Document:

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                                                                    EXHIBIT 10.2

                           GRAIN PROCUREMENT AGREEMENT
                                       OF
                   GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
                                       AND
                        FARMERS COOPERATIVE ELEVATOR CO.

                               Dated May 14, 2004

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                           GRAIN PROCUREMENT AGREEMENT

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                         <C>
TITLE I:  PRIOR AGREEMENTS..............................................     1
      1.1.01:  PRIOR AGREEMENTS SUPERSEDED..............................     1

TITLE II:  FACILITY.....................................................     1
   ARTICLE I - PREMISES.................................................     1
      2.1.01:  LAND.....................................................     1

TITLE III:  CORN PROCUREMENT............................................     2
   ARTICLE I - PROVISION OF CORN........................................     2
      3.1.01:  FCE'S PROVISION OF CORN..................................     2
      3.1.02:  CORN QUALITY.............................................     2
      3.1.03:  LICENSING................................................     5
      3.1.04  PAYMENTS TO CORN SUPPLIERS................................     5

   ARTICLE II - TERM OF CORN PROCUREMENT................................     5
      3.2.01:  COMMENCEMENT.............................................     5
      3.2.02:  TERM OF AGREEMENT........................................     6

   ARTICLE III - CORN PROCUREMENT FEE...................................     6
      3.3.01:  PROCUREMENT FEE..........................................     6
      3.3.02:  CORN FOR GFCEP...........................................     6
      3.3.03:  HEDGING ASSISTANCE.......................................     6

   ARTICLE IV - INVOICING AND PAYMENT...................................     7

   ARTICLE V - LOCATION OF FCE'S DELIVERY...............................     7

   ARTICLE VI - DEFAULT, WAIVER AND REMEDIES............................     8
      3.6.01:  DEFAULT, NOTICE, AND CURE................................     8
      3.6.02:  WAIVER...................................................     8
      3.6.03:  REMEDIES.................................................     8

TITLE IV:  GENERAL PROVISIONS...........................................     9
   ARTICLE 1 - WARRANTIES...............................................     9
      4.1.01:  OWNERSHIP AND QUALITY OF CORN............................     9
      4.1.02:  NO EXPRESS OR IMPLIED WARRANTIES.........................     9

   ARTICLE II - DISPUTE RESOLUTION......................................    10
      4.2.01:  ALTERNATIVE DISPUTE RESOLUTION...........................    10
      4.2.02:  ATTORNEY'S FEES AND COSTS................................    10

   ARTICLE III - FORCE MAJEURE..........................................    10
      4.3.01:  RELIEF FROM TRANSFERRING CORN............................    10
      4.3.02:  DEFINITION...............................................    11

   ARTICLE IV - DELIVERY OF PAYMENTS AND NOTICES........................    11
      4.4.01:  METHOD AND TIME..........................................    11
      4.4.02:  NOTICE TO FCE............................................    11
      4.4.03:  NOTICE TO GFCEP..........................................    12
      4.4.04:  CHANGE OF ADDRESS........................................    12
</TABLE>

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<TABLE>
<S>                                                                         <C>
   ARTICLE V - INDEMNITY................................................    12
      4.5.01:  DUTY TO INDEMNIFY (FCE).................................     12
      4.5.02:  DUTY TO INDEMNIFY (GFCEP)................................    12

   ARTICLE VI - OTHER GENERAL PROVISION.................................    13
      4.6.01:  COMPUTATION OF TIME......................................    13
      4.6.02:  SUCCESSORS IN INTEREST...................................    13
      4.6.03:  ENTIRE AGREEMENT.........................................    13
      4.6.04:  PARTIAL INVALIDITY.......................................    13
      4.6.05:  RELATIONSHIP OF PARTIES..................................    13
      4.6.06:  INTEREST.................................................    14
      4.6.07:  MODIFICATION.............................................    14
      4.6.08:  CHOICE OF LAW............................................    14
      4.6.09:  HEADINGS AND CAPTIONS....................................    14
      4.6.10:  COUNTERPARTS.............................................    14
</TABLE>

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                           GRAIN PROCUREMENT AGREEMENT

      THIS GRAIN PROCUREMENT AGREEMENT, (the "Agreement") is made and entered
into this 14 day of May, 2004, by and between GRANITE FALLS COMMUNITY
ETHANOL PLANT, LLC ("GFCEP") and FARMERS COOPERATIVE ELEVATOR CO. ("FCE").

      WHEREAS, GFCEP intends to construct, own, and operate a dry mill ethanol
and byproduct manufacturing plant and related facilities (the "Facilities") on
the Premises (defined below);

      WHEREAS, the acquisition of a steady and reliable supply of corn is
integral to the use and operation of the Facilities;

      WHEREAS, in order to guaranty the use and operation of the Facilities, the
parties are entering into this Agreement whereby FCE will provide a steady and
reliable supply of corn to GFCEP for use in the operation of the Facilities
under the terms and conditions hereinafter described.

       NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, it is hereby agreed as follows:

                            TITLE I: PRIOR AGREEMENTS

1.1.01:  PRIOR AGREEMENTS SUPERSEDED

      The parties hereby agree and acknowledge that they previously entered into
one or more agreements relating to the operation of GFCEP, including, but not
limited to a Declaration of Restrictions and Covenants made by the Granite Falls
Community Ethanol Plant, LLC; a Corn Storage and Delivery Agreement, and a
Pre-Closing Memorandum. All such agreements are superseded by the terms of this
Grain Procurement Agreement and such prior agreements are hereby revoked;
provided, however, that all subscription agreements to purchase units in GFCEP
shall remain in full force and effect.

                               TITLE II: FACILITY

                                    ARTICLE I
                                    PREMISES

2.1.01: LAND

      The Facilities (also described herein as "plant") will be constructed on
the premises (real estate) legally described as being east of the City of
Granite Falls, County of Chippewa, State of Minnesota, legally described as:

             SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF

                           TITLE III: CORN PROCUREMENT

                                    ARTICLE I
                                PROVISION OF CORN

3.1.01: FCE'S PROVISION OF CORN

      (a) FCE shall have the exclusive right and responsibility to provide GFCEP
its full daily requirements of No. 2 yellow corn, 15% moisture content, meeting
the specifications of this Agreement (the "Corn") during the term hereof and
under the conditions herein set forth. This right and responsibility shall
include the plant as originally constructed and any and all alterations,
modifications or expansions thereof.

      (b) Purchases. The parties acknowledge and agree that GFCEP shall purchase
all of its corn requirements from FCE and shall place all actual orders for
purchase of corn to be delivered to the facility with FCE. At all times, FCE,
either through its own management or through lawful contracts entered into with
third parties, shall maintain
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or cause to be maintained such licenses and/or authorities as may be required to
lawfully engage in the purchase and sale of corn.

      (c) Risk Management. Notwithstanding the foregoing, GFCEP acknowledges
that it shall separately retain appropriate risk management services for
evaluating corn pricing and purchases and/or for making trades for price
protection and future delivery such as options, future contracts and the like.

      (d) Delivery Estimates. GFCEP agrees to provide to FCE an estimate on or
before the first day of each calendar quarter with respect to its required
deliveries of corn for the following calendar quarter. The parties expressly
understand that GFCEP's notice shall be a good faith estimate and that the
parties anticipate reasonable variations between delivery forecast and actual
delivery requirements. For purposes of this Agreement the phrase "reasonable
variations" shall mean a variation of no more than 10% between the delivery
forecast and actual delivery requirements. To that end, GFCEP shall also report
to FCE on or before the first business day of each month its estimated delivery
requirement of corn for the following month.

      (e) FCE shall maintain a minimum of four days supply of corn in storage at
GFCEP at all times.

3.1.02: CORN QUALITY

      (a) Corn Quality. Corn delivered under this Agreement shall: (i) be No. 2
shelled yellow corn, having no more than a 15% moisture content; (ii) be graded
in accordance with State and Federal laws and in accordance with any reasonable
standards set by GFCEP; (iii) be merchantable and not be adulterated; (iv) meet
such additional specifications and standards as the parties may establish from
time to time by mutual agreement, including without limitation standards and
specifications related to test weight (determined with reference to moisture
content), foreign material and mycotoxin and other toxin levels.

      It is understood and agreed that corn over 15% moisture content will be
delivered and/or corn with certain of the discount elements described in
paragraph 3.1.02(b) may be delivered and such is acceptable to GFCEP, subject to
the pricing discount(s) and other terms described in said paragraph 3.1.02(b).

      It is understood and agreed that the parties intend that the corn quality
provisions of this Agreement that pertain to daily averages shall be construed
so that FCE is able to compete with other corn merchants in the surrounding area
and correspondingly so that GFCEP is treated fairly. The daily average on
quality factors shall not be abused by reasons such as bringing specific quality
loads at certain times of the day to maximize the ranges allowed in the average
window allowance(s). This will be monitored on a daily basis and if there is any
material violation, GFCEP will not be required to and shall not allow any loads
for that day to be applied to the daily averages as described in this Agreement.

      (b) Corn Not Meeting Quality Requirements. GFCEP may, at its option: (i)
reject any corn delivered by FCE that does not meet these specifications
described herein or (ii) accept corn delivered by FCE that does not meet these
specifications on the following discounted pricing terms:

DISCOUNT SCHEDULE

Corn Discounts that will be charged to FCE from GFCEP:

Moisture

15.0% and under-no discount
15.1-15.5% 2 cents per bu.
15.6 - 16.0% - 4 cents per bu.
16.1 - 16.5% - 6 cents per bu.
16.6 to 17.0% - 8 cents per bu.
Corn over 17.0% - subject to rejection

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Test Weight

54.0 lbs and over - no discount
53.0 - 53.9 lbs. - 2 cents per bu.
52.0 - 52.9 lbs. - 4 cents per bu.
Below 52.0 lbs. - additional 2 cents per lb. per bu.

Regular Damage

5.0% and under - no discount
5.1% and up - 2 cents per bu. Per each 1%
Over 10.0% - subject to rejection

Foreign Material

4.0% and under - no discount
4.1% and up - 3 cents per bu. Per each 1%

MUSTY/SOUR - 5 cents per bu. If not rejected.

The parties agree that the quality requirements (and corresponding right to
reject corn) and discount schedule shall be applied as follows:

      1.    Moisture: There will be no discount on a load of corn until it is
            above 15.0%, and then a discount and right to reject as described in
            the discount schedule. The discount schedule and right to reject
            regarding moisture shall be determined on a load by load basis.

      2.    Test Weight: All loads with a test weight of 50 lbs. and above shall
            be averaged on a daily average basis, with the discount schedule
            applied on that daily average. All loads of test weights below 50
            lbs. shall be handled on a load by load basis, subject to the right
            of rejection and with the discount schedule (if such corn is
            accepted) being applied on a load by load basis.

      3.    Damage (Regular and/or Heat): All loads between 0% and 10% damage
            shall be averaged on a daily average basis, with the discount
            schedule applied on that daily average. Any loads of corn with more
            than 10% damage shall be handled on a load by load basis, with right
            to reject and in applying the discount schedule.

      4.    Foreign Material: Loads with 0% to 6% foreign material shall be
            averaged on a daily average basis, with the discount schedule
            applied on that daily average. Loads with more than 6% foreign
            material shall be handled on a load by load basis, with right to
            reject and in applying the discount schedule. Toxins. Any load of
            corn that tests positive for microtoxins or other toxins will be
            rejected. However, it is agreed that FCE is responsible only to use
            "black light" testing to determine the existence of such toxins. If
            GFCEP desires additional testing, it shall give written notice to
            FCE and

            GFCEP shall pay all costs of such additional testing.

This discount schedule is subject to change as market conditions dictate
providing both FCE and GFCEP mutually agree to any change in writing.

      (c) Limitation on Quality Requirements. Notwithstanding the foregoing
provisions of this Section 3.1.02, FCE shall not be required to provide Corn
under this Agreement with qualities and characteristics exceeding the average
qualities of Corn produced during the preceding corn production year ending on
August 31 of such year in the specific area surrounding the Plant defined as
within a twenty (20) mile radius of the plant. If such average qualities of corn
produced within a 20 mile radius of the plant are unacceptable to GFCEP, as
reasonably determined by GFCEP, then FCE shall have the right to procure corn
from other geographic areas until such time as the average qualities of corn
within the 20 mile radius of the plant are reasonably acceptable to GFCEP. If
corn is procured

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from other geographic areas pursuant to the terms of this paragraph, the Market
Price shall be the purchase price, plus shipping costs. In addition, GFCEP shall
pay FCE the per bushel procurement fee.

      (d) Determination of a Bushel of Corn. For purposes of FCE's delivery
obligations hereunder, a "bushel of Corn" or "bushel" is to be equivalent to a
bushel of No. 2 shelled yellow corn at 15% moisture and a weight of 56 pounds
per bushel. The moisture content and test weights of the Corn delivered to GFCEP
under this Agreement shall be determined and discounts on price, if any,
applied, as described in Paragraph 3.1.02 (b).

3.1.03: LICENSING

      FCE shall obtain Corn to be provided to GFCEP under this Agreement under
FCE's own grain dealer's license. GFCEP shall obtain and maintain a grain
dealer's license. FCE shall also obtain any and all licenses or permits
necessary for FCE to meet its obligations under this Agreement.

3.1.04: PAYMENTS TO CORN SUPPLIERS

      FCE will account for the Corn provided by, and settle with, all third
parties providing Corn to the Plant.

                                   ARTICLE II
                            TERM OF CORN PROCUREMENT

3.2.01: COMMENCEMENT

      The terms of this Agreement shall become effective on the first date that
the facility needs corn for testing, startup or operations. GFCEP shall notify
FCE ten (10) days in advance of when corn is first needed.

3.2.02: TERM OF AGREEMENT

      The term of this Agreement shall begin on the first day corn is requested
by GFCEP as stated in paragraph 3.2.01 and shall continue for a term of twelve
(12) years thereafter. Suspensions of operations for any reason, such as
repairs, modifications, expansions or damage to the facility shall not terminate
this Agreement - provided the plant thereafter resumes operations.

                                   ARTICLE III
                              CORN PROCUREMENT FEE

3.3.01: PROCUREMENT FEE

      For the first four (4) years of the Corn Procurement Term, GFCEP will pay
FCE a Corn procurement and delivery fee of $0.05 per bushel of Corn delivered
pursuant to Title 3 of this Agreement (the "Procurement Fee"). Beginning on the
fourth (4th) year anniversary of the Corn Procurement Term, the Procurement Fee
shall be increased to 5.5 cents per bushel of Corn delivered. Beginning on the
eighth (8th) year anniversary of the Corn Procurement Term, the Procurement Fee
shall be increased to 6 cents per bushel of Corn delivered.

3.3.02: CORN FOR GFCEP

      For any Corn required by GFCEP and provided by FCE pursuant to this
Agreement, GFCEP shall pay FCE the Market Price as determined in Title III,
Article IV (or, if applicable, Title III, Article I, paragraph 3.1.02(c)), plus
the Procurement Fee and storage fees provided for under this Agreement.

3.3.03: HEDGING ASSISTANCE

      FCE shall assist GFCEP, or GFCEP's designated agent, in GFCEP's forward
purchases of Corn to "lock in" the costs thereof whenever GFCEP determines such
risk positions are prudent. The determination of GFCEP need not be separately
evidenced in writing so long as GFCEP communicates to FCE its decision to make
forward

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purchases. GFCEP shall pay the purchase price for such forward purchases plus
the Procurement fee and, if applicable, storage fees.

      GFCEP shall pay the purchase price when the corn is purchased or when
invoiced, whichever occurs first. The Procurement fee shall be due when the corn
is delivered to the plant and the Procurement fee invoiced as provided by Title
III, Article IV, paragraph 3.4.01. Any storage fees shall be paid as agreed on a
case by case basis by the parties, or if no such agreement occurs, as is
customary and standard or as otherwise provided by this Agreement.

                                   ARTICLE IV
                              INVOICING AND PAYMENT

3.4.01 GFCEP shall pay FCE for the corn as delivered to the GFCEP facilities and
the corresponding Procurement Fee for said corn every Wednesday at 10:00 a.m.
central time for deliveries accrued through the close of business on Monday. If
any Wednesday falls on a national holiday, payment shall occur 10:00 a.m. the
next day.

3.4.02 The Market Price per bushel is the daily posted board price at the
Minnesota Falls branch of the FCE as of 10:00 a.m. the next trading day after
the corn is delivered to the GFCEP facility. The discounts, if any, shall be
determined pursuant to paragraph 3.1.02(b).

                                    ARTICLE V
                           LOCATION OF FCE'S DELIVERY

3.5.01 FCE shall deliver all Corn to GFCEP, and risk of loss shall pass to
GFCEP, at the Facilities.

3.5.02 All responsibility for and all unloading will be performed by GFCEP at
the sole and exclusive cost of GFCEP.

3.5.03 The GFCEP shall provide space rent free at its facility for no more than
two (2) employees of the FCE, so that said employees may coordinate the purchase
and delivery of corn to the GFCEP facilities. Said employee shall not be
responsible for and shall not be involved in the unloading or handling of said
corn when it arrives at the facility site. It is intended that said FCE
employees shall remain in "office" because of GFCEP's liability concerns.

      Said FCE employees at GFCEP shall be responsible to weigh and grade corn
as delivered to the GFCEP facility. FCE employees will take and provide the
required corn samples so that said weighing and grading can properly occur.
GFCEP employees shall, from time to time, spot check the weighing and grading
conducted by FCE employees.

3.5.04 Any disputes over grade discrepancies will be settled by the Minnesota
Grain Inspection Department.

3.5.05 The grain purchased or owned by GFCEP which is held pursuant to warehouse
receipt or priced later shall be physically stored in FCE's facilities.

3.5.06 The facility as constructed by GFCEP shall have a minimum of 470,000
bushels of corn storage and if the plant is expanded, then storage on the plant
site shall proportionately increase so the on site storage at the plant has at
least enough capacity to hold ten (10) days of corn for operation of the plant.

3.5.07 The design of the GFCEP grain receiving, handling and storage facilities
shall be subject to the review of FCE before such are constructed. Any expansion
or material modification of such grain receiving, handling and storage
facilities of GFCEP shall likewise be subject to review by FCE before any such
expansion or material modification occurs. GFCEP shall give due consideration to
comments or recommendations made by FCE following its review. However, GFCEP
shall not be bound to accept such comments or recommendations.

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                                   ARTICLE VI
                          DEFAULT, WAIVER, AND REMEDIES

3.6.01: DEFAULT, NOTICE, AND CURE

      (a) Except as provided in Section 3.6.01(b), if either party shall fail to
perform any of the covenants or obligations imposed upon it by this Agreement
(except such failure as shall be excused under Title IV, Article III), the other
party shall notify the party in default in writing of the alleged default and if
the party in default shall not cure said default within fifteen (15) days from
and after receiving such notice (the "Cure Period"), then notwithstanding any
other provision of this Agreement, the complaining party shall have the remedies
set forth in Section 3.6.03.

      (b) If GFCEP fails to make payment for Corn delivered by FCE and accepted
by GFCEP under the terms of this Agreement, the provisions of Section 3.6.01(a)
shall apply; however, the Cure Period shall be three (3) days from and after
GFCEP's receipt of notice of GFCEP's default from FCE.

3.6.02: WAIVER

      Waiver by either party of any breach of the terms and conditions herein
contained shall not be construed as a waiver of any subsequent breach of the
same or any other provision of this Agreement.

3.6.03: REMEDIES

      (a) GFCEP's Remedies. If FCE fails to deliver Corn as required by this
Agreement, or if GFCEP reasonably in good faith believes that FCE will fail to
deliver corn as required by this agreement, GFCEP may: (i) in good faith and
without unreasonable delay, make any reasonable purchase of Corn in substitution
of the quantity due from FCE, (ii) recover from FCE as damages the difference
between the cost of cover under (i) and the Market Price (or the average Board
price at the comparable location(s) established by the Amendment to this
Agreement, if Market Price cannot be determined), plus the Procurement Fee,
together with any incidental or consequential damages, but less expenses saved
in consequence of FCE's breach, (iii) seek and receive injunctive relief or a
decree of specific performance, (iv) credit the amount of damages FCE has become
obligated to pay GFCEP, as determined by arbitration or if arbitration fails to
occur as required hereby, a court of competent jurisdiction, to GFCEP and set
off such amount against any amounts owed by GFCEP to FCE.

      (b) FCE's Remedies. If GFCEP fails to make any payment for Corn delivered
by FCE and accepted by GFCEP under the terms of this Agreement, FCE may recover
the payments from GFCEP. FCE may withhold future scheduled deliveries only if
GFCEP fails to pay FCE the payments owed FCE as provided by this Agreement
within three (3) business days after GFCEP's receipt of FCE's written demand for
payment. FCE shall also have the right to specifically enforce the terms of this
Agreement, including, but not limited to, the obligation of GFCEP to purchase
all of the corn needed to operate the plant from FCE.

      (c) No right, power or remedy conferred by this Agreement shall be
exclusive of any other right, power or remedy now or hereafter available at law,
in equity, by statute or otherwise. In case of material reoccurring defaults,
the non-defaulting party shall be entitled to an immediate remedy available at
law, in equity, by statute or otherwise, not withstanding the notice and cure
provisions of this Article 6.

                          TITLE IV: GENERAL PROVISIONS

                                    ARTICLE I
                                   WARRANTIES

4.1.01: OWNERSHIP AND QUALITY OF CORN

      FCE warrants to GFCEP that FCE owns all of the Corn delivered to GFCEP
under this Agreement and that such Corn shall be free and clear of any security
interest, lien, penalty, charge, or encumbrance, governmental or

                                      -6-
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otherwise. If FCE has granted a security interest in any of the Corn delivered,
FCE shall inform GFCEP in writing, at or before delivery of the Corn, of any
such secured party's name and address. GFCEP shall have the right, but not the
obligation, to name the secured party as co-payee with FCE on any payment for
the Corn and to deliver such payment to the secured party.

4.1.02: NO EXPRESS OR IMPLIED WARRANTIES

      Neither party shall be liable for any representation or warranty of any
kind, express or implied, not expressly set forth in this Agreement.

                                   ARTICLE II
                               DISPUTE RESOLUTION

4.2.01: ALTERNATIVE DISPUTE RESOLUTION

      If a dispute, controversy, or claim arises out of or relates to this
Agreement, or the alleged breach thereof, including any claim or allegation of
fraud or misrepresentation, and if said dispute cannot be settled through direct
discussions, the parties agree to first endeavor to settle the dispute in an
amicable manner by mediation with an independent mediator selected by mutual
agreement of the parties. If the parties are unable to agree on a mediator,
mediation shall be administered by the American Arbitration Association under
its Commercial Mediation Rules. If the matter has not been resolved pursuant to
mediation within thirty (30) days of the commencement of such mediation (which
period may be extended by mutual agreement in writing), then any unresolved
dispute, controversy, or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration administered by the American
Arbitration Association in accordance with its Commercial Arbitration Rules (the
"Commercial Arbitration Rules"), and judgment upon the award rendered by the
arbitrators may be entered in the Minnesota District Court in Yellow Medicine or
Chippewa County, Minnesota, or the highest state court having jurisdiction. The
arbitration shall be conducted in Yellow Medicine County, Minnesota by a panel
of three neutral arbitrators appointed pursuant to the Commercial Arbitration
Rules.. The arbitrators shall permit each party to conduct limited relevant
discovery. The arbitrators shall award damages measured by the prevailing
party's actual damages, and may not, in any event, make any ruling, finding or
award that does not conform to the terms and conditions of this Agreement. The
provisions of this Agreement shall be a complete bar and defense to any suit,
action or proceeding instituted in any court or administrative tribunal with
respect to any controversy or dispute under this Agreement which is arbitrable.

4.2.02: ATTORNEY'S FEES AND COSTS

      The parties agree that the arbitration panel shall award to the prevailing
party in any dispute resolution proceedings related to this Agreement, from the
other party, the amount of the prevailing party's costs, expenses, and
attorneys' fees as the arbitrators deem fair and equitable.

                                   ARTICLE III
                                  FORCE MAJEURE

4.3.01: RELIEF FROM TRANSFERING CORN

      In the event of either party being rendered reasonably unable by Force
Majeure to perform any of its obligations in receiving or delivering Corn
hereunder, the obligations of such party shall be suspended, to the extent it is
unable, in whole or in part, to receive or deliver Corn by reason of Force
Majeure, during the continuance of any inability so caused and the cause of such
inability shall, so far as possible, be remedied with reasonable diligence.
Inability may include a storm event that does not allow management of GFCEP to
execute documents and otherwise perform wire transfers or payment as required by
this Agreement or which does not permit FCE to perform as required by this
Agreement. However, the party not subject to the force majeure event may, during
such period, accept performance from the other party or a third party as it may
reasonably determine under the circumstances.

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4.3.02: DEFINITION

      The term "Force Majeure" as used in this Agreement shall mean natural
catastrophe, strikes, lockouts, or other industrial disturbances, acts of the
public enemy, wars, declared or undeclared, blockades, insurrections, riots,
fires, civil disturbances, explosions, curtailment of power or natural gas,
compliance with laws, governmental regulations, orders and requests, whether
valid or not, curtailment or other inability to obtain equipment, supplies,
materials, including corn, or transportation facilities, breakdown of
facilities, machinery or equipment and any other cause whether of the kinds
herein enumerated or otherwise, not within the reasonable control of the party
claiming suspension, all of which by the exercise of due diligence such party
could not have reasonably foreseen and provided against; provided, however, that
the settlement of strikes or lockouts shall be entirely within the discretion of
the party having the difficulty.

                                   ARTICLE IV
                        DELIVERY OF PAYMENTS AND NOTICES

4.4.01: METHOD AND TIME

      All payments for corn and related fees shall be made by wire transfer. All
payments of other sums, notices, demands, or requests from one party to another
may be personally delivered or sent by mail, certified or registered, postage
prepaid, to the addresses stated in this section, and shall be deemed to have
been given at the time of personal delivery or forty-eight (48) hours after the
time of mailing.

4.4.02: NOTICE TO FCE

      All notices, demands or requests from GFCEP to FCE shall be given to FCE
at:

            Farmers Cooperative Elevator Co.
            C/o General Manager
            P. O. Box 59
            Hanley Falls, Minnesota  56245
            Fax number:  (507) 768-3675.

4.4.03: NOTICE TO GFCEP

      All notices, demands or requests from FCE to GFCEP shall be given to GFCEP
at:

            Granite Falls Community Ethanol Plant
            C/o General Manager

      with a required copy to:

            To be determined.

4.4.04: CHANGE OF ADDRESS

      Each party shall have the right, from time to time, to designate a
different address by notice given in conformity with this section.

                                    ARTICLE V
                                    INDEMNITY

4.5.01: DUTY TO INDEMNIFY. FCE agrees to indemnify and hold GFCEP harmless
against any and all claims, losses, damages or expenses by or on behalf of any
person or entity arising out of the performance of any covenant or agreement to
be performed by FCE, or arising from any act or negligence or willful misconduct
on the part of FCE, any person or entity claiming by, through or under FCE or
its agents, contractors, employees or invitees, including reasonable attorney
fees, expenses, and liabilities, incurred in connection with any such claim or
action or proceeding brought against GFCEP.

                                      -8-
<PAGE>
4.5.02: DUTY TO INDEMNIFY. GFCEP agrees to indemnify and hold FCE harmless
against any and all claims, losses, damages or expenses by or on behalf of any
person or entity arising out of the performance of any covenant or agreement to
be performed by GFCEP, or arising from any act or negligence or willful
misconduct on the part of GFCEP, any person or entity claiming by, through or
under GFCEP or its agents, contractors, employees or invitees, including
reasonable attorney fees, expenses, and liabilities, incurred in connection with
any such claim or action or proceeding brought against FCE.

                                   ARTICLE VI
                            OTHER GENERAL PROVISIONS

4.6.01: COMPUTATION OF TIME

      The time in which any act provided by this Agreement is to be done shall
be computed by excluding the first day and including the last, unless the last
day is a Saturday, Sunday or holiday, and then it is also excluded, except that
storage and interest shall begin to accrue on the first day.

4.6.02: SUCCESSORS IN INTEREST

      Each and all of the covenants, conditions and restrictions in this
Agreement shall inure to the benefit of and shall be binding upon the
successors, assigns, transferees, sublessees, licensees of the parties hereto;
provided, however, that if FCE sells to or is acquired by any other cooperative,
corporation or entity, and does not retain majority ownership or control, this
Agreement shall terminate, at the option of GFCEP.

4.6.03: ENTIRE AGREEMENT

      This Agreement contains the entire agreement of the parties with respect
to the matters covered herein, and no other agreement, statement or promise made
by any party, to any employee, officer, or agent of any party, which is not
contained in this Agreement shall be binding or valid.

4.6.04: PARTIAL INVALIDITY

      If any term, covenant, condition or provision of this Agreement is held by
a court of competent jurisdiction or the arbitrators to be invalid, void, or
unenforceable, the invalid, void or unenforceable term(s) shall be void, and the
parties shall renegotiate said term(s) of this Agreement in good faith and if
the parties cannot reach agreement, said term(s) shall be established by the
Dispute Resolution provisions of this Agreement.

4.6.05: RELATIONSHIP OF PARTIES

      Nothing contained in this Agreement shall be deemed or construed by the
parties or by any third person, arbitrator, or court to create the relationship
of principal and agent or of partnership or of joint venture or of any
association between FCE and GFCEP, and neither the method of computation of rent
or fees nor any other provisions contained in this Agreement nor any acts of the
parties shall be deemed to create any relationship between FCE and GFCEP, other
than the relationship of seller and buyer.

4.6.06: INTEREST

      Any sum accruing to FCE or GFCEP under the provisions of this Agreement
which shall not be paid when due shall bear interest at the rate of ten percent
(10%) per annum from the date of written notice specifying such nonpayment is
served on the defaulting party, until paid.

4.6.07: MODIFICATION

      This Agreement may not be modified or amended except by written instrument
signed by both of the parties, provided that the Board of Directors of both
parties approve the modification, and shall not be modified or

                                      -9-
<PAGE>
altered by any subsequent course of performance by either of the parties, except
as expressly otherwise herein provided.

4.6.08: CHOICE OF LAW

      This Agreement shall be deemed to have been made and executed in the State
of Minnesota and the validity, construction, interpretation, effect and
enforcement thereof shall be governed by the laws of the State of Minnesota.

4.6.09: HEADINGS AND CAPTIONS

      The headings and captions of the titles, articles, sections, and
subsections of this Agreement are inserted for convenience of reference only,
and do not constitute part of the Agreement.

4.6.10: COUNTERPARTS

      This Agreement may be executed simultaneously in two or more counterparts,
each of which shall in such event be deemed an original, but all of which
together shall constitute one and the same instrument.

      IN WITNESS WHEREOF, FCE and GFCEP have caused this Agreement to be
executed by their duly authorized representatives as of the date first set forth
above.

FARMERS COOPERATIVE                 GRANITE FALLS COMMUNITY
ELEVATOR CO.  (FCE)                 ETHANOL PLANT, LLC (GFCEP)

By /s/ Wayne Lonwagie               By /s/ Tom Branham
   ---------------------------         ---------------------------------

Its President                       Its CEO/General Manager
   ---------------------------          --------------------------------
   8-5-04                               August 4, 2004

                                      -10-
<PAGE>
                                   Exhibit "A"

     Legal Description of the Premises on which the facilities ("plant") of
     Granite Falls Community Ethanol Plant, LLC (GFCEP) will be constructed:

County of Chippewa, State of Minnesota:

                                      -11-<PAGE>
                                                                    EXHIBIT 10.4

                       OPERATING AND MANAGEMENT AGREEMENT

      THIS OPERATING AND MANAGEMENT AGREEMENT ("Agreement") is made effective as
of the 9 day of July, 2004, by and between GLACIAL LAKES ENERGY, LLC, a South
Dakota limited liability company ("Manager"), and GRANITE FALLS COMMUNITY
ETHANOL PLANT, LLC, a Minnesota limited liability company ("Owner").

                              Background Statements

      Owner and the Manager (as a Member of Owner) have entered into certain
agreements, of even date herewith, which will provide for sufficient capital to
construct and thereafter operate a 40 million gallon per year dry mill ethanol
plant on property owned by Owner (the "Facility"). Owner desires to contract
with Manager for operating and management services for the Facility. Manager
desires to provide these services having provided similar services in the
construction and operation of such facilities in the past. This Agreement sets
forth the responsibilities of the parties with respect to the Facility and its
operation and management.

                             Statement of Agreement

      NOW THEREFORE, in consideration of the mutual promises set forth in this
Agreement, the parties hereto agree as follows:

                                    ARTICLE 1

                                Duties of Manager

      During the term of this Agreement Owner hereby grants to Manager, subject
to the terms and conditions hereof, the sole right and authority to supervise
and direct the management and operation of the Facility. Manager hereby accepts
such responsibility and agrees, subject to the supervision and direction of
Owner's Board of Governors, to perform all services necessary for the
construction, equipping, start up and thereafter operation of the Facility in
accordance with highest industry standards. Manager's duties shall include, but
not be limited to the following:

      (a)   Maintenance and Operation. Upon completion of construction, to
direct the maintenance and operation of the Facility. In connection therewith:

            i.    Manager shall, at all times, do all things necessary to obtain
                  permits and licenses required for the construction and/or
                  operation of the Facility. Thereafter Manager shall continuous
                  ensure compliance with all regulatory matters to which the
                  Facility or its operations may be subject.

            ii.   Manager shall, at all times, hire, promote, discharge and
                  supervise the work of all employees necessary to operate the
                  Facility, and arrange for payment of all employee wages,
                  salaries and benefits as established from time to time by
                  Owner. Notwithstanding, the parties understand and agree that
                  all employees shall, except for the CEO/General Manager, the
                  Commodities Manager, and the Environmental, Health and Safety
                  Manager, and the Chief Finance Officer (the "CFO") be
                  employees of Owner.

            iii.  Manager shall direct all audit and accounting functions with
                  respect to the Facility and its operation and, in connection
                  therewith, shall upon approval of Owners Board secure the
                  services, at competitive rates, of accountants, auditors,
                  lawyers or other professionals as reasonably necessary to
                  carry out such functions.

            iv.   Subject to the limitations and policies as established, from
                  time to time by Owner's Board of Governors, Manager shall
                  direct contracting for purchase or sale of goods and
<PAGE>
                  services, for the purchase of equipment and fixtures, to
                  arrange for necessary repairs, renewals, additions and/or
                  improvements to the Facility, all in such amounts as may be
                  within Owner's budget and/or as may authorized by the Board of
                  Governors from time to time. It is understood and agreed by
                  the parties that, except as otherwise provided by the Board of
                  Governors, Manager will not enter into any agreement or
                  commitment to utilize the credit of Owner or to borrow money
                  in the name of the Owner unless approved in writing in advance
                  by Owner, except for purchase of goods and services and other
                  items on credit as are in the ordinary course and are
                  customary and consistent with the day to day operation of
                  Owner.

            v.

                  (a)   Managers shall collect income and pay expenses of Owner
                        in accordance with the terms set forth herein and as
                        provided, from time to time by Owners Board of
                        Governors.

                  (b)   Manager shall deposit in banking institution or
                        institutions as may be designated from time to time by
                        Owner, as soon as possible after collection, all monies
                        or other income received by Manager in operation of the
                        Facility and disburse and pay from the same, on behalf
                        of and in the name of Owner, such amounts and at such a
                        time as required to be disbursed or paid pursuant to
                        this Agreement. The parties agree that Owner shall
                        approve any proposed appointee of Manager as a person
                        designated as one authorized to withdraw funds from any
                        such account. Such person shall be insured by a Fidelity
                        Bond or insurance policy in a form as approved by Owner.

                  (c)   In connection with all income collected and deposited,
                        Manager shall segregate funds necessary for paying
                        ordinary and necessary expenses into a working capital
                        account which shall not, without Owner's advance
                        consent, have a balance in excess of $100,000. Funds in
                        excess of such amount shall be held on deposit or in
                        investments as determined, from time to time by Owner.

                  (d)   With respect to disbursements, Manager shall cause to be
                        paid all obligations incurred in the ordinary course in
                        the operation and management of the Facility from the
                        working capital account. Payment for expense outside of
                        the ordinary course of business shall require Owner's
                        advance written consent.

            vi.   Manager shall prepare, for approval by Owner, an annual budget
                  prior to each 12 months operation of the Facility. Said budget
                  shall contain all anticipated expenses, both ordinary and
                  extraordinary for the coming year. Manager shall report on a
                  monthly basis the results of actual operation as compared to
                  the Annual Budget. Payment of any unbudgeted items, or items
                  exceeding the budgeted allowance shall require Owner's advance
                  consent.

            vii.  Manager shall direct all grain purchasing and risk management
                  with respect to the same, and as may be necessary to operate
                  the Facility in accordance with reasonable business practices
                  and in accordance with any agreements or contracts entered
                  into by Owner with respect to the same.

            viii. Manager shall direct the marketing of all product produced at
                  the Facility and use Manager's best efforts to secure the
                  highest rate of return for Owner and its members.

            ix.   Manager shall recommend to Owner and shall assist Owner in
                  procuring and keeping in force such property, public liability
                  and workman's' compensation insurance and such other insurance
                  for risk and causality as are customarily insured against with
                  respect to

                                      -2-
<PAGE>
                  operations similar to that of the Facility and in such an
                  amounts and on such terms as may be customary in the industry.

            x.    Manager shall maintain books and records in accordance with
                  GAAP, and shall cause to be prepared and delivered to Owner
                  regular financial and operational reports as directed by Owner
                  from time to time and which shall include a monthly profit and
                  loss statement, annual balance sheet and related statement of
                  profit and loss for each fiscal year together with statement
                  showing assets employed in the operation of the Facility and
                  liabilities incurred in connection therewith.

            xi.   Manager shall direct the preparation of all tax returns, SEC
                  and other filings which may be required of Owner and arrange
                  for payment of all taxes, fees, licenses and assessments
                  related to the Facility and its operations. In addition,
                  Manager shall arrange and give proper notice of annual
                  meetings of Owner.

            xii.  Manager shall attend all meetings, prepare such reports, and
                  shall otherwise manage, supervise and conduct the day-to-day
                  affairs of the Company, including, without limitation, the
                  daily operations of financial management, government reports,
                  board and member reports, tax reporting and filing,
                  maintenance and service of the plant, (subject to Article
                  I(a)(iii) above) hiring of legal counsel and auditors and
                  accountants, public relations, buying and selling goods and
                  services and all other things necessary and desirable for the
                  operation of the plant, and as may be requested from time to
                  time by Owner. At all times Managers shall follow policies and
                  procedures as may, from time to time, be announced by Owner's
                  Board of Governors.

            xiii. To hire and dismiss such employees of the Owner and
                  independent contractors as the Manager shall deem reasonably
                  necessary to the operation of the facility.

            xiv.  Within the scope of Owner's Board authorization to purchase or
                  otherwise obtain the right to use equipment, supplies,
                  hardware and software technology associated with the facility.

            xv.   Under the direction of Owner's Board, to institute, prosecute,
                  defend, settle, compromise and dismiss lawsuits or other
                  judicial or administrative proceedings brought on or in behalf
                  of, or against, the Owner, the Members or the Manager in
                  connection with activities arising out of or incidental to
                  this Agreement, and to engage counsel or others in connection
                  therewith.

            xvi.  To carry on any other activities necessary to, in connection
                  with, or incidental to any of the foregoing or the day-to-day
                  operations of the Owner.

            xvii. Manager shall perform start-up and operational monitoring and
                  reporting; review physical performance compared to plan and
                  compared to vendor guarantees; and certification of issues
                  surrounding completion as defined in Credit and other
                  Agreements (close out).

            xviii. Owner's Board shall, promptly upon execution hereof and upon
                   this Agreement becoming effective announce, in advance, to
                   Manager its policies and procedures as related to the duties
                   of Manager as described above; and shall thereafter review
                   the same, at least annually with Manager. Manager shall be
                   entitled to rely on the policies and procedures of Owner
                   until such time as Owner's Board advises Manager, in writing,
                   of a change with respect to the same. Further, in
                   establishing its policies and procedures Owner's Board shall
                   give due consideration to the format and effectiveness of
                   Manager's existing operational authority for other ethanol
                   plants managed by it.

                                      -3-
<PAGE>
      (b)   Indemnity of Manager. Except for Wrongful Conduct (as defined below)
by Manager, Owner will indemnify, defend and hold Manager harmless from and
against any and all costs, liabilities, losses, and expenses (and reasonable
attorney's fees and other legal costs) resulting from any claim, suit, action,
or proceeding brought by any third party against Manager arising out of or
related to this Agreement. Further, except for Wrongful Conduct, Owner shall
have no cause of action against Manager for Manager's actions and conduct under
the terms of the Agreement. The term "Wrongful Conduct" used herein shall be
defined as any and all acts or conduct by Manager which: (1) is willful, wanton,
intentional, knowing, reckless, or grossly negligent misconduct; (2) constitutes
self dealing and/or gives rise to improper profit on the part of Manager in
breach of fiduciary duty or duty of loyalty that Manager owes to Owner
hereunder; or (3) in nature, violates any state or federal criminal law unless
Manager reasonably believes, at the time of such act or conduct, that such act
or conduct will not violate the same, or has no reasonable cause to believe the
conduct unlawful. In the event of any third party claim against Manager, Manager
shall give Owner notice of any third party claims against Manager and Owner may,
at its option, take over the defense of such claim at its own expense.

      (c)   Damages. In the event Manager earns or acquires improper profit in
breach of fiduciary duty or duty of loyalty that Manager owes to Owner
hereunder, Owner is entitled to, in addition to any other remedies that Owner
may have under applicable law and equity, the maximum amount of such improper
profit plus interest at the maximum rate applicable under applicable law.

                                    ARTICLE 2

                            Right to Replace Manager

2.1   Material Breach. Upon a material breach of the Agreement by Manager, Owner
shall have the right to replace Manager as operator during the Term by
terminating this Agreement under Article 6 hereof, after notice of such breach
of Manager.

      (a)   A material breach of this Agreement by Manager shall mean: (i)
Managers failure to comply with applicable laws or regulations; (ii) Managers
breach of a material term of this Agreement, or (iii) any and all acts or
conduct by Manager which is willful, wanton, intentional, knowing, reckless, or
grossly negligent misconduct, or which constitutes self dealing and/or gives
rise to improper profit on the part of Manager in breach of fiduciary duty or
duty of loyalty that Manager owes to Granite Falls hereunder.

      (b)   Notwithstanding any other terms to the contrary hereof or of any
other agreement between the parties, in the event Owner replaces Manager for
cause pursuant to the terms and conditions hereof, neither Manager nor any
individual member, employee, agent of Manager, notwithstanding as a Governor or
Owner, may participate in the vote that may result in the replacement of Manager
or termination of this Agreement, or otherwise exercise voting power, right, or
privilege granted to Manager or to such individual hereunder or elsewhere in
connection with such replacement or termination. Such decision to terminate
shall require the affirmative vote of seventy-five percent (75%) of the
remaining Governors.

                                    ARTICLE 3

                                Fees and Expenses

3.1   Fee. (A) Upon commencement of the term of this Agreement, Manager shall
receive, for its compensation for the services rendered hereunder, $35,000.00
per month. (B) In addition, Manager shall receive additional compensation in the
amount of 3% of net income, payable annually. For purposes of this net income
calculation, gifts received by the Owner, grants, government payments or
subsidies, tax credits (such as Jobz) and the like shall be excluded.

3.2   Terms of Payment. Each month, Manager shall deliver to Owner an invoice
indicating the sum due Manager from Owner for the operating and management
services provided to Owner during the previous month, which invoice shall be
paid within 10 days. The fee based upon net income shall be paid within 20 days
of completion of the Owner's fiscal year and annual audit.

                                      -4-
<PAGE>
3.3   Inflationary Adjustment. Upon the three year anniversary of the
commencement of the term of this Agreement, the monthly fee of $35,000 shall be
adjusted to correspond to changes in the Consumer Price Index from the date of
this Agreement to the date of the three year anniversary of the contract term.

                                    ARTICLE 4

                             Relationship of Parties

4.1   Services Provided by Manager. At all times during the Term, Manager and
its employees shall be considered independent contractors with respect to Owner.
Any person engaged by Manager to perform services at the facility shall do so
solely as servant or agent of Manager. Manager shall pay all salaries and fringe
benefits, withhold payroll taxes, and make any other payments normally made to,
or for the benefit of such persons. Manager shall provide all appropriate
payroll administration services with respect to such persons.

4.2   Services Provided by Owner. At all times during the Term, Owner and its
employees shall be considered independent contractors with respect to Manager.
Any person engaged by Owner to perform services at the facility shall do so
solely as servant, agent or employee of Owner. Owner shall pay all salaries and
fringe benefits, withhold payroll taxes, and make any other payments normally
made to, or for the benefit of such persons. Owner shall provide all payroll
administration services with respect to such persons.

4.3   The Independent Contractors to be Provided by Manager. It is intended that
Manager will provide the following independent contractors: CEO/General Manager,
CFO, Commodities Manager to monitor/handle grain procurement and grain risk and
Environment, Health and Safety Manager. These individuals will not be full-time,
but shall divide time between Watertown and Granite Falls. Manager shall also
provide the part-time services of a CFO to provide oversight on financial
records and reports, an employee to provide assistance to the Plant Manager to
be hired by Owner, and an employee to provide assistance to the Maintenance
Manager hired by Owner. All other persons will be employees of the Owner, except
for services that may be provided by independent contractors (other than
Manager) on a case by case basis. All other persons will be employees of the
Owner, except for services that may be provided by independent contractors
(other than Manager) on a case by case basis.

4.4   Insurance. Manager, at its own cost and expense, during the full term of
this Agreement, shall carry and maintain Workers' Compensation insurance at
statutory limits and Employer's Liability Insurance and General Commercial
Liability Insurance with a limit of not less than $500,000 [sic], $1,000,000,
respectively, $2,000,000 aggregate [sic]. Evidence of such insurance shall be
furnished to Owner upon written request therefore.

                                    ARTICLE 5

                                 Confidentiality

      Each party will treat as confidential all information designated by the
other party in writing as confidential which is not otherwise lawfully known to
it or already in the public domain, shall not disclose such information to any
third party (except its attorneys, accountants or other advisors (who shall be
similarly bound by this Confidentiality Clause), or unless such disclosure is
required by law) without the prior written consent of the other party, shall
return such information promptly to the other party upon request, and shall keep
such information confidential both during and following the expiration of the
Term of this Agreement.

                                    ARTICLE 6

                            Termination of Agreement

6.1   Termination. Anything in this Agreement to the contrary notwithstanding,
this Agreement may be terminated prior to the end of the Term set forth in
Article 11 hereof upon any of the following events:

                                      -5-
<PAGE>
      (a)   By mutual written consent of Manager and Owner;

      (b)   Upon written notice from either party to the other if such other
party is subject to proceedings under any law relating to bankruptcy, or the
relief of debtors, other than an involuntary petition in bankruptcy which is
dissolved within sixty (60) days after the commencement thereof.

      (c)   As provided at Article 2 hereof.

      (d)   Upon written notice from either party to the other party if the
other party has failed to make any payment due hereunder which is not reasonably
in dispute within twenty (20) days after delivery of written notice that such
amount is past due; or

      (e)   Upon written notice from either party to the other if such other
party has breached any material term of this Agreement that is not excused by
Force Majeure and such other party does not commence curative action with
reasonable diligence to cure the breach as soon as practicable within twenty
(20) days following the delivery of written notice to such other party
specifying such breach.

      (f)   Upon the dissolution or liquidation of either party or the inability
of either party to carry on its business.

6.2   Effect of Termination. Upon termination of this Agreement for any reason,
all obligations of the parties hereunder shall terminate, except confidentiality
obligations hereunder, and the obligations which may become due and payable in
respect to any services provided pursuant to this Agreement prior to
termination. Nothing in this Section 6.2 shall affect the right of either party
to bring an action against the other party for a breach occurring prior to the
termination or for a wrongful termination, and to recover damages resulting
therefrom. No failure or delay on the part of the parties hereto to exercise any
right, power or privilege hereunder shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.

                                    ARTICLE 7

                                  Force Majeure

      Except as otherwise provided herein, the performance of a party shall be
excused due to Force Majeure, including any event, action or circumstance which
is beyond the reasonable control of the party claiming Force Majeure and
adversely and directly renders the performance of the party impossible in whole
or in part. In the event a party is responsible for an action, event, or
circumstance pursuant to this Agreement, then such action, event, or
circumstance shall be deemed beyond the reasonable control of the other party,
by such other party, except as otherwise provided herein. Where such
impossibility of performance is in part due to Force Majeure, the said party
shall not be relieved of the performance of that party which is not so rendered
impossible. Any party prevented from performing due to an event of Force Majeure
shall be obligated to use all reasonable efforts to remedy such condition as
soon as reasonably possible. Either party may terminate this Agreement upon not
less than thirty (30) days prior written notice if an event of Force Majeure has
occurred that will prevent either party from performing its obligations
hereunder for more than ninety (90) days.

                                    ARTICLE 8

                                     Notices

      All notices pertaining to this Agreement shall be given in writing to the
representatives indicated below (or as may otherwise be designated in writing by
either party) delivered personally or sent by express or certified mail, postage
prepaid, or faxed with a hard copy mailed at the following addresses:

            Owner:      P.O. Box 216, Granite Falls, MN 56241
                        ------------------------------------------
                        Granite Falls Community Ethanol Plant, LLC

                                      -6-
<PAGE>
            Manager:    P.O. Box 933, Watertown, SD 57201
                        ---------------------------------
                        Glacial Lakes Energy, LLC

                                    ARTICLE 9

                          Entire Agreement; Amendments

9.1   Entire Agreement. Except as otherwise agreed to in a writing signed by
both parties, represent the entire agreement between the parties concerning
provisions of operating and maintenance service for the Ethanol Plant and
supersedes all prior negotiations and representations whether written or oral.

9.2   Amendment. This Agreement may be amended or modified only by a written
instrument signed by the respective authorized representatives of the parties.

                                   ARTICLE 10

                                Term of Agreement

10.1  Initial Term. The term of this Agreement shall commence six months prior
to the estimated start-up date of the facility and shall continue until the
fifth anniversary thereof.

10.2  Renewal Term. Thereafter, this Agreement shall be automatically renewed
for successive periods of one (1) year each, provided, however, that this
Agreement may be terminated by either party upon one-hundred eighty (180) days
written notice prior to the beginning of any such renewal period.

                                   ARTICLE 11

                                  Miscellaneous

11.1  Severability. If any provision of this Agreement or any remedy provided
herein is found to be invalid, illegal, or unenforceable in part or in whole
under any applicable law, such provision or remedy, or portion thereof, shall be
inapplicable and deemed omitted from this Agreement, but the remaining
provisions shall continue in full force and effect.

11.2  Counterparts. Any number of counterparts to this Agreement may be executed
and each shall have the same force and effect as the original.

11.3  Governing Law. This agreement shall be governed by and interpreted under
the laws of the State of Minnesota.

11.4  Successors and Assigns. This Agreement shall not be assigned by either
party without the prior written consent of the other party, which consent shall
not be unreasonably withheld. This Agreement shall be binding upon and shall
inure to the benefit of the parties' successors and assigns.

11.5  Inspection of Records. Upon reasonable prior notice, each party shall
allow the other to inspect the records supporting the calculations determined
under this Agreement (which relate to the performance of this Agreement) which
may be required by law or this Agreement to be maintained by either party. Where
and when reasonable to do so, either party may install its own temporary or
permanent measuring device at its own expense to verify any measurement made by
the other party pursuant to this Agreement.

11.6  Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration in Yellow
Medicine County, Minnesota in accordance with the rules then existing of the
American Arbitration Association, and judgment upon the award rendered may be
entered in any court having jurisdiction thereof. The arbitrator or arbitrators
under this provision shall decide who shall pay the expenses of

                                      -7-
<PAGE>
arbitration. Any decision made by an arbitrator or arbitrators under this
provision shall be enforceable as final and binding as if it were a final
decision or decree of a court of competent jurisdiction.

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

Owner:                                       Manager:

GRANITE FALLS COMMUNITY ETHANOL              GLACIAL LAKES ENERGY, LLC
PLANT, LLC

                                             By: /s/ Jon T. Anderson
                                                --------------------------------
                                             Printed Name: Jon T. Anderson
                                                          ----------------------
By:  /s/ Paul Enstad                         Title: President
    -------------------------------                -----------------------------
Printed Name: Paul Enstad
             ----------------------
Title: Chairman
      -----------------------------

                                      -8-

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