares of Class B common stock. On May 25, 2005, US Bio Resource Group elected to
convert all shares of our Class B common stock into shares of our Class A common stock. As
provided in our articles of incorporation, each share of Class B common stock is convertible into
one share of Class A common stock. Upon its conversion, US Bio Resource Group was issued
14,537,877 shares of our Class A common stock and, through its December 2004 subscription
agreement, US Bio Resource Group will be issued an additional 10,462,123 shares of Class A common
stock upon our receipt of an additional $3,500,000.

     Our articles of incorporation further provide that shares of our Class B common stock that are
converted may not be reissued. Therefore, following the conversion of Class B common stock into
Class A common stock, we had no shares of Class B common stock issued or outstanding and none are
available for issuance.

Merger Transaction with Superior Corn Products

     On March 31, 2005, we entered into a Transaction Agreement with Superior Corn Products,
LLC (“Superior Corn”) pursuant to which we would acquire Superior Corn by merger. Superior Corn
was a development-stage company organized to develop, own and operate a 45 million gallon per year
dry grind ethanol plant near Lake Odessa, Michigan. The merger was structured as a reverse
triangular merger of Superior Corn into a subsidiary we created for the purpose of this
acquisition, with Superior Corn as the surviving company in the merger. The effect of the reverse
triangular merger is that following the merger Superior Corn is our wholly-owned subsidiary.

     On April 30, 2005, we closed the merger transactions with Superior Corn and in connection with
the closing, we issued 1,500,000 shares of our Class A common stock to the 21 members of Superior
Corn in exchange for all 600 outstanding Superior Corn membership units. As a result, Superior
Corn became our wholly-owned subsidiary and we acquired all of the rights, privileges, properties
and assets of Superior Corn and became responsible for all of the liabilities and obligations of
Superior Corn. In connection with the merger, we adopted an amended and restated operating
agreement of Superior Corn as its sole member. This operating agreement is similar to the one we
have in place with our US Bio Albert City subsidiary.

     In connection with the transaction agreement relating to the merger, we and Superior Corn each
made certain customary representations and warranties to each other regarding our respective
businesses, capital structures, assets and liabilities. These representations and warranties will
survive the closing date for a period of one year. If there is a claim by a third party that
arises out of a material breach of Superior Corn’s representations or warranties, the members of
Superior Corn’s board of directors are obligated to jointly and severally indemnify us and Superior
Corn against all losses and liabilities asserted against either party, which either individually or
in the aggregate exceeds $50,000. In connection with this indemnification obligation by the
Superior Corn board, each Superior Corn board member pledged to us the shares of our Class A common
stock they received in the merger. Except in cases of fraud or intentional misconduct, our sole
remedy against the members of Superior Corn’s Board is to foreclose on this pledge.

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Acquisition Transaction with United Bio Energy, LLC

     Effective May 5, 2005, we closed two transactions resulting in our acquisition of United
Bio Energy, LLC (“UBE”). The acquisition transactions were between us, UBE and UBE’s two members,
ICM Marketing, Inc. (“ICMM”) and Fagen Management, LLC (“Fagen Management”). ICMM and Fagen
Management held 60% and 40%, respectively, of the outstanding voting power of UBE. The primary
business of each of ICMM and Fagen Management was their ownership of UBE. UBE provides
professional and operational services to ethanol plants through its five subsidiaries and currently
provides services to approximately thirteen existing ethanol plants.

     The first of the two transactions resulting in the acquisition of UBE was a merger between us
and ICMM in which we were the surviving company. In connection with the merger, we issued to
ICMM’s three shareholders an aggregate of 3,000,000 shares of our Class A common stock in exchange
for all 800 shares of ICMM common stock outstanding. The three shareholders of ICMM were Dave
Vander Griend, Jeff Roskam and Randy Ives who received 1,650,000, 1,050,000 and 300,000 shares of
our Class A common stock in the merger, respectively, representing their proportionate ownership
interest in ICMM. As a result of the merger with ICMM, we acquired all of the rights, privileges,
properties and assets of ICMM and became responsible for all of the liabilities and obligations of
ICMM.

     The second transaction resulting in the acquisition of UBE was a purchase by us of all of the
membership interest in UBE held by Fagen Management in exchange for 2,000,000 shares of our Class A
common stock. The sole member of Fagen Management is Ron Fagen, our director.

     In connection with the transaction agreement and member assignment agreement relating to the
acquisition of UBE, the parties each made certain customary representations and warranties to each
other regarding their respective businesses, capital structures, assets and liabilities. In the
transaction agreement the parties also provided for indemnification by Ron Fagen, Dave Vander
Griend, Jeff Roskam and Randy Ives of certain liabilities of UBE and/or ICMM. The agreements
regarding the indemnification for these certain liabilities will survive the closing indefinitely.
The other representations and warranties will survive the closing date for a period of one year.
If there is a claim by a third party that arises out of a material breach of the representations or
warranties of UBE or ICMM, the owners of the respective entity are obligated to indemnify us
against all losses and liabilities asserted against us, which either individually or in the
aggregate exceeds $50,000. The indemnification obligation is pro-rata among the owners of UBE and
ICMM based upon their respective ownership of such entity. Further, the indemnification obligation
is capped at an amount equal to the value received by each owner (directly or indirectly) in the
UBE acquisition transactions. To secure the obligations of the indemnification, each owner has
pledged to us the shares of Class A common stock each received in the UBE acquisition transactions.

     The effect of our merger with ICMM and our acquisition of UBE membership units from Fagen
Management is that we became the sole member of UBE. In connection with the acquisition
transaction with UBE, we adopted an amended and restated operating agreement of

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UBE as its sole member. This operating agreement is similar to the one we have in place with
our US Bio Albert City subsidiary.

     The rights and obligations of UBE and its subsidiaries to third parties did not change as a
result of our acquisition of UBE. One of the liabilities of UBE Fuels and UBE Ingredients is a
revolving loan of up to $15,000,000 from LaSalle Business Credit, LLC (“LaSalle”). As of May 5,
2005, there was approximately $5,850,025 outstanding under the LaSalle loan. Amounts under the
loan are secured by the assets of UBE and each of its subsidiaries and guaranteed by each of the
UBE subsidiaries. ICM, Inc. and Fagen, Inc. also provided LaSalle a joint limited guaranty for up
to $4,000,000 of the loan obligations. ICM, Inc. is controlled by David Vander Griend, our
director, and Fagen, Inc. is controlled by Ron Fagen, our director. In connection with the
acquisition of UBE, we entered into a contribution and repayment agreement with LaSalle that
provides that if UBE makes distributions or dividend payments to us that exceed the amount
necessary to cover the tax liability we may incur as a result of our ownership of UBE, we must pay
to LaSalle such excess amount. LaSalle has similar agreements in place with UBE and each of its
subsidiaries limiting the distributions and dividends that may be received by them to the amount of
their respective tax liabilities.

     On April 28, 2005, our Board of Directors granted ten-year options to purchase 185,000 shares
of our Class A common stock under our 2005 Stock Incentive Plan to management of UBE as incentives
for future performance. All options to UBE management have an exercise price of $1.00 and vest
with respect to 20% of the underlying shares on the first anniversary of the date of grant and each
of the next four anniversaries of the date of grant.

     Effective May 5, 2005, we appointed Jeff Roskam as the President of UBE, a position which he
held prior to our acquisition of UBE. Also effective May 5, 2005, we appointed David Vander Griend
to our Board of Directors, entered into a three-year consulting arrangement with him and granted
him an option to purchase our Class A common stock. Further, with the addition of David Vander
Griend to our Board, Jill Wilts resigned as a member of our Board of Directors. See “Management –
Employment and Consulting Arrangements” for a description of our agreements with Jeff and Dave.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     Since our inception, we have engaged in the transactions described below with our directors,
officers and shareholders owning more than 5% of our voting securities. Although we believe that
these transactions were in our best interests, we cannot assure you that these transactions were
entered into on terms as favorable to us as those that could have been obtained in arms-length
transactions.

     In addition, conflicts of interest exist and may arise in the future because of the
relationships between and among our officers, directors, affiliates and us, and the fact that we
may, from time to time, enter into transactions with our officers, directors and affiliates. These
conflicts of interest are described below. Conflicts of interest could cause our officers and
directors to put their own personal interests ahead of ours. We may not be able to resolve

73

 

conflicts of interests, or if resolved, the resolution may be less favorable than if it
involved unaffiliated parties.

     Transactions with related parties and conflicts of interest may adversely affect our business
and the value of your investment.

Our Related Parties

     Our shareholder, US Bio Resource Group, LLC, has two equal members, Capitaline Advisors,
LLC and Global Ethanol, Inc. Gordon Ommen is the sole owner of Capitaline Advisors, LLC. Ron and
Diane Fagen own 91.24% of the voting power of Global Ethanol, Inc., with the remaining voting
power controlled by approximately 8 other shareholders, some of whom are our directors and
executive officers. Ron Fagen is also the sole owner of Fagen, Inc. and Fagen Management, LLC.
David Vander Griend, our director, is the principal owner of ICM, Inc.

Private Placement Issuances of Our Common Stock to Related Parties

     In November 2004, US Bio Resource Group subscribed for 10,000,000 shares of our common
stock at a price of $0.10 per share. On November 2, 2004, November 23, 2004 and December 28, 2004,
US Bio Resource Group made payments on this December 2004 subscription agreement totaling
$1,000,000 and, in consideration for these payments, we issued to US Bio Resource Group an
aggregate of 10,000,000 shares. The proceeds from this private placement were used to capitalize
our company and to pay the expenses associated with its formation, organization and initial
development of the Albert City ethanol plant.

     In December 2004, US Bio Resource Group subscribed for an additional 15,000,000 shares of our
common stock at a per share price of
$0.331/3 per share. In connection with the amendment and
restatement of our Articles of Incorporation in January 2005, each share of common stock sold to US
Bio Resource Group in the November and December 2004 subscriptions was automatically reclassified
as one share of Class B common stock for a total of 25,000,000 shares of our Class B common stock
issuable to US Bio Resource Group.

     On December 28, 2004, April 18, 2005 and April 28, 2005, US Bio Resource Group made payments
on this December 2004 subscription agreement totaling $1,500,000 and, in consideration for these
payments, we issued to US Bio Resource Group an aggregate of 4,537,877 shares of our Class B common
stock. Thus, immediately following the last subscription payment on April 28, 2005, we had
received $2,500,000 in aggregate subscription proceeds from US Bio Resource Group and had issued to
US Bio Resource Group an aggregate of 14,537,877 shares of our Class B common stock therefor.

     On May 25, 2005, US Bio Resource Group elected to convert all shares of our Class B common
stock into shares of our Class A common stock. As provided in our articles of incorporation, each
share of Class B common stock is convertible into one share of Class A common stock. Upon its
conversion, US Bio Resource Group was issued 14,537,877 shares of our Class A common stock and,
through its December 2004 subscription agreement, US Bio

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Resource Group will be issued an additional 10,462,123 shares of Class A common stock upon our
receipt of an additional $3,500,000.

Administration of Our 2005 Stock Incentive Plan and Issuances of Options

     In January 2005, we issued each of our seven directors and our Chief Financial Officer,
Chad D. Hatch, a seven-year option to purchase 30,000 shares of Class A common stock at an exercise
price of $1.00 per share in recognition of their services since our inception. Each option vests
and becomes exercisable as to 10,000 shares of Class A common stock on each of the first three
anniversaries of the date of grant. On April 28, 2005, our Board of Directors granted ten-year
options to purchase an aggregate of 185,000 shares of our Class A common stock under our 2005 Stock
Incentive Plan to management of UBE as incentives for future performance. All options to UBE
management have an exercise price of $1.00 and vest with respect to 20% of the underlying shares on
the first anniversary of the date of grant and each of the next four anniversaries of the date of
grant. These options were issued under our 2005 Stock Incentive Plan.

     Pursuant to the terms of the administrative services agreement between us and US Bio Resource
Group, our board has delegated the discretion to determine the persons eligible to receive an
award, the type of award and the number of shares underlying the award and the other terms and
conditions of such awards consistent with the 2005 Stock Incentive Plan, to US Bio Resource Group.
This delegation of authority is with respect to 5,000,000 shares of Class A common stock to be
granted as options or other awards. Our board of directors continues to maintain authority over
the 5,000,000 shares of Class A common stock currently authorized for awards under the 2005 Stock
Incentive Plan and over which US Bio Resource Group has not been delegated any authority. US Bio
Resource Group may issue awards under the 2005 Stock Incentive Plan to persons who render services
to us or on our behalf, who may be employees of Capitaline Advisors, Global Ethanol or Fagen. No
award or option may be granted pursuant to this delegation of authority in consideration for or
arising out of any services related to our capital raising activities to persons who are not our
employees without our prior approval. Of the total number of shares over which US Bio Resource
Group has discretionary authority, up to 4,000,000 shares may be issued as options and the
remainder as other awards under the 2005 Stock Incentive Plan. The costs of such awards are in
addition to the other costs for such administrative services provided by US Bio Resource Group.

     The delegation of authority will automatically terminate and US Bio Resource Group may not
grant any awards pursuant to its delegation of authority from and after the earlier of an initial
public offering of our stock, a change in control of us (as defined in the 2005 Stock Incentive
Plan) or the termination of the administrative services agreement.

Transactions with Affiliates in Connection with the Acquisition Transactions

     In connection with the Acquisition Transactions, we issued shares of our Class A common
stock to Fagen Management, LLC, which is controlled by Ron Fagen, one of our directors and a
shareholder owning more than 5% of our voting securities. We also entered into a consulting
agreement with David Vander Griend and in connection with that consulting arrangement, granted Dave
an option to purchase 100,000 shares of our Class A common stock.

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Dave is also the president and chief executive officer of ICM, Inc. Dave is a former
shareholder of ICMM and in connection with the acquisition of UBE, was appointed as one of our
directors. We also entered into a letter agreement with Jeff Roskam, a former shareholder of ICMM,
in connection with his appointment as the President of UBE relating to severance and change of
control arrangements. See “Management-Employment and Consulting Arrangements” for a description of
our agreements with Jeff and Dave.

     Moreover, as a result of the Acquisition Transactions, we acquired the businesses of Superior
Corn and UBE, each of which had pre-existing relationships with our directors, officers and
shareholders owning more than 5% of our voting securities. These pre-existing relationships will
continue after the Acquisition Transactions and include:

	•	 	the limited guaranty by Fagen, Inc. and ICM, Inc. of debt of UBE
Fuels and UBE Ingredients to LaSalle for a revolving loan of up to
$15,000,000;
	 
	•	 	an agreement between Superior Corn and Fagen, Inc. for the
construction of an ethanol plant near Lake Odessa, Michigan; and
	 
	•	 	UBE’s clients are ethanol plants, some of which are owned at least
in part by or receive services from our directors, officers or
shareholders owning 5% or more of our voting securities.

     You should review the description of the Acquisition Transactions in this memorandum to
further understand these relationships. Although we believe that these transactions were in our
best interests, we cannot assure you that these transactions were entered into on terms as
favorable to us as those that could have been obtained in arms-length transactions.

Transactions with US Bio Resource Group and Affiliates

  Transactions with US Bio Resource Group, LLC

     We have entered into an administrative services agreement with US Bio Resource Group, LLC
to provide us management and administrative services relating to the development of our business
and ethanol plants. Under our management services agreement, US Bio Resource Group will assist us
with and advise us on nearly all management and administrative functions of our business, ranging
from accounting matters, billing and collections, business planning, tax matters and maintenance of
business and corporate records to human resource functions. US Bio Resource Group may contract
with Capitaline Advisors, Fagen or its affiliates, or any other third party to provide these
services. With our acquisition of UBE, we expect that we or US Bio Resource Group will utilize UBE
for some of these services. See “Management’s Plan of Operation – UBE Services Business” for more
information regarding the services US Bio Resource Group and UBE will provide to us.

     Under the administrative services agreement, we will pay US Bio Resource Group an annual
percentage amount of our audited annual earnings before interest, taxes, depreciation and
amortization (before deduction of such annual percentage amount) (“EBITDA”) as soon as practicable
following the end of our fiscal year, but no later than 105 days following the end of each fiscal
year. The following table shows the percentage of EBITDA to be paid to US Bio Resource Group for
the periods noted:

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	Period	 	EBITDA
	Commencement of agreement through December 31, 2011
	 	 	5	%
	January 1, 2012 through December 31, 2013
	 	 	4	%
	January 1, 2014 through termination of agreement
	 	 	3	%

     We will also pay US Bio Resource Group an annual structure charge in an amount to be
mutually agreed upon each year (payable in equal monthly installments) to compensate US Bio
Resource Group for a portion of its corporate infrastructure expenses. In addition, we will
reimburse US Bio Resource Group for all personnel costs of US Bio Resource Group related to
providing the above services to us, all out-of-pocket expenses and all amounts charged to US Bio
Resource Group by Fagen and Capitaline relating to services provided to us. The agreement also
provides that we will indemnify US Bio Resource Group against claims arising from their services to
us.

     Pursuant to the terms of the administrative services agreement between us and US Bio Resource
Group, our board has delegated the discretion to determine the persons eligible to receive an
award, the type of award and the number of shares underlying the award and the other terms and
conditions of such awards consistent with the 2005 Stock Incentive Plan, to US Bio Resource Group.
See the section entitled “Certain Relationships and Related Party Transactions – Administration of
Our 2005 Stock Incentive Plan and Issuance of Options” for additional information about this
delegation of authority.

     The administrative services agreement has a term ending on December 31, 2016. After this
initial term, the administrative services agreement will automatically be renewed on an annual
basis for successive one year terms, unless earlier terminated upon notice for breach or at such
time as US Bio Resource Group and its affiliates hold less than 5% of the outstanding voting power
of us (as measured on the last day of each fiscal year). Even if the administrative services
agreement is terminated prior to December 31, 2016, we are still obligated to pay US Bio Resource
Group the annual percentage amount based upon EBITDA.

     Transactions with Fagen, Inc.

     Master Design-Build Letter Agreement

     We have entered into a master design-build letter agreement with Fagen pursuant to which
Fagen will provide us construction services relating to dry mill fuel grade ethanol plants in the
U.S. Pursuant to this letter agreement, Fagen will design/build ethanol plants, utilizing ICM
technology, for an agreed-upon lump sum base price per 100 mgy gas-fired fuel ethanol plant and
agreed-upon lump sum base price per 50 mgy gas-fired fuel ethanol plant, guaranteed through
December 31, 2007 and subject to a volume discount. Following December 31, 2007, Fagen may adjust
the lump sum base pricing on design build agreements with us after December 31, 2007 to Fagen’s
standard lump sum base price, less the volume discount. We have agreed to use Fagen as our
exclusive developer and design-builder in connection with fuel ethanol plants.

     In connection with the letter agreement, Fagen has the right to provide us with construction
services relating to dry grind fuel grade ethanol plants we wish to have built on

77

 

terms no less favorable to us than those we could obtain in arms-length transactions with
unrelated third parties.

     A committee of our board consisting of two directors who are associated with Capitaline
Advisors and one director who is associated with Fagen have the right to review the terms upon
which Fagen proposes to provide us services to determine that they are no less favorable than the
terms we might obtain from unrelated third parties. Our board will review the membership of the
committee from time to time to determine compliance with then-applicable laws relating to approval
of transactions between Fagen and us. As used in the letter agreement, the term “Board” means our
board of directors or, if the board has delegated its authority to the committee described above,
the committee.

     In connection with a transaction, if the Board determines that a proposal for services by a
party other than Fagen would, if consummated in accordance with its terms, result in the services
being provided to us on terms more favorable to us than Fagen’s proposal, we will provide Fagen
notice of this superior proposal and provide it an opportunity to match these terms. If Fagen does
not agree to provide us services on the terms contained in the superior proposal, we may proceed to
engage the party submitting the superior proposal. From time to time, the Board may also conduct a
fee review for services to be provided by Fagen and, based upon that review, it may adjust the
prices for Fagen’s services to us to the average of the fees charged on the comparable or similar
transactions included in the review.

     If we proceed with a party other than Fagen for the engineering or design-build services for
any project, we must reimburse Fagen for its expenses incurred in connection with the project based
upon its standard rate plus all third party costs incurred with respect to the project.

     The letter agreement with Fagen terminate at the close of the first fiscal year following the
letter agreement in which US Bio Resource Group, together with its affiliates, owns or controls
less than 15% of the outstanding voting power of us.

     The parties will enter into definitive design-build agreements acceptable to the parties with
respect to each facility or project to be developed or constructed.

     Administrative Services Agreement

     Pursuant to the terms of the administrative services agreement between us and US Bio
Resource Group, our board has delegated the discretion to determine the persons eligible to receive
an award, the type of award and the number of shares underlying the award and the other terms and
conditions of such awards consistent with the 2005 Stock Incentive Plan, to US Bio Resource Group.
US Bio Resource Group may make awards under the 2005 Stock Incentive Plan to employees of Global
Ethanol or Fagen. See the section entitled “Certain Relationships and Related Party Transactions –
Administration of Our 2005 Stock Incentive Plan and Issuance of Options” for additional information
about this delegation of authority.

     Transactions with Capitaline Advisors, LLC

     Right to Future Financial Services

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     We have entered into a letter agreement with Capitaline Advisors pursuant to which it has
a right to provide us financial advisory services in connection with any purchase, acquisition,
sale or disposition of any person or any properties or assets of any person having an aggregate
transaction value in excess of $5,000,000. For such services, we will pay Capitaline Advisors a
fee of 1% of the transaction value, plus its expenses. We have also agreed to engage Capitaline
Advisors for financial advisory services in connection with our preparation for any public
securities offering by us, with the compensation to Capitaline Advisors for such services to be
determined at the time of the offering and subject to a review of the Board, as described below.
Capitaline Advisors may choose to decline to provide us services for any transaction.

     A committee of our board consisting of two directors who are associated with Fagen and one
director who is associated with Capitaline Advisors have the right to review the terms upon which
Capitaline Advisors proposes to provide us services to determine that they are no less favorable
than the terms we might obtain from unrelated third parties. Our board will review the membership
of the committee from time to time to determine compliance with then-applicable laws relating to
approval of transactions between Capitaline Advisors and us. As used in the letter agreement, the
term “Board” means our board of directors or, if the board has delegated its authority to the
committee described above, the committee.

     In connection with a transaction, if the Board determines that a proposal for services by a
party other than Capitaline Advisors would, if consummated in accordance with its terms, result in
the services being provided to us on terms more favorable to us than Capitaline Advisor’s proposal,
we will provide Capitaline Advisors notice of this superior proposal and provide it an opportunity
to match these terms. If Capitaline Advisors does not agree to provide us services on the terms
contained in the superior proposal, we may proceed to engage the party submitting the superior
proposal.

     From time to time, the Board may also conduct a fee review for services to be provided by
Capitaline and, based upon that review, it may adjust the prices for Capitaline Advisor’s services
to us to the average of the fees charged on the comparable or similar transactions included in the
review.

     The provisions of this letter agreement terminate at the close of the first fiscal year
following the letter agreement in which US Bio Resource Group, together with its affiliates, owns
or controls less than 15% of the outstanding voting power of us.

     Administrative Services Agreement

     Pursuant to the terms of the administrative services agreement between us and US Bio
Resource Group, our board has delegated the discretion to determine the persons eligible to receive
an award, the type of award and the number of shares underlying the award and the other terms and
conditions of such awards consistent with the 2005 Stock Incentive Plan, to US Bio Resource Group.
US Bio Resource Group may make awards under the 2005 Stock Incentive Plan to employees of
Capitaline Advisors. See the section entitled “Certain Relationships and Related Party
Transactions – Administration of Our 2005 Stock Incentive Plan and Issuance of Options” for
additional information about this delegation of authority.

79

 

     Conflicts of Interest

     In addition to the transactions described above that present conflicts of interest among
the parties, conflicts of interest could arise from the following relationships, among others:

	•	 	Capitaline Renewable Energy II, a private fund created by
Capitaline Advisors for the purpose of investing in this
offering, intends to subscribe for Class A common stock in
this offering. Capitaline Advisors is the investment advisor
for Capitaline Renewable Energy II and therefore, controls
the voting and disposition of the shares of Class A common
stock purchased by Capitaline Renewable Energy II in this
offering. Capitaline Advisors may experience a conflict of
interest in acting in our best interest and in acting in the
best interest of the investors in Capitaline Renewable Energy
II when making decisions regarding the voting and/or
disposition of our Class A common stock.
	 
	•	 	The officers and directors of US BioEnergy also serve as
officers or directors of Fagen, Global Ethanol or Capitaline
Advisors. The demands on the time of these officers and
directors due to their attention to the business of Global
Ethanol or Capitaline may from time to time compete for their
time and attention to our business. In addition, these
officers or directors may experience conflicts in attempting
to act in the best interest of both US BioEnergy, Global
Ethanol, Fagen or Capitaline Advisors.
	 
	•	 	Our directors also serve as directors of other ethanol
producers that currently compete or will compete with us.
While our directors must devote sufficient time to our
business and affairs, our directors may experience conflicts
of interest in allocating their time and attention between us
and other businesses. Our directors may also acquire
financial or other incentives in other businesses, including
ethanol producers.
	 
	•	 	We will reimburse our directors and officers for
out-of-pocket expenses relating to our business. We do not
have a reimbursement policy or guideline for determining what
expenses will be reimbursed. We will review and reimburse all
reasonable expenses that our directors and officers submit to
us.
	 
	•	 	Decisions of our directors and executive officers will affect
our EBITDA and because annual payments to US Bio Resource
Group under the administrative services agreement is based
upon a percentage of EBITDA, these decisions may affect the
amount we pay to US Bio Resource Group.
	 
	•	 	Decisions of our directors and executive officers regarding
various matters, including expenditures that we make for our
business, reserves for accrued expenses, including
compensation of officers, compensation of directors and
reimbursement of out-of-pocket expenses, awards under the
2005 Stock Incentive Plan, loan covenants, capital
improvements and contingencies will affect the amount of cash
available for distribution to shareholders and because of
their significant ownership of our shares, our directors and
executive officers will stand to benefit to a greater degree
from any distribution to shareholders.

80

 

AMENDMENT NO. 1 AND WAIVER TO

MASTER LOAN AGREEMENT

          This Amendment No. 1 and Waiver to Master Loan Agreement (this “Amendment”) is
effective as of July 31, 2006, between US Bio Albert City, LLC, an Iowa limited liability company,
as borrower (the “Borrower”), and AgStar Financial Services, PCA, as lender (the
“Lender”).

RECITALS

          Each of the parties hereto entered into that certain Master Loan Agreement, dated as of
November 15, 2005, as supplemented by the Amended and Restated First Supplement thereto, dated as
of January 26, 2006, and as further supplemented by the Second Supplement thereto, dated as of
November 15, 2005 (as so modified and as may be further amended, restated, supplemented or
otherwise modified from time to time, the “Loan Agreement”).

          The Borrower has requested that the Lender grant certain waivers with respect to certain
provisions of the Loan Agreement, all as more fully described herein, and the Lender has agreed to
grant such waivers upon the terms and conditions set forth herein.

          The Borrower has requested that the Lender amend certain provisions of the Loan Agreement, all
as more fully described herein, and the Lender has agreed to grant such amendments upon the terms
and conditions set forth herein.

AGREEMENT

          NOW, THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties
hereto, the parties hereto hereby agree as follows:

          Section 1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned thereto in the Loan Agreement.

          Section 2. Waivers. Subject to the terms and conditions set forth herein,

               (a) the Lender hereby waives any Event of Default that has occurred under Section 6.01(d) of
the Loan Agreement as a result of the failure of the Borrower to deliver financial statements or a
Compliance Certificate for the period from the Closing Date through and including the date hereof
under Section 5.01(c) of the Loan Agreement;

               (b) the Lender hereby waives any Event of Default or unmatured Event of Default under Section
6.01(e) of the Loan Agreement as a result of the Borrower’s failure to

1

 

furnish to the Lender the items required to be furnished from the Closing Date through and
including the date hereof pursuant to Section 5.01(c);

               (c) the Lender hereby waives any Event of Default or unmatured Event of Default under Section
6.01(b), Section 6.01(e), Section 6.01(f) and Section 6.01(r) of the Loan Agreement as a result of
the granting by the Borrower of any liens or other encumbrances with respect to any of its
properties to secure its obligations under that certain Value-Added Agricultural Products and
Processes Financial Assistance Program Agreement, dated April 21, 2005 (the “IDED Loan
Agreement”), between the Iowa Department of Economic Development and the Borrower, the failure
of the Borrower to perform its obligations in the IDED Loan Agreement, the Borrower’s incurrence of
obligations under the IDED Loan Agreement, the occurrence or existence of certain defaults under
the IDED Loan Agreement, the Borrower’s failure to provide a copy of the IDED Loan Agreement to the
Lender and the Borrower’s failure to disclose any of the foregoing to the Lender; and

               (d) the Lender hereby waives any Event of Default or unmatured Event of Default under Section
6(c) of that certain Guaranty, dated as of November 15, 2005, between US BioEnergy Corporation, as
guarantor, and the Lender as a result of the failure of the Borrower to observe any covenant or
agreement contained in the Master Loan Agreement or another Loan Document.

          Section 3. Amendments. Subject to the terms and conditions set forth herein, the Loan
Agreement is hereby amended as follows:

               (a) Schedule 4.01(a) of the Loan Agreement is hereby amended and restated in its entirety to
read as set forth on Annex A hereto.

               (b) Schedule 5.01(o) is hereby deleted in its entirety; and the Loan Agreement is hereby
further amended by deleting each reference to Schedule 5.01(o) each time it appears in the Loan
Agreement and each other Loan Document.

               (c) Schedule 5.02(a) of the Loan Agreement is hereby amended and restated in its entirety to
read as set forth on Annex B hereto.

               (d) Schedule 5.02(k) of the Loan Agreement is hereby amended and restated in its entirety to
read as set forth on Annex C hereto.

               (e) Section 5.01(o) of the Loan Agreement is hereby amended by amending and restating such
section in its entirety to read as follows:

Borrower shall give notice to the Lender of any change in the Chief
Executive Officer or the Chief Financial Officer of the Borrower
within thirty (30) days of such change.

               (f) Section 5.02(b) of the Loan Agreement is hereby amended by adding to the last sentence of
such section at the end of such sentence, immediately before the semicolon, the following:

2

 

; provided, further, that notwithstanding anything to the contrary
contained in this paragraph 5.02(b), the Borrower may pay a
distribution to US BioEnergy Corporation in an amount not to exceed
$30,367,176 with the proceeds of the Refunding Loan (as defined in
the Amended and Restated First Supplement dated as of January 24,
2006, as amended)

               (g) Section 5.02(k) of the Loan Agreement is hereby amended by deleting in its entirety the
phrase “which are fully disclosed to Lender” where such phrase appears in clause (ii) of such
section.

               (h) Section 5.02(l) of the Loan Agreement is hereby amended by amending and restating the
second sentence of such section in its entirety to read as follows:

Notwithstanding the foregoing, the Borrower may pay management fees
to any of its Affiliates, provided that such management fees are no
less favorable to the Borrower than would be obtained in a
comparable arm’s length transaction with a Person that is not an
Affiliate; or

               (i) Section 5.02(m) of the Loan Agreement is hereby amended by amending and restating such
section in its entirety to read as follows:

US BioEnergy Corporation shall fail to own, directly or indirectly,
100% of the common (voting) membership interests in the Borrower.

               (j) Section 6.01(s) of the Loan Agreement is hereby amended by amending and restating such
section in its entirety to read as follows:

The Borrower should terminate, change, amend or restate any Material
Contract or any material Construction Contract without the Lender’s
prior consent if any such termination, change, amendment or
restatement would be materially adverse to the Lender.

          Section 4. Conditions to Effectiveness of this Amendment. This Amendment shall become
effective as of the date hereof upon the satisfaction of the conditions precedent that the Lender
shall have received, on or before the date hereof, executed counterparts of this Amendment, duly
executed by each of the parties hereto, and an executed Consent of Guarantor in the form attached
hereto as Exhibit A, duly executed by the Guarantor.

          Section 5. Representations and Warranties. The Borrower hereby represents to the
Lender that, after giving effect to this Amendment:

               (a) All of the representations and warranties of the Borrower contained in the Loan Agreement
and in each other Loan Document are true and correct in all material respects as though made on and
as of the date hereof.

3

 

               (b) As the date hereof, except as otherwise specifically stated herein, no Event of Default
has occurred and is continuing.

          Section 6. Miscellaneous.

               (a) Effect; Ratification. The amendments set forth herein are effective solely for
the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to
(i) be a consent to, or an acknowledgment of, any amendment, waiver or modification of any other
term or condition of the Loan Agreement or (ii) prejudice any right or remedy which the Lender may
now have or may have in the future under or in connection with the Loan Agreement, as amended
hereby, or any other instrument or agreement referred to therein. Each reference in the Loan
Agreement to “this Agreement,” “herein,” “hereof” and words of like import and each reference in
the other Loan Documents to the “Loan Agreement,” the “Master Loan Agreement,” or the Loan
Agreement shall mean the Loan Agreement, as amended hereby.

               (b) Loan Documents. This Amendment is a Loan Document executed pursuant to the Loan
Agreement and shall be construed, administered and applied in accordance with the terms and
provisions thereof.

               (c) Counterparts. This Amendment may be executed in any number of counterparts, each
such counterpart constituting an original and all of which when taken together shall constitute one
and the same instrument.

               (d) Severability. Any provision contained in this Amendment which is held to be
inoperative, unenforceable or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions of this Amendment
in that jurisdiction or the operation, enforceability or validity of such provision in any other
jurisdiction.

               (e) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF MINNESOTA.

               (f) WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENT TO WHICH IT IS A PARTY OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.

               (g) IDED Loan Agreement Consent. The Lender hereby consents to the amendment of the
IDED Loan Agreement by the parties thereto so long as the aggregate principal amount outstanding
thereunder is not increased.

               (h) Intercreditor Agreement Consent. In connection with that certain Intercreditor
and Subordination Agreement, dated as of December ___, 2005 (the “Intercreditor Agreement”),
among the Lender, Ethanol Income Fund, LLC and MVP Enterprises, LLC, the Lender hereby consents to
the amendment of the EIF Loan Agreement (as defined in the Intercreditor Agreement) by the parties
thereto and the amendment of the MVP Loan Agreement

4

 

(as defined in the Intercreditor Agreement) by the parties thereto so long as the aggregate
principal amount outstanding under the EIF Loan Agreement or the MVP Loan Agreement, as applicable,
is not increased.

(Signature Page Follows)

5

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their respective duly authorized officers as of the date first written above.

	 	 	 	 	 
	 	 	US BIO ALBERT CITY, LLC,
	 
	 	 	 	 
	 	 	as Borrower
	 
	 	 	 	 
	 

	 	By:	 	/s/ CHAD D. HATCH
	 

	 	 	 	 
	 

	 	Name:	 	Chad Hatch
	 

	 	Title:	 	Vice President
	 
	 	 	 	 
	 	 	AGSTAR FINANCIAL SERVICES, PCA,
	 
	 	 	 	 
	 

	 	as Lender	 	 
	 
	 	 	 	 
	 

	 	By:	 	/s/ MARK D. SCHMIDT
	 

	 	 	 	 
	 

	 	Name:	 	Mark D. Schmidt
	 

	 	Title:	 	Vice President

 

 

Annex A

Schedule 4.01(a)

None.

 

 

Annex B

Schedule 5.02(a)

Borrower has secured a $100,000 letter of credit from First National Bank of Sioux Falls in Sioux
Falls, South Dakota. The LC is secured by the Borrower’s cash on deposit with that bank.

Loan Agreement, dated as of December 19, 2005, among the Borrower, US BioEnergy Corporation, as
guarantor, and M.V.P. Enterprises, LLC, as lender

Loan Agreement, dated as of December 19, 2005, among the Borrower, US BioEnergy Corporation, as
guarantor, and Ethanol Income Fund, L.L.C., as lender

Value-Added Agricultural Products and Processes Financial Assistance Program Agreement, dated April
21, 2005, between the Iowa Department of Economic Development and the Borrower

 

 

Annex B

Schedule 5.02(k)

All of the membership interests in the Borrower are owned by US BioEnergy Corporation (the
“Parent”). Certain services relating to procurement of inputs, marketing and sale of ethanol and
DDGs, risk management and plant operation are, or will be, performed by the Parent’s wholly-owned
subsidiary, UBS Services, LLC. The Company has also entered into a Design-Build Agreement with
Fagen, Inc., an affiliate of the Parent. Roland J. Fagen, a director of the Parent, is the
principal of Fagen, Inc. and other directors of the Parent are employees or officers of Fagen, Inc.
The Company has also entered into an agreement relating to environmental consulting services with
ICM, Inc., of which David Vander Griend, a director of Parent, is the principal. In addition,
members of the Company’s Board of Managers are officers of the Parent or members of the Board of
Directors of the Parent. In addition, affiliates of the Parent may provide management or
administrative services to Borrower.

 

 

EXHIBIT A

Consent of Guarantor

     The undersigned, US BioEnergy Corporation, hereby (i) consents to the modifications to (A) the
Master Loan Agreement dated as of November 15, 2005 pursuant to that certain Amendment No. 1 and
Waiver to Master Loan Agreement effective as of July 31, 2006 between US Bio Albert City, LLC (the
“Borrower”) and AgStar Financial Services, PCA (the “Lender”) and (B) the Amended
and Restated First Supplement dated as of January 24, 2006 pursuant to that certain Amendment No. 1
to Amended and Restated First Supplement to Master Loan Agreement effective as of July 31, 2006
between the Borrower and the Lender and (ii) acknowledges and agrees that the obligations of the
undersigned contained in that certain Continuing Guaranty made as of November 15, 2005 by the
undersigned for the benefit of the Lender are, and shall remain, in full force and effect.

	 	 	 	 	 
	 	 	US BIOENERGY CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/
CHAD HATCH 
	 

	 	 	 	 
	 

	 	Name:	 	Chad Hatch 
	 
	 	 	 	 
	 

	 	Title:	 	VP 

 

 

FIRST SUPPLEMENT

TO THE MASTER LOAN AGREEMENT

(CONSTRUCTION LOAN)

THIS FIRST SUPPLEMENT TO THE MASTER LOAN AGREEMENT (this “First Supplement”), dated as of November
15, 2005, is between AGSTAR FINANCIAL SERVICES, PCA (the “Lender”) and US BIO ALBERT CITY, LLC, an
Iowa limited liability company (the “Borrower”), and supplements that certain Master Loan
Agreement, dated as of even date herewith, between the Lender and the Borrower (as the same may be
amended, modified, supplemented, extended or restated from time to time, the “MLA”).

1. Definitions. As used in this Supplement, the following terms shall have the following
meanings. Capitalized terms used and not otherwise defined in this Supplement shall have the
meanings attributed to such terms in the MLA. Terms not defined in either this Supplement or the
MLA shall have the meanings attributed to such terms in the Uniform Commercial Code, as enacted in
the State of Minnesota and as amended from time to time.

“Draw Request” means a request for an advance against the Construction Note prior to
the Construction Loan Maturity Date, submitted by the Borrower to the Lender and the
Disbursing Agent, in accordance with the terms and conditions of the Disbursing Agreement.

“Sworn Construction Statement” means a sworn construction statement, sworn to by the
Borrower and the General Contractor, and of a form and substance acceptable to the Lender, a
sample of which is attached hereto as Exhibit A.

     2. The Construction Loan. On the terms and conditions set forth in the MLA and this
First Supplement, Lender agrees to make a Construction Loan to the Borrower (the “Construction
Loan”), by means of multiple advances in an amount not to exceed the lesser of (i) $75,000,000.00
or (ii) an amount equal to 60% of the Project Costs (the “Construction Loan Commitment”). Under
the Construction Loan, amounts borrowed and repaid or prepaid may not be reborrowed.

     3. Purpose. Advances under the Construction Loan may be used to fund the
payment of Project Costs, including closing costs and fees associated with the Construction Loan.
The Borrower agrees that the proceeds of the Construction Loan are to be used only for the purposes
set forth in this Section 3.

     4. Interest Rate. Subject to the provisions of Sections 5 and 7 of this First
Supplement, the Construction Loan shall bear interest at a rate equal to the LIBOR Rate plus 350
basis points. The computation of interest, amortization, maturity and other terms and conditions
of the Construction Loan shall be as provided in the Construction Note, provided, however, in no
event shall the applicable rate exceed the Maximum Rate. Such fixed rate of interest shall not be
subject to any adjustments under Section 2.05 of the MLA.

1

 

     5. Default Interest. In addition to the rights and remedies set forth in the MLA:
(i) if the Borrower fails to make any payment to Lender when due (including, without limitation,
any purchase of equity of Lender when required), then at Lender’s option in each instance, such
obligation or payment shall bear interest from the date due to the date paid at 2% per annum in
excess of the rate of interest that would otherwise be applicable to such obligation or payment;
(ii) upon the occurrence and during the continuance of an Event of Default beyond any applicable
cure period, if any, at Lender’s option in each instance, the unpaid balances of the Construction
Loan shall bear interest form the date of the Event of Default or such later date as Lender shall
elect at 2% per annum in excess of the rate(s) of interest that would otherwise be in effect on the
Construction Loan under the terms of the Construction Note; (iii) after the maturity of the
Construction Loan, whether by reason of acceleration or otherwise, the unpaid principal balance of
the Construction Loan (including without limitation, principal, interest, fees and expenses) shall
automatically bear interest at 2% per annum in excess of the rate of interest that would otherwise
be in effect on the Construction Loan under the terms of the Construction Note. Interest payable
at the Default Rate shall be payable from time to time on demand or, if not sooner demanded, on the
last day of each calendar month.

     6. Late Charge. If any payment of principal or interest due under this Supplement or
the Construction Note is not paid within ten (10) days of the due date thereof, the Borrower shall
pay, in addition to such amount, a late charge equal to five percent (5%) of the amount of such
payment.

     7. Changes in Law Rendering Certain LIBOR Rate Loans Unlawful. In the event that any
change in any applicable law (including the adoption of any new applicable law) or any change in
the interpretation of any applicable law by any judicial, governmental or other regulatory body
charged with the interpretation, implementation or administration thereof, should make it (or in
the good-faith judgment of the Lender should raise a substantial question as to whether it is)
unlawful for the Lender to make, maintain or fund LIBOR Rate Loans, then: (a) the Lender shall
promptly notify each of the other parties hereto; and (b) the obligation of the Lender to make
LIBOR rate loans of such type shall, upon the effectiveness of such event, be suspended for the
duration of such unlawfulness. During the period of any suspension, Lender shall make loans to
Borrower that are deemed lawful and that as closely as possible reflect the terms of the MLA.

     8. Payments and Computations.

          (a) Method of Payment. Except as otherwise expressly provided herein, all payments of
principal, interest, and other amounts to be made by the Borrower under the Loan Documents shall be
made to the Lender in U.S. dollars and in immediately available funds, without set-off, deduction,
or counterclaim, not later than 2:00 P.M. (Minneapolis, Minnesota time) on the date on which such
payment shall become due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day).

          (b) Application of Funds. Lender may apply all payments received by it to the
Borrower’s obligations to Lender in such order and manner as Lender may elect in its sole

2

 

discretion; provided that any payments received from any guarantor or from any disposition of any
collateral provided by such guarantor shall only be applied against obligations guaranteed by such
guarantor.

          (c) Payments on a Non-Business Day. Whenever any payment under any Loan Document
shall be stated to be due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be included in the
computation of the payment of interest and fees, as the case may be.

          (d) Proceeds of Collateral. All proceeds received by the Lender from the sale or
other liquidation of the Collateral when an Event of Default exists shall first be applied as
payment of the accrued and unpaid fees and expenses of the Lender hereunder, including, without
limitation, under Section 7.04 of the MLA and then to all other unpaid or unreimbursed Loan
Obligations (including reasonable attorneys’ fees and expenses) owing to the Lender and then any
remaining amount of such proceeds shall be applied to the unpaid amounts of the Loan Obligations,
until all the Loan Obligations have been paid and satisfied in full or cash collateralized. After
all the Loan Obligations (including without limitation, all contingent Loan Obligations) have been
paid and satisfied in full, all Commitments terminated and all other obligations of the Lender to
the Borrower otherwise satisfied, any proceeds of Collateral shall be delivered to the Person
entitled thereto as directed by the Borrower or as otherwise determined by applicable law or
applicable court order.

          (e) Computations. Except as expressly provided otherwise herein, all computations of
interest and fees shall be made on the basis of actual number of days lapsed over a year of 365 or
366 days, as appropriate. Interest shall accrue from and include the date of borrowing, but
exclude the date of payment.

     7. Maximum Amount Limitation. Anything in the MLA, this First Supplement, or the
other Loan Documents to the contrary notwithstanding, Borrower shall not be required to pay
unearned interest on the Construction Note or any of the Loan Obligations, or ever be required to
pay interest on the Construction Note or any of the Loan Obligations at a rate in excess of the
Maximum Rate, if any. If the effective rate of interest which would otherwise be payable under the
MLA, this First Supplement, the Construction Note, or any of the other Loan Documents would exceed
the Maximum Rate, if any, then the rate of interest which would otherwise be contracted for,
charged, or received under the MLA, this First Supplement, the Construction Note, or any of the
other Loan Documents shall be reduced to the Maximum Rate, if any. If any unearned interest or
discount or property that is deemed to constitute interest (including, without limitation, to the
extent that any of the fees payable by Borrower for the Loan Obligations to the Lender under the
MLA, this First Supplement, the Construction Note, or any of the other Loan Documents are deemed to
constitute interest) is contracted for, charged, or received in excess of the Maximum Rate, if any,
then such interest in excess of the Maximum Rate shall be deemed a mistake and canceled, shall not
be collected or collectible, and if paid nonetheless, shall, at the option of the holder of the
Construction Note, be either refunded to the Borrower, or credited on the principal of the
Construction Note. It is further agreed that, without limitation of the foregoing and to the
extent permitted by applicable law, all calculations of the rate of interest or discount contracted
for, charged or received by the Lender under the Construction Note, or under

3

 

any of the Loan Documents, that are made for the purpose of determining whether such rate exceeds
the Maximum Rate applicable to the Lender, if any, shall be made, to the extent permitted by
applicable laws (now or hereafter enacted), by amortizing, prorating and spreading during the
period of the full terms of the Advances evidenced by the Construction Note, and any renewals
thereof all interest at any time contracted for, charged or received by Lender in connection
therewith. This section shall control every other provision of all agreements among the parties to
the MLA pertaining to the transactions contemplated by or contained in the Loan Documents, and the
terms of this section shall be deemed to be incorporated in every Loan Document and communication
related thereto.

     8. Lender Records. All advances and all payments or prepayments made thereunder on
account of principal or interest may be evidenced by the Lender in accordance with its usual
practice in an account or accounts evidencing such advances and all payments or prepayments
thereunder from time to time and the amounts of principal and interest payable and paid from time
to time thereunder; in any legal action or proceeding in respect of the Notes, the entries made in
such account or accounts shall be prima facie evidence of the existence and amounts
of all advances and all payments or prepayments made thereunder on account of principal or
interest. Lender shall provide monthly statements of such entries to Borrower for the purpose of
confirming the accuracy of such entries.

     9. Loan Payments. During the continuance of an Event of Default, the Lender may
deduct any obligations due or any other amounts due and payable by the Borrower under the Loan
Documents from any accounts maintained with the Lender.

     10. Compensation. Upon the request of the Lender, the Borrower shall pay to the
Lender such amount or amounts as shall be sufficient (in the reasonable opinion of the Lender) to
compensate it for any loss, cost, or expense (excluding loss of anticipated profits incurred by it)
as a result of: (i) any payment, prepayment, or conversion of a LIBOR rate loan for any reason on a
date other than the last day of the Interest Period for such Loan; or (ii) any failure by the
Borrower for any reason (including, without limitation, the failure of any condition precedent
specified in the MLA or this First Supplement to be satisfied) to borrow, extend, or prepay a LIBOR
rate loan on the date for such borrowing, extension, or prepayment specified in the relevant notice
of borrowing, extension or prepayment under this First Supplement.

     Such indemnification may include any amount equal to the excess, if any, of: (a) the amount
of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or
extended, for the period from the date of such prepayment or of such failure to borrower, convert
or extend to the last day of the applicable Interest Period (or in the case of a failure to borrow,
convert or extend, the Interest Period that would have commenced on the date of such failure) in
each case at the applicable rate of interest for such loan as provided for herein; over (b) the
amount of interest (as reasonably determined by the Lender) which would have accrued to the Lender
on such amount by placing such amount on deposit for a comparable period with leading banks in the
interbank LIBOR market. The covenants of the Borrower set forth in this section shall survive the
repayment of the Construction Loan and other obligations under the Loan Documents hereunder.

4

 

     11. Construction Loan Term. The Construction Loan shall run for a period
beginning on the Closing Date and ending on the Construction Loan Maturity Date. On the
Construction Loan Maturity Date, the amount of the then unpaid principal balance of the
Construction Loan and any and all other amounts due and owing hereunder or under any other
Construction Loan Document relating to this Construction Loan shall be due and payable, except for
that part, if any, of the Construction Loan which is converted into a Term Loan pursuant to the
terms of the MLA.

     12. Payment and Calculation. The Borrower will pay interest on the Construction Loan
(i) quarterly in arrears on first day of each January, April, July and October (each such dated a
“Quarterly Payment Date”), commencing on the first Quarterly Payment Date following the date on
which the first Advance is made on the Construction Loan, and continuing on each Quarterly Payment
Date thereafter until the Construction Loan Maturity Date. If any Quarterly Payment Date is not a
Business Day, then the principal installment then due shall be paid on the next Business Day and
shall continue to accrue interest until paid.

     13. Disbursement of Construction Loan.

          (a) Deposit Account. Disbursements of the Construction Loan will be made by the
Lender in the manner provided in the Disbursing Agreement. Subject to Section 13(b) below, all
disbursements will be made by wire transferring such funds to the deposit account of the
Disbursing Agent in the amount of each Draw Request which is approved pursuant to the Disbursing
Agreement. All Construction Loan funds will be considered to have been advanced to and received by
the Borrower upon, and interest on such funds will be payable by the Borrower from and after, their
deposit in such deposit account.

          (b) Lender’s Application of Loan Proceeds. Notwithstanding the provisions of Section
13(a), above, the Lender may elect, upon ten (10) days’ notice to the Borrower, to use the
Construction Loan funds to pay, as and when due, any Construction Loan fees owing to Lender,
interest on the Construction Loan, release charges under prior mortgages on the Property, and legal
fees and disbursements of the Lender’s attorneys which are payable by the Borrower, unless Borrower
causes such amount(s) to be paid within said ten (10) days. Such

5

 

payments may be made, at the option of the Lender, by debiting or charging the Construction
Loan funds in the amount of such payments.

          (c) Cost Information. All disbursements will be based upon a detailed breakdown of
the Project Costs as set forth in the Sworn Construction Statement attached as Exhibit A to the
MLA. In the event that the Borrower becomes aware of any change in the approved Project Costs,
which would increase the total cost in excess of $50,000.00 above the amount shown on the attached
Sworn Construction Statement, the Borrower shall immediately notify the Lender in writing and
promptly submit to the Lender for its approval a revised Sworn Construction Statement. No further
disbursements need be made by the Disbursing Agent unless and until the revised Sworn Construction
Statement is approved. The Lender reserves the right to approve or disapprove any revised Sworn
Construction Statement in its reasonable discretion.

          (d) Loan in Balance, Deposit of Funds by Borrower. The Borrower shall keep the Loan
in balance as provided in this Section. If the Lender at any time reasonably determines that the
amount of the undisbursed Construction Loan proceeds will not be sufficient fully to pay for all
costs required to complete the construction of the Project in accordance with the approved Plans
and Specifications and for all Project Costs to be incurred by the Borrower, whether such
deficiency is attributable to changes in the work of construction or in the Plans and
Specifications or to any other cause, the Lender may make written demand on the Borrower to deposit
in an escrow fund to be established with the Lender an amount equal to the amount of the shortage
reasonably determined by the Lender. The Borrower shall then deposit the required funds with the
Lender within ten (10) days after the date of the Lender’s written demand. No further
disbursements shall be made by the Disbursing Agent until those funds are deposited by the Borrower
in the escrow fund. Whenever the Lender has any such funds on deposit in such escrow fund, it
shall make all future advances for Project Costs from the escrow fund before making any further
advances under the Loan.

          (e) Additional Security. The Borrower irrevocably assigns to the Lender and grants to
the Lender a security interest in, as additional security for the performance of the Borrower’s
obligations under this the MLA and this First Supplement and the Related Documents, its interest in
all funds held by the Disbursing Agent, whether or not disbursed, all funds deposited by the
Borrower with the Lender under this First Supplement, all governmental permits obtained for the
lawful construction of the Project, and all reserves, deferred payments, deposits, refunds, cost
savings, and payments of any kind relating to the construction of the Project. Upon any default of
the Borrower, the Lender may use any of the foregoing for any purpose for which the Borrower could
have used them under this First Supplement or with respect to the construction or financing of the
Project. The Lender will also have all other rights and remedies as to any of the foregoing which
are provided under applicable law or in equity.

          (f) Conditions Precedent to Construction Advances. The Lender’s obligation to make
Construction Advances under the Construction Note shall be subject to the terms, conditions and
covenants set forth in the MLA and this First Supplement, including, without limitation, the
following further conditions precedent:

6

 

               (i) Representations and Warranties. The representations and warranties set forth in
the MLA and this First Supplement are true and correct in all material respects as of the date of
the request for any Advance, except as disclosed in writing to the Lender, to the same extent and
with the same effect as if made at and as of the date thereof;

               (ii) Draw Request. The Borrower has submitted to the Lender and the Disbursing Agent
a Draw Request for each such Advance, which such Draw Request shall comply with the requirements
contained in this the MLA, this Supplement and the Disbursing Agreement;

               (iii) Compliance With Disbursing Agreement. All of the terms and conditions of the
Disbursing Agreement have been satisfied with respect to each such Advance;

               (iv) Sworn Construction Statement. The Borrower shall furnish to the Lender an updated
Sworn Construction Statement setting forth the Contractor(s) providing services or materials with
respect to specific portions of the construction of the Project and setting forth the amounts
actually incurred and paid, or to be incurred, in completing construction of the Project. Such
updated Sworn Construction Statement shall be sworn to by the Borrower and the General Contractor
to be a true, complete and accurate account of all costs actually incurred and an accurate estimate
of all costs to be incurred in the future;

               (v) No Defaults. The Borrower is not in default under the terms of the MLA, the
Related Documents or any other agreement to which the Borrower is a party and which relates to the
construction of the Project;

               (vi) Guaranties. Each of the Guarantors shall have executed and delivered to Lender
the Guaranties;

               (vii) Loan in Balance. The Loan is in balance, as required by the provisions of
Section 13(d), above;

               (viii) Government Action. No license, permit, permission or authority necessary for
the construction of the Project has been revoked or challenged by or before any Governmental
Authority;

          (g) Suspension of Construction. If the Lender in reasonably good faith determines
that any work or materials do not conform to the approved Plans and Specifications or sound
building practice, or otherwise departs from any of the requirements of the MLA and this
Supplement, the Lender may require the work to be stopped and withhold disbursements until the
matter is corrected. In such event, the Borrower will promptly correct the work to the Lender’s
satisfaction. Provided Lender’s actions were reasonable, in good faith, and the work or materials
did not conform to the approved Plans and Specifications or sound building practice, no such action
by the Lender will affect the Borrower’s obligation to complete the Project on or before the
Completion Date.

          (h) Inspections. The Borrower and the Inspecting Engineer shall be responsible for
making inspections of the Project during the course of construction and shall determine to their

7

 

own satisfaction that the work done or materials supplied by the Contractors to whom payment
is to be made out of each Advance has been properly done or supplied in accordance with the
applicable contracts with such Contractors. If any work done or materials supplied by a Contractor
are not satisfactory to the Borrower or the Inspecting Engineer, the Borrower will immediately
notify the Lender in writing of such fact. It is expressly understood and agreed that the Lender
or its authorized representative may conduct such inspections of the Project as it may deem
necessary for the protection of the Lender’s interest, and, specifically, an architectural or
engineering firm acceptable to the Lender may, at the option of the Lender and at the expense of
the Borrower, conduct such periodic inspections of the Project, prepare such written progress
reports during the period of construction, prepare such written reports upon completion of the
Project and sign such Draw Requests, as the Lender may reasonably request, provided that no
inspection shall unreasonably delay progress on the Project. Any inspections which may be made of
the Project by the Lender or its representative will be made, and all certificates issued by the
Lender’s representative will be issued, solely for the benefit and protection of the Lender, and
that Borrower will not rely thereon. The Lender is under no duty to supervise or inspect
construction or examine any books and records. Any inspection or examination by the Lender is for
the sole purpose of protecting the Lender’s security and preserving the Lender’s rights under the
MLA and this Supplement. No default of the Borrower will be waived by any inspection by the
Lender. In no event will any inspection by the Lender be a representation that there has been or
will be compliance with the Plans or Specifications or that the construction is free from defective
materials or workmanship.

          (j) No Waiver. Any waiver by the Lender of any condition of disbursement must be
expressly made in writing. The making of a disbursement prior to fulfillment of one or more
conditions thereof shall not be construed as a waiver of such conditions, and the Lender reserves
the right to require their fulfillment prior to making any subsequent disbursements.

     14. Construction of Project. As a further condition to the Lender’s funding of
Project Costs pursuant to the terms of the MLA and this First Supplement, the Borrower will:

               (i) diligently proceed with construction of the Project in accordance with the Plans and
Specifications and in accordance with all applicable laws and ordinance and will complete the
Project on or before the Completion Date;

               (ii) use the proceeds of all Advances solely to pay the Project Costs as specified in the
Project Sources and Uses Statement;

               (iii) use its best efforts to require the Contractor(s) to comply with all rules, regulations,
ordinances and laws relating to work on the Project;

               (iv) obtain the Lender’s prior written approval of any change in the Plans and Specifications
for the Project approved by the Lender which might materially adversely affect the value of the
Lender’s security, and has a cost of $50,000.00 or greater. The Lender will have a reasonable time
to evaluate any requests for its approval of any changes referred to in this paragraph. The Lender
may approve or disapprove changes in its discretion,

8

 

subject to the foregoing provisions of this Section 14(iv). If it reasonably appears to the
Lender that any change may increase the Project Costs, the Lender may require the Borrower to
deposit additional funds with the Lender pursuant to the provisions of this The MLA and this in an
amount sufficient to cover the increased costs as a condition to giving its approval;

               (v) comply with and keep in effect all necessary permits and approvals obtained from any
Governmental Authority relating to the lawful construction of the Project. The Borrower will
comply with all applicable existing and future laws, regulations, orders, and requirements of any
Governmental Authority, judicial, or legal authorities having jurisdiction over the Real Property
or Project, and with all recorded restrictions affecting the Real Property;

               (vi) furnish to the Lender from time to time on request by the Lender, in a form acceptable to
the Lender, correct lists of all contractors and subcontractors employed in connection with
construction of the Project and true and correct copies of all executed contracts and subcontracts.
The Lender may contact any contractor or subcontractor to verify any facts disclosed in the lists,
Borrower must consent to the disclosure of such information by the contractors and subcontractors
to Lender or its agents upon Lender’s request, and Borrower must assist Lender or its agents in
obtaining such information upon Lender’s request;

               (vii) upon completion of the building foundation of the Project, deliver to the Lender an
“as-built” survey of the Real Property which: (a) sets forth the location and exterior lines and
egress and other improvements completed on the Real Property and demonstrates compliance with all
applicable setback requirements; (b) demonstrates that the Project is entirely within the exterior
boundaries of the Real Property and any building restriction lines and does not encroach upon any
easements or rights-of-way; and (c) contains such other information as the Lender may reasonably
request;

               (viii) not purchase any materials, equipment, fixtures, or articles of personal property
placed in the Project prior to the Completion Date under any security agreement or other agreement
where the seller reserves or purports to reserve title or the right of removal or repossession, or
the right to consider them personal property after their incorporation in the work of construction,
unless authorized by the Lender in writing;

               (ix) provide the Lender and its representatives with access to the Real Property and the
Project at any reasonable time and upon reasonable notice to enter the Real Property and inspect
the work or construction and all materials, plans, specifications, and other matters relating to
the construction. The Lender will also have the right to, at any reasonable time and upon
reasonable notice, examine, copy, and audit the books, records, accounting data, and other
documents of the Borrower and its contractors relating to the Real Property or construction of the
Project;

               (x) pay and discharge all claims and liens for labor done and materials and services furnished
in connection with the construction of the Project. The Borrower will have the right to contest in
good faith any claim or lien, provided that it does so diligently and without prejudice to the
Lender or the ability to obtain title insurance in the manner required by the MLA, this Supplement
and the Disbursing Agreement. Upon the Lender’s request, the

9

 

Borrower will promptly provide a bond, cash deposit, or other security reasonably satisfactory to
the Lender to protect the Lender’s interest and security should the contest be unsuccessful;

               (xi) at the Lender’s request and expense, post signs on the Real Property for the purpose of
identifying the Lender as the “Lender.” At the request of the Lender, or the participating local
community banks, the Borrower will use its best efforts to identify the Lender as the lender in
publicity concerning the Project;

               (xii) maintain in force until full payment of the Loan all insurance required by law, public
liability insurance, and property insurance. The policies must be approved by the Lender as to
amounts, form, risk coverage, deductibles, insurer, and loss payable and cancellation provision.
The Lender’s approval, however, will not be a representation of the solvency of any insurer or the
sufficiency of any amount of insurance;

               (xiii) cooperate at all times with the Lender in bringing about the timely completion of the
Project, and resolve all disputes arising during the work of construction in a manner which will
allow work to proceed expeditiously. With respect to such disputes, the Borrower will have the
right to contest in good faith claims resulting in disputes, provided that it does so diligently
and without prejudice to the Lender. Upon the Lender’s request, the Borrower will promptly provide
a bond, cash deposit, or other security reasonably satisfactory to the Lender to protect the
Lender’s interest and security should the contest be unsuccessful;

               (xiv) pay the Lender’s and the Disbursing Agent’s reasonable out-of-pocket costs and expenses
incurred in connection with the making or disbursement of the Loans or in the exercise of any of
its rights or remedies under the MLA, this Supplement and the Disbursing Agreement, including but
not limited to title insurance and escrow charges, disbursing agent fees, recording charges, and
mortgage taxes, reasonable legal fees and disbursements, and reasonable fees and costs for services
which are not customarily performed by the Lender’s salaried employees and are not specifically
covered by the fees charged to originate the Loan, if any. The provision of this paragraph will
survive the termination of the MLA, this Supplement and the repayment of the Loan;

               (xv) keep true and correct financial books and records on a cash basis for the construction of
the Project and maintain adequate reserves for all contingencies. If required by the Lender, the
Borrower will submit to the Lender at such times as it requires (which will in no event be more
often than monthly) a statement which accurately shows the application of all funds expended to
date for construction of the Project and the source of those funds as well as the Borrower’s best
estimate of the funds needed to complete the Project and the source of those funds. The Borrower
will promptly supply the Lender with any financial statements or other information concerning its
affairs and properties as the Lender may reasonably request, and will promptly notify the Lender of
any material adverse change in its financial condition or in the physical condition of the Property
or Project;

               (xvi) comply with the requirements of any commitment or agreement entered into by Borrower
with any Governmental Authority to assist the construction or

10

 

financing of the Real Property and/or Project and with the terms of all applicable laws,
regulations, and requirements governing such assistance;

               (xvii) indemnify and hold the Lender harmless from and against all liabilities, claims,
damages, reasonable costs, and reasonable expenses (including but not limited to reasonable legal
fees and disbursements) arising out of or resulting from any defective workmanship or materials
occurring in the construction of the Project. Upon demand by the Lender, the Borrower will defend
any action or proceeding brought against the Lender alleging any defective workmanship or
materials, or the Lender may elect to conduct its own defense at the reasonable expense of the
Borrower. The provisions of this paragraph will survive the termination of the MLA, this
Supplement and the repayment of the Loan; and

               (xviii) obtain and deliver to the Lender copies of all necessary occupancy certificates
relating to the Project.

     15. Security. The Borrower’s obligations hereunder and, to the extent related
thereto, the MLA, shall be secured as provided in the MLA.

IN WITNESS WHEREOF, the parties have caused this First Supplement to the Master Loan Agreement
to be executed by their duly authorized officers as of the date shown above.

	 	 	 	 	 
	 	 	US BIO ALBERT CITY, LLC

an Iowa limited liability company
	 
	 	 	 	 
	 

	 	By:	 	/s/ CHAD D. HATCH
	 

	 	 	 	 
	 

	 	Name:
	 	Chad D. Hatch
	 

	 	Title:
	 	Vice President and Treasurer
	 
	 	 	 	 
	 	 	AGSTAR FINANCIAL SERVICES, PCA

an United States corporation
	 
	 	 	 	 
	 

	 	By:	 	/s/ MARK SCHMIDT
	 

	 	 	 	 
	 

	 	 	 	Mark Schmidt
	 

	 	 	 	Its Vice President

11

 

EXHIBIT A

SWORN CONSTRUCTION STATEMENT

OWNER: US BioEnergy 

 PROPERTY AT: Albert City, IA

 

			
	 	
    IMPORTANT NOTICE: This statement must be complete as to names
    of all persons and companies furnishing labor and/or material on
    the premises herein. Any increase in cost, from changes in
    construction or otherwise, must be forthwith reported to the
    DISBURSING AGENT with additional deposits to cover such increase
    in cost.	 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ITEMS	 	FURNISH BY	 	TOTAL COST		 	AMT PAID		 	BALANCE	
	 	 	 	 	 	 	 		 	 		 	 	
	
    
    1

    	 	
    General contractor fees	 	
    Fagen, Inc.	 	$	97,250,000	 	 	$	23,035,950	 	 	$	74,214,050	 
	
    
    2

    	 	
    Accounting fees	 	
    Christenson & Associates	 	$	90,000	 	 	$	20,000	 	 	$	70,000	 
	
    
    3

    	 	
    Consulting fees	 	
    Terricon Consultants, Yaggy Colby Assoc. Plans	 	$	533,000	 	 	$	134,016	 	 	$	398,984	 
	
    
    4

    	 	
    Dues	 	
    EPIC	 	$	10,000	 	 	$	10,000	 	 	$	—	 
	
    
    5

    	 	
    Insurance-Builders Risk,	 	
    IMA	 	$	200,000	 	 	$	133,877	 	 	$	66,123	 
	
    
    6

    	 	
    Real Estate	 	
    Stern, Diehl, Comish & Jensen Trust Acct.	 	$	385,000	 	 	$	384,674	 	 	$	326	 
	
    
    7

    	 	
    Site Engineering	 	
    Antioch, ICM, Kushi & Payer, LTD	 	$	50,000	 	 	$	32,266	 	 	$	17,714	 
	
    
    8

    	 	
    Phase 1 site grading	 	
    JB Holland, Paterson Contractors	 	$	1,600,000	 	 	$	1,791,183	 	 	$	(181,183	)
	
    
    9

    	 	
    Phase 2 site work	 	
    McComick Constr., JB Holland, Pagan Inc.	 	$	765,000	 	 	$	287,939	 	 	$	477,061	 
	
    
    10

    	 	
    Site improvements & tilling	 	
    Golly Farms, Terricon Cons., Planscape Partners	 	$	100,000	 	 	$	170,879	 	 	$	(70,879	)
	
    
    11

    	 	
    Water wells	 	
    Thain Well Co.	 	$	325,000	 	 	$	97,756	 	 	$	227,244	 
	
    
    12

    	 	
    Other	 	 	 	$	23,692,000	 	 	$	16,341	 	 	$	23,675,659	 
	
    
    13

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    14

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    15

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    16

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    17

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    18

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    19

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    20

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    21

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    22

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    23

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    24

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    25

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    26

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    27

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    28

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    29

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    30

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    31

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    32

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    33

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    34

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    35

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    36

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    37

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    38

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    39

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    40

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    41

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    42

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    43

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    44

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    45

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    46

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    47

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    48

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    49

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    50

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    51

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    52

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    53

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	
    SUBTOTAL	 	$	125,000,000	 	 	$	26,114,901	 	 	$	98,885,099	 

STATE OF SOUTH DAKOTA

SS.

COUNTY OF BROOKINGS

The undersigned being first duly sworn, each for himself, as
General Contractor and Borrower, deposes and says that the
foregoing are the names of all parties having contracts or
subcontracts for specified portions of the work on said property
and building or material entering into the construction thereof,
and the amounts due and to become due to each of said parties,
that the items mentioned include all labor and material required
to complete said buildings according to plans and
specifications, that there are no other contracts outstanding;
and that there is nothing due or to become due to any person for
material, labor or other work of any kind done upon said
building other than as above stated.

The undersigned further deposes and says that no increase in the
cost of construction will be made under any circumstances
without furnishing information on same to the DISBURSING AGENT
with additional deposits to cover such increase; that, in the
event of any such increase, no orders or claims will be made to
said company until such information and additional deposits
shall have been completed; that the purpose of said statement is
to induce said company to pay out the proceeds of a loan of
$75,000,000.00 secured by a mortgage on said property; and that,
upon payment of the specific unpaid items listed herein, the
undersigned General Contractor hereby agrees to waive all claims
of priority to said mortgage and both parties herein will save
said company harmless as to any claims of priority of lien for
any labor or material, furnished or to be furnished, for
completion of construction.

/s/ CHAD HATCH

 

US BioEnergy

 

The foregoing instrument was acknowledged before me this
11 day of November, 2005

by Angela M. Burns

 

NOTARY STAMP

		
	 	
    /s/ Angela M. Burns
	 	
     

	 	
    Signature of Notary Public
	 	
    exp. 12/10/09

12

 

AMENDMENT NO. 1 TO AMENDED AND RESTATED

FIRST SUPPLEMENT TO MASTER LOAN AGREEMENT

          This Amendment No. 1 to Amended and Restated First Supplement to Master Loan Agreement (this
“Amendment”) is effective as of July 31, 2006, between US Bio Albert City, LLC, an Iowa
limited liability company, as borrower (the “Borrower”), and AgStar Financial Services,
PCA, as lender (the “Lender”).

RECITALS

          Each of the parties hereto entered into that certain Amended and Restated First Supplement to
Master Loan Agreement, dated as of January 24, 2006 (the “Supplement”). Each of the
parties hereto is also a party to that certain Master Loan Agreement, dated as of November 15,
2005, as amended by Amendment No. 1 thereto, effective as of July 31, 2006 (as so amended and as
may be further amended, restated, supplemented or otherwise modified from time to time, the
“Loan Agreement”).

          The Borrower has requested that the Lender amend certain provisions of the Supplement to
provide for the Refunding Loan (as hereinafter defined), all as more fully described herein, and
the Lender has agreed to grant such amendments upon the terms and conditions set forth herein.

AGREEMENT

          NOW, THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties
hereto, the parties hereto hereby agree as follows:

          Section 1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned thereto in the Supplement as amended by this
Amendment.

          Section 2. Amendments. Subject to the terms and conditions set forth herein, the
Supplement is hereby amended as follows:

               (a) Section 1 of the Supplement is hereby amended by adding, in appropriate alphabetical
order, the new definition of “Refunding Loan” to such section:

“Refunding Loan” means the loan from the Lender to the
Borrower in the amount of $30,367,176 or such lesser amount as
requested by the Borrower and pursuant to the terms and conditions
of this First Supplement. The Refunding Loan shall be deemed to be
part

1

 

of the Construction Loan for all purposes of this First Supplement
and the MLA.

               (b) Section 2 of the Supplement is hereby amended by adding to the end of such section the
following:

     Notwithstanding anything in the MLA, this First Supplement or
any Related Document to the contrary, the Lender agrees to make the
Refunding Loans to the Borrower on any Business Day from and after
July 31, 2006; provided that notice is given by the Borrower to the
Lender before 12:00 Noon (Minneapolis, MN time) on a Business Day
which is at least three (3) Business Days prior to the date such
Refunding Loan is to be made. Such notice will specify the amount
of the Refunding Loan (which shall not exceed $30,367,176), the date
the Refunding Loan is to be made and the account in which the
proceeds of such Loan are to be deposited. The amount so requested
from the Lender shall be made available to the Borrower subject to
satisfaction of the conditions set forth below in this Section 2
(and no other conditions contained in the MLA, the First Supplement
or any Related Document), by (i) the Lender depositing the same in
same day funds in an account of the Borrower or (ii) the Lender wire
transferring such funds to a Person designated by the Borrower in
writing. The making of the Refunding Loan shall be subject to the
satisfaction of following conditions precedent as of the date the
Refunding Loan is made:

     (a) Representations and Warranties. All of the
representations and warranties of the Borrower contained in the Loan
Agreement and in each other Loan Document shall be true and correct
in all material respects as though made on and as of such date.

     (b) Notice of Borrowing. The Borrower shall have
submitted to the Lender a notice of borrowing for the Refunding Loan
which notice of borrowing shall be executed by the Borrower and
shall contain representations by the Borrower as follows: (1) the
Loan shall be in balance immediately after giving effect to the
making of the Refunding Loan and (2) lien waivers have been obtained
for all Project Costs outstanding as of such date (in excess of
$3,000), as of the date of such notice.

     (c) No Defaults. The Borrower is not in default under
the terms of the MLA, the Related Documents or any other agreement
to which the Borrower is a party and which relates to the
construction of the Project.

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     (d) Loan in Balance. The Loan shall be in balance as
required by the provisions of Section 13(d) of the Supplement.

     (e) Government Action. No license, permit, permission
or authority necessary for the construction of the Project has been
revoked or challenged by or before any Governmental Authority.

               (c) Section 3 of the Supplement is hereby amended by adding to the first sentence of such
section at the end of such sentence, immediately before the period, the following:

; provided, that the proceeds of the Refunding Loan may be used to
pay a distribution to US BioEnergy Corporation

          (d) Section 13(a) of the Supplement is hereby amended by amending and restating such section
in its entirety to read as follows:

Disbursements of the Construction Loan will be made by the Lender in
the manner provided in the Disbursing Agreement; provided, however,
that the disbursement of the proceeds of the Refunding Loan shall
not be subject to the Disbursing Agreement. Subject to Section
13(b) below and other than disbursements of the proceeds of the
Refunding Loan, all disbursements will be made by wire transfer of
such funds to the deposit account of the Disbursing Agent in the
amount of each Draw Request which is approved pursuant to the
Disbursing Agreement. All Construction Loan funds (other than the
proceeds of the Refunding Loan) will be considered to have been
advanced to and received by the Borrower upon, and interest on such
funds will be payable by the Borrower from and after, their deposit
in such deposit account. The proceeds of the Refunding Loan shall
be deposited in the account notified by the Borrower to the Lender.

          Section 3. Conditions to Effectiveness of this Amendment. This Amendment shall become
effective as of the date hereof upon the satisfaction of the conditions precedent that the
Lender shall have received, on or before the date hereof, executed counterparts of this Amendment,
duly executed by each of the parties hereto, and an executed Consent of Guarantor in the form
attached hereto as Exhibit A, duly executed by the Guarantor.

          Section 4. Representations and Warranties. The Borrower hereby represents to the
Lender that, after giving effect to this Amendment:

               (a) All of the representations and warranties of the Borrower contained in the Loan Agreement
and in each other Loan Document are true and correct in all material respects as though made on and
as of the date hereof.

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               (b) As the date hereof, no Event of Default has occurred and is continuing under the Loan
Agreement.

          Section 5. Miscellaneous.

               (a) Effect; Ratification. The amendments set forth herein are effective solely for
the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to
(i) be a consent to, or an acknowledgment of, any amendment, waiver or modification of any other
term or condition of the Supplement or (ii) prejudice any right or remedy which the Lender may now
have or may have in the future under or in connection with the Supplement, as amended hereby, or
any other instrument or agreement referred to therein. Each reference in the Supplement to “this
Supplement,” “this First Supplement,” “this Agreement,” “herein,” “hereof” and words of like import
and each reference in the Loan Agreement and the other Loan Documents to (i) the “Supplement” shall
include the Supplement, as amended hereby and (ii) the “First Supplement” shall mean the
Supplement, as amended hereby.

               (b) Loan Documents. This Amendment is a Loan Document executed pursuant to the Loan
Agreement and shall be construed, administered and applied in accordance with the terms and
provisions thereof.

               (c) Counterparts. This Amendment may be executed in any number of counterparts, each
such counterpart constituting an original and all of which when taken together shall constitute one
and the same instrument.

               (d) Severability. Any provision contained in this Amendment which is held to be
inoperative, unenforceable or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions of this Amendment
in that jurisdiction or the operation, enforceability or validity of such provision in any other
jurisdiction.

               (e) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF MINNESOTA.

               (f) WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENT TO WHICH IT IS A PARTY OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.

(Signature Page Follows)

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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their respective duly authorized officers as of the date first written above.

	 	 	 	 	 
	 	 	US BIO ALBERT CITY, LLC,
	 
	 	 	 	 
	 	 	as Borrower
	 
	 	 	 	 
	 

	 	By:	 	/s/ CHAD D. HATCH
	 

	 	 	 	 
	 

	 	Name:	 	Chad Hatch
	 

	 	Title:	 	Vice President
	 
	 	 	 	 
	 	 	AGSTAR FINANCIAL SERVICES, PCA,
	 
	 	 	 	 
	 	 	as Lender
	 
	 	 	 	 
	 

	 	By:	 	/s/ MARK D. SCHMIDT
	 

	 	 	 	 
	 

	 	Name:	 	Mark D. Schmidt
	 

	 	Title:	 	Vice President

 

 

EXHIBIT A

Consent of Guarantor

     The undersigned, US BioEnergy Corporation, hereby (i) consents to the modifications to (A) the
Master Loan Agreement dated as of November 15, 2005 pursuant to that certain Amendment No. 1 and
Waiver to Master Loan Agreement effective as of July 31, 2006 between US Bio Albert City, LLC (the
“Borrower”) and AgStar Financial Services, PCA (the “Lender”) and (B) the Amended
and Restated First Supplement dated as of January 24, 2006 pursuant to that certain Amendment No. 1
to Amended and Restated First Supplement to Master Loan Agreement effective as of July 31, 2006
between the Borrower and the Lender and (ii) acknowledges and agrees that the obligations of the
undersigned contained in that certain Continuing Guaranty made as of November 15, 2005 by the
undersigned for the benefit of the Lender are, and shall remain, in full force and effect.

	 	 	 	 	 
	 	 	US BIOENERGY CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/ CHAD HATCH
	 

	 	 	 	 
	 

	 	Name:	 	Chad Hatch
	 
	 	 	 	 
	 

	 	Title:	 	VP

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SECOND SUPPLEMENT

TO THE MASTER LOAN AGREEMENT

(REVOLVING LOAN)

THIS SECOND SUPPLEMENT TO THE MASTER LOAN AGREEMENT (this “Second Supplement”), dated as of
November 15, 2005, is between AGSTAR FINANCIAL SERVICES, PCA (the “Lender”) and US BIO ALBERT CITY,
LLC, an Iowa limited liability company (the “Borrower”), and supplements that certain Master Loan
Agreement, dated as of even date herewith, between the Lender and the Borrower (as the same may be
amended, modified, supplemented, extended or restated from time to time, the “MLA”).

1. Definitions. As used in this Supplement, the following terms shall have the following
meanings. Capitalized terms used and not otherwise defined in this Supplement shall have the
meanings attributed to such terms in the MLA. Terms not defined in either this Supplement or the
MLA shall have the meanings attributed to such terms in the Uniform Commercial code, as enacted in
the State of Minnesota and as amended from time to time.

     “Availability Date” shall have the meaning specified in Section 5 of this Supplement.

     “Eligible Accounts Receivable” means all unpaid Accounts, net of any credits, except
the following shall not in any event be deemed Eligible Accounts:

(a) That portion of Accounts unpaid 30 days or more after the invoice date:

(b) That portion of Accounts that is disputed or subject to a claim of offset or a
contra account;

(c) That portion of Accounts not yet earned by the final delivery of goods or
rendition of services, as applicable, by any Borrower to the customer;

(d) Accounts owed by any unit of government, whether foreign or domestic except
Incentive Payments will be considered a part of Eligible Accounts as defined in this
Agreement;

(e) Accounts owed by an account debtor located outside the United States;

(f) Accounts owed by an account debtor that is insolvent, the subject of bankruptcy
proceedings or has gone out of business;

(g) Accounts owed by a shareholder, Guarantor, Affiliate, officer or employee of any
Borrower;

(h) Accounts not subject to a duly perfected security interest in the Lender’s
favor or which are subject to any lien, security interest or claim in favor of any
Person other than the Lender, including, without limitation, any payment or
performance bond;

(i) That portion of Accounts that has been restructured, extended, amended or
modified;

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(j) That portion of Accounts that constituted advertising, finance charges,
service charges or sales or excise taxes; and

(k) Accounts, or portions thereof, otherwise deemed ineligible by the Lender, in
its sole discretion, exercised reasonably.

“Eligible Inventory” means all inventory held for ultimate sale or lease, or which
has been or will be supplied under contracts of service, or which are raw materials, work in
process, or materials used or consumed in the Borrower’s business and that has been
specifically identified and accepted by the Lender, excluding all of the following
inventory:

	 	(a)	 	Covered by documents of title, instruments, or chattel paper
when these documents, instruments and paper are not owned and held by the
Borrower or are subject to competing claims, liens or encumbrances.
	 
	 	(b)	 	Intended to be sold outside of the ordinary course of business.
	 
	 	(c)	 	Consigned, sold or leased to others or on consignment or lease
from others or subject to a bailment.
	 
	 	(d)	 	Subject to a competing claim, lien or encumbrance.
	 
	 	(e)	 	Paid for in advance with progress payments or any other sums to
the Borrower in anticipation of the sale and delivery of inventory.
	 
	 	(f)	 	Obsolete or unusable in the ordinary course of business.
	 
	 	(g)	 	Inventory of work in progress.
	 
	 	(h)	 	Inventory that the Lender, in its sole discretion, disqualifies
as Eligible Inventory.

“Borrowing Base” means, at any time, the lesser of: (a) $6,500,000.00; or (b)
commencing sixty days after start-up of operations, the sum of: (i) 75% of Borrower’s
Eligible Accounts Receivable; plus (ii) 75% of Borrower’s Eligible Inventory.

“Borrowing Base Certificate” means the certificate in the form of Exhibit A attached
hereto properly completed and duly executed by an authorized officer of the Borrower.

“Incentive Payments” means any and all federal or state governmental subsidies,
payments, transfers or other benefits, whether now or hereafter established, received by the
Borrower in any fiscal year aged less than 120 days.

“Maximum Rate” shall have the meaning specified in Section 8 of this Supplement.

“Monthly Payment Date” means the first (1st) day of each calendar month.

“Outstanding Credit” means, at any time of determination, the aggregate amount of
Advances then outstanding.

“Outstanding Revolving Advance” means the total Outstanding Credit under this
Supplement and the Revolving Note.

“Request for Advance” shall have the meaning specified in Section 6(a) of this
Supplement.

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“Revolving Advance” means an advance under this Supplement and the Revolving Note.

“Revolving Loan” shall have the meaning specified in Section 2 of this Supplement.

“Revolving Commitment” shall have the meaning specified in Section 2 of this
Supplement.

“Revolving Loan Maturity Date” shall have the meaning specified in Section 2 of this
Supplement.

“Revolving Loan Termination Date” shall have the meaning specified in
Section 2 of this Supplement.

“Unused Commitment Fee” shall have the meaning specified in Section 6(d) of this
Supplement.

     2. Revolving Loan Commitment. On the terms and conditions set forth in the MLA
and this Second Supplement, Lender agrees to make one or more advances (collectively, the
“Revolving Loan”) to the Borrower, during the period beginning on the Construction Loan Maturity
Date (as defined in Section 5 of this Second Supplement) and ending on the Business Day immediately
preceding the Revolving Loan Maturity Date (as hereinafter defined in this Section 2) (the
“Revolving Loan Termination Date”), in an aggregate principal amount outstanding at any one time
not to exceed $6,500,000.00 (the “Revolving Loan Commitment”) provided, however, that at no time
shall the Outstanding Revolving Advance exceed the Borrowing Base. The Revolving Loan Commitment
shall expire at 12:00 noon Central time on the first (1st) anniversary of the
Availability Date (the “Revolving Loan Maturity Date”). Subject to Section 7 of this Second
Supplement, under the Revolving Loan Commitment amounts borrowed and repaid or prepaid may be
reborrowed at any time prior to and including the Termination Date.

     3. Purpose. The purposes for which advances under the Loan may be used are for
general corporate and operating purposes of the Borrower and its subsidiaries, including closing
costs and fees associated with the Revolving Loan. The Borrower agrees that the proceeds of

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the Loan are to be used only for the purposes set forth in this Section 3.

     4. Repayment of the Revolving Loan. The Borrower will pay interest on the
Revolving Loan on the first (1st) day of each month, commencing on the first
(1st) Monthly Payment Date following the date on which the first Advance is made on the
Revolving Loan, and continuing on each Monthly Payment Date thereafter until the Revolving Loan
Maturity Date. On the Revolving Loan Maturity Date, the amount of the then unpaid principal
balance of the Revolving Loan and any and all other amounts due and owing hereunder or under any
other Loan Document relating to the Revolving Loan will be due and payable. If any Payment Date is
not a Business Day, then the principal installment then due shall be paid on the next Business Day
and shall continue to accrue interest until paid.

     5. Availability. Subject to the provisions of the MLA and this Second Supplement,
during the period commencing on the date on which all conditions precedent to the initial advance
under the Revolving Loan are satisfied (the “Availability Date”) and ending on the Termination
Date, advances under the Revolving Loan will be made as provided in this Second Supplement.

     6. Making the Advances. 

          (a) Revolving Advances. Each Revolving Advance shall be made, on notice from the
Borrower (a “Request for Advance”) to the Lender delivered before 12:00 Noon (Minneapolis,
Minnesota time) on a Business Day which is at least three (3) Business Days prior to the date of
such Revolving Advance specifying the amount of such Revolving Advance, provided that, no
Revolving Advance shall be made while an Event of Default exists or if the interest rate for such
LIBOR Rate Accounts would exceed the Maximum Rate. Any Request for Advance applicable to a
Revolving Advance received after 12:00 Noon (Minneapolis, Minnesota time) shall be deemed to have
been received and be effective on the next Business Day. The amount so requested from the Lender
shall, subject to the terms and conditions of this Second Supplement, be made available to the
Borrower by: (i) depositing the same, in same day funds, in an account of the Borrower; or (ii)
wire transferring such funds to a Person or Persons designated by the Borrower in writing.

          (b) Requests for Advances Irrevocable. Each Request for Advance shall be irrevocable
and binding on the Borrower and the Borrower shall indemnify the Lender against any loss or expense
it may incur as a result of any failure to borrow any Advance after a Request for Advance
(including any failure resulting from the failure to fulfill on or before the date specified for
such Advance the applicable conditions set forth in Article III of this Second Supplement),
including, without limitation, any loss (including loss of anticipated profits) or expense incurred
by reason of the liquidation or reemployment of deposits or other funds

4

 

acquired by the Lender to fund such Advance when such Advance, as a result of such failure, is not
made on such date.

          (c) Minimum Amounts. Each Revolving Advance shall be in a minimum amount equal to
$50,000.00.

          (d) Unused Commitment Fee. In addition to the underwriting and participation fees
payable on the Closing Date, Borrower agrees to pay to the Lender an Unused Commitment Fee on the
average daily unused portion of such Lender’s commitment under the Revolving Loan from the
Construction Loan Maturity Date until the Revolving Loan Maturity Date at the rate of 0.25% per
annum, payable in arrears in quarterly installments payable on the first (1st) day of
each third month after the Construction Loan Maturity Date.

          (e) Conditions Precedent to All Advances. The Lender’s obligation to make each
Advance under the Revolving Note shall be subject to the terms, conditions and covenants set forth
in the MLA and this Second Supplement, including, without limitation, the following further
conditions precedent:

               (i) Completion of Project. The Project shall have been completed per the Plans and
Specifications and a Completion Certificate shall have been obtained;

               (ii) Repayment of Construction Loan. All obligations of the Borrower’s for the
Construction Loan shall have been paid in full;

               (iii) Representations and Warranties. The representations and warranties set forth in
the MLA and this Second Supplement are true and correct in all material respects as of the date of
the request for any Advance, except as disclosed in writing to the Lender, to the same extent and
with the same effect as if made at and as of the date thereof except as disclosed in writing to the
Lender;

               (iv) No Defaults. The Borrower is not in default under the terms of the MLA, the
Related Documents or any other Material Contracts to which the Borrower is a party and which
relates to the construction of the Project or the operation of the Borrower’s business;

               (v) Government Action. No license, permit, permission or authority necessary for the
construction or operation of the Project has been revoked or challenged by or before any
Governmental Authority; and

               (vi) Marketing Agreements. The Borrower has executed marketing agreements for all
ethanol and DDGs to be produced at the Project and provided Lender with collateral assignments of
all such agreements in form and content which is satisfactory to Lender and its counsel and
acknowledged by the non-Borrower party to all such agreements.

     7. Letters of Credit.

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          (a) Commitment to Issue. The Borrower may request Revolving Advances by the Lender,
and the Lender, subject to the terms and conditions of this Second Supplement, may, in its sole
discretion, issue letters of credit for any Borrower’s account (such letters of credit, being
hereinafter referred to collectively as the “Letters of Credit”); provided, however, that:

               (i) the aggregate amount of outstanding Letter of Credit Liabilities shall not at any time
exceed the amount of $3,000,000.00;

               (ii) the sum of the outstanding Letters of Credit plus the Outstanding Revolving Advances
shall not at any time exceed the Borrowing Base.

          (b) Letter of Credit Request Procedure. The Borrower shall give the Lender
irrevocable prior notice (effective upon receipt) on or before 3:00 P.M. (Minneapolis, Minnesota
time) on the Business Day three Business Days prior to the date of the requested issuance of a
Letter of Credit specifying the requested amount, expiry date and issuance date of each Letter of
Credit to be issued and the nature of the transactions to be supported thereby. Any such notice
received after 3:00 P.M. (Minneapolis, Minnesota time) on a Business Day shall be deemed to have
been received and be effective on the next Business Day. Each Letter of Credit shall be in the
form of Exhibit B to this Supplement, have an expiration date that occurs on or before the
Revolving Loan Maturity Date, shall be payable in U.S. dollars, must be satisfactory in form and
substance to the Lender, and shall be issued pursuant to such documentation as the Lender may
require, including, without limitation, the Lender’s standard form letter of credit request and
reimbursement Second Supplement; provided that, in the event of any conflict between the terms of
such Second Supplement and the other Loan Documents, the terms of the other Loan Documents shall
control.

          (c) Letter of Credit Fees. The Borrower shall pay to the Lender for (i) all fees,
costs, and expenses of the Lender arising in connection with any Letter of Credit, including the
Lender’s customary fees for amendments, transfers, and drawings on Letters of Credit and (ii) on
the date of the issuance of the Letter of Credit, and at the anniversary date of issuance of such
Letter of Credit, an issuance fee equal to two and one-half (2.5%) percent, on an annualized basis,
of the maximum amount available to be drawn under the Letter of Credit.

          (d) Funding of Drawings. Upon receipt from the beneficiary of any Letter of Credit of
any demand for payment or other drawing under such Letter of Credit, the Issuer shall promptly
notify the Borrower as to the amount to be paid as a result of such demand or drawing and the
respective payment date. Any notice pursuant to the forgoing sentence shall specify the amount to
be paid as a result of such demand or drawing and the respective payment date.

          (e) Reimbursements. After receipt of the notice delivered pursuant to clause (d) of
this section with respect to a Letter of Credit, the Borrower shall be irrevocably and
unconditionally obligated to reimburse the Lender for any amounts paid by the Lender upon any
demand for payment or drawing under the applicable Letter of Credit, without presentment, demand,
protest, or other formalities of any kind other than the notice required by clause (d) of this
section. Such reimbursement shall occur no later than 3:00 P.M. (Minneapolis, Minnesota time) on
the date of payment under the applicable Letter of Credit if the notice under clause (d) of this
section is received by 2:00 P.M. (Minneapolis, Minnesota time) on such date or by

6

 

11:00 A.M. (Minneapolis, Minnesota time) on the next Business Day, if such notice is received after
2:00 P.M. (Minneapolis, Minnesota time). All payments on the Reimbursement Obligations (including
any interest earned thereon) shall be made to the Lender for the account of the Lender in U.S.
dollars and in immediately available funds, without set-off, deduction, or counterclaim.

          (f) Reimbursement Obligations Absolute. The Reimbursement Obligations of the Borrower
under this Second Supplement shall be absolute, unconditional, and irrevocable, and shall be
performed strictly in accordance with the terms of the Loan Documents under all circumstances
whatsoever and the Borrower hereby waives any defense to the payment of the Reimbursement
Obligations based on any circumstance whatsoever, including, without limitation, in any case, the
following circumstances: (i) any lack of validity or enforceability of any Letter of Credit or any
other Loan Document; (ii) any amendment or waiver of or any consent to departure from any Loan
Document; (iii) the existence of any claim, set-off, counterclaim, defense, or other rights which
any Borrower or any other Person may have at any time against any beneficiary of any Letter of
Credit, the Lender or any other Person, whether in connection with any Loan Document or any
unrelated transaction; (iv) any statement, draft, or other documentation presented under any Letter
of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever; (v) payment by the Lender
under any Letter of Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; or (vi) any other circumstance whatsoever, whether or not
similar to any of the foregoing; provided that Reimbursement Obligations with respect to a Letter
of Credit may be subject to avoidance by a Borrower if the Borrower proves in a final
non-appealable judgment that it was damaged and that such damage arose directly from the Lender’s
willful misconduct or gross negligence in determining whether the documentation presented under the
Letter of Credit in question complied with the terms thereof.

          (g) Issuer Responsibility. Borrower assumes all risks of the acts or omissions of any
beneficiary of any Letter of Credit with respect to its use of such Letter of Credit. Neither the
Lender, nor any of its respective officers or directors shall have any responsibility or liability
to the Borrower or any other Person for: (a) the failure of any draft to bear any reference or
adequate reference to any Letter of Credit, or the failure of any documents to accompany any draft
at negotiation, or the failure of any Person to surrender or to take up any Letter of Credit or to
send documents apart from drafts as required by the terms of any Letter of Credit, or the failure
of any Person to note the amount of any instrument on any Letter of Credit, each of which
requirements, if contained in any Letter of Credit itself, it is agreed may be waived by the
Lender; (b) errors, omissions, interruptions, or delays in transmission or delivery of any
messages; (c) the validity, sufficiency, or genuineness of any draft or other document, or any
endorsement(s) thereon, even if any such draft, document or endorsement should in fact prove to be
in any and all respects invalid, insufficient, fraudulent, or forged or any statement therein is
untrue or inaccurate in any respect; (d) the payment by the Lender to the beneficiary of any Letter
of Credit against presentation of any draft or other document that does not comply with the terms
of the Letter of Credit; or (e) any other circumstance whatsoever in making or failing to make any
payment under a Letter of Credit. The Lender may accept documents that appear on

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their face to be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.

     8. Interest Rate. Subject to the provisions of Sections 6 and 9 of this Second
Supplement, the Revolving Loan shall bear interest at a rate equal to the LIBOR Rate plus 325 basis
points. The computation of interest, amortization, maturity and other terms and conditions of the
Revolving Loan shall be as provided in the Revolving Note, provided, however, in no event shall the
applicable rate exceed the maximum nonusurious interest rate, if any, that at any time, or from
time to time, may be contracted for, taken, reserved, charged, or received under applicable state
or federal laws (the “Maximum Rate”).

     9. Default Interest. In addition to the rights and remedies set forth in the
MLA: (i) if the Borrower fails to make any payment to Lender when due (including, without
limitation, any purchase of equity of Lender when required), then at Lender’s option in each
instance, such obligation or payment shall bear interest from the date due to the date paid at 2%
per annum in excess of the rate of interest that would otherwise be applicable to such obligation
or payment; (ii) upon the occurrence and during the continuance of an Event of Default beyond any
applicable cure period, if any, at Lender’s option in each instance, the unpaid balances of the
Revolving Loan shall bear interest from the date of the Event of Default or such later date as
Lender shall elect at 2% per annum in excess of the rate(s) of interest that would otherwise be in
effect on the Revolving Loan under the terms of the Revolving Note; (iii) after the maturity of the
Revolving Loan, whether by reason of acceleration or otherwise, the unpaid principal balance of the
Revolving Loan (including without limitation, principal, interest, fees and expenses) shall
automatically bear interest at 2% per annum in excess of the rate of interest that would otherwise
be in effect on the Revolving Loan under the terms of the Revolving Note. Interest payable at the
Default Rate shall be payable from time to time on demand or, if not sooner demanded, on the last
day of each calendar month.

     10. Late Charge. If any payment of principal or interest due under this Supplement or
the Revolving Note is not paid within ten (10) days of the due date thereof, the Borrower shall, in
addition to such amount, a late charge equal to five percent (5%) of the amount of such payment.

     11. Changes in Law Rendering Certain LIBOR Rate Loans Unlawful. In the event that any
change in any applicable law (including the adoption of any new applicable law) or any change in
the interpretation of any applicable law by any judicial, governmental or other regulatory body
charged with the interpretation, implementation or administration thereof, should make it (or in
the good-faith judgment of the Lender should raise a substantial question as to whether it is)
unlawful for the Lender to make, maintain or fund LIBOR Rate Loans, then:

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(a) the Lender shall promptly notify each of the other parties hereto; and (b) the obligation of
the Lender to make LIBOR rate loans of such type shall, upon the effectiveness of such event, be
suspended for the duration of such unlawfulness. During the period of any suspension, Lender shall
make loans to Borrower that are deemed lawful and that as closely as possible reflect the terms of
the MLA.

     12. Payments and Computations.

          (a) Method of Payment. Except as otherwise expressly provided herein, all payments of
principal, interest, and other amounts to be made by the Borrower under the Loan Documents shall be
made to the Lender in U.S. dollars and in immediately available funds, without set-off, deduction,
or counterclaim, not later than 2:00 P.M. (Minneapolis, Minnesota time) on the date on which such
payment shall become due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day). The Borrower shall, at the time of making
each such payment, specify to the Lender the sums payable under the Loan Documents to which such
payment is to be applied and in the event that the Borrower fail to so specify or if an Event of
Default exists, the Lender may apply such payment and any proceeds of any Collateral to the Loan
Obligations in such order and manner as it may elect in its sole discretion, subject to Section
12(c).

          (b) Application of Funds. Apply all payments received by it to the Borrower’s
obligations to Lender in such order and manner as Lender may elect in its sole discretion;
provided that any payments received from any guarantor or from any disposition of any
collateral provided by such guarantor shall only be applied against obligations guaranteed by such
guarantor.

          (c) Payments on a Non-Business Day. Whenever any payment under any Loan Document
shall be stated to be due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be included in the
computation of the payment of interest and fees, as the case may be.

          (d) Proceeds of Collateral. All proceeds received by the Lender from the sale or
other liquidation of the Collateral when an Event of Default exists shall first be applied as
payment of the accrued and unpaid fees and expenses of the Lender hereunder and then to all other
unpaid or unreimbursed Loan Obligations (including reasonable attorneys’ fees and expenses) owing
to the Lender and then any remaining amount of such proceeds shall be applied to the unpaid amounts
of Loan Obligations, until all the Loan Obligations have been paid and satisfied in full or cash
collateralized. After all the Loan Obligations (including without limitation, all contingent Loan
Obligations) have been paid and satisfied in full, all Commitments terminated and all other
obligations of the Lender to the Borrower otherwise satisfied, any proceeds of Collateral shall be
delivered to the Person entitled thereto as directed by the Borrower or as otherwise determined by
applicable law or applicable court order.

          (e) Computations. Except as expressly provided otherwise herein, all computations of
interest and fees shall be made on the basis of actual number of days lapsed over

9

 

a year of 365 or 366 days, as appropriate. Interest shall accrue from and include the date of
borrowing, but exclude the date of payment.

     13. Maximum Amount Limitation. Anything in this MLA, this Second Supplement, or the
other Loan Documents to the contrary notwithstanding, Borrower shall not be required to pay
unearned interest on the Revolving Note or any of the Loan Obligations, or ever be required to pay
interest on the Revolving Note or any of the Loan Obligations at a rate in excess of the Maximum
Rate, if any. If the effective rate of interest which would otherwise be payable under the MLA,
this Supplement, the Revolving Note, or any of the other Loan Documents would exceed the Maximum
Rate, if any, then the rate of interest which would otherwise be contracted for, charged, or
received under the MLA, this Supplement, the Revolving Note, or any of the other Loan Documents
shall be reduced to the Maximum Rate, if any. If any unearned interest or discount or property
that is deemed to constitute interest (including, without limitation, to the extent that any of the
fees payable by Borrower for the Loan Obligations to the Lender under the MLA, this Supplement, the
Revolving Note, or any of the other Loan Documents are deemed to constitute interest) is contracted
for, charged, or received in excess of the Maximum Rate, if any, then such interest in excess of
the Maximum Rate shall be deemed a mistake and canceled, shall not be collected or collectible, and
if paid nonetheless, shall, at the option of the holder of the Revolving Note, be either refunded
to the Borrower, or credited on the principal of the Revolving Note. It is further agreed that,
without limitation of the foregoing and to the extent permitted by applicable law, all calculations
of the rate of interest or discount contracted for, charged or received by the Lender under the
Revolving Note, or under any of the Loan Documents, that are made for the purpose of determining
whether such rate exceeds the Maximum Rate applicable to the Lender, if any, shall be made, to the
extent permitted by applicable laws (now or hereafter enacted), by amortizing, prorating and
spreading during the period of the full terms of the Advances evidenced by the Revolving Note, and
any renewals thereof all interest at any time contracted for, charged or received by Lender in
connection therewith. This section shall control every other provision of all agreements among the
parties to the MLA pertaining to the transactions contemplated by or contained in the Loan
Documents, and the terms of this section shall be deemed to be incorporated in every Loan Document
and communication related thereto.

     14. Lender Records. All advances and all payments or prepayments made thereunder on
account of principal or interest may be evidenced by the Lender in accordance with its usual
practice in an account or accounts evidencing such advances and all payments or prepayments
thereunder from time to time and the amounts of principal and interest payable and paid from time
to time thereunder; in any legal action or proceeding in respect of the Notes, the entries made in
such account or accounts shall be prima facie evidence of the existence and amounts
of all advances and all payments or prepayments made thereunder on account of principal or
interest. Lender shall provide monthly statements of such entries to Borrower for the purpose of
confirming the accuracy of such entries.

     15. Mandatory Prepayments or Collateralization. The Borrowers shall, within five (5)
days following the earlier of the delivery of each Borrowing Base Certificate hereof or the day
upon which such Borrowing Base Certificate was due, either (i) prepay the Advances in the amount,
if any, by which the Outstanding Credit on the date of prepayment under this Section 15

10

 

exceeds the Borrowing Base at such time, together with accrued interest to the date of such
prepayment on the amount prepaid, or (ii) pledge and assign to the Lender additional collateral
acceptable to the Lender, in the Lender’s sole discretion, and deliver all documentation that the
Lender, in its sole discretion, may require in connection with such pledge and assignment and the
perfection of a first-priority security interest in such additional collateral, so that the
Borrowing Base plus the value assigned by the Lender, in its sole discretion, to such additional
collateral equals or exceeds the Outstanding Credit.

     16. Loan Payments. During the continuance of an Event of Default, the Lender may
deduct any obligations due or any other amounts due and payable by the Borrower under the Loan
Documents from any accounts maintained with the Lender.

     17. Reporting Requirements. In addition to the reporting requirements under Section
5.01(c) in the MLA, the Borrower will furnish to the Lender as soon as available and in any event
within 30 days after the end of each month (or at such other times or with such greater frequency
as is requested by the Lender), a duly completed Borrowing Base Certificate, setting forth the
Borrowing Base as of the last day of such month calculated based upon collateral value criteria and
advance rates which do not exceed those set forth in the Borrowing Base Certificate, and including
such other information, representation and warranties contemplated therein, certified by the
appropriate authorized officer of the Borrower.

     18. Compensation. Upon the request of the Lender, the Borrower shall pay to the
Lender such amount or amounts as shall be sufficient (in the reasonable opinion of the Lender) to
compensate it for any loss, cost, or expense (excluding loss of anticipated profits incurred by it)
as a result of: (i) any payment, prepayment, or conversion of a LIBOR rate loan for any reason on a
date other than the last day of the Interest Period for such Loan; or (ii) any failure by the
Borrower for any reason (including, without limitation, the failure of any condition precedent
specified in the MLA or this Supplement to be satisfied) to borrow, extend, or prepay a LIBOR rate
loan on the date for such borrowing, extension, or prepayment specified in the relevant notice of
borrowing, extension or prepayment under this Agreement.

     Such indemnification may include any amount equal to the excess, if any, of: (a) the amount
of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or
extended, for the period from the date of such prepayment or of such failure to borrower, convert
or extend to the last day of the applicable Interest Period (or in the case of a failure to borrow,
convert or extend, the Interest Period that would have commenced on the date of such failure) in
each case at the applicable rate of interest for such loan as provided for herein; over (b) the
amount of interest (as reasonably determined by the Lender) which would have accrued to the Lender
on such amount by placing such amount on deposit for a comparable period with leading banks in the
interbank LIBOR market. The covenants of the Borrower set forth in this section shall survive the
repayment of the Revolving Loan and other obligations under the Loan Documents hereunder.

     19. Security. The Borrower’s obligations hereunder and, to the extent related
thereto, the MLA, shall be secured as provided in the MLA.

11

 

IN WITNESS WHEREOF, the parties have caused this Second Supplement to the Master Loan Agreement to
be executed by their duly authorized officers as of the date shown above.

	 	 	 	 	 
	 	 	US BIO ALBERT CITY, LLC

an Iowa limited liability company
	 
	 	 	 	 
	 

	 	By:	 	/s/ CHAD D. HATCH
	 

	 	 	 	 
	 

	 	Name:
	 	Chad D. Hatch
	 

	 	Title:
	 	Vice President and Treasurer
	 
	 	 	 	 
	 	 	AGSTAR FINANCIAL SERVICES, PCA

an United States corporation
	 
	 	 	 	 
	 

	 	By:	 	/s/ MARK SCHMIDT
	 

	 	 	 	 
	 

	 	 	 	Mark Schmidt
	 

	 	 	 	Its Vice President

12

 

EXHIBIT A

BORROWING BASE CERTIFICATE

Detailed Calculation

Date:                      ____,______

	 	 	 	 	 	 	 	 	 	 	 
	1
	 	Accounts Receivable:	 	 	 	 	 	 	 	 
	 
	 	     ___________________ (ethanol)	 	$	 	 	 	 	 	 
	 
	 	     ___________________ (DDGs)	 	$	 	 	 	 	 	 
	 
	 	     Other	 	$	 	 	 	 	 	 
	 
	 	     Other	 	$	 	 	 	 	 	 
	 
	 	     Total	 	$	 	 	 	 	 	 
	 
	 	Deduct Ineligible Accounts	 	$	 	 	 	 	 	 
	 
	 	     (31 days or more from invoice date)	 	 	 	 	 	 	 	 
	 
	 	Deduct Ineligible Accounts	 	$	 	 	 	 	 	 
	 
	 	     (as determined by Bank)	 	 	 	 	 	 	 	 
	 
	 	Eligible Accounts Receivable	 	$	 	 	 	 	 	 
	 
	 	Multiply by Borrowing Base Factor	 	 	75.00	%	 	 	 	 
	 
	 	Accounts Receivable Loan Availability	 	 	 	 	 	$	 	 
	 
	2
	 	Corn and Distiller’s Dried Grain (current value)	 	 	 	 	 	 	 	 
	 
	 	Ending Corn Inventory	 	$	 	 	 	 	 	 
	 
	 	Ending DDGs Inventory	 	$	 	 	 	 	 	 
	 
	 	Total Inventory	 	 	 	 	 	 	 	 
	 
	 	Multiply by Borrowing Base Factor	 	 	75.00	%	 	 	 	 
	 
	 	Corn Inventory Loan Availability	 	 	 	 	 	$	 	 
	 
	3
	 	Ethanol Inventories (lower of cost or market)	 	 	 	 	 	 	 	 
	 
	 	Ending Fuel Ethanol Inventory	 	$	 	 	 	 	 	 
	 
	 	Ending Denaturant Inventory	 	$	 	 	 	 	 	 
	 
	 	Ending AA Enzyme Inventory	 	$	 	 	 	 	 	 
	 
	 	Ending GA Enzyme Inventory	 	$	 	 	 	 	 	 
	 
	 	Other Inventory	 	 	 	 	 	 	 	 
	 
	 	Total Inventory	 	$	 	 	 	 	 	 
	 
	 	Multiply by Borrowing Base Factor	 	 	75.00	%	 	 	 	 
	 
	 	Inventory Loan Availability	 	 	 	 	 	$	 	 
	 
	4
	 	Total Borrowing Base (Totals from #1, #2, & #3)	 	 	 	 	 	$	 	 
	 
	5
	 	Outstanding Loan Balance (as of month end)	 	$	 	 	 	 	 	 
	 
	6
	 	Margin (Line 4 minus Line 5)	 	 	 	 	 	$	 	 

13

 

EXHIBIT B

FORM OF LETTER OF CREDIT

IRREVOCABLE STANDBY LETTER OF CREDIT NO. ________

(Date)

                    

                    

                    

(Beneficiary)

Ladies and Gentlemen:

At the request of US Bio Albert City, LLC,                     , Albert City, IA                     , we
hereby establish our Irrevocable Standby Letter of Credit in your favor in the amount of $ ___
U.S. dollars.

We undertake that drawings under this Letter of Credit will be honored upon presentation of your
draft drawn on AgStar Financial Services, PCA, at 1921 Premier Drive, Mankato, Minnesota 56002-4249
and the original of this Letter of Credit prior to the expiration date set forth herein. All
drafts submitted to Agstar Financial Services, PCA must indicate the number and date of this
credit.

This Letter of Credit expires on                     , but will automatically renew on each anniversary
date of                      for an additional one (1) year if you have not received by registered mail
notification of our intention not to renew sixty (60) days prior to the original expiration date
and each subsequent expiration date. However, in no event will this Letter of Credit be extended
beyond                    . Unless AgStar is notified of an address to the contrary the notification
will be sent to                                                             .

Except as expressly stated herein, this undertaking is not subject to any conditions or
qualification. The obligation of AgStar Financial Services, PCA, under this Letter of Credit shall
be the individual obligation of AgStar Financial Services, PCA, and in no way contingent upon
reimbursement with respect thereto.

This credit is subject to the Uniform Customs and Practice for Documentary Credits, 1993 Version,
of the International Chamber of Commerce or any successor publication.

Sincerely,

AGSTAR FINANCIAL SERVICES, PCA

Mark Schmidt

14

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