Document:

Unassociated Document

     

    January
      2, 2008

    

    East
      Coast Ethanol, LLC

    Attention:
      Dr. Randy Hudson

    528
      Vo-Tech Drive

    PO
      Box
      527

    Ocilla,
      GA 31774

    

    Re: East
      Coast Ethanol, LLC Campbellton, Florida Ethanol Project

    

    Dear
      Dr.
      Hudson:

    

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

    Upon
      execution by both Parties, this letter shall supercede and replace in all
      respects any and all prior letters of intent entered into by Fagen with, or
      for
      the benefit of, Owner. 

    

    The
      Parties agree to effect the Transaction subject only to the execution and
      delivery (in each case in a form satisfactory to Fagen) of a definitive
      Design-Build Agreement and other ancillary instruments and agreements (the
      “Transaction
      Documents”).
      The
      Parties agree that the Transaction Documents must be executed and delivered
      by
      the parties thereto no later than February 1, 2009 (the “Closing
      Date”);
      or
      this Letter of Intent will terminate in accordance with Paragraph 11(a)
      hereof.

    

    
      	
              1.

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

            

    

    

    
      	 	
              (a)

            	
              Fagen
                agrees to provide Owner with those services as described in this
                Letter of
                Intent which are necessary for Owner to develop a detailed description
                of
                a one hundred ten (110) million gallons per year (“MGY”)
                dry grind ethanol production facility located near Campbellton, Florida
                (the “Plant”)
                and to establish a price for which Fagen would provide design,
                engineering, procurement of equipment and construction services for
                the
                Plant. The description of the Plant will be sufficiently detailed
                to
                permit an analysis of the Owner’s lump-sum cost to develop the Plant and
                to develop an economic pro forma sufficient to determine if the Plant
                can
                be financed. 

            

    

    

    
      	 	
              (b)

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        2
of
        19

       

    

    
      	 	
              (c)

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

            

    

    

    
      	 	
              (d)

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

            

    

    
      	 	 	 

    

    
      	 	
              (e)

            	
              Owner
                shall offer Fagen the right to invest in the project. Unless otherwise
                specifically agreed between Fagen and Owner, such investment shall
                be
                offered on the same terms and conditions as all other
                investors.

            

    

    

    
      	 	
              (f)

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

            

    

    

    
      	
              2.

            	
              Contract
                Price.
                Subject to the terms and conditions set forth herein, Owner shall
                pay
                Fagen One Hundred Forty-six Million Two Hundred Thousand Dollars
                ($146,200,000) (the “Contract
                Price”)
                as full consideration to Fagen for complete performance of the services
                described in the Design-Build Agreement and all costs incurred in
                connection therewith. The Contract Price is based upon Fagen’s standard
                plant design, attached hereto as Exhibit A, and shall be subject
                to
                adjustments to reflect any deviations from standard design, either
                as
                requested by Owner or resulting from seismic considerations at the
                location of the Plant; provided, however, that all deviations from
                Fagen’s
                standard design must be submitted to Fagen by Owner no later than
                the
                earlier of: (a) the date upon which the Phase I engineering is scheduled
                to be delivered to Owner pursuant to the Phase I and Phase II Engineering
                Services Agreement (as such term is defined herein); or (b) the date
                upon
                which the Design-Build Agreement is executed. The Contract Price
                shall be
                subject to the following:

            

    

    

    
      	 	
              (a)

            	
              The
                Contract Price shall not include any costs related to union labor
                or
                prevailing wage requirements. If any action by Owner, a change in
                applicable law, or a governmental authority (as those terms are defined
                in
                the Design-Build Agreement) acting pursuant to a change in applicable
                law
                or local or regional labor considerations or availability, shall
                require
                Fagen, in its reasonable judgment, to employ union labor or compensate
                labor at prevailing wages, the Contract Price shall be adjusted upwards
                to
                include any increased costs, of any kind or nature, associated with
                such
                labor or wages including but not limited to site security and personnel
                costs. Such adjustment shall include, but not be limited to, increased
                labor, subcontractor, and material and equipment costs resulting
                from any
                union or prevailing wage requirement; provided, however, that if
                an option
                is made available to either employ union labor, or to compensate
                labor at
                prevailing wages, such option shall be at Fagen’s sole discretion and that
                if such option is executed by Owner without Fagen’s agreement, Fagen shall
                have the right to terminate this Letter of Intent or the Design-Build
                Agreement, as applicable, and receive compensation pursuant to Paragraph
                4(c) hereof or the terms of the Design-Build Agreement, whichever
                is
                applicable.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page 3
        of
        19

       

    

    
      	 	
              (b)

            	
              If
                Notice to Proceed is given on or after February 15, 2009 and the
                Construction Cost Index published by Engineering News-Record Magazine
                (“CCI”)
                for the month in which such Notice to Proceed is given to Fagen is
                greater
                than the February 2009 CCI, then the Contract Price shall be increased
                by
                a percentage amount equal to the percentage increase in the
                CCI.

            

    

    

    
      	 	
              (c)

            	
              If
                Notice to Proceed is given on or after February 15, 2009, then due
                to
                rapidly accelerating costs of certain specialty materials required
                for
                Plant Construction, in addition to any adjustment provided for in
                Paragraph 2(b) hereof, Fagen shall also add a surcharge to the Contract
                Price of one half of one percent (0.50%) for each calendar month
                that has
                passed between February 2009 and the month in which a valid Notice
                to
                Proceed is given to Fagen. By way of example, if a valid Notice to
                Proceed
                is given on April 7, 2009 and the CCI has increased one percent (1%)
                over
                such period of time, the total adjustment to the Contract Price shall
                be
                one percent (1%) in accordance with Paragraph 2(b) plus one half
                of one
                percent (0.50%) for each of the two months from February 2009 to
                the
                delivery of a valid Notice to Proceed in accordance with this paragraph,
                for a total adjustment of two percent
                (2%).

            

    

    

    
      	
              3.

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

            

    

    

    
      	 	
              (a)

            	
              Fagen
                will have no responsibility for and will not perform any site preparation
                work. Owner’s site responsibilities, in each instance in accordance with
                applicable specifications provided by Fagen, will include, but will
                not be
                limited to:

            

    

     

    
      
        	
                i.

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

              
	 	 
	
                ii.

              	
                site
                  grading including soil stabilization and the costs connected
                  therewith;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page 4
          of
          19

         

      

      
        	
                iii.

              	
                final
                  grading, seeding, and mulching;

              
	 	 
	
                iv.

              	
                site
                  security, including any site fencing;

              
	 	 
	
                v.

              	
                procuring
                  boundary and topographic surveys;

              
	 	 
	
                vi.

              	
                procuring
                  soil borings and geotechnical reports;

              
	 	 
	
                vii.

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

              
	 	 
	
                viii.

              	
                obtaining
                  storm water runoff permit and erosion control/land disturbance
                  permit;

              
	 	 
	
                ix.

              	
                obtaining
                  any necessary pollutant elimination discharge permit;

              
	 	 
	
                x.

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

              
	 	 
	
                xi.

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

              
	 	 
	
                xii.

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

              
	 	 
	
                xiii.

              	
                paying
                  for a water pre-treatment system, including any building or structure
                  required to house such system and other equipment, the cost of
                  which is
                  not included in the Contract Price, which shall be provided by
                  a vendor
                  selected by Fagen and designed and constructed by Fagen pursuant
                  to a
                  separate side-letter agreement executed by Owner and Fagen at Fagen’s
                  standard time plus material rates during the relevant time period
                  and at
                  the relevant locale (the “Water Pre-Treatment System Agreement”), and
                  maintaining and using such system, including the use of all chemicals
                  specified for the operation of such water pre-treatment system,
                  for the
                  entirety of the warranty period, it being agreed that failure by
                  Owner to
                  maintain and properly use the water pre-treatment system for the
                  duration
                  of the warranty period shall void any and all warranties affected
                  by such
                  failure.

              
	 	 
	
                xiv.

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

              
	 	 
	
                xv.

              	
                providing
                  and maintain required ditches and permanent roads;

              
	
                xvi.

              	
                constructing,
                  furnishing, and equipping the administration building;

              
	 	 
	
                xvii.

              	
                providing
                  maintenance and power equipment and spare parts;

              
	
                xviii.

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

              
	 	 
	
                xix.

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

              
	 	 
	
                xx.

              	
                paying
                  for the required fire protection system for the
                  Plant,

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        5of
        19

       

    

    
      	 	
              (b)

            	
              Owner
                will enter into a Phase I and Phase II Engineering Services Agreement
                with
                Fagen Engineering, LLC on a form acceptable to both parties but which
                shall be based on Fagen Engineering, LLC’s standard form (“Phase
                I and Phase II Engineering Services Agreement”).
                The Phase I and Phase II Engineering Services Agreement will provide
                for
                commencement of work on the Phase I and Phase II engineering for
                the
                project as set forth therein. The Phase I engineering shall consist
                of
                engineering and design of the Plant site and shall include: property
                layout; grading, drainage and erosion control plan drawings; roadway
                alignment drawings; culvert cross sections and details; and seeding
                and
                landscaping, if required. The Phase II engineering shall consist
                of
                engineering and design of site work and utilities for the Plant,
                all
                within the property line of the Plant, including: property layout;
                site
                grading and drainage drawings; roadway alignment; all utility layout
                including fire loop, potable water, well water if applicable, sanitary
                sewer, utility water blowdown, and natural gas; geometric layout;
                site
                utility piping tables; tank farm layout; tank farm details; sections
                and
                details drawing, if required, and miscellaneous details drawing,
                if
                required. Owner will pay Fagen Engineering, LLC One Hundred Eighty-five
                Thousand Dollars ($185,000) for such engineering services pursuant
                to the
                terms of that agreement, the full amount of which, upon payment in
                full,
                shall be included in and credited to the Contract Price. Notwithstanding
                the foregoing sentence, if a Notice to Proceed is not issued pursuant
                to
                the terms of the Design-Build Agreement, or Financial Closing is
                not
                obtained, then Fagen Engineering, LLC shall keep the full amount
                paid
                under the Phase I and Phase II Engineering Services Agreement as
                compensation for the services provided
                thereunder.

            

    

    

    
      	 	
              (c)

            	
              Fagen
                will provide reasonable assistance to Owner in obtaining Owner’s permits,
                approvals and licenses. Notwithstanding the foregoing, Owner shall
                hold
                harmless Fagen, its officers, directors, employees, and agents, for
                Owner's failure to comply with applicable laws in obtaining or maintaining
                the required permits, except to the extent caused by the gross negligence,
                misrepresentations, fraud, or willful misconduct of Fagen or its
                officers,
                directors, employees, and agents. The denial or revocation of any
                Owner-obtained permit as a result of Owner's failure to comply with
                applicable laws shall entitle Fagen to an extension of contract times
                and
                an adjustment of Contract Price to the extent affected by such denial
                or
                revocation and to any and all other remedies available pursuant to
                the
                Design-Build Agreement and applicable law except to the extent caused
                by
                the gross negligence, misrepresentations, fraud, or willful misconduct
                of
                Fagen or its officers, directors, employees, and
                agents.

            

    

    

    
      	 	
              (d)

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        6
of
        19

       

    

    
      	 	
              (e)

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

            

    

    

    
      	 	
              (f)

            	
              Fagen
                may subcontract portions of the
                work.

            

    

    

    
      	 	
              (g)

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

            

    

    

    
      	 	
              (h)

            	
              Owner
                must obtain Financial Closing prior to the issuance of a Notice to
                Proceed
                Financial Closing shall be deemed occurred when the loan documents
                for the
                construction financing have been executed and Owner is not in default
                under the terms of such loan
                documents.

            

    

    

    
      	 	
              (i)

            	
              Owner
                will pay, at Fagen’s standard time plus material rates during the relevant
                time period and at the relevant locale, all reasonable costs incurred
                by
                Fagen for frost removal so that winter construction can proceed.
                Such
                costs will be in addition to, and not included in, the Contract
                Price.

            

    

    

    
      	 	
              (j)

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

            

    

    

    
      	 	
              (k)

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

            

    

    

    
      	 	
              (l)

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page 7
        of
        19

       

    

    
      	 	
              (m)

            	
              Work
                will commence following receipt of Owner’s written valid notice to proceed
                (“Notice
                to Proceed”).
                At least twenty (20) days, but no more than thirty (30) days prior
                to
                Owner’s anticipated delivery of Notice to Proceed, Owner must deliver
                notice to Fagen specifying the anticipated delivery date for Notice
                to
                Proceed (“Pre-NTP Notice”). The Notice to Proceed cannot be given until
                (1) Owner has title to the real estate on which the project will
                be
                constructed; (2) the site work required of Owner is completed; (3)
                Owner
                has executed the Water Pre-Treatment System Agreement and the Fire
                Protection System Agreement; (4) the air permit(s) and/or other applicable
                local, state or federal permits necessary so that construction can
                begin
                have been obtained; (5) Owner has obtained Financial Closing and
                delivered
                a certificate of financial closing executed by Owner and Lenders
                in a form
                acceptable to Fagen; (6) if applicable, Owner has executed a sales
                tax
                exemption certificate and provided the same to Fagen; (7) Owner has
                provided the name of its property/all-risk insurance carrier and
                the
                specific requirements for fire protection; (8) Owner has provided
                insurance certificates or copies of insurance policies demonstrating
                that
                Owner has obtained the insurance policies required pursuant to the
                Design-Build Agreement and naming additional insureds and protecting
                other
                interests as prescribed therein, and (9) Fagen
                has provided Owner written notification of its acceptance of the
                Notice to
                Proceed, provided that Fagen shall not be required to accept the
                Notice to
                Proceed earlier than twenty (20) days after receipt of the Pre-NTP
                Notice.
                Owner must deliver the Pre-NTP Notice, complete the prerequisites
                to the
                issuance of a valid Notice to Proceed, as listed in items number
                (1)
                through (8) of this Paragraph, and submitted a Notice to Proceed,
                to Fagen
                for Fagen’s acceptance by June 2009; otherwise, this LOI and Design-Build
                Agreement may be terminated, at Fagen’s sole option,
                thus releasing Fagen of all obligations. In the event that Owner
                has not
                delivered a valid Notice to Proceed to Fagen by December 31, 2009,
                the
                Contract Price may, at Fagen’s sole discretion, and if the LOI and
                Design-Build Agreement have not already been terminated, be adjusted
                to
                reflect Fagen’s then current (December 2009) Contract Price for a 110 MGY
                dry grind ethanol production facility (with a corresponding revised
                December 2009 CCI benchmark). Within ten (10) business days of receipt
                by
                Design-Builder of the notice to proceed, Design-Builder shall deliver
                to
                Owner notice of either acceptance or denial of notice to proceed.
                If
                accepted by Design-Builder, the Notice to Proceed shall be deemed
                effective on the date on which it was received by
                Design-Builder.

            

    

    

    
      	 	
              (n)

            	
              “Substantial
                Completion”
                will be the date on which the Plant construction has been completed
                to a
                point that the Plant is ready to grind the first batch of corn for
                producing ethanol and begin operation for its intended use as a one
                hundred ten (110) MGY dry grind ethanol production facility. No production
                capacity is guaranteed on the Substantial Completion date, but the
                Plant
                is largely completed as of that date.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
         

        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page 8
          of
          19

         

      

    

    
      	 	
              (o)

            	
              Substantial
                Completion will occur within Six Hundred and Thirty-Five (635) days
                after
                the date of the Notice to Proceed; provided, however, that, in addition
                to
                other adjustments to this date as may be available pursuant to the
                Design-Build Agreement, Design-Builder shall be entitled to a day-for-day
                extension of time for attaining Substantial Completion for each day
                in
                excess of thirty (30) days that the Pre-NTP Notice was delivered
                prior to
                Owner’s delivery of a valid Notice to
                Proceed.

            

    

    

    
      	 	
              (p)

            	
              Fagen
                will be entitled to an early completion bonus for each day that
                Substantial Completion occurs in advance of the scheduled Substantial
                Completion date (“Early
                Completion Bonus”).
                Early Completion Bonus shall accrue at a rate of Twenty Thousand
                Dollars
                ($20,000) per day. The Early Completion Bonus shall be capped and
                shall
                not exceed One Million Dollars ($1,000,000). The Early Completion
                Bonus is
                earned for achieving Substantial Completion early, but is not due
                until
                the final payment.

            

    

    

    
      	 	
              (q)

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

            

    

    

    
      	 	
              (r)

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

            

    

    

    
      	 	
              (s)

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

            

    

    

    
      	 	
              (t)

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

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
         

        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page 9
          of
          19

         

      

    

    
      	 	
              (u)

            	
              The
                aggregate liability of Fagen, its Subcontractors, vendors, suppliers,
                agents and employees, to Owner (or any successor thereto or assignee
                thereof) for any and all claims and/or liabilities arising out of
                or
                relating in any manner to the work or to Fagen’s performance or
                non-performance of its obligations under the Design-Build Agreement,
                whether based on contract, tort (including negligence), strict liability,
                or otherwise, shall not exceed in the aggregate, the Contract Price
                and
                shall be reduced, upon the issuance of each Application for Payment,
                by
                seventy-five percent (75%) of the total value of such Application
                for
                Payment; provided, however, that upon the earlier of Substantial
                Completion or such point in time that requests for payment pursuant
                to the
                Design-Build Agreement have been made for ninety percent (90%) of
                the
                Contract Price, Fagen's aggregate liability shall be limited to the
                greater of (1) Ten Percent (10%) of the Contract Price or (2) the
                amount
                of insurance coverage available to respond to the claim or liability
                under
                any policy of insurance provided by Fagen under the Design-Build
                Agreement.

            

    

    

    
      	 	
              (v)

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

            

    

    

    
      	 	
              (w)

            	
              Owner
                will pay Fagen a mobilization fee in the amount of Twenty Million
                Dollars
                ($20,000,000) as soon as possible following the execution of the
                Design-Build Agreement, and at the latest, at the earlier to occur
                of
                financial closing or the issuance of a Notice to Proceed. Such
                mobilization fee shall be applied against the Contract
                Price.

            

    

    

    
      	 	
              (x)

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

            

    

    

    
      	 	
              i.

            	
              On
                or before the twenty-fifth (25th) day of each month following the
                acceptance of Notice to Proceed Fagen will submit to Owner a request
                for
                payment (an “Application
                for Payment”).
                Along with each Application for Payment, except with respect to the
                first
                Application for Payment, Fagen will submit to Owner, via hardcopy
                or by
                electronic means including facsimile or portable document format,
                signed
                lien waivers for the work included in the Application for Payment
                submitted for the immediately preceding pay period and for which
                payment
                has been received. 

            

    

    
    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page 10
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                  ii.

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

                
	
                   

                	 
	
                  iii.

                	
                  The
                    Application for Payment may request payment for (i) completed
                    work; (ii)
                    prepayments for materials or equipment for the project when prepayment
                    is
                    required by the manufacturer or supplier of such materials or
                    equipment;
                    or (iii) equipment and materials not yet incorporated into the
                    project
                    provided that (x) the materials and equipment are suitably stored
                    at the
                    site or elsewhere, (y) the equipment and materials are protected
                    by
                    suitable insurance, and (z) upon payment, Owner will receive
                    title to such
                    equipment and materials.

                
	
                   

                	 
	
                  iv.

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

                
	
                   

                	 
	
                  v.

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

                
	
                   

                	 
	
                  vi.
                    

                	
                  Retainage
                    on progress payments made pursuant to the Design-Build Agreement
                    will be
                    capped at five percent (5%) of the total price. Owner will retain
                    ten
                    percent (10%) of each payment up to a maximum of five percent
                    (5%) of the
                    total final Contract Price, as adjusted pursuant to any increased
                    based on
                    the CCI pursuant to Paragraph 2(b) herein as well as the monthly
                    percentage increases pursuant to Paragraph 2(c) herein. Once
                    five percent
                    (5%) of the total price has been retained, Owner will not retain
                    any
                    additional amounts from subsequent payments. Owner will release
                    retainage,
                    less the amount equal to the value of subcontractor lien waivers
                    not yet
                    obtained, upon completion of the Performance Tests. The release
                    of any
                    retainage by Owner shall be reduced by an amount equal to one
                    hundred
                    fifty percent (150%) of any amount required to finish any incomplete
                    items
                    of work.

                
	 	 
	
                  vii.

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

                

        

      

    

    
    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

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        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page 11
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                vii.

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

              

      

    

     

     

    
      	 	
              (y)

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

            

    

    

    
      	 	
              (z)

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

            

    

    

    
      	 	
              (aa)

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

            

    

    

    
      	 	
              (bb)

            	
              If
                Fagen is delayed at any time in the commencement or progress of the
                work
                due to a delay in the delivery of, or unavailability of, essential
                materials or labor to the project as a result of a significant
                industry-wide economic fluctuation or disruption beyond the control
                of and
                without the fault of Fagen or its subcontractors which is experienced
                or
                expected to be experienced by certain markets providing essential
                materials, equipment or labor to the project during the performance
                of the
                work and such economic fluctuation or disruption adversely impacts
                the
                price, availability, and delivery timeframes of essential materials
                and
                equipment (such event an “Industry-Wide
                Disruption”),
                Fagen shall be entitled to an equitable extension of the Contract
                Time on
                a day-for-day basis equal to such delay and an equitable adjustment
                to the
                Contract Price. The Owner and Fagen shall undertake reasonable steps
                to
                mitigate the effect of such delays. Notwithstanding any other provision
                to
                the contrary, Fagen shall not be liable to the Owner for any expenses,
                losses or damages arising from a delay, or unavailability of, essential
                materials or labor to the project as a result of an Industry-Wide
                Disruption.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

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        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page 12
        of
        19

       

    

    
      	
              4.

            	
              Exclusivity,
                No Solicitation or Negotiations.
                

            

    

    

    
      	 	
              (a)

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

            

    

     

    
      	 	
              (b)

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

            

    

    

    
      	 	
              (c)

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

            

    

    

    
      	 	
              (d)

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

            

    

    

    
      	 	
              (e)

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

            

    

    

    
      	
              5.

            	
              Commitment
                Fee.
                Immediately upon the execution of this Letter of Intent, Owner shall
                pay
                Fagen Three Hundred Thirty-three Thousand Three Hundred Thirty-three
                Dollars ($333,333) as a non-refundable commitment fee (“Commitment
                Fee”).
                The Commitment Fee will be credited against the Contract Price upon
                the
                occurrence of: (i) the execution of the Transaction documents; and
                (ii)
                timely acceptance of Notice to Proceed pursuant to the Design-Build
                Agreement. If Owner chooses not to proceed with the project or the
                Transaction Documents are not executed and delivered by the Closing
                Date
                or Owner fails to provide a timely Notice to Proceed pursuant to
                the
                Design-Build Agreement, Fagen shall retain the full amount of the
                Commitment Fee and Owner shall not be entitled to any refund or credit.
                 Should
                Owner fail to pay the Commitment Fee upon execution of this Letter
                of
                Intent, this Letter of Intent shall terminate and Fagen shall have
                the
                right to receive compensation pursuant to Paragraph 4(c)
                hereof.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

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        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page 13
        of
        19

       

    

    
      	
              6.

            	
              Confidentiality.
                Owner and Fagen have entered into that certain Confidentiality and
                Non-Circumvention Agreement dated September 19, 2007 (“Confidentiality
                Agreement”),
                which agreement is incorporated herein by reference hereto. Owner
                hereby
                acknowledges and agrees that any Confidential Information, as such
                term is
                defined in the Confidentiality Agreement, disclosed to Owner pursuant
                to
                or in advancement of this Letter of Intent shall be subject to the
                terms
                and conditions of the Confidentiality Agreement. Notwithstanding
                anything
                herein to the contrary, the Parties hereto shall, with respect to
                information disclosed pursuant to or in advancement of this Letter
                of
                Intent, have all rights and obligations as set forth in the
                Confidentiality Agreement.

            

    

    

    
      	
              7.

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

            

    

    

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

     

    
      	
              8.

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

            

    

    

    
      	
              9.

            	
              Legal
                Effect. Although
                this Letter of Intent does not contain all matters upon which agreement
                must be reached in order for the Transaction to be consummated, Fagen
                and
                Owner wish to set forth, prior to the execution of the Transaction
                Documents, their mutual agreement as to the material terms and conditions
                of the Transaction. Each Party agrees to negotiate in good faith
                towards
                entering into the written, definitive and legally binding Transaction
                Documents containing, among other terms and conditions, those terms
                and
                conditions set forth in this Letter of Intent including, without
                limitation, those terms set forth in Paragraphs 2 and 3 hereof; provided,
                however, that except as specifically identified and set forth herein,
                nothing in this Agreement shall be read to promise, guarantee, or
                otherwise secure on Owner’s behalf any specific construction start date
                with respect to the Plant including but not limited to any pour concrete
                date, scheduling slots or dates for the delivery of design packages
                or to
                entitle Owner to any rights, privileges, or claims with respect thereto
                or
                any right, privilege, or claim to any place on Fagen’s construction
                schedule. Notwithstanding the foregoing, the provisions of this Paragraph
                and of Paragraphs 1, 4, 5, 6, 7, 8, 11, 12, 14, 17, 18 and 20 hereof
                are
                agreed to be legally binding obligations of the Parties upon the
                execution
                and acceptance of this Letter of Intent.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page 14
        of
        19

       

    

    
      	
              10.

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

            

    

    

    
      	
              11.

            	
              Termination.
                This Letter of Intent will terminate on February 1,
                2009:

            

    

    

    
      	 	
              (a)

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

            

    

    

    
      	 	
              (b)

            	
              upon
                the execution and delivery of the Transaction
                Documents.

            

    

    

    
      	12.	
              Governing
                Law. This
                Letter of Intent is governed by, and the Transaction shall be 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.

            

    

    

    
      	
              13.

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

            

    

    

    
      	
              14.

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

            

    

    

    
      	15.	
              Assignability;
                Binding Effect; Benefit.This
                Letter of Intent will inure to the benefit of and be binding upon
                the
                Parties and their respective successors and assigns. Nothing in this
                Letter of Intent, either expressed or implied, is intended to confer
                on
                any person other than the Parties and their respective successors
                and
                permitted assigns, any rights, remedies, obligations or liabilities
                under
                or by reason of this Letter of Intent. Neither Fagen nor Owner shall,
                without the written consent of the other, assign or transfer this
                Letter
                of Intent. Any sale, transfer, or disposition by Owner of over fifty
                percent (50%) of its assets or any sale, transfer, or disposition
                of more
                than fifty percent (50%) of Owner to any single entity by one or
                more
                entities holding interest in Owner shall be deemed an assignment
                subject
                to this paragraph. Notwithstanding any consent granted by Fagen to
                any
                assignment, Owner shall remain jointly liable for any failure of
                any
                assignee to fulfill its obligations under this Letter of Intent,
                including
                but not limited to any payment and confidentiality obligations established
                hereunder.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        15
of
        19

       

    

    
      	
              16.

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

            

    

    

    
      	
              17.

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

            

    

    

    
      	
              18.

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

            

    

    

    
      	
              19.

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

            

    

    

    
      	
              20.

            	
              Other
                Contractual Obligations. Owner
                represents and warrants that it has not entered into any contracts
                with,
                and has no other contractual obligations or prospective contractual
                obligations or relations with, any project design/build firm or technology
                provider for any work contemplated in this Letter of Intent. Owner
                will
                indemnify, defend, and hold harmless Fagen, its officers, directors,
                shareholders, and employees from and against any and all liabilities,
                claims, losses, suits, liabilities, damages, penalties, fines, and
                expenses (including reasonable attorneys’ and consultants’ fees and
                disbursements, and costs of settlement, defense, and investigation
                of any
                claim or suit) which Fagen, its officers, directors, shareholders,
                or
                employees may hereafter incur, become responsible for, or pay out
                as a
                result of the breach of the representation and warranty made pursuant
                to
                this Paragraph 20.

            

    

    

    
      	
              21.

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        16 of
        19

       

    

    
      	
              21.

            	
              Binding
                Agreement.
                This Letter of Intent replaces and supercedes in all respects any
                prior
                letters of intent (including any amendments thereto), contracts,
                memoranda, and other agreements relating to the subject matter hereof.
                

            

    

     

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

     

    
      	 	 	 
	 	
              Yours
                sincerely,

            
	 	 
	 	
              Fagen,
                Inc.

            
	 
 	 
 	 
 
	
            	
            	/s/
              Ron
              Fagen
	 	
              

              By:
                 Roland
                “Ron” Fagen

            
	 	
              Title:
                 President
                and CEO

            

    

     

    Accepted
      and agreed to this 28th
      day
      of
January,
      2008.

    

    East
      Coast Ethanol, LLC

    

    /s/Randall
      Hudson 
      
        

      

    By:
      Randall Hudson 

    Title:
      Chairman & CEO

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    East
      Coast Ethanol, LLC 

    Letter
      of
      Intent

    January
      2, 2008

    Page
      17
of
      19

    EXHIBIT
      A

    

    Standard
      Scope of Work

     

    Construct
      a 110 MGY dry mill fuel ethanol plant near Campbellton,Florida. The plant will
      grind approximately 39.3 million bushels of corn per year to produce
      approximately 110 MGY of denatured fuel ethanol. The plant will also produce
      approximately 353,100 tons per year of 11% moisture dried distillers grains
      with
      solubles (DDGS), and approximately 314,270 tons per year of raw carbon dioxide
      (CO2)
      gas.

     

    Delivered
      corn will be dumped in the receiving building. The receiving building will
      have
      two truck grain receiving bays and a rail receiving bay, including an
      underground conveyor from the rail pit to the second truck receiving bay both
      of
      which share a common receiving leg. The truck driver will drive onto one of
      two
      pitless scales located near the administration building, be weighed and sampled,
      then drive to the receiving building, dump the grain, then proceed back to
      one
      of two pitless scales and obtain a final weight ticket. Two independent
      20,000-bu/hr legs will lift the corn to storage bins with a total capacity
      of
      1,000,000 bushels. A dust collection system will be installed on the grain
      receiving system to limit particulate emissions as described in the Air Quality
      Permit application. 

     

    Corn
      is
      cleaned in rotary scalpers before being milled in four parallel hammermills.
      Ground corn will be mixed in a slurry tank, passed through a second, and then
      routed through a hydroheater and cook tube following which steam is flashed
      off
      in a flash vessel. Cooked mash will continue through liquefaction tanks and
      into
      one of the seven 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. CO2
      from the
      fermentation process is vented to atmosphere through a scrubber for reducing
      emissions.

     

    Alcohol
      streams are dehydrated in the rectifier column, the side stripper and the
      molecular sieve system. Two hundred proof alcohol is pumped to the tank farm
      day
      tank and blended with five percent natural gasoline as the product is being
      pumped into one of two 1,500,000 gallon final storage tanks. Two 600 gpm trucks
      and one uncovered 1,000 gpm rail load out stations will be provided. Tank farm
      tanks include: one tank for 190 proof storage, one tank for 200 proof storage,
      one tank for denaturant storage and two 1,500,000 gallon tanks for denatured
      ethanol storage. Concrete truck loading secondary containment is by the
      Design-Builder. Track pan secondary containment is by the Owner. Pipe connecting
      both to the tank farm basin are by the Owner. The tank farm liner and tank
      foundations are provided by the Design-Builder.

     

    Corn
      mash
      from the beer stripper is dewatered in the parallel centrifuges. 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 wet cake pad is located
      along side the DDGS dryer building to divert wet cake to the pad when necessary
      or for limited production of 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, then conveyed to DDGS storage silos. Transfer to silos
      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 for shipment through a 15,000 bph
      bulk-weigh system after being mechanically unloaded from the DDGS silos. A
      truck
      or rail car can be loaded without repositioning.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        18
of
        19

       

    

    Fresh
      water for the boilers, cooking, cooling tower and other processes will be
      obtained from the Owner supplied water pretreatment system. Boiler water 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
      HRSG.

     

    Steam
      energy will be provided by heat recovery steam generators (HRSG’s) recovering
      heat from thermal oxidizers (TO’s) and utilizing a high percentage of condensate
      return.

     

    The
      TO’s
      are 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 after passing through the HRSG’s will be ducted through stack
      gas economizer(s) to recover the majority 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, 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, RO reject, softener reject, 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 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. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        19
of
        19

       

    

    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 store reasonable quantities. 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 A 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.Unassociated Document

     

    January
      2, 2008

    

    East
      Coast Ethanol, LLC

    Attention:
      Dr. Randy Hudson

    528
      Vo-Tech Drive

    PO
      Box
      527

    Ocilla,
      GA 31774

    

    Re:  
      East
      Coast Ethanol, LLC Chester, South Carolina Ethanol Project

    

    Dear
      Dr.
      Hudson:

    

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

    Upon
      execution by both Parties, this letter shall supercede and replace in all
      respects any and all prior letters of intent entered into by Fagen with, or
      for
      the benefit of, Owner. 

    

    The
      Parties agree to effect the Transaction subject only to the execution and
      delivery (in each case in a form satisfactory to Fagen) of a definitive
      Design-Build Agreement and other ancillary instruments and agreements (the
      “Transaction
      Documents”).
      The
      Parties agree that the Transaction Documents must be executed and delivered
      by
      the parties thereto no later than February 1, 2009 (the “Closing
      Date”);
      or
      this Letter of Intent will terminate in accordance with Paragraph 11(a)
      hereof.

    

    
      	
              1.

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

            

    

    

    
      	 	
              (a)

            	
              Fagen
                agrees to provide Owner with those services as described in this
                Letter of
                Intent which are necessary for Owner to develop a detailed description
                of
                a one hundred ten (110) million gallons per year (“MGY”)
                dry grind ethanol production facility located near Chester, South
                Carolina
                (the “Plant”)
                and to establish a price for which Fagen would provide design,
                engineering, procurement of equipment and construction services for
                the
                Plant. The description of the Plant will be sufficiently detailed
                to
                permit an analysis of the Owner’s lump-sum cost to develop the Plant and
                to develop an economic pro forma sufficient to determine if the Plant
                can
                be financed. 

            

    

    

    
      	 	
              (b)

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        2
of
        19

    

     

    
      	 	
              (c)

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

            

    

    

    
      	 	
              (d)

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

            

    

    
      	 	 	 

    

    
      	 	
              (e)

            	
              Owner
                shall offer Fagen the right to invest in the project. Unless otherwise
                specifically agreed between Fagen and Owner, such investment shall
                be
                offered on the same terms and conditions as all other
                investors.

            

    

    

    
      	 	
              (f)

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

            

    

    

    
      	
              2.

            	
              Contract
                Price.
                Subject to the terms and conditions set forth herein, Owner shall
                pay
                Fagen One Hundred Forty-six Million Two Hundred Thousand Dollars
                ($146,200,000) (the “Contract
                Price”)
                as full consideration to Fagen for complete performance of the services
                described in the Design-Build Agreement and all costs incurred in
                connection therewith. The Contract Price is based upon Fagen’s standard
                plant design, attached hereto as Exhibit A, and shall be subject
                to
                adjustments to reflect any deviations from standard design, either
                as
                requested by Owner or resulting from seismic considerations at the
                location of the Plant; provided, however, that all deviations from
                Fagen’s
                standard design must be submitted to Fagen by Owner no later than
                the
                earlier of: (a) the date upon which the Phase I engineering is scheduled
                to be delivered to Owner pursuant to the Phase I and Phase II Engineering
                Services Agreement (as such term is defined herein); or (b) the date
                upon
                which the Design-Build Agreement is executed. The Contract Price
                shall be
                subject to the following:

            

    

    

    
      	 	
              (a)

            	
              The
                Contract Price shall not include any costs related to union labor
                or
                prevailing wage requirements. If any action by Owner, a change in
                applicable law, or a governmental authority (as those terms are defined
                in
                the Design-Build Agreement) acting pursuant to a change in applicable
                law
                or local or regional labor considerations or availability, shall
                require
                Fagen, in its reasonable judgment, to employ union labor or compensate
                labor at prevailing wages, the Contract Price shall be adjusted upwards
                to
                include any increased costs, of any kind or nature, associated with
                such
                labor or wages including but not limited to site security and personnel
                costs. Such adjustment shall include, but not be limited to, increased
                labor, subcontractor, and material and equipment costs resulting
                from any
                union or prevailing wage requirement; provided, however, that if
                an option
                is made available to either employ union labor, or to compensate
                labor at
                prevailing wages, such option shall be at Fagen’s sole discretion and that
                if such option is executed by Owner without Fagen’s agreement, Fagen shall
                have the right to terminate this Letter of Intent or the Design-Build
                Agreement, as applicable, and receive compensation pursuant to Paragraph
                4(c) hereof or the terms of the Design-Build Agreement, whichever
                is
                applicable.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        3
of
        19

       

    

    
      	 	
              (b)

            	
              If
                Notice to Proceed is given on or after February 15, 2009 and the
                Construction Cost Index published by Engineering News-Record Magazine
                (“CCI”)
                for the month in which such Notice to Proceed is given to Fagen is
                greater
                than the February 2009 CCI, then the Contract Price shall be increased
                by
                a percentage amount equal to the percentage increase in the
                CCI.

            

    

    

    
      	 	
              (c)

            	
              If
                Notice to Proceed is given on or after February 15, 2009, then due
                to
                rapidly accelerating costs of certain specialty materials required
                for
                Plant Construction, in addition to any adjustment provided for in
                Paragraph 2(b) hereof, Fagen shall also add a surcharge to the Contract
                Price of one half of one percent (0.50%) for each calendar month
                that has
                passed between February 2009 and the month in which a valid Notice
                to
                Proceed is given to Fagen. By way of example, if a valid Notice to
                Proceed
                is given on April 7, 2009 and the CCI has increased one percent (1%)
                over
                such period of time, the total adjustment to the Contract Price shall
                be
                one percent (1%) in accordance with Paragraph 2(b) plus one half
                of one
                percent (0.50%) for each of the two months from February 2009 to
                the
                delivery of a valid Notice to Proceed in accordance with this paragraph,
                for a total adjustment of two percent
                (2%).

            

    

    

    
      	
              3.

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

            

    

    

    
      	 	
              (a)

            	
              Fagen
                will have no responsibility for and will not perform any site preparation
                work. Owner’s site responsibilities, in each instance in accordance with
                applicable specifications provided by Fagen, will include, but will
                not be
                limited to:

            

      	 	 	 

    

    
      	 	
              i.

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

            

      	 	 	 

    

    
      	 	
              ii.

            	
              site
                grading including soil stabilization and the costs connected
                therewith;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

      
        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page
          4 of
          19

         

      

    

    
      	 	
              iii.

            	
              final
                grading, seeding, and mulching;

            

      	 	 	 

    

    
      	 	
              iv.

            	
              site
                security, including any site fencing;

            

      	 	 	 

    

    
      	 	
              v.

            	
              procuring
                boundary and topographic surveys;

            

      	 	 	 

    

    
      	 	
              vi.

            	
              procuring
                soil borings and geotechnical reports;

            

      	 	 	 

    

    
      	 	
              vii.

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

            

      	 	 	 

    

    
      	 	
              viii.

            	
              obtaining
                storm water runoff permit and erosion control/land disturbance
                permit;

            

      	 	 	 

    

    
      	 	
              ix.

            	
              obtaining
                any necessary pollutant elimination discharge
                permit;

            

      	 	 	 

    

    
      	 	
              x.

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

            

      	 	 	 

    

    
      	 	
              xi.

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

            

      	 	 	 

    

    
      	 	
              xii.

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

            

      	 	 	 

    

    
      	 	
              xiii.

            	
              paying
                for a water pre-treatment system, including any building or structure
                required to house such system and other equipment, the cost of which
                is
                not included in the Contract Price, which shall be provided by a
                vendor
                selected by Fagen and designed and constructed by Fagen pursuant
                to a
                separate side-letter agreement executed by Owner and Fagen at Fagen’s
                standard time plus material rates during the relevant time period
                and at
                the relevant locale (the “Water
                Pre-Treatment System Agreement”),
                and maintaining and using such system, including the use of all chemicals
                specified for the operation of such water pre-treatment system, for
                the
                entirety of the warranty period, it being agreed that failure by
                Owner to
                maintain and properly use the water pre-treatment system for the
                duration
                of the warranty period shall void any and all warranties affected
                by such
                failure. 

            

      	 	 	 

    

    
      	 	
              xiv.

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

            

      	 	 	 

    

    
      	 	
              xv.

            	
              providing
                and maintain required ditches and permanent
                roads;

            

      	 	 	 

    

     

    
      	 	
              xvii.

            	
              providing
                maintenance and power equipment and spare
                parts;

            

      	 	 	 

    

    
      	 	
              xviii.

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

            

      	 	 	 

    

    
      	 	
              xix.

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

            

      	 	 	 

    

    
      	 	
              xx.

            	
              paying
                for the required fire protection system for the Plant, including
                any
                building or structure required to house such system, the cost of
                which is
                not included in the Contract Price, and which shall be provided by
                Fagen
                pursuant to a separate side-letter agreement executed by Owner and
                Fagen
                at Fagen’s standard time plus material rates during the relevant time
                period and at the relevant locale (the “Fire
                Protection System Agreement”).

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
        
           

          East
            Coast Ethanol, LLC 

          Letter
            of
            Intent

          January
            2, 2008

          Page
            5
of
            19

           

        

      

    

    
      	 	
              (b)

            	
              Owner
                will enter into a Phase I and Phase II Engineering Services Agreement
                with
                Fagen Engineering, LLC on a form acceptable to both parties but which
                shall be based on Fagen Engineering, LLC’s standard form (“Phase
                I and Phase II Engineering Services Agreement”).
                The Phase I and Phase II Engineering Services Agreement will provide
                for
                commencement of work on the Phase I and Phase II engineering for
                the
                project as set forth therein. The Phase I engineering shall consist
                of
                engineering and design of the Plant site and shall include: property
                layout; grading, drainage and erosion control plan drawings; roadway
                alignment drawings; culvert cross sections and details; and seeding
                and
                landscaping, if required. The Phase II engineering shall consist
                of
                engineering and design of site work and utilities for the Plant,
                all
                within the property line of the Plant, including: property layout;
                site
                grading and drainage drawings; roadway alignment; all utility layout
                including fire loop, potable water, well water if applicable, sanitary
                sewer, utility water blowdown, and natural gas; geometric layout;
                site
                utility piping tables; tank farm layout; tank farm details; sections
                and
                details drawing, if required, and miscellaneous details drawing,
                if
                required. Owner will pay Fagen Engineering, LLC One Hundred Eighty-five
                Thousand Dollars ($185,000) for such engineering services pursuant
                to the
                terms of that agreement, the full amount of which, upon payment in
                full,
                shall be included in and credited to the Contract Price. Notwithstanding
                the foregoing sentence, if a Notice to Proceed is not issued pursuant
                to
                the terms of the Design-Build Agreement, or Financial Closing is
                not
                obtained, then Fagen Engineering, LLC shall keep the full amount
                paid
                under the Phase I and Phase II Engineering Services Agreement as
                compensation for the services provided
                thereunder.

            

    

    

    
      	 	
              (c)

            	
              Fagen
                will provide reasonable assistance to Owner in obtaining Owner’s permits,
                approvals and licenses. Notwithstanding the foregoing, Owner shall
                hold
                harmless Fagen, its officers, directors, employees, and agents, for
                Owner's failure to comply with applicable laws in obtaining or maintaining
                the required permits, except to the extent caused by the gross negligence,
                misrepresentations, fraud, or willful misconduct of Fagen or its
                officers,
                directors, employees, and agents. The denial or revocation of any
                Owner-obtained permit as a result of Owner's failure to comply with
                applicable laws shall entitle Fagen to an extension of contract times
                and
                an adjustment of Contract Price to the extent affected by such denial
                or
                revocation and to any and all other remedies available pursuant to
                the
                Design-Build Agreement and applicable law except to the extent caused
                by
                the gross negligence, misrepresentations, fraud, or willful misconduct
                of
                Fagen or its officers, directors, employees, and
                agents.

            

    

    

    
      	 	
              (d)

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      East
        Coast Ethanol, LLC

      Letter
        of
        Intent

      January
        2, 2008

      Page 6
        of
        19

       

    

    
      	 	
              (e)

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

            

    

    

    
      	 	
              (f)

            	
              Fagen
                may subcontract portions of the
                work.

            

    

    

    
      	 	
              (g)

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

            

    

    

    
      	 	
              (h)

            	
              Owner
                must obtain Financial Closing prior to the issuance of a Notice to
                Proceed
                Financial Closing shall be deemed occurred when the loan documents
                for the
                construction financing have been executed and Owner is not in default
                under the terms of such loan
                documents.

            

    

    

    
      	 	
              (i)

            	
              Owner
                will pay, at Fagen’s standard time plus material rates during the relevant
                time period and at the relevant locale, all reasonable costs incurred
                by
                Fagen for frost removal so that winter construction can proceed.
                Such
                costs will be in addition to, and not included in, the Contract
                Price.

            

    

    

    
      	 	
              (j)

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

            

    

    

    
      	 	
              (k)

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

            

    

    

    
      	 	
              (l)

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
        
           

          East
            Coast Ethanol, LLC 

          Letter
            of
            Intent

          January
            2, 2008

          Page
            7
of
            19

           

        

      

    

    
      	 	
              (m)

            	
              Work
                will commence following receipt of Owner’s written valid notice to proceed
                (“Notice
                to Proceed”).
                At least twenty (20) days, but no more than thirty (30) days prior
                to
                Owner’s anticipated delivery of Notice to Proceed, Owner must deliver
                notice to Fagen specifying the anticipated delivery date for Notice
                to
                Proceed (“Pre-NTP Notice”). The Notice to Proceed cannot be given until
                (1) Owner has title to the real estate on which the project will
                be
                constructed; (2) the site work required of Owner is completed; (3)
                Owner
                has executed the Water Pre-Treatment System Agreement and the Fire
                Protection System Agreement; (4) the air permit(s) and/or other applicable
                local, state or federal permits necessary so that construction can
                begin
                have been obtained; (5) Owner has obtained Financial Closing and
                delivered
                a certificate of financial closing executed by Owner and Lenders
                in a form
                acceptable to Fagen; (6) if applicable, Owner has executed a sales
                tax
                exemption certificate and provided the same to Fagen; (7) Owner has
                provided the name of its property/all-risk insurance carrier and
                the
                specific requirements for fire protection; (8) Owner has provided
                insurance certificates or copies of insurance policies demonstrating
                that
                Owner has obtained the insurance policies required pursuant to the
                Design-Build Agreement and naming additional insureds and protecting
                other
                interests as prescribed therein, and (9) Fagen
                has provided Owner written notification of its acceptance of the
                Notice to
                Proceed, provided that Fagen shall not be required to accept the
                Notice to
                Proceed earlier than twenty (20) days after receipt of the Pre-NTP
                Notice.
                Owner must deliver the Pre-NTP Notice, complete the prerequisites
                to the
                issuance of a valid Notice to Proceed, as listed in items number
                (1)
                through (8) of this Paragraph, and submitted a Notice to Proceed,
                to Fagen
                for Fagen’s acceptance by June 2009; otherwise, this LOI and Design-Build
                Agreement may be terminated, at Fagen’s sole option,
                thus releasing Fagen of all obligations. In the event that Owner
                has not
                delivered a valid Notice to Proceed to Fagen by December 31, 2009,
                the
                Contract Price may, at Fagen’s sole discretion, and if the LOI and
                Design-Build Agreement have not already been terminated, be adjusted
                to
                reflect Fagen’s then current (December 2009) Contract Price for a 110 MGY
                dry grind ethanol production facility (with a corresponding revised
                December 2009 CCI benchmark). Within ten (10) business days of receipt
                by
                Design-Builder of the notice to proceed, Design-Builder shall deliver
                to
                Owner notice of either acceptance or denial of notice to proceed.
                If
                accepted by Design-Builder, the Notice to Proceed shall be deemed
                effective on the date on which it was received by
                Design-Builder.

            

    

    

    
      	 	
              (n)

            	
              “Substantial
                Completion”
                will be the date on which the Plant construction has been completed
                to a
                point that the Plant is ready to grind the first batch of corn for
                producing ethanol and begin operation for its intended use as a one
                hundred ten (110) MGY dry grind ethanol production facility. No production
                capacity is guaranteed on the Substantial Completion date, but the
                Plant
                is largely completed as of that date.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      East
        Coast Ethanol, LLC

      Letter
        of
        Intent

      January
        2, 2008

      Page
        8
of 19

       

    

    
      	 	
              (o)

            	
              Substantial
                Completion will occur within Six Hundred and Thirty-Five (635) days
                after
                the date of the Notice to Proceed; provided, however, that, in addition
                to
                other adjustments to this date as may be available pursuant to the
                Design-Build Agreement, Design-Builder shall be entitled to a day-for-day
                extension of time for attaining Substantial Completion for each day
                in
                excess of thirty (30) days that the Pre-NTP Notice was delivered
                prior to
                Owner’s delivery of a valid Notice to
                Proceed.

            

    

    

    
      	 	
              (p)

            	
              Fagen
                will be entitled to an early completion bonus for each day that
                Substantial Completion occurs in advance of the scheduled Substantial
                Completion date (“Early
                Completion Bonus”).
                Early Completion Bonus shall accrue at a rate of Twenty Thousand
                Dollars
                ($20,000) per day. The Early Completion Bonus shall be capped and
                shall
                not exceed One Million Dollars ($1,000,000). The Early Completion
                Bonus is
                earned for achieving Substantial Completion early, but is not due
                until
                the final payment.

            

    

    

    
      	 	
              (q)

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

            

    

    

    
      	 	
              (r)

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

            

    

    

    
      	 	
              (s)

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

            

    

    

    
      	 	
              (t)

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page 9
        of
        19

    

     

    
      	 	
              (u)

            	
              The
                aggregate liability of Fagen, its Subcontractors, vendors, suppliers,
                agents and employees, to Owner (or any successor thereto or assignee
                thereof) for any and all claims and/or liabilities arising out of
                or
                relating in any manner to the work or to Fagen’s performance or
                non-performance of its obligations under the Design-Build Agreement,
                whether based on contract, tort (including negligence), strict liability,
                or otherwise, shall not exceed in the aggregate, the Contract Price
                and
                shall be reduced, upon the issuance of each Application for Payment,
                by
                seventy-five percent (75%) of the total value of such Application
                for
                Payment; provided, however, that upon the earlier of Substantial
                Completion or such point in time that requests for payment pursuant
                to the
                Design-Build Agreement have been made for ninety percent (90%) of
                the
                Contract Price, Fagen's aggregate liability shall be limited to the
                greater of (1) Ten Percent (10%) of the Contract Price or (2) the
                amount
                of insurance coverage available to respond to the claim or liability
                under
                any policy of insurance provided by Fagen under the Design-Build
                Agreement.

            

    

    

    
      	 	
              (v)

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

            

    

    

    
      	 	
              (w)

            	
              Owner
                will pay Fagen a mobilization fee in the amount of Twenty Million
                Dollars
                ($20,000,000) as soon as possible following the execution of the
                Design-Build Agreement, and at the latest, at the earlier to occur
                of
                financial closing or the issuance of a Notice to Proceed. Such
                mobilization fee shall be applied against the Contract
                Price.

            

    

    

    
      	 	
              (x)

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

            

    

    

    
      	 	
              i.

            	
              On
                or before the twenty-fifth (25th) day of each month following the
                acceptance of Notice to Proceed Fagen will submit to Owner a request
                for
                payment (an “Application
                for Payment”).
                Along with each Application for Payment, except with respect to the
                first
                Application for Payment, Fagen will submit to Owner, via hardcopy
                or by
                electronic means including facsimile or portable document format,
                signed
                lien waivers for the work included in the Application for Payment
                submitted for the immediately preceding pay period and for which
                payment
                has been received. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

      
        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page
          10
of
          19

         

      

    

    
      	 	
              ii.

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

            

      	 	 	 

    

    
      	 	
              iii.

            	
              The
                Application for Payment may request payment for (i) completed work;
                (ii)
                prepayments for materials or equipment for the project when prepayment
                is
                required by the manufacturer or supplier of such materials or equipment;
                or (iii) equipment and materials not yet incorporated into the
                project
                provided that (x) the materials and equipment are suitably stored
                at the
                site or elsewhere, (y) the equipment and materials are protected
                by
                suitable insurance, and (z) upon payment, Owner will receive title
                to such
                equipment and materials.

            

      	 	 	 

    

    
      	 	
              iv.

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

            

      	 	 	 

    

    
      	 	
              v.

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

            

      	 	 	 

    

    
      	 	
              vi.

            	
              Retainage
                on progress payments made pursuant to the Design-Build Agreement
                will be
                capped at five percent (5%) of the total price. Owner will retain
                ten
                percent (10%) of each payment up to a maximum of five percent (5%)
                of the
                total final Contract Price, as adjusted pursuant to any increased
                based on
                the CCI pursuant to Paragraph 2(b) herein as well as the monthly
                percentage increases pursuant to Paragraph 2(c) herein. Once five
                percent
                (5%) of the total price has been retained, Owner will not retain
                any
                additional amounts from subsequent payments. Owner will release retainage,
                less the amount equal to the value of subcontractor lien waivers
                not yet
                obtained, upon completion of the Performance Tests. The release of
                any
                retainage by Owner shall be reduced by an amount equal to one hundred
                fifty percent (150%) of any amount required to finish any incomplete
                items
                of work.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

      
        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page
          11
of
          19

         

      

    

    
      	 	
              vii.

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

            

    

    

    
      	 	
              (y)

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

            

    

    

    
      	 	
              (z)

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

            

    

    

    
      	 	
              (aa)

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

            

    

    

    
      	 	
              (bb)

            	
              If
                Fagen is delayed at any time in the commencement or progress of the
                work
                due to a delay in the delivery of, or unavailability of, essential
                materials or labor to the project as a result of a significant
                industry-wide economic fluctuation or disruption beyond the control
                of and
                without the fault of Fagen or its subcontractors which is experienced
                or
                expected to be experienced by certain markets providing essential
                materials, equipment or labor to the project during the performance
                of the
                work and such economic fluctuation or disruption adversely impacts
                the
                price, availability, and delivery timeframes of essential materials
                and
                equipment (such event an “Industry-Wide
                Disruption”),
                Fagen shall be entitled to an equitable extension of the Contract
                Time on
                a day-for-day basis equal to such delay and an equitable adjustment
                to the
                Contract Price. The Owner and Fagen shall undertake reasonable steps
                to
                mitigate the effect of such delays. Notwithstanding any other provision
                to
                the contrary, Fagen shall not be liable to the Owner for any expenses,
                losses or damages arising from a delay, or unavailability of, essential
                materials or labor to the project as a result of an Industry-Wide
                Disruption.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        12
of
        19

       

    

    
      	
              4.

            	
              Exclusivity,
                No Solicitation or Negotiations.
                

            

    

    

    
      	 	
              (a)

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

            

    

     

    
      	 	
              (b)

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

            

    

    

    
      	 	
              (c)

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

            

    

    

    
      	 	
              (d)

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

            

    

    

    
      	 	
              (e)

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

            

    

    

    
      	
              5.

            	
              Commitment
                Fee.
                Immediately upon the execution of this Letter of Intent, Owner shall
                pay
                Fagen Three Hundred Thirty-three Thousand Three Hundred Thirty-four
                Dollars ($333,334) as a non-refundable commitment fee (“Commitment
                Fee”).
                The Commitment Fee will be credited against the Contract Price upon
                the
                occurrence of: (i) the execution of the Transaction documents; and
                (ii)
                timely acceptance of Notice to Proceed pursuant to the Design-Build
                Agreement. If Owner chooses not to proceed with the project or the
                Transaction Documents are not executed and delivered by the Closing
                Date
                or Owner fails to provide a timely Notice to Proceed pursuant to
                the
                Design-Build Agreement, Fagen shall retain the full amount of the
                Commitment Fee and Owner shall not be entitled to any refund or credit.
                 Should
                Owner fail to pay the Commitment Fee upon execution of this Letter
                of
                Intent, this Letter of Intent shall terminate and Fagen shall have
                the
                right to receive compensation pursuant to Paragraph 4(c)
                hereof.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page
          13
of
          19

         

      

    

    
      	
              6.

            	
              Confidentiality.
                Owner and Fagen have entered into that certain Confidentiality and
                Non-Circumvention Agreement dated September 19, 2007 (“Confidentiality
                Agreement”),
                which agreement is incorporated herein by reference hereto. Owner
                hereby
                acknowledges and agrees that any Confidential Information, as such
                term is
                defined in the Confidentiality Agreement, disclosed to Owner pursuant
                to
                or in advancement of this Letter of Intent shall be subject to the
                terms
                and conditions of the Confidentiality Agreement. Notwithstanding
                anything
                herein to the contrary, the Parties hereto shall, with respect to
                information disclosed pursuant to or in advancement of this Letter
                of
                Intent, have all rights and obligations as set forth in the
                Confidentiality Agreement.

            

    

    

    
      	
              7.

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

            

    

    

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

            

    

     

    
      	
              8.

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

            

    

    

    
      	
              9.

            	
              Legal
                Effect. Although
                this Letter of Intent does not contain all matters upon which agreement
                must be reached in order for the Transaction to be consummated, Fagen
                and
                Owner wish to set forth, prior to the execution of the Transaction
                Documents, their mutual agreement as to the material terms and conditions
                of the Transaction. Each Party agrees to negotiate in good faith
                towards
                entering into the written, definitive and legally binding Transaction
                Documents containing, among other terms and conditions, those terms
                and
                conditions set forth in this Letter of Intent including, without
                limitation, those terms set forth in Paragraphs 2 and 3 hereof; provided,
                however, that except as specifically identified and set forth herein,
                nothing in this Agreement shall be read to promise, guarantee, or
                otherwise secure on Owner’s behalf any specific construction start date
                with respect to the Plant including but not limited to any pour concrete
                date, scheduling slots or dates for the delivery of design packages
                or to
                entitle Owner to any rights, privileges, or claims with respect thereto
                or
                any right, privilege, or claim to any place on Fagen’s construction
                schedule. Notwithstanding the foregoing, the provisions of this Paragraph
                and of Paragraphs 1, 4, 5, 6, 7, 8, 11, 12, 14, 17, 18 and 20 hereof
                are
                agreed to be legally binding obligations of the Parties upon the
                execution
                and acceptance of this Letter of Intent.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page
          14
of
          19

         

      

    

    
      	
              10.

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

            

    

    

    
      	
              11.

            	
              Termination.
                This Letter of Intent will terminate on February 1,
                2009:

            

    

    

    
      	 	
              (a)

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

            

    

    

    
      	 	
              (b)

            	
              upon
                the execution and delivery of the Transaction
                Documents.

            

    

    

    
      	12.	
              Governing
                Law. This
                Letter of Intent is governed by, and the Transaction shall be 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.

            

    

    

    
      	
              13.

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

            

    

    

    
      	
              14.

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

            

    

    

    
      	
              15.

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
        
           

          East
            Coast Ethanol, LLC 

          Letter
            of
            Intent

          January
            2, 2008

          Page
            15
of
            19

           

        

      

    

    
      	
              
                16.

              

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

            

    

    

    
      	
              
                17.

              

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

            

    

    

    
      	
              
                18.

              

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

            

    

    

    
      	
              
                19.

              

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

            

    

    

    
      	
              
                20.

              

            	
              Other
                Contractual Obligations. Owner
                represents and warrants that it has not entered into any contracts
                with,
                and has no other contractual obligations or prospective contractual
                obligations or relations with, any project design/build firm or technology
                provider for any work contemplated in this Letter of Intent. Owner
                will
                indemnify, defend, and hold harmless Fagen, its officers, directors,
                shareholders, and employees from and against any and all liabilities,
                claims, losses, suits, liabilities, damages, penalties, fines, and
                expenses (including reasonable attorneys’ and consultants’ fees and
                disbursements, and costs of settlement, defense, and investigation
                of any
                claim or suit) which Fagen, its officers, directors, shareholders,
                or
                employees may hereafter incur, become responsible for, or pay out
                as a
                result of the breach of the representation and warranty made pursuant
                to
                this Paragraph 20.

            

    

    

    
      	
              
                21.

              

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page 16 of
          19

         

      

    

    
      
        	
                22.

              	
                Binding Agreement.
                  This Letter of Intent replaces and supercedes in all respects any
                  prior
                  letters of intent (including any amendments thereto), contracts,
                  memoranda, and other agreements relating to the subject matter
                  hereof.
                  

              

      

    

     

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

     

    
      	 	Yours sincerely,
	 	 	 
	 	Fagen, Inc.
	 
 	 
 	 
 
	
            	 	/s/
              Ron
              Fagen
	 	
              

              By:
                 Roland
                “Ron” Fagen

              Title:
                 President
                and CEO

            

    

     

    Accepted
      and agreed to this 23rd
      day
      of
January,
      2008.

    

    East
      Coast Ethanol, LLC

    

    

    /s/Randall
      Hudson

    
      
        

      

    

    By:
      Randall Hudson 

    Title:
      Chairman & CEO

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      East
        Coast Ethanol, LLC 

      Letter
        of
        Intent

      January
        2, 2008

      Page
        17
of
        19

    

    EXHIBIT
      A

    

    Standard
      Scope of Work

     

    Construct
      a 110 MGY dry mill fuel ethanol plant near Chester, South Carolina. The plant
      will grind approximately 39.3 million bushels of corn per year to produce
      approximately 110 MGY of denatured fuel ethanol. The plant will also produce
      approximately 353,100 tons per year of 11% moisture dried distillers grains
      with
      solubles (DDGS), and approximately 314,270 tons per year of raw carbon dioxide
      (CO2)
      gas.

     

    Delivered
      corn will be dumped in the receiving building. The receiving building will
      have
      two truck grain receiving bays and a rail receiving bay, including an
      underground conveyor from the rail pit to the second truck receiving bay both
      of
      which share a common receiving leg. The truck driver will drive onto one of
      two
      pitless scales located near the administration building, be weighed and sampled,
      then drive to the receiving building, dump the grain, then proceed back to
      one
      of two pitless scales and obtain a final weight ticket. Two independent
      20,000-bu/hr legs will lift the corn to storage bins with a total capacity
      of
      1,000,000 bushels. A dust collection system will be installed on the grain
      receiving system to limit particulate emissions as described in the Air Quality
      Permit application.

     

    Corn
      is
      cleaned in rotary scalpers before being milled in four parallel hammermills.
      Ground corn will be mixed in a slurry tank, passed through a second, and then
      routed through a hydroheater and cook tube following which steam is flashed
      off
      in a flash vessel. Cooked mash will continue through liquefaction tanks and
      into
      one of the seven 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. CO2
      from the
      fermentation process is vented to atmosphere through a scrubber for reducing
      emissions.

     

    Alcohol
      streams are dehydrated in the rectifier column, the side stripper and the
      molecular sieve system. Two hundred proof alcohol is pumped to the tank farm
      day
      tank and blended with five percent natural gasoline as the product is being
      pumped into one of two 1,500,000 gallon final storage tanks. Two 600 gpm trucks
      and one uncovered 1,000 gpm rail load out stations will be provided. Tank farm
      tanks include: one tank for 190 proof storage, one tank for 200 proof storage,
      one tank for denaturant storage and two 1,500,000 gallon tanks for denatured
      ethanol storage. Concrete truck loading secondary containment is by the
      Design-Builder. Track pan secondary containment is by the Owner. Pipe connecting
      both to the tank farm basin are by the Owner. The tank farm liner and tank
      foundations are provided by the Design-Builder.

     

    Corn
      mash
      from the beer stripper is dewatered in the parallel centrifuges. 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 wet cake pad is located
      along side the DDGS dryer building to divert wet cake to the pad when necessary
      or for limited production of 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, then conveyed to DDGS storage silos. Transfer to silos
      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 for shipment through a 15,000 bph
      bulk-weigh system after being mechanically unloaded from the DDGS silos. A
      truck
      or rail car can be loaded without repositioning.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page
          18
of
          19

         

      

    

    Fresh
      water for the boilers, cooking, cooling tower and other processes will be
      obtained from the Owner supplied water pretreatment system. Boiler water 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
      HRSG.

     

    Steam
      energy will be provided by heat recovery steam generators (HRSG’s) recovering
      heat from thermal oxidizers (TO’s) and utilizing a high percentage of condensate
      return.

     

    The
      TO’s
      are 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 after passing through the HRSG’s will be ducted through stack
      gas economizer(s) to recover the majority 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, 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, RO reject, softener reject, 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 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        East
          Coast Ethanol, LLC 

        Letter
          of
          Intent

        January
          2, 2008

        Page
          19
of
          19

         

      

    

    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 store reasonable quantities. 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 A 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.

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